[Senate Hearing 116-490]
[From the U.S. Government Publishing Office]


                                                   S. Hrg. 116-490

                          COVID	19 AND BEYOND:
  OVERSIGHT OF THE FDA'S FOREIGN DRUG MANUFACTURING INSPECTION PROCESS

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

                                HEARING

                               BEFORE THE

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              JUNE 2, 2020

                               __________


[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                     
                                     

            Printed for the use of the Committee on Finance

                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
45-640 PDF                 WASHINGTON : 2021                     
          
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                          COMMITTEE ON FINANCE

                     CHUCK GRASSLEY, Iowa, Chairman

MIKE CRAPO, Idaho                    RON WYDEN, Oregon
PAT ROBERTS, Kansas                  DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming             MARIA CANTWELL, Washington
JOHN CORNYN, Texas                   ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota             THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina         BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio                    SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania      MICHAEL F. BENNET, Colorado
TIM SCOTT, South Carolina            ROBERT P. CASEY, Jr., Pennsylvania
BILL CASSIDY, Louisiana              MARK R. WARNER, Virginia
JAMES LANKFORD, Oklahoma             SHELDON WHITEHOUSE, Rhode Island
STEVE DAINES, Montana                MAGGIE HASSAN, New Hampshire
TODD YOUNG, Indiana                  CATHERINE CORTEZ MASTO, Nevada
BEN SASSE, Nebraska

             Kolan Davis, Staff Director and Chief Counsel

              Joshua Sheinkman, Democratic Staff Director

                                  (ii)
                                  
                                  
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Grassley, Hon. Chuck, a U.S. Senator from Iowa, chairman, 
  Committee on Finance...........................................     1
Wyden, Hon. Ron, a U.S. Senator from Oregon......................     3

                        ADMINISTRATION WITNESSES

Abdoo, Mark, Associate Commissioner for Global Policy and 
  Strategy, Food and Drug Administration, Department of Health 
  and Human Services, Silver Spring, MD..........................     7
McMeekin, Judith, Pharm.D., Associate Commissioner for Regulatory 
  Affairs, Food and Drug Administration, Department of Health and 
  Human Services, Silver Spring, MD..............................     8
Denigan-Macauley, Mary, Ph.D., Director, Health Care, Government 
  Accountability Office, Washington, DC..........................     9
Throckmorton, Douglas C., M.D., Deputy Director for Regulatory 
  Programs, Center for Drug Evaluation and Research, Food and 
  Drug Administration, Department of Health and Human Services, 
  Silver Spring, MD..............................................    11

                          ADDITIONAL WITNESSES

Light, David, founder and CEO, Valisure, New Haven, CT...........    40
VanTrieste, Martin, RPh, president and CEO, Civica, Inc., Lehi, 
  UT.............................................................    42

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Abdoo, Mark:
    Testimony....................................................     7
    Prepared statement...........................................    49
    Responses to questions from committee members................    62
Denigan-Macauley, Mary, Ph.D.:
    Testimony....................................................     9
    Prepared statement...........................................    97
    Responses to questions from committee members................   114
Grassley, Hon. Chuck:
    Opening statement............................................     1
    Prepared statement with attachments..........................   120
Lever, Harry, M.D.:
    Prepared statement...........................................   131
Light, David:
    Testimony....................................................    40
    Prepared statement...........................................   132
    Responses to questions from committee members................   155
McMeekin, Judith, Pharm.D.:
    Testimony....................................................     8
    Prepared statement...........................................    49
    Responses to questions from committee members................    62
Throckmorton, Douglas C., M.D.:
    Testimony....................................................    11
    Prepared statement...........................................    49
    Responses to questions from committee members................    62
VanTrieste, Martin, RPh:
    Testimony....................................................    42
    Prepared statement...........................................   162
    Responses to questions from committee members................   168
Wyden, Hon. Ron:
    Opening statement............................................     3
    Prepared statement with attachments..........................   172

                             Communications

Association for Accessible Medicines.............................   197
Kolchinsky, Peter, Ph.D..........................................   208
Natural Products Association.....................................   214
Ohio State University, Fisher College of Business................   216
TruTag Technologies, Inc.........................................   218
U.S. Pharmacopeia................................................   219

 
                          COVID-19 AND BEYOND:
                  OVERSIGHT OF THE FDA'S FOREIGN DRUG
                    MANUFACTURING INSPECTION PROCESS

                              ----------                              


                         TUESDAY, JUNE 2, 2020

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The WebEx hearing was convened, pursuant to notice, at 2:30 
p.m., in Room SD-106, Dirksen Senate Office Building, Hon. 
Chuck Grassley (chairman of the committee) presiding.
    Present: Senators Cornyn, Thune, Toomey, Cassidy, Daines, 
Wyden, Stabenow, Menendez, Carper, Cardin, Brown, Whitehouse, 
Bennet, Casey, Warner, Hassan, and Cortez Masto.
    Also present: Republican staff: Joshua Flynn-Brown, Deputy 
Chief Investigative Counsel; and Charles Pankenier, Detailee. 
Democratic staff: David Berick, Chief Investigator; Peter 
Gartrell, Investigator; and Joshua Sheinkman, Staff Director.

 OPENING STATEMENT OF HON. CHUCK GRASSLEY, A U.S. SENATOR FROM 
              IOWA, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. Good afternoon, everybody. I want to welcome 
everyone to the Finance Committee oversight hearing on Food and 
Drug Administration's foreign drug manufacturing inspection 
process. This committee has an obligation to ensure drugs paid 
for by the taxpayers, whether it is Medicare or Medicaid, 
satisfy quality standards and are safe and effective for 
patients.
    Second, besides taxpayer concerns, this committee has 
jurisdiction over trade, and we have responsibilities to 
guarantee only quality pharmaceuticals enter the United States. 
That responsibility, both of Congress and the FDA, is 
heightened now that we are living through the COVID pandemic. 
Whether we are in the midst of a pandemic or not, these supply 
chain issues must be shored up and solved.
    Starting in June of last year, I began oversight activities 
on this issue. I wrote letters at that time to Secretary Azar 
and Acting FDA Commissioner Dr. Sharpless. I asked a series of 
questions relating to manufacturing facilities overseas that 
manufacture final dosages for drugs and active pharmaceutical 
ingredients. And I am going to refer to ``active pharmaceutical 
ingredients'' throughout the day as APIs. I also asked how the 
Food and Drug Administration manages its foreign inspection 
regime.
    The Government Accountability Office has said that the FDA 
does conduct some unannounced inspections overseas, but they do 
not have data on the frequency. However, the Government 
Accountability Office noted in 2019 that the FDA estimated that 
they generally provided 12 weeks of notice before the 
inspection.
    So, simply said, FDA then is undermining the ability of 
field inspectors to do their job. Twelve weeks, common sense 
tells me, is plenty of time to doctor up a facility to make 
sure that it passes inspection. Yet incredibly, some facilities 
still get caught. That is how bad it is, and we have to do 
something about it. The result is that the consumer is put at 
risk.
    According to the most recent FDA data, the United States 
has 46 percent of finished dosage form facilities. That is 
where API are turned into final form such as tablets. That 
means over 50 percent of the sites manufacturing finished drugs 
are located outside the United States. But that is just part of 
the story.
    What we really need to know is, where did the API come 
from? According to the most recent FDA data, 13 percent comes 
from China, 19 percent from India. Combined, that is more than 
any other country. And overall then, more than 70 percent of 
facilities that make APIs are located overseas.
    These figures, coupled with the COVID pandemic, have 
garnered a lot of attention, including what might need to be 
done from a national security standpoint. But the figures do 
not make clear what needs to be done from a drug safety 
perspective.
    We need to have a robust and aggressive foreign inspection 
program. Now, with respect to China and India, both those 
countries have had serious quality control problems. We all 
remember the valsartan recall, where that drug was found to 
contain contaminants used in rocket fuel. Facilities in China 
and India produce that drug. We also should not forget Heparin, 
and that is a scandal all by itself. In that case, patients 
undergoing dialysis began to have severe and life-threatening 
side effects because the manufacturing plant in China 
introduced a toxin into the production chain.
    Hundreds of people died, and hundreds were sickened. And 
then we have Ranbaxy, an Indian manufacturer. Ranbaxy's 
production chain exposed drugs to potential cross-contamination 
by penicillin and used APIs from facilities that were not 
approved by the FDA. That company also manufactured Lipitor and 
was shut down because it could not explain why some of those 
tablets had pieces of glass in them.
    I fear these examples are just the tip of iceberg. They 
show why the FDA must maintain an aggressive inspection machine 
to ensure drug quality, but at the same time also impose a 
strong enforcement regime on bad actors.
    In February of this year, FDA Commissioner Hahn told me 
that in Fiscal Year 2018 the Center for Drug Evaluation and 
Research issued almost five times as many warning letters for 
human drug manufacturers as compared to 2015. He said that is a 
sign that FDA is better able to use its resources for 
identifying problems.
    Now that is very good: stay aggressive and do not hesitate 
to be more aggressive. On the front end, though, that process 
should include unannounced inspections overseas. After all, why 
would we give manufacturers time to prepare their facilities 
for inspection? They ought to be looking over their shoulder 
every day. That would keep them honest.
    During the Obama administration, we had what was called the 
India Pilot Program. It allowed for no-warning inspections, or 
a couple of days' worth of warning. Under it, the FDA issued a 
60-percent increase in what are termed ``official action 
indicated'' findings. In 2015, the Obama administration shut 
the pilot program down, and I believe that there was no 
explanation of why.
    It sounds like the program was a victim of its own success. 
Now, this issue is a very bipartisan issue. Republican and 
Democrat administrations have come up short. The Government 
Accountability Office has a body of work from multiple 
administrations that proves that this is bipartisan. For 
example, both the Obama and Trump administrations have 
struggled to fill vacancies in foreign offices. So that brings 
us to today, as what I have just said is what we found out from 
over a year or more of investigations without a hearing.
    Today we have witnesses from the FDA. They can speak to all 
these issues and how the pandemic has impacted their work. On 
the first panel we have FDA witnesses and a Government 
Accountability witness. On the second panel, we have private-
sector companies.
    So I thank all of you for being here. It is important to 
note that I plan to follow up with another hearing soon 
examining another problematic aspect for the medical supply 
chain, specifically, the increase in trade of fake and faulty 
personal protective equipment. That is separate from what we 
will discuss today.
    In closing, I want to say two things. First, thank you to 
FDA officials who work tirelessly to inspect facilities 
overseas. Second, regardless of party, we must have an honest 
discussion of the government's shortcomings so that we can 
better understand what we as Congress can do to ensure drug 
safety for the taxpayers. After all, we work for them and must 
always answer to them.
    One thing before I introduce Ranking Member Wyden, and that 
is simply to say that we have one more vote in a series that 
started at 2:15. We will continue to go through that vote, and 
we also have a vote at 4:30, and we will continue to go through 
that vote.
    [The prepared statement of Chairman Grassley appears in the 
appendix.]
    So, Senator Wyden, are you ready?
    Senator Wyden. I am, Mr. Chairman. Would you like me to 
proceed now?
    The Chairman. Please do.

             OPENING STATEMENT OF HON. RON WYDEN, 
                   A U.S. SENATOR FROM OREGON

    Senator Wyden. This afternoon, the Finance Committee is 
holding its first meeting since March, focusing on the FDA's 
failure to adequately inspect foreign drug manufacturers for 
safety. In my view, the head of the FDA ought to be at this 
hearing to face tough questions on this issue, but FDA 
Commissioner Hahn is not with us today for one reason, and that 
is because the Trump administration blocked his testimony. The 
Trump administration did this to prevent the committee from 
holding the point person for the FDA accountable.
    I also asked for the committee to invite the journalist 
Katherine Eban to testify, because she has literally written 
the book on this issue. That also, unfortunately, has not 
happened.
    In lieu of that, I would ask unanimous consent to enter 
into the record testimony and articles from Ms. Eban on this 
subject.
    The Chairman. Without objection, so ordered.
    [The documents appear in the appendix beginning on p. 174.]
    Senator Wyden. Thank you, Mr. Chairman.
    While the committee meets for this hearing, COVID-19 is 
ripping through nursing homes and killing thousands of 
Americans each week. Unemployment is at near-Depression levels. 
The kindling laid down over the centuries of racial injustice 
was reignited by the murder of George Floyd. The President is 
agitating for more violence and more escalation as our Nation 
suffers.
    The injustice driving peaceful protesters to the streets 
over the last few days is woven throughout society. Since the 
committee is dealing with health care in this hearing, I am 
going to start my remarks with an immediate piece of urgently 
needed health-care reform. COVID-19 has hit the African 
American community harder than virtually any other group of 
Americans. I would note, the recent analysis that was described 
in The Washington Post showed that counties that are majority 
black had three times the rate of infections and almost six 
times the rate of deaths as counties where white residents are 
in the majority.
    The racial injustice status quo is simply immoral, with the 
long terrible history of our health-care system working against 
black people in America, from simply not listening when 
symptoms are reported, up to performing cruel experiments on 
black human beings. That is part of why COVID-19 is having such 
an out-sized impact on the African American community. There is 
a risk, for example, that when a COVID-19 vaccine becomes 
available, vaccination rates in the African American community 
may be lower because many in the community, for understandable 
reasons, do not believe that American health care is really 
looking out for them and is really going to give them a fair 
shake.
    So I want to make something very clear right now. This 
committee has real muscle when it comes to Federal health-care 
spending and doing something about what I just described. Two 
trillion dollars in spending over flagship programs like 
Medicare and Medicaid, the Affordable Care Act, and more are 
inside the jurisdiction of the Finance Committee.
    So today, in the beginning, I am calling on this committee 
to come together and use all of that power and authority to 
right the wrongs of the past that I have described this 
afternoon. On our watch, colleagues, this just has to get done.
    Now, as to the subject of today's hearing, I want to focus 
on one specific example of the FDA and the President teaming up 
to put Americans in danger. I want to talk about 
hydroxychloroquine. Back in March, with the pandemic exploding 
nationwide, far-right media began talking about using this old 
malaria drug to treat COVID-19. The President seized on the 
report, without any valid evidence, and spent weeks declaring 
it to be the ultimate game changer in the fight against this 
horrible pandemic. The FDA, in my view, bowed to pressure and 
issued what's called an emergency use authorization for the 
drug. Doing so throws open the doors to tens of millions of 
pills, including some directly related to this hearing, 
manufactured inside facilities in Pakistan and India that have 
either failed FDA inspection or never been inspected by the FDA 
at all.
    Studies have now shown that the drug has no benefit for 
COVID patients. In fact, it is actually linked to higher rates 
of COVID-19 mortality. On April 24th, the Food and Drug 
Administration warned against using the drug in COVID 
treatment, and they said there were serious, I quote here, 
``serious and potentially life-threatening heart rhythm 
problems,'' unquote. The FDA says it still can be imported from 
unapproved manufacturing facilities.
    A recent article in The New England Journal of Medicine 
said the episode posed, and I quote, ``fundamental threats to 
the U.S. drug evaluation process.'' Mr. Chairman, without 
objection, I would like to have that article from The New 
England Journal of Medicine put into the record at this point.
    The Chairman. Without objection, so ordered.
    [The article appears in the appendix on p. 194.]
    Senator Wyden. The fact is, lots of Americans take this 
medication to treat other diseases, including lupus and 
rheumatoid arthritis. It is prescribed by their doctors as part 
of a valid treatment. They are counting on having a safe supply 
of their medication, and it seems Donald Trump has pretty much 
taken that away from them. He repeated a bunch of far-right 
pundits touting junk science. Now the U.S. market is polluted 
with tens of millions of hydroxychloroquine doses that may or 
may not be safe. It is not clear that there is a system in 
place to distinguish them from other stockpiles that came from 
unapproved sources.
    So if you are talking about FDA failures leading to greater 
risk for Americans, hydroxychloroquine is the case in point. 
There is also the botched roll-out of COVID-19 antibody tests. 
There is the emergency use authorization for faulty K-95 masks 
that pose a danger to health-care workers and first responders. 
There is the fact that the number of FDA inspections for 
foreign drug manufacturing facilities was already down under 
the Trump administration.
    Now on this committee, we know that there is bipartisan 
interest in seeing improvements at the FDA. It makes sense for 
us to build our drug manufacturing capacity in America. 
However, the Trump administration just handed a big contract 
for COVID-19 drug manufacturing to a company with no experience 
in manufacturing drugs and no facilities in which to 
manufacture them. That is not good enough in my view, Mr. 
Chairman and colleagues. It is not a good enough plan to help 
COVID patients who are suffering right now.
    It also raises questions about how this administration 
would handle a COVID-19 vaccine if and when a vaccine becomes 
available. There is much to account for on this issue. The 
Trump administration's continuing efforts to stonewall our 
oversight by blocking Commissioner Hahn from answering our 
questions today is preventing real, actual accountability.
    Still, I want to make it clear to our witnesses who are 
here with us, we thank them for doing so, and I look forward to 
their testimony.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Wyden appears in the 
appendix.]
    The Chairman. One clarification. The Trump administration 
did allow Commissioner Hahn to show, but we decided for the 
purpose of the issues of this hearing, which deal with the 
importation of some less-than-quality products from foreign 
countries, that having additional FDA witnesses would fill a 
very important gap in knowledge for our committee.
    I am going to introduce Mark Abdoo, Associate Commissioner 
for Global Policy and Strategy, providing executive oversight, 
strategic leadership, and policy direction to FDA's global 
operations, trade and diplomacy activity, and engagement with 
international stakeholders. He leads the Office of Global 
Policy and Strategy, which is comprised of the Office of 
Diplomacy and Partnership, the Office of Global Operations, and 
the Office of Trade, Mutual Recognition, and International 
Arrangements--which are collectively dedicated to expanding the 
reach of FDA's global agenda in sustainable and measurable 
ways.
    Judith McMeekin is Associate Commissioner for Regulatory 
Affairs and has responsibility for 5,000 staff and operations 
within the Office of Regulatory Affairs. The Office of 
Regulatory Affairs is FDA's field force supporting FDA's 
product center through responsibilities including inspections 
and investigations, criminal investigations, compliance with 
enforcement, import operations, regulatory science, and field 
laboratory operations.
    Dr. Douglas Throckmorton is Deputy Director of Regulatory 
Programs at the Office of Drug Evaluation and Research. Dr. 
Throckmorton is a board-certified physician. He carries the 
responsibility for overseeing the regulation of research 
development; manufacturing; marketing of prescription, over-
the-counter, and generic drugs in the United States; and 
ensuring that the benefits of approved drugs outweigh their 
known risks.
    Dr. Mary Denigan-Macauley oversees the U.S. Government 
Accountability Office's portfolio of audits on public health, 
private health, and the markets associated with them, including 
opioid issues. Mary joined GAO in 2001, managing a diverse 
portfolio related to science, agricultural production, and 
defense on GAO's Natural Resource and Environment team. This 
work covered cross-cutting topics such as antibiotic 
resistance, food safety, and emergency preparation.
    As the witnesses know, we are under time restrictions at 
the moment. And accordingly, the three FDA witnesses will try 
to keep their opening statements to a combined 7\1/2\ minutes. 
And then GAO will have the equal 7\1/2\ minutes.
    We will begin with Mr. Abdoo.
    Senator Wyden. Mr. Chairman?
    The Chairman. Yes; go ahead.
    Senator Wyden. If I could, just for a minute, with respect. 
We still feel, for real accountability over all the issues we 
are discussing today, you have got to have Dr. Hahn. And in 
fact, all of the employees that you just described, we 
certainly recognize their role at the FDA. They all report to 
Dr. Hahn.
    So, respectfully, we have a difference of opinion. I think 
it is very unfortunate that he is not with us today, because he 
is the person who is really accountable for the entire array of 
issues we are discussing today, and I appreciate the chance to 
respond briefly.
    The Chairman. The only thing I would give back to you is 
that these witnesses are the experts and cover the bases that 
we are interested in for this hearing.
    Mr. Abdoo, would you proceed, please?

  STATEMENT OF MARK ABDOO, ASSOCIATE COMMISSIONER FOR GLOBAL 
 POLICY AND STRATEGY, FOOD AND DRUG ADMINISTRATION, DEPARTMENT 
        OF HEALTH AND HUMAN SERVICES, SILVER SPRING, MD

    Mr. Abdoo. Chairman Grassley, Ranking Member Wyden, members 
of the committee, I am Mark Abdoo, Associate Commissioner for 
Global Policy and Strategy. As Chairman Grassley noted, I lead 
the FDA's Office of Global Policy and Strategy by oversight, 
leadership, and policy direction to our global operations in 
trade, and diplomacy activities and engagement with 
international stakeholders.
    Thank you for the opportunity to discuss FDA's 
international pharmaceutical oversight today. Over the past 30 
years, pharmaceutical manufacturing has become increasingly a 
global enterprise. Beginning in the 1970s, industry moved away 
from the mainland United States, first to Puerto Rico in 
response to tax incentives and then to Europe and nations that 
were developing at the time such as China and India, which 
offer significantly lower labor, energy, and transportation 
costs.
    Globalization presented substantial challenges to 
regulatory oversight. FDA has responded with a comprehensive 
strategy to facilitate greater coordination and oversight of 
medical products. In addition to increasing foreign 
inspections, our efforts have included the following: 
developing new enforcement and regulatory tools; increasing 
collaboration with foreign regulators and other stakeholders; 
developing internationally harmonized standards and standard 
convergence; educating foreign industry about FDA requirements; 
and increasing transparency and accountability in the supply 
chain.
    Responsibility for addressing these global challenges is 
distributed across the agency. My office serves as a focal 
point for FDA-wide coordination and information-sharing and a 
point of access to multilateral organizations, addresses issues 
related to international trade of regulated products, 
negotiates mutual recognition agreements, enters into 
arrangements that facilitate foreign inspections and the 
sharing of information with global regulatory counterparts, and 
manages FDA's foreign offices around the world.
    We have made progress in recent years in developing the 
foreign base inspectorate; staffing at the foreign offices is 
at historically high levels. Our foreign offices conduct 
inspections, particularly unannounced for-cause inspections. 
They also work with regulatory counterparts in-country, engage 
in outreach education and training with industry associations, 
promote good manufacturing practices including data integrity 
and quality, and provide boots-on-the-ground data and analysis 
to inform decision-making at FDA headquarters.
    In recent years, we also completed the historic Mutual 
Recognition Agreement between FDA and the European Union, which 
is now beginning to yield benefits. The MRA enables FDA and EU 
regulatory authorities to rely on information from routine drug 
inspections conducted within each other's borders.
    As implementation continues and more information is 
exchanged, the MRA will help to further minimize duplication of 
drug inspections, lower inspection costs, and permit us to 
devote more resources to other parts of the world where there 
may be greater risks.
    We are deeply committed to leveraging all of our resources 
to protect the reliability and availability of the drugs to 
treat Americans.
    Thank you again for the opportunity to be here today.
    [The prepared statement of Mr. Abdoo appears in the 
appendix.]
    The Chairman. Dr. McMeekin?

STATEMENT OF JUDITH McMEEKIN, Pharm.D., ASSOCIATE COMMISSIONER 
     FOR REGULATORY AFFAIRS, FOOD AND DRUG ADMINISTRATION, 
   DEPARTMENT OF HEALTH AND HUMAN SERVICES, SILVER SPRING, MD

    Dr. McMeekin. Chairman Grassley, Ranking Member Wyden, and 
members of the committee, I am Judith McMeekin, Associate 
Commissioner for Regulatory Affairs at the Food and Drug 
Administration. Thank you for the opportunity to discuss FDA's 
foreign drug inspection program.
    Protecting public health is the FDA mission, and it is the 
foundation of all of our work. Americans can be confident in 
the quality of FDA-regulated products. Whether a drug or food 
is produced in the United States or overseas, products must 
undergo the same rigorous process, and the information must be 
fully reviewed by our highly trained scientific staff.
    The FDA inspects manufacturing facilities around the world. 
As the products we regulate globalize, it is important for us 
to modernize our policies and processes to ensure that 
companies, regardless of where they are located, meet the FDA's 
strict standards.
    The FDA's drug inspection program shifted from one focused 
heavily on the U.S.-based facilities through the early 2000s to 
programs that, since 2015, have conducted more foreign than 
domestic drug inspections. Consistent with domestic oversight, 
the FDA's strategy for overseeing the safety of imported 
products is to maximize the agency's public health impact by 
aligning resource allocations to risk levels and tailoring the 
use of regulatory tools accordingly.
    In the foreign arena, the FDA does not draw upon the same 
enforcement mechanisms or have a comparable level of 
infrastructure. For example, if a domestic firm refuses 
inspection, we are able to seek an inspection warrant. But we 
do not have the same capacity in foreign countries. To 
supplement our foreign oversight, the agency utilizes 
additional tools to ensure the safety and efficacy of products, 
including but not limited to import targeting systems; border 
surveillance including import alerts, import certification, and 
enhanced import screening to identify products for sampling; 
and conducting foreign inspections.
    The FDA optimizes our oversight of foreign manufacturers by 
leveraging the work of partners with strong regulatory systems 
and responsible parties in the supply chain. During the COVID-
19 pandemic, the FDA continues to utilize and implement 
alternative inspection tools and approaches while postponing 
foreign and domestic routine surveillance facility inspections.
    This approach will continue, as conditions warrant, with 
the exception of certain mission-critical inspections, 
including preapproval and for-cause assignments. Importantly, 
during this interim period, we are evaluating additional ways 
to conduct our inspection work that would not jeopardize public 
safety and protects both the firms and the FDA staff.
    FDA is utilizing all available tools to oversee the safety 
and quality of FDA-regulated products for all Americans. 
Foreign inspections present the agency with unique challenges, 
including the hiring and retention of qualified investigators. 
I am committed to taking an assessment of our inspection 
process and identifying opportunities for improvement, ways to 
optimize and streamline processes using technology and 
innovation, to be more efficient, and modernize our approach.
    I welcome continued discussion with the committee and 
others. Thank you again for the opportunity to be here today, 
and I look forward to answering your questions.
    [The prepared statement of Dr. McMeekin appears in the 
appendix.]
    The Chairman. Thank you very much. Now we call on Dr. Mary 
Denigan-Macauley.

  STATEMENT OF MARY DENIGAN-MACAULEY, Ph.D., DIRECTOR, HEALTH 
     CARE, GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, DC

    Dr. Denigan-Macauley. Thank you, Chairman Grassley, Ranking 
Member Wyden, and members of the committee, for the opportunity 
to discuss our work on FDA's foreign drug inspection program.
    The COVID-19 pandemic has called greater attention to the 
United States' reliance on foreign drug manufacturers and 
highlights the importance of a secure pharmaceutical supply 
chain.
    Like most drugs manufactured for the U.S. market, many that 
are important for treating COVID-19 are manufactured overseas. 
This includes antibiotics for secondary respiratory infections 
and sedatives for ventilating patients. Today, the majority of 
establishments manufacturing drugs are overseas. Americans must 
have access to safe but effective drugs. However, we have had 
longstanding concerns about FDA's ability to oversee the 
increasingly global supply chain.
    In 1998, we reported that FDA had significant problems 
managing its foreign inspection data and conducted infrequent 
inspections of foreign establishments compared to what they did 
domestically. Since then, we have returned to the topic 
multiple times and found that problems persist. In 2008 for 
example, we determined that FDA data were not sufficient to 
know how many foreign drug establishments were subject to 
inspection. In addition, FDA continued to inspect relatively 
few foreign establishments, and when it did, investigators 
faced challenges that influenced how the inspections were 
conducted.
    For example, unlike in the U.S., where an establishment has 
no notice that an investigator is coming, FDA routinely gave 
foreign manufacturers significant notice. And FDA investigators 
relied on English-speaking employees of the establishment that 
they were inspecting to translate key documents, including 
those demonstrating compliance with good manufacturing 
practices.
    In 2010, we found that while FDA was conducting more 
inspections overseas, many establishments still had never been 
inspected. We also identified shortcomings in the operations of 
foreign offices FDA opened to provide the agency with in-
country information and inspection capability. In 2010 and 
2016, we found that these offices faced persistently high 
vacancy rates, raising questions about their effectiveness. As 
a result of these and other challenges, we added FDA's 
oversight of medical products to GAO's high-risk list.
    Last December, we reported that from 2012 to 2016 FDA 
increased the number of foreign inspections it conducted. And 
in 2015, FDA had, for the first time, conducted more foreign 
inspections than domestic. A growing percentage of these were 
in China and India, which have the largest number of 
establishments manufacturing drugs for the United States. 
However, as Senator Grassley noted, we also found that FDA 
still provided up to a 3-month advance notice for most foreign 
inspections, which could give establishments a chance to fix 
the problems before an investigator even arrives.
    Investigators also continued to face persistent challenges 
when they traveled overseas. As we learned on our site visits 
to India and China, and in conversation with investigators, a 
single investigator often had to inspect manufacturing campuses 
covering hundreds of acres of land in rural areas. Most have 
little flexibility to extend their time at a facility. Travel 
schedules required back-to-back inspections.
    FDA also continued to send inspectors into establishments 
without translators. We were told this was particularly 
difficult in Japan and China. Investigators also had to rely on 
translators provided by the same drug manufacturer that they 
were inspecting, raising questions about the accuracy of the 
information. One investigator told us they had to resort to a 
translation app on their phone. We also found that from 2016 to 
2018 both foreign and domestic inspections had decreased. FDA 
attributed the decline in part to continued vacancies among 
investigators available to conduct these investigations.
    While FDA has made progress over the years, these 
persistent challenges raise questions about its ability to 
conduct inspections overseas that are equivalent to those done 
here in the United States. The pandemic has further complicated 
the playing field. In March, as has already been noted, the 
agency announced it had postponed nearly all inspections of 
foreign manufacturing establishments. While FDA notes that it 
has other tools to ensure the safety of the U.S. drug supply, 
the lack of foreign inspections removes a critical source of 
information about the quality of the drugs that are 
manufactured for our U.S. market.
    Further, it is unclear the effect COVID will have on FDA's 
ability to fill those persistent vacancies, both in foreign 
offices and among the U.S.-based inspectors who conduct most of 
the inspections overseas. And it is unclear what the effect 
will be on FDA's ability to gather that critical in-country 
information to help determine, for example, which 
establishments are at highest risk.
    Thank you, Chairman Grassley, Ranking Member Wyden, and 
members of the committee, for holding this hearing. This 
concludes my prepared remarks. I am happy to respond to any 
questions you may have.
    [The prepared statement of Dr. Denigan-Macauley appears in 
the appendix.]
    Senator Cornyn [presiding]. Thank you for your testimony. I 
see one of your credentials, Mary, is having taught at Sam 
Houston State University, so it's good to have you as a witness 
here today.
    Dr. Denigan-Macauley. Thank you.
    Senator Cornyn. Dr. Throckmorton will be the next witness. 
He is the Deputy Director for Regulatory Programs, Center for 
Drug Evaluation and Research, Food and Drug Administration. Dr. 
Throckmorton?

STATEMENT OF DOUGLAS C. THROCKMORTON, M.D., DEPUTY DIRECTOR FOR 
 REGULATORY PROGRAMS, CENTER FOR DRUG EVALUATION AND RESEARCH, 
 FOOD AND DRUG ADMINISTRATION, DEPARTMENT OF HEALTH AND HUMAN 
                  SERVICES, SILVER SPRING, MD

    Dr. Throckmorton. Chairman Grassley, Ranking Member Wyden, 
and members of the committee, I am Dr. Douglas Throckmorton, 
Deputy Director for Regulatory Programs at the Center for Drug 
Evaluation and Research in the FDA. Thank you for inviting me 
to participate in this important discussion. Protecting the 
safety, quality, and availability for Americans is at the heart 
of everything we do at the FDA. To accomplish this, we use 
several tools.
    Today's hearing is focused on inspections, which are one 
important part of a robust, multipronged approach to overseeing 
the safety and quality of FDA-regulated products. While 
important, inspections are not the only impetus for drug 
quality. First and foremost, the firms manufacturing these 
products have the primary responsibility to reliably produce 
quality products. Sponsors are required to comply with good 
manufacturing practices to assure the identity, strength, and 
purity of their products and to provide routine quality 
testing.
    CDER and FDA support this work by providing guidance to 
them about best manufacturing practices, critically assessing 
adverse events to spot manufacturing issues, actively 
surveilling drug quality, and applying post-marketing study 
requirements to identify and evaluate emerging drug safety 
signals.
    The goal of all of these efforts is to protect the public 
health. We also partner with the FDA's ORA to maximize the 
values of those inspections. Additionally, other safety 
initiatives include proactive testing by FDA of selected 
pharmaceutical ingredients and finished dosage-form drugs in 
our state-of-the-art laboratories.
    Only a small percentage, about 1 percent of drugs, that are 
tested fail to meet the established quality specifications. 
Additionally, the manufactured quality problems we do identify 
are similar for both U.S. and foreign facilities. We also 
collect data about safety and quality of the drugs once they 
are on the market. And just this week, CDER released our fifth 
annual report entitled ``Drug Safety Priorities: 2019'' 
detailing our key safety programs and activities, and 
highlighting the depth and versatility of our drug safety 
initiatives across CDER.
    All these checks and rechecks are needed because much of 
pharmaceutical manufacturing still operates with decades-old 
approaches and technologies. CDER's vision is to spur the 
industry to modernize so the quality can be consistently and 
reliably built into each tablet or vial they produce. This 
includes initiatives to encourage advanced manufacturing 
technologies and quality management maturity. While time does 
not permit me to go into detail, I would welcome the 
opportunity to discuss these proactive strategies. CDER 
believes they would yield important benefits for both quality 
and safety.
    Importantly, these advanced manufacturing techniques 
provide a safer and more secure drug supply chain and may 
promote a shift to more U.S. domestic pharmaceutical 
manufacturing. I look forward to working with the committee to 
protect the reliability and availability of drugs to treat 
Americans, and to strengthen investments in modern 
manufacturing technology.
    Thank you, very much.
    [The prepared statement of Dr. Throckmorton appears in the 
appendix.]
    Senator Cornyn. Thank you, Dr. Throckmorton. We will now go 
to rounds of questioning. The chairman has gone to vote, so he 
has asked me to chair in his absence.
    I would like to change the topic just slightly, but it 
seems to me if there is one thing that COVID-19 has taught us, 
it is that we cannot rely on supply chains coming from outside 
of our country. We have long become accustomed to being able to 
buy cheaper products because they are manufactured in other 
countries with the lower overhead, labor, and other costs, but 
obviously this pandemic has demonstrated, at least to me, the 
importance of on-
shoring a lot of our most basic functions--things like medical 
equipment, things like drugs.
    And I would just like to get the reaction of the witnesses. 
Am I wrong? Do you think we are stuck with this dispersed 
global supply chain that can be disrupted in the next pandemic? 
Or do you think there are steps, as a matter of sound public 
policy, that the Congress ought to consider in terms of 
bringing that capacity for manufacturing back onshore?
    So, Dr. McMeekin, would you care to take a stab at that?
    Dr. McMeekin. Sure; thank you. American consumers should 
know that the U.S. drug supply is safe and supply chains are 
secure. The U.S. drug supply is among the safest in the world. 
FDA thoroughly reviews drug applications to ensure that 
medications are safe and effective before they reach the market 
and oversees drug quality post-approval.
    Senator Cornyn. Excuse me just a second. Did you say our 
supply chains are secure?
    Dr. McMeekin. Yes.
    Senator Cornyn. How much of our active pharmaceutical 
ingredients for our drugs in America depend on China?
    Dr. McMeekin. I am going to refer to Doug. Doug, can you 
add to the----
    Senator Cornyn. And how much do we depend on India? Pardon 
me. Dr. Throckmorton, go ahead.
    Dr. Throckmorton. For active pharmaceutical ingredients, 
the U.S. provides about 28 percent; China, about 13 percent; 
and India, 18 percent.
    Senator Cornyn. So I mean they are as secure as the supply 
from China and from India is, at least for the percentage that 
they contribute, but I seem to remember that there was at least 
one instance during the pandemic where hydroxychloroquine was 
being hoarded by one of the countries that ordinarily is a 
source for that drug. Do I remember that incorrectly? Or do you 
recall that?
    Dr. McMeekin. We do have imports of products, and the FDA 
uses additional tools to help complement our inspections, 
including remote assessments of foreign manufacturing firms.
    Senator Cornyn. I am sorry. I am not talking about 
inspections now. I am sorry if I was not clear. I am just 
talking about, in the midst of the next pandemic, what 
percentage of the pharmaceuticals, the active pharmaceutical 
ingredients that we depend upon in the United States, are 
vulnerable, or are in jeopardy because that supply comes from a 
country--let us say in this instance, where China obviously has 
been the main source of personal protective equipment, but 
after the virus broke out they obviously delayed notifying the 
World Health Organization and other countries around the world 
why they had hoarded personal protective equipment.
    It seems to me the same thing could happen to our drug 
supply. Am I wrong?
    Dr. McMeekin. The foreign establishments and the domestic 
establishments are held to the same standards. The standards 
are the same, whether you are foreign or you are domestic. We 
follow the same process to inspect them. We have the same 
standards to inspect them, and they are held to the same high 
standards of FDA requirements.
    Senator Cornyn. So the percentage of the active 
pharmaceutical ingredients that we get from China--if for some 
reason China is either unwilling or unable to continue 
supplying that, does that not strike you as a vulnerability for 
the United States and our public health?
    Dr. McMeekin. It would be good to have redundant systems.
    Senator Cornyn. Do any of you care to venture what it is 
that the U.S. Congress might do as a matter of sound public 
policy to encourage more manufacturing of active pharmaceutical 
ingredients here in the United States, as opposed to depending 
on these supply chains overseas?
    Dr. Throckmorton. Senator, I might take a stab at that one. 
I will just echo what you said. We do need a robust, reliable 
supply source for all of our drugs for the American public. No 
question at all.
    We do believe that there are things that we can do as a 
country that would encourage additional on-shoring. As I 
mentioned in my testimony, we believe that the advanced 
manufacturing practices that U.S. firms currently employ put us 
ahead of what is seen in the rest of the world. And to the 
extent we could encourage and support the adoption of those, it 
would reduce costs. We believe it would reduce environmental 
impact by reducing the size of factories. It could potentially 
improve the security by reducing the length of the supply 
chain. And we believe there would be a good business case 
potentially for drug firms to make to on-shore those factories 
and bring them back to the U.S., with the net result that we 
would see the additional redundancy and increased security that 
you are rightly asking how to incentivize.
    Senator Cornyn. Thank you, Dr. Throckmorton. This is beyond 
the scope of really what this hearing is, but I could not pass 
the opportunity to ask you those questions. I appreciate your 
answer, and I trust that at some point the Finance Committee 
and the Senate and the Congress as a whole will take up how to 
reduce our vulnerability to the supply chains that we have seen 
is a risk to our public health and our ability to deal with 
risks like this pandemic, for the benefit of the American 
people.
    Thank you, Mr. Chairman. I will kick it back to you.
    The Chairman. Thank you very much for taking over while I 
voted.
    I am going to start with Dr. McMeekin. The Government 
Accountability Office has noted that almost all domestic 
inspections are unannounced. However, the FDA often 
preannounces foreign inspections. In some cases, FDA has 
provided 12 weeks of notice before a foreign inspection.
    Question number one: by providing advance warning, does it 
not give bad actors time to hide the true nature of the 
problems at their facilities?
    Dr. McMeekin. So in general, domestic surveillance 
inspections are almost always unannounced, whereas in foreign 
establishments, generally we give notice of surveillance 
inspections.
    Given the importance of avoiding a potential refusal and 
waste of ORA resources, most foreign inspections are 
preannounced. And this preannouncement is intended to verify 
that the facility is indeed a drug manufacturer with the 
jurisdiction under the FDA. To facilitate the inspection 
process and ensure appropriate reference, the personnel will be 
made available.
    We also announce foreign inspections due to the 
jurisdictional differences between domestic and foreign firms. 
The preannouncement process documents the foreign firm's 
agreement to allow FDA to inspect.
    When a foreign firm refuses an inspection, FDA takes a 
different course of action than with a domestic refusal. In the 
domestic arena, FDA can seek an inspection warrant to enter the 
facility. However, in the foreign arena, due to the 
jurisdictional differences, FDA can refuse products at the 
border or not grant an approval. But FDA does not have the 
authority to compel the firm to allow FDA to enter and inspect.
    In mid-2019, we did initiate a change to our IT system to 
actually record data of whether an inspection was announced or 
unannounced. Efforts are underway to include a data field in 
our inspectional database in the next version, scheduled for 
this June, to accurately record whether an inspection is 
announced or unannounced.
    Having this accurate data will enable a critical evaluation 
of the outcome of inspections. Although typically domestic 
sites are not announced and foreign are typically preannounced, 
we do conduct for-cause inspections in the foreign arena.
    The Chairman. I want all three people to answer this. Do 
any of you know why the Obama administration shut down the 
India Pilot Program?
    Mr. Abdoo. Thank you, Senator Grassley, for that question. 
The India Pilot was not a true pilot. It was rolled out only in 
one country. It had no metrics by which we could evaluate 
whether it was a success or not. And it was collecting data 
with inherent bias, in that we perform unannounced inspections 
abroad on a for-cause basis, meaning that FDA had already 
determined that those firms had significant problems.
    We did, however, implement some best practices that we 
determined were useful from the pilot program. First, we 
stopped having firms issue letters so that we could get visas 
for our investigators. Second, we stopped having firms make our 
hotel selections for us. And third, and probably most 
importantly, we began a program whereby the investigator going 
out on the inspection received a preapproval briefing from his 
colleagues or her colleagues at the ORA headquarters to improve 
the efficiency and effectiveness of the inspection.
    The Chairman. I asked all three of you to respond to that, 
but because of time I want to ask Dr. Denigan-Macauley, would 
unannounced foreign inspections improve FDA's ability to 
oversee the drug supply chain? And if not, why not?
    Dr. Denigan-Macauley. We do feel that unannounced 
inspections are very important and, as was noted, some are 
done, but they are very few, and it does raise questions about 
the equivalency to what we do here in the United States.
    The Chairman. And also to you, should FDA gain visibility 
into the active pharmaceutical suppliers for final dosage form 
facilities? Would that better help FDA oversee the supply 
chain? And if not, why not?
    Dr. Denigan-Macauley. So understanding the supply chain for 
the active pharmaceutical ingredients is very important. It is 
challenging. It is quite complex. Ingredients can come from 
many different sources. And being able to enhance that 
oversight and visibility into that supply chain would be 
something that would be very valuable to understanding the 
safety of the drug.
    The Chairman. My time is up, so, Senator Wyden?
    Senator Wyden. Let me start with you, Dr. Denigan-Macauley. 
On March 28th of this year--so this is on the Trump 
administration's watch--the FDA issued an emergency use 
authorization allowing the acceptance and use of two malaria 
drugs for the treatment of COVID-19 through the stockpile. One 
source for these drugs which the FDA specifically allowed into 
the United States was manufacturing plants in Pakistan. Rick 
Bright, the HHS whistleblower, reported these plants had never 
been inspected by the FDA.
    Another source of the malaria drugs specifically allowed 
into the United States by the FDA was an Indian company which 
is on the FDA import alert list, and which has been prohibited 
by the FDA from bringing these exact drugs into the United 
States since 2015.
    These are drugs that have long been known to carry cardiac 
health risks. There was not any solid medical evidence that 
they were effective in the treatment of COVID-19.
    My first question to you, Dr. Denigan-Macauley, is, is it 
dangerous to America to import and distribute drugs from India 
that, up until a few days ago, could not come into our country 
because they were on the import alert list? I hope we could get 
a ``yes'' or ``no'' answer to that question.
    Dr. Denigan-Macauley. Yes; we would have concerns and hope 
that it is a science-based decision.
    Senator Wyden. Is it dangerous to Americans to import and 
distribute drugs from facilities in Pakistan that have never 
been inspected? A ``yes'' or ``no,'' please.
    Dr. Denigan-Macauley. Yes; dangerous from any country not 
inspected.
    Senator Wyden. Dr. Rick Bright, the former head of BARDA, 
is now a whistleblower and has said that the FDA process for 
approving the drugs was not based on science, it was based on 
politics.
    So let me ask you--because we are not going to get you into 
politics here--is that how the process is supposed to work? 
What I have described, is that the way things are supposed to 
traditionally play out so as to protect the public interest?
    Dr. Denigan-Macauley. It should be based on science.
    Senator Wyden. No, but I just described to you the process. 
Is the process that I described the way things are supposed to 
work?
    Dr. Denigan-Macauley. We have not looked extensively into 
that, and we have ongoing work looking at emergency use 
authorizations, and we would be happy to address that issue 
once we have looked carefully to ensure that that was the 
process used.
    Senator Wyden. So you are going to look at whether this 
process I have described sounds like the traditional process 
that is based on science? Because Rick Bright, the 
whistleblower, has said this does not resemble science, and I 
just asked you about whether the processes were dangerous, and 
you told me ``yes.'' So it is kind of hard to see how something 
that is dangerous by your words is somehow in line with the 
process, but we will wait and see about your follow-up inquiry.
    Now one of the problems created by efforts by the President 
to talk up the dubious nature of these malaria drugs is that it 
has created shortages of the drug for Americans who rely on 
them for illnesses unrelated to COVID-19. How can those 
Americans be sure that the drugs they depend on are safe, when 
drugs that we know are not inspected by the FDA are coming into 
the country?
    Dr. Denigan-Macauley. So there is no country-of-origin 
labeling. So as a consumer, you would not know if that came 
from Pakistan or from an uninspected or inspected facility.
    Senator Wyden. Okay, so that is yet another factor in 
raising concern about how all these practices that we are 
talking about from March and the following weeks--on the Trump 
administration's watch--represent real danger, and I appreciate 
your laying that out. And that is why I have, frankly, already 
gone through it with the chairman. If you want to get stuff 
changed, you have to have the person here who can actually 
change matters. And that is why we felt so strongly about it.
    One last question, if I might, for you, Dr. Denigan-
Macauley. The U.S. has found itself horribly short of medical 
supplies. A search for N-95 respirators and PPE has been a 
nightmare for my State for weeks. After Oregon bought 
respirators that the FDA had authorized for import from China, 
under an emergency use authorization, the FDA then removed them 
from the approved list. At the same time, companies that Oregon 
had been trying to get EUA approval for to make respirators had 
been unable to do so.
    How does it make sense that manufacturers of substandard 
equipment from China get an FDA emergency okay to ship to 
America, and manufacturers in the United States and my State 
that want to make those same products get put on hold? How does 
that make sense?
    Dr. Denigan-Macauley. I do not have an answer for you. FDA 
does have oversight over these medical devices. It is a 
decision that FDA alone makes with that authority, and in 
coordination with the task force, so FEMA and DoD in support of 
FDA.
    Senator Wyden. I just hope we can get that changed. Because 
to me, it defies common sense that respirator manufacturers in 
China can get an emergency authorization and manufacturers in 
the United States cannot get a call returned. That means 
something is really out of whack. Again, the person who is 
accountable at the agency for changing the kinds of problems we 
have is not here. And that is why I felt so strongly about 
making it clear that we think we are not going to get to the 
bottom of it until we hear from him.
    Thank you again, Mr. Chairman.
    The Chairman. Thank you. The next person on a first-come-
first-served basis would be Mr. Toomey. I will wait a couple of 
seconds.
    Senator Toomey. Mr. Chairman, can you hear me?
    The Chairman. Yes, I can hear you. Go ahead.
    Senator Toomey. Thank you very much.
    I want to go back to the line of questioning that Senator 
Cornyn was pursuing. Dr. Throckmorton, back in March the FDA 
Commissioner identified 20 drugs out of the over 20,000 drugs 
that are available in the United States--20 he identified as 
being solely made in China or containing an API that was solely 
sourced from China. Further, I believe that in this report it 
was determined that none of these drugs were considered 
critical drugs. And I think the criteria for being ``critical'' 
is a drug for which there is no available substitute.
    So first of all, is that your understanding of the extent 
of dependence on China as a source of drugs and API? Because 
certainly that makes it sound as though there is not a great 
deal of reliance on Chinese sources for critical drugs. Is that 
your understanding?
    Dr. Throckmorton. Senator, let me answer your question by 
going back to where we found ourselves in March and the 
situation we needed to respond to.
    So, as we typically respond to an increase in need for a 
drug, we see drug shortages occur. When drug shortages occur, I 
have a staff whose sole job, 24/7, is to reach out to 
manufacturers, look at API manufacturers, identify possible 
sources for those products.
    So when go back to March, what we found ourselves in was a 
situation where we were looking to identify the products that 
were essential, and which products were not as essential for 
the immediate response to COVID. That drug shortage team, along 
with other offices, went to work looking at the available 
products. Where were they made? What products were available?
    And the shortest answer to your question is, yes, you are 
right. China had a small footprint as far as the creation of 
manufacturing of those drugs. Having----
    Senator Toomey. Well, can I just get a clarification here, 
Doctor? Are you saying that this report, these 20 drugs that 
were identified, these are just within the universe of drugs 
that are for the purpose of treating COVID-19, or is it broader 
than that?
    Dr. Throckmorton. A great question, and I apologize if I 
was not clear. Definitely broader than that. And again, it 
starts with where we found ourselves in March. We knew less 
than we do now about the impact of COVID, much less than we 
know now about the specific drugs that are needed. And so our 
focus was on products that we knew were historically in 
shortage, products that we anticipated were likely to be needed 
in hospitals.
    As we learned more, we responded in----
    Senator Toomey. Yes; my question is focusing much more 
broadly than just on COVID-19. I want to understand. The 
American public has an understandable concern about whether or 
not, and to what extent, we could be reliant on any one 
country, and most of all an adversarial country, for something 
as important as life-
saving medicines. But it sounds to me like, from this March 
report, the FDA's conclusion is that there are no drugs that 
are considered critical drugs--in other words, drugs for which 
there is no substitute--on which we rely on China, and less 
than one-tenth of 1 percent of all drugs are sole-sourced from 
China or contain an API that is solely sourced from China.
    Do I have the basic facts correct?
    Dr. Throckmorton. I will have to get back to you about the 
basic facts. I do not want to mislead you about that. But I do 
want to agree with your focus on the larger issue of total 
availability. Whether a product comes from a specific country 
or not, it is important--I am not minimizing that. But it is 
more important for me as a U.S. Federal drug official to make 
sure the drug is available from somewhere to meet the needs of 
the American public.
    So if it is China, or it is France, or it is whatever, is 
of interest, but I am even more interested in knowing the total 
available market. Can it meet the needs of the U.S. or not? If 
it can, and it is done to high quality, then that is the piece 
that I am going to want to stay focused on.
    Senator Toomey. So we have, certainly in my State of 
Pennsylvania, we have heard from health-care providers, 
hospitals, and pharmacies about shortages of drugs that they 
wanted to be able to administer, and much of which were related 
to COVID treatment. It was pain medicine. It was antibiotics. 
It was inhalers. It was a variety of medicines. And there were 
shortages.
    So could you characterize the source? Is it just because 
there was a sudden spike in demand, because suddenly we had a 
lot of people with COVID-19? Or were there other factors 
contributing to these shortages?
    Dr. Throckmorton. That is a terrific question. The short 
answer is, we do not know all of the factors that led to that, 
whether it was distribution challenges with particular 
hospitals, or whether it was solely related to isolated demand 
in particular areas. There were different factors that drove 
spot shortages that were extremely serious.
    So where I started before was to say, we focused on the 
larger market. And that has been our short goal. With COVID, we 
had to start worrying about your hospitals in Pennsylvania----
    Senator Toomey. And just as my last--I am probably out of 
time--just a last quick, final question. Are you aware of any 
case where a source of these medicines from overseas, the 
country or the manufacturer overseas, decided for whatever 
reason not to distribute to the United States medicines that 
they normally would have? Was there a conscious decision to 
withhold medicines that American consumers needed?
    Dr. Throckmorton. I am not aware of any case where the 
country carried through on that--that threat to withhold 
medicines; no.
    Senator Toomey. Okay; thank you very much, Mr. Chairman.
    The Chairman. You bet. Senator Stabenow?
    Senator Stabenow. Yes; thank you very much. Thank you, Mr. 
Chairman and Ranking Member Wyden. And I certainly agree that 
the FDA should increase inspections to make sure that drugs we 
rely on are safe and effective.
    I do think it is important to note that the current budget, 
that is the Trump administration budget for 2021, actually 
froze the number of field staff for human drug and biologic 
safety programs, which is of great concern to the public. And 
they actually called for budget cuts. So we certainly need to 
make sure we are not doing that.
    This is obviously an important topic. At the moment, 
though, we are looking at over 100,000 people having lost their 
lives in the United States because of COVID-19, over 5,000 
people in Michigan alone. And we have an urgent, urgent need to 
address this major health-care pandemic, and be very much 
focused on it. And now, on top of everything else, we have 
another huge urgent issue, which is what is happening in terms 
of African Americans in this country. And not only racial 
disparities on display because of COVID-19, but also what we 
are seeing now as a result of the horrific murder of George 
Floyd.
    The violence to African Americans has gone on too often and 
for way, way too long. And it is all interconnected. The 
reality is that racism is a human rights issue, but it is also 
a health issue. And I think that is playing out in COVID-19, 
where 14 percent of Michiganders are African American, yet over 
40 percent of the deaths are African Americans, because of 
health disparities. So this is a huge issue. So we have all got 
to come together and bring accountability and change to the 
country, and I hope we will do that.
    My colleagues have talked a couple of times about what we 
need to do in terms of bringing pharmaceutical drugs, bringing 
the needed medicine back to the United States. I could not 
agree more that we need to do that. I do want to point out, 
though, that in the legislation that was passed by Republicans 
in 2017, there were trillions of dollars in cuts and billions 
of dollars to the pharmaceutical industry, but nothing to 
incentivize or require the companies either to lower the cost 
of prescription drugs or to bring the jobs back and the 
medicines back to the United States.
    In fact, the structure of the global minimum tax, the GILTI 
tax provision, exempts the first 10 percent of income from 
physical assets, factories and so on, in foreign countries, 
which creates an incentive to off-shore assets to increase the 
exemptions. So we could start by getting rid of that and then 
focus on what we need to do here in the United States.
    Let me ask a question related to specifically the FDA, 
where I have great concern, and the people in Michigan do, 
about the politics that have been projected to the FDA.
    We need the FDA to be based on science and to be making 
decisions that are in the best interest of all of us, our 
safety, and the right thing to do based on science. We all know 
now about the President's talking and now saying he took 
hydroxychloroquine. And in fact the FDA provided emergency use 
authorization for the drug on March 28th, and now on your 
website you indicate that there is no evidence the drug treats 
COVID-19 and in fact could actually cause loss of life. But the 
emergency use authorization waived the Current Good 
Manufacturing Practices, or they talked about today allowing 
the drug to be imported from uninspected foreign manufacturing 
facilities.
    Is that correct? Just ``yes'' or ``no''?
    Dr. Throckmorton. I cannot answer that. I will ask my 
colleague, Dr. McMeekin.
    Dr. McMeekin. FDA has inspected manufacturers of 
hydroxychloroquine, and as recently as April 2020, an 
inspection of an alternative manufacturer was actually 
conducted by our local office.
    Senator Stabenow. Do you share these concerns about Rick 
Bright, who was talking about the safety issues around this, 
you and your colleagues--you know, the whole question of the 
safety around this particular drug?
    The Chairman. Can you give a short answer to that so we can 
go on to the next member?
    Dr. McMeekin. I have not had those discussions. Dr. 
Throckmorton?
    [Pause.]
    Senator Stabenow. Thank you, Mr. Chairman. I am out of 
time, but I would just say that people are deeply, deeply 
concerned. We want to be able to trust the integrity of the 
FDA, and with the politics and things that have been happening, 
it is deeply concerning.
    The Chairman. Thank you. Senator Sasse is next.
    [No response.]
    The Chairman. Okay, then Senator Cantwell.
    [No response.]
    The Chairman. Okay, then Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    The Chairman. Go ahead, Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    President Trump announced last Friday that the United 
States would terminate its relationship with the World Health 
Organization, terminating our relationship with the world 
premier global health organization. The administration is 
abdicating, in my view, the U.S.'s long-held leadership role on 
health on the world stage, a role that China will be eager to 
fill. This decision also undermines the safety of Americans. We 
know that if we do not work in partnership with the WHO and the 
international community to combat COVID-19 everywhere, all 
Americans will remain at risk.
    So, Mr. Abdoo, beyond its urgent work on COVID-19, WHO is 
also the central entity to the fight against other major health 
threats that matter to Americans. The bulk of U.S. funds to WHO 
helps saves lives, gives hope to populations around the world 
facing diseases like polio, malaria, measles, tuberculosis, 
HIV/AIDs, including in humanitarian hot spots like Yemen, the 
Democratic Republic of Congo, where agencies and NGOs are 
unwilling to work.
    How does the administration intend to address these needs? 
What is the plan?
    Mr. Abdoo. Thank you for that question, Senator Menendez. I 
am not familiar with those discussions and would refer you to 
the National Security Council or the presidential spokesperson.
    Senator Menendez. So you have no idea on these issues 
relating to the World Health Organization?
    Mr. Abdoo. As I said, I have not been privy to those 
conversations.
    Senator Menendez. Pretty amazing.
    Dr. Throckmorton, on April 8th I sent a letter with 
Representative Pascrell to Dr. Hahn to express concerns about 
the FDA's emergency use authorization approval process during 
the ongoing COVID-19 pandemic, and in particular the fast-
tracking of approvals for potential treatments promoted by 
various administration officials, including the President.
    The FDA is the gold standard worldwide for drug and device 
approval, and I believe it is important to ensure that nothing, 
especially pressure from the White House, erodes that public 
trust in the FDA.
    Can you confirm for the committee that the FDA did not 
change its protocols for EUA approvals during this pandemic, in 
specific to approvals for hydroxychloroquine or chloroquine?
    Dr. Throckmorton. Senator, I was not privy to all of the 
discussions that led up to the EUA authorizations. I can tell 
you I am aware of no instance of political influence on any of 
the decision-making.
    Senator Menendez. But the question is, did the FDA--can you 
confirm that the FDA did not change its protocols for EUA 
approvals during the pandemic?
    Dr. Throckmorton. The approach, as far as I am aware, was 
the same as the approach that we have taken in past emergency 
use authorizations.
    Senator Menendez. Well then, explain to the committee how 
is it that the FDA issued emergency approval of 
hydroxychloroquine and chloroquine to treat COVID-19, despite 
the fact that there was no adequate and well-controlled trial 
demonstrating safety and efficacy for COVID-19 patients?
    Dr. Throckmorton. I think what I would rather do is refer 
you to the materials that are available on our website that lay 
out, in general ways, the types of information that we had at 
the time that we approved the emergency use authorization. 
There were data available, and a decision was made at that 
period of time in support of the emergency use authorization. I 
should say, we continue to collect additional information, 
continue to reevaluate as additional data become available. 
That led to the drug safety communication----
    Senator Menendez. If you want to refer me to documents, I 
do not need to have a hearing. I have you at a hearing. At the 
end of the day, there were former FDA officials who questioned 
the EUA, noting the lack of scientific evidence; and sure 
enough, researchers are raising concerns about 
hydroxychloroquine. Just this week, the WHO halted its trial of 
hydroxychloroquine due to harmful side effects, including heart 
problems.
    So you know, we should have Commissioner Hahn, then, come 
to explain this discrepancy.
    Dr. Denigan-Macauley, given that we are likely to see 
additional global spikes in cases during the pandemic, what 
specific steps should the FDA take to ensure continued 
oversight of foreign manufacturers, and also to ensure the 
safety of their inspectors?
    Dr. Denigan-Macauley. Thank you; yes, it is important that 
the inspectors have their safety taken into consideration. So I 
can certainly understand what FDA is doing on that end.
    It is important, though, that the decisions be made on 
science, and that they continue to get the critical information 
that they need to know what establishments may be at risk. And 
so, for example, with the EUA, the emergency use authorization, 
we do have work beginning that is going to look at that, to 
look at the decision-making, and look to see if any criteria 
had changed. We have previously reported that you need to 
maintain criteria when you take a drastic step like that, 
allowing an importer who is banned to be able to have a drug 
like hydroxychloroquine come into the United States.
    So they need to be diligent. And while we are in an 
emergency, they still need to be very careful in moving quickly 
during this unprecedented time, to ensure that they follow the 
steps they have put in place for the safety of our drugs.
    The Chairman. Is Senator Sasse ready?
    [No response.]
    The Chairman. Is Senator Cantwell ready?
    [No response.]
    The Chairman. Okay, Senator Carper.
    Senator Carper. Senator Carper is ready.
    The Chairman. Go ahead.
    Senator Carper. Mr. Chairman, thank you for the hearing, 
you and Senator Wyden, our ranking member. Thank you to our 
witnesses, especially the one who I think was an undergraduate 
at the University of Delaware in animal science a few years 
ago. We are happy to welcome especially Mary Denigan-Macauley, 
and we ask you guys at GAO to pass on our sincere appreciation 
for the work that you do every day for our country.
    Dr. Denigan-Macauley. Thank you.
    Senator Carper. You are welcome, and we thank you.
    Before I ask a question or two of our witnesses, I want to 
make some brief comments. Racial disparities in this country of 
ours are rampant, and the COVID-19 pandemic is only 
exacerbating some of those issues, as we know.
    People of color are less likely to work at jobs that would 
allow them to work from home. In addition to having increased 
exposure to the virus, people of color have lower access to 
health insurance, healthy foods, thus increasing the likelihood 
of a pre-existing health condition. These issues, paired with 
many others such as economic inequities, make people of color 
disproportionately more likely to contract COVID-19 and die 
from it. Nearly 23 percent of the 100,000 COVID-19 deaths in 
the U.S. are African Americans, while they only make up about 
13 percent of the American population. Hispanics and Latinos 
make up 4 percent of the U.S. population, but make up 11 
percent of cases.
    With the recent killing of George Floyd at the hands of 
police officers, we are seeing yet again another form of 
devastating effects on communities of color, and particularly 
black Americans. Americans across the country are feeling deep 
pain and devastation, and they are grieving the loss of loved 
ones to COVID-19, and the loss of George Floyd. We can do 
better than this. We must do better than this.
    The first question I have is for Mary, and I would expect 
the GAO--it is kind of a two-part question. Does GAO have any 
work examining racial and ethnic disparities in health care 
that would speak to important issues to consider in light of 
the response to COVID-19?
    Dr. Denigan-Macauley. We do. We do. We have work that we 
will begin, looking at the disparities for COVID, specifically 
for the reasons that you mentioned. And it will be very 
important to see the results of that work.
    We also issued a report recently--I believe it was in April 
of this year--on maternal mortality. And you see the same 
disparities there that we are seeing here, with Native Alaskans 
and Hispanics and black women dying more frequently of maternal 
mortality-
related deaths than other ethnicities in the United States. So 
it is very concerning. And it is important too that, as we go 
forward with COVID, that we look not only at the data, but how 
we are collecting it, and that we look at how we are reporting 
it.
    Because one of the findings that we made about maternal 
mortality was that the data that was being collected was very 
difficult to get--real-time data--and to get it out there in 
time to make it useful for the researchers. Sometimes it lagged 
as much as 3 years.
    So during this pandemic, right now we need data more 
quickly than that. So hopefully the CDC, I am sure, is taking 
that under consideration for lessons learned going forward with 
COVID.
    Senator Carper. Thank you for that response. Let me ask a 
follow-up question. Does GAO have any work examining the 
collection of health-care data that raises issues important to 
the COVID-19 responses, based on what you just said?
    Dr. Denigan-Macauley. Yes. Well, I think number one is 
ensuring that those data can be collected in a way that can be 
collated, and ensuring that the States are doing it equally. As 
you noted, data is collected at a local level, and then it is 
rolled up. And so that would be very important. Our past work 
has shown that it needs to be collected in a way that it can be 
standardized and equal across all of the States.
    Senator Carper. Thank you. And a question to be shared by 
Dr. McMeekin and Dr. Throckmorton. What are you and your 
colleagues doing to ensure that the rules of the road for 
COVID-19 tests and PPE manufacturers are clear and consistent 
and stable enough to ensure that we, as a country, can produce 
and procure a sufficient and high-quality supply of tests and 
PPE?
    Dr. McMeekin?
    Dr. McMeekin. So we would continue with our tools to help 
as these products are imported in. We have additional tools to 
complement the inspection; we utilize and import screening 
tools that predict where we can adjust based upon different 
devices or different products. We also conduct physical 
examinations of product samples, and we will continue that 
effort.
    Senator Carper. Dr. Throckmorton, do you have anything to 
add?
    Dr. Throckmorton. I do not have anything to add. The 
devices are regulated in a different center. Our major 
interactions center around the shortage groups. We have been 
trying to share whatever shortage information we could obtain 
with that group around PPE to make sure they had that.
    Senator Carper. Thank you, Mr. Chairman.
    Charles Throckmorton, who was a Marine--I understand he is 
a Lieutenant Colonel now--was an attache in our office for a 
year or two. And he is about to go back to Dover Air Force Base 
and is doing great work for our country. I just want to say, he 
reflects well on the Throckmorton family.
    The Chairman. Before I call on the next Senator, without 
objection, I want to put in the record letters of oversight 
that I sent to HHS and FDA, regarding their foreign inspection 
regime. Those letters were sent on June the 27th, 2019. And on 
August the 6th, 2019, I sent a second oversight letter to HHS 
and FDA. We received responses to both, including thousands of 
pages of records, and these letters will be inserted in the 
record without objection.
    [The letters appear in the appendix beginning on p. 74.]
    The Chairman. Now I will go to Senator Sasse.
    [No response.]
    The Chairman. Is Senator Cantwell ready?
    [No response.]
    The Chairman. Then is Senator Cardin ready?
    Senator Cardin. I am here, Mr. Chairman; thank you.
    The Chairman. Go ahead.
    Senator Cardin. Thank you, Mr. Chairman, and let me thank 
all of our witnesses. I want to ask a question to Dr. 
Throckmorton as it relates to the supply chain issue and the 
shortages of drugs.
    We recognize that COVID-19 makes life more challenging in 
regards to the supply chain, and we want to make sure that the 
supply chain is safe. We also want to make sure that, to the 
extent possible, we have our domestic supplies and we do not 
have that risk factor.
    But before COVID-19, we found drug shortages in the United 
States, not because of foreign sources, but because it just was 
not as profitable for drug companies to manufacture particular 
drugs than other drugs. And in cases where there was a single 
U.S. source for those drugs--and I am talking about important 
drugs dealing with infant safety, dealing with cancer 
maintenance treatments, dealing with diabetes--we had a 
shortage in the domestic supply because of the economics 
involved.
    Now, we are going to do some bills to try to do something 
about it, but does the FDA have a strategy to make sure that we 
do not have drug shortages in this country? Even when there are 
adequate supply chain issues, it is more the economics of the 
private drug manufacturer deciding not to make enough of that 
drug available to the population.
    Dr. Throckmorton. Senator Cardin, you raise an incredibly 
important point. COVID basically superimposes new demands on 
the drug supply on top of existing drug shortage demands.
    So we started with a situation where we were challenged for 
many critically important drugs, and then COVID hit us. And now 
we have a sort of additional challenge. Yes, I believe there 
are things that we can do to address economic disincentives 
that are leading to choices made by manufacturers either to 
leave the market or to seek less-expensive places for 
manufacturing.
    We put out a drug shortage report, as I know you are aware, 
last fall. And it laid out some of the solutions that we 
believe are important. One critically important one I am very 
fond of, that I talk about now, is the quality management 
maturity. The idea is that if we can find a way to improve the 
transparency about the quality of the drug supply chain, 
purchasers could make better choices about what products to 
choose to pay just a little bit more for to be assured that 
they were high-quality. Quality management maturity, we 
believe, would help lead the way to get that kind of 
transparency by, at least in part, giving us the ability to set 
up a rating system to identify products that were manufactured 
to very high quality, higher than just meeting the minimum 
standards, and that would allow manufacturers to advertise that 
they have received that rating, with the hope that they then 
would be paid just that little extra more so that they could 
make the choice to manufacture the product instead of the 
choice to leave the market.
    As you point out, prices for generic drugs continue to 
fall, despite their being difficult to obtain. We need to find 
a way to change that economic incentive, if we can.
    Senator Cardin. I appreciate that answer, and I am all for 
providing financial incentives so that less-expensive drugs do 
not go into drug shortage. Count me as a supporter of that.
    We have been talking about some of these drugs now for a 
couple of years, and there is still a shortage. It seems to me 
we may have to look for an additional supplier of that drug, in 
addition to the drug company that currently manufactures that 
product.
    So I hope that we would look at broader ways, because 
allowing these shortages to continue in the wealthiest nation 
in the world is just ridiculous. And there is no supply issue. 
It is just price incentive to the manufacturer of the drug, and 
we should be able to overcome that together. I would hope that 
you would work with us and help us figure out a way to bring 
this to an end.
    Dr. Throckmorton. I would be delighted to do that, sir.
    Senator Cardin. Thank you, Mr. Chairman.
    The Chairman. You bet. And now I am going to go back to the 
top of the list to Senator Cantwell. And if she is not 
answering, Senator Brown would be next.
    Senator Brown. Thank you, Mr. Chairman.
    Dr. Throckmorton, does the FDA have the authority to 
require mandatory recall of a prescription drug? It seems to me 
that mandatory recall authority could help expedite FDA's 
ability to pull an adulterated product or harmful drug from the 
market. Do you agree?
    Dr. Throckmorton. Senator, we do not have mandatory recall 
authority. Having said that, the vast majority of the time when 
we do request a recall by a company, they do it. It is only the 
rare case where people have pushed back against the need for 
that recall. But we would be happy to talk with you about that.
    Senator Brown. Okay; we would like to pursue that. And we 
will follow up with congressional affairs at FDA, because we 
would like to work on that.
    I want to raise one other issue and then make a brief 
statement--the issue of active pharmaceutical ingredients. Last 
year in front of the Energy and Commerce Committee, Dr. 
Woodcock testified there is a gap in FDA authority as it 
relates to APIs and reporting requirements when it comes to 
over-the-counter medications.
    Dr. Throckmorton, can you speak a little more about these 
gaps, why they are problematic, and if the FDA is interested in 
working with Congress in filling these gaps in authority?
    Dr. Throckmorton. I would be happy to talk in general terms 
about those gaps. I will begin by saying I think we are in very 
similar circumstances to where we were when Dr. Woodcock 
testified. So I believe the same issue still exists, which is 
that for those kinds of products, those APIs used for 
compounding and certain over-the-counter products, they can 
give them to Americans without inspections being required by 
the manufacturers.
    Now, we do sometimes inspect those facilities, as you know. 
There are other ways for us to do that. But there is no 
requirement for it. We think that is a loophole. Dr. Woodcock 
called it a loophole. We would be happy to work with you on 
that.
    Senator Brown. Okay; we will pursue that.
    Mr. Chairman and Ranking Member Wyden, I try not to indulge 
too often in the Senate's penchant for grandstanding. I try to 
work with colleagues in both parties, bringing substantive 
questions, especially in this committee. But I am astounded by 
the topic of this hearing.
    Our country is in crisis. People are dying of a disease 
that continues to spread, particularly among seniors, 
particularly among black and brown workers who are keeping our 
society afloat, the essential workers who are, frankly, 
expendable. They are not paid well. They are not protected in 
the workplace.
    Black Americans continue to die at the hands of the very 
people who are supposed to protect them. The President refuses 
to lead. My Senate Republican colleagues refuse to stand up and 
speak out about it. We should be the people to fill that 
presidential void. I share this chairman's concern over the 
weaknesses in our drug supply chain, but we serve in the most 
powerful committee in the Senate.
    This is the Finance Committee's first hearing since the 
onset of the pandemic and since the murders of Mr. Floyd and 
Ms. Taylor. And I said this morning in our Banking Committee 
hearing, not everything is about money. But that is what this 
committee has power over, and it can make a whole lot of 
difference to a whole lot of people.
    We have power over unemployment insurance taxes, programs 
like Medicare and Medicaid, CHIP, the Affordable Care Act. We 
ought to be using that power to help the people who make the 
country work, and show Americans, all Americans, including our 
black and brown sisters and brothers, that their government is 
actually on their side.
    We could be putting more money directly in those Americans' 
pockets, instead of trusting that it will trickle down from 
corporations, because, Mr. Chairman--I know Senator Wyden knows 
this, and I think you do, Mr. Chairman--it does not trickle 
down.
    We can be discussing safety standards for nursing homes; 
30,000 seniors have lost their lives to this illness. Thousands 
of workers, largely women, many people of color, are putting 
their own health care at risk for loved ones, and we are doing 
a hearing on this instead?
    Instead, Chairman Grassley has chosen to hold a hearing on 
a topic outside our jurisdiction and unrelated to this crisis. 
Simply, Mr. Chairman, putting COVID-19 in the name of the 
hearing does not make it about the pandemic. This hearing is 
sadly no exception. It is time to step in. If you believe as I 
do, in the capacity of this country to meet a challenge, to 
continually build, to continually bend the arc a little further 
toward justice, we should be doing the work.
    Thank you, Mr. Chairman.
    The Chairman. The only disagreement I would have with 
Senator Brown is the fact that this committee spends tens of 
billions of dollars on Medicare, Medicaid, and prescription 
drugs. We ought to be buying quality drugs. We have 
jurisdiction over trade, and we ought to make sure that what 
enters the United States is a quality product.
    So, obviously this committee has great concern about FDA's 
inspections overseas. And when it comes to everything else he 
mentioned about COVID, this committee has done several things 
by increasing reimbursement for Medicaid connected with COVID-
19 by 20 percent, more money for Medicaid. We have put $175 
million into hospitals as a result of it.
    We have given out $300 billion in increased unemployment 
compensation. We have reduced payroll taxes for 1 year for 
companies that need more liquidity. We have set up a program 
for increased liquidity for other companies as well, besides 
small businesses. And this committee has been very active in 
the $3 trillion that is already out for the pandemic and the 
shutdown of the economy and the opening up of the economy as a 
result of the government shutting it down.
    So I think this committee has been very active in 
everything related to the pandemic, and we will be more active. 
As we decided 7 weeks ago--whatever decision we were making 7 
weeks ago, we did not know if the economy would turn around. We 
did not know the condition of the pandemic. And we went into it 
with open eyes that, if there was more that needed to be done, 
we would do it. And we are in the middle of that process now. 
And when we get to the point of making that add-on decision, 
whatever needs to be done, this committee will be active at 
that particular time.
    But we have billions of dollars in the CARES Act 1 that is 
still not out. Our work in the first step is not done yet. I 
will----
    Senator Brown. Mr. Chairman, if I could take the last part 
of my time. Lincoln used to tell his White House staff, ``I've 
got to go out and get my public opinion bath.'' And I think if 
any of us are on the phone--I know a lot of us are on the phone 
a lot of the time--we still see the pain and the suffering. And 
I see my colleagues from New Hampshire, Oregon, and 
Pennsylvania, and I know how hard they work and how they are 
hearing about that pain and suffering. And this committee has 
got to be talking about extending the unemployment benefits. It 
has got to be talking about Medicare and Medicaid, and not 
having no hearings for the last, I do not know, 7, or 8, or 10 
weeks, when there is so much suffering out there and so much 
work to be done. But I will stop there. Thank you, Mr. 
Chairman.
    The Chairman. I know you are the person who always wants 
the last word, so to get on with this hearing, I will let you 
get away with what you always get away with.
    Senator Casey?
    Senator Casey. Mr. Chairman, thanks very much for this 
hearing. I want to note that these issues that relate to the 
FDA are very important, but I do not think we can forget at 
this time in our Nation's history, especially this week after 
what happened just a week ago, I do not think we can fail to 
remember the murder of George Floyd and all the pain, the 
trauma, the anger, and the protests that have resulted from 
that death.
    We cannot simply condemn the actions that killed him and 
lament the failures of our criminal justice system as it 
relates to the African American community. We should do both, 
but that is not enough. We must act legislatively.
    This committee does not have the same jurisdiction as the 
Judiciary Committee, but this Finance Committee does have 
jurisdiction over health care and economic security, for 
example. And there is a lot we could do to examine a whole 
range of issues under those broad topics that relate to 
communities of color. And part of our set of actions to help 
these communities must focus on those actions.
    Second, I would note that in the broad category of COVID-
19--the deaths that have resulted and the number of cases--the 
death number is disproportionately higher for African 
Americans. In some States, it is more than double or triple the 
percent of the population; the percent of the deaths are 
outpacing by a long shot the percent of the population.
    As it relates to what this committee can be doing in 
connection to COVID-19, one of the areas that Senator Brown 
mentioned would be in the area of nursing homes. We should have 
a hearing on nursing homes. It should focus on a couple of 
topics. First and foremost, we should hear from the Centers for 
Medicare and Medicaid Services to ask them questions, to ask 
Administrator Verma questions about transparency, and why 
information and data about cases in nursing homes and deaths in 
nursing homes have not been on the public record to the extent 
that I and Senator Wyden and a number of our colleagues have 
asked for.
    We have had 40,000-plus deaths in nursing homes--40,000-
plus, when you include nursing home residents and workers. 
There has been a failure to collect data. Nursing homes need a 
lot of things right now. They need funding, a lot more of it. 
They need testing. They need personal protective equipment.
    I have a bill to do all of that, Senate bill 3768. It is 
the only bill in the Senate that would provide that kind of 
help, $20 billion to help States with cohorting, where they 
separate the residents with COVID-19 from those who do not have 
it, and pay for surge teams and other best practices to get the 
professional help that is needed sometimes when a nursing home 
is in crisis.
    With that as a long predicate, Dr. Denigan-Macauley, the 
GAO did an analysis of detection, prevention, and control 
problems in nursing homes. Could you quickly summarize that 
report?
    Dr. Denigan-Macauley. Yes, thank you. We did that. We 
looked at data from 2013 to 2017, and we found that nursing 
homes have widespread problems. Over 82 percent had 
deficiencies, and in some cases more than half of them had more 
than one deficiency. And it was basic infection control 
problems; for example, staff not washing their hands, or not 
disinfecting equipment, and sharing of bathrooms. And that is 
pretty dramatic if you are looking at now. If we were to go 
back in and look at that during COVID, and the infectious rate 
of that disease, it would be pretty devastating.
    Senator Casey. Thanks very much, Doctor.
    Mr. Chairman, that concludes well short of my time, and I 
want to say two things. Number one is, I will submit questions 
for the record for Dr. Throckmorton. And, Mr. Chairman, I will 
say this about your leadership and this hearing. I may disagree 
that we should be covering some other topics, but at least you 
are having a hearing that relates to COVID-19, unlike what has 
happened on the floor the entire month of May. All nominations. 
Nothing on COVID-19, with the limited exception of a few votes 
on the Foreign Intelligence Surveillance Act.
    Mr. Chairman, I will yield the balance of my time.
    The Chairman. Senator Warner?
    [No response.]
    The Chairman. Senator Whitehouse?
    Senator Warner. Hold on; I am here, Mr. Chairman.
    The Chairman. Senator Warner, go ahead.
    Senator Warner. All right; thank you, Mr. Chairman. I 
appreciate it.
    I want to talk to the panel, Dr. Denigan-Macauley and our 
friends from the FDA, about supply chain issues that I think 
this virus has exposed. It would seem to me that our national 
strategic stockpile was significantly underprepared for this 
virus, and I guess what I want to start with today is, what 
kind of partnerships has the FDA looked at, particularly with 
outreach to both our Energy and DoD partners and your intel 
partners--I am the vice chairman of the Intelligence 
Committee--on how we would be better prepared in terms of the 
strategic stockpile in any future problems? Do you support any 
kind of partnerships there? I am not sure which of the FDA 
colleagues will address that.
    Dr. Throckmorton. Senator, this is Doug Throckmorton. I can 
start, and the others might chime in if they have anything 
additional. I can tell you about the interagency partnerships 
that we have formed, because I agree they are absolutely 
critical for the response to COVID.
    So we have been engaged in discussions with FEMA, for 
instance, from really Day One in terms of the response to the 
COVID outbreak, about distribution, giving them whatever 
information we can to help them make good decisions. I know 
that engages with the strategic national stockpile.
    That is also focused through the Health and Human Services 
administration through the ASPRs--that is the name of the group 
there. We have also been engaged with them, again on, roughly 
speaking, a daily basis because we understood the need for us 
to provide whatever support we could for the decisions they 
were making about the strategic national stockpile.
    Similarly, we have been in close contact with the DEA 
regarding controlled substances and the need for controlled 
substances. As I am sure you no doubt know, there have been 
extensive needs for fentanyl and other opioids for pain and for 
ventilator settings and things, and we have had to do 
everything we could to support that work that they do regarding 
the availability of those products.
    And then finally, BARDA, the acquisitions group, is engaged 
with us around the work that Flo and other manufacturers have 
recently taken up----
    Senator Warner. If I could interrupt for a second; I do not 
have that much time.
    One of the things that we have discovered, as the 
administration basically had States versus States searching for 
PPE and for testing equipment, is that a lot of that came from 
foreign sources, China in particular, you know. In terms of 
thinking this through, have you had any kind of outreach to the 
intel community or the defense community about how we better 
prepare in the future? I think there are a lot of us on both 
sides of the aisle who do not want to be reliant on China for 
APIs going forward, or on circumstances of not having a 
domestic supply of PPE, testing equipment--and you are talking 
mostly domestic agencies. What about our intel community or 
DoD?
    Dr. Throckmorton. I have not been part of those 
conversations. That does not mean that they have not occurred, 
sir. I would be happy to get back with whatever information we 
can.
    Senator Warner. Dr. Denigan-Macauley, did you have any 
comment there? Did you want to speak to advanced manufacturing 
facilities? I think there is someone on the second panel who 
will highlight some of the work that is being done at Virginia 
Commonwealth University on advanced manufacturing in this space 
around APIs, but I am really concerned about the domestic 
sourcing of these materials.
    Dr. Denigan-Macauley. Yes. And GAO has work that we have 
ongoing, looking at not only the strategic national stockpile, 
but we are anxious to be able to get out of our homes and talk 
to the intel communities that you are referring to, because 
they are key with respect to analysis and understanding of how 
best to ensure that those supplies are there.
    We have a robust body of work looking at APIs, where they 
are coming from, how we are going to stockpile, medical 
countermeasures, the whole shebang. We will continue to report 
out through the CARES report every 60 days, as well as CARES 
reports over the longer period of time.
    Senator Warner. We are about out of time, but I do hope 
that we will have that resilient domestic supply chain, 
recognizing where we are sourcing a lot of this material and 
looking at this from a national security standpoint. I will 
tell you, Mr. Chairman, I know that, for example--Senator Wyden 
and I both are on Intel, and I think this is a national 
security issue that needs serious attention, and I hope the 
committee will come back and revisit it.
    I yield back my last seconds.
    The Chairman. Okay. Senator Whitehouse?
    [No response.]
    The Chairman. Senator Hassan?
    Senator Hassan. I am right here, Mr. Chairman.
    The Chairman. Go ahead, Senator Hassan.
    Senator Hassan. Thank you, Mr. Chair, and thank you, 
Ranking Member Wyden, for this hearing. And thank you to our 
participants, our witnesses who are participating today.
    I just want to start out by saying that I share the 
concerns that my colleagues have expressed, that this hearing 
is the first hearing that the committee has had since the onset 
of the pandemic. It is especially troubling, given the pain 
that millions of Americans are feeling at this moment in time. 
The murder of George Floyd happened at a time when many African 
Americans already were feeling despair about the way this 
pandemic has disproportionately taken their lives and 
livelihoods.
    We could be working today on actions that would be 
constructive steps towards addressing their rightful concerns. 
But we are having this hearing today--and I do want to focus on 
the fact that in the last few months FDA has authorized the use 
of hydroxychloroquine for COVID-19 without properly evaluating 
its safety or effectiveness, and allowed highly inaccurate 
COVID-19 tests to enter the market.
    These decisions have negatively impacted our day-to-day 
response to this pandemic and potentially put lives at risk, 
yet we do not have an FDA official here who can speak to those 
decisions. Moving forward, I hope this committee can conduct 
the type of broad oversight of the Federal response to COVID-19 
that the American people deserve, including an examination of 
what has happened in our country's nursing homes.
    Like so many other States, my State's nursing homes have 
been devastated, and the deaths in New Hampshire due to COVID-
19 are unbelievably, disproportionately happening in our long-
term care facilities.
    So, Dr. Denigan-Macauley, a couple of questions for you. 
Your testimony before the House Energy and Commerce Committee 
in December touched on many of the shortcomings of FDA's 
foreign inspection process. Can you discuss the potential risks 
these shortcomings pose to Americans who rely on these 
pharmaceuticals, and how FDA's decision to modify its approach 
to foreign inspections during the COVID-19 pandemic may 
exacerbate those risks?
    Dr. Denigan-Macauley. The GAO has reported that, while FDA 
has many tools at its disposal to ensure the safety of our drug 
supply, inspections are absolutely critical. And they stood up 
the FDA overseas offices specifically to be able to have boots 
on the ground, to be able to get the intel to find out which 
establishments are good or might be bad actors and to be able 
to get in there and to do inspections with very little notice, 
like we have here in the United States, to make sure that it is 
equivalent.
    So the fact that it stopped--I understand the need for 
being able to protect their own people, but it is concerning. 
And I would want to ensure that the other steps that they have 
in place are rigorous.
    Senator Hassan. Well, I thank you for that clear response, 
because, while I too understand the need to protect FDA 
inspectors, their work is essential. And given the risk to 
patient safety, I believe the FDA's decision to curtail 
inspections is inappropriate. And it sounds to me, given your 
answer, that you have deep concerns about it too.
    Dr. Denigan-Macauley. We do have concerns, and we continue 
our work in this area.
    Senator Hassan. Thank you.
    To Doctors McMeekin and Throckmorton, last year I had the 
opportunity to travel to China and speak with both U.S. and 
Chinese officials about the massive production of fentanyl, 90 
percent of which originates in China and is not regulated. I 
have continued to push efforts around putting a stop to illegal 
production and distribution of fentanyl devastating people in 
New Hampshire and beyond.
    Doctors McMeekin and Throckmorton, can you speak to what 
steps FDA is taking to combat illegal fentanyl from China? I 
would also be interested in hearing about the work your agency 
is doing in China, as well as efforts to stop illegal fentanyl 
from crossing our border, including sales on the dark web.
    Dr. McMeekin. Thank you very much. Our enforcement efforts 
are primarily focused at our ports of entry and the 
international mail facilities. In addition, our Office of 
Criminal Investigations and our health fraud staff are 
investigating online sales of opioids, including fentanyl. In 
the States, we are working primarily on counterfeits, and also 
working in conjunction with other law enforcement counterparts.
    In fiscal year 2019, we had 55 arrests and 53 convictions 
related to these products, or involving elicit opioids. So we 
continue to work hard on our web and health fraud activities 
surrounding these products.
    Senator Hassan. Thank you. Dr. Throckmorton?
    Dr. Throckmorton. I do not have a lot to add to that. I am 
glad that she made the distinction between elicit fentanyl 
manufacturing, which is going to elicit drug use, from 
prescription fentanyl manufacturing, which is occurring, 
obviously, within the U.S. borders, because I think there has 
been some confusion there.
    In regard to the elicit fentanyl manufacturing, we have 
been focusing our efforts especially at the borders, and 
especially online sales, working with the online sellers, the 
Amazons of the world, to try to stop people from being able to 
order elicit opioids like fentanyls on the dark web, or from 
other sources. I think that is a really strong focus of that.
    Senator Hassan. So, thank you. And thank you, Mr. Chair. I 
do not want to lose sight of the fact that, while we have the 
pandemic of COVID-19, we continue to have an opioid epidemic. 
Thank you.
    The Chairman. Thank you. And now, is Senator Whitehouse 
available?
    [No response.]
    The Chairman. Okay; then is Senator Cassidy available?
    Senator Cassidy. Senator Cassidy is here.
    The Chairman. Go ahead, Senator Cassidy.
    Senator Cassidy. Great; thank you. I am sorry I am not on 
video.
    Doctor--I think this is for the FDA--Senator Toomey had 
mentioned about API coming from China. Dr. Throckmorton pointed 
out there does not seem to be that much of a shortage. But API 
is different than the chemicals that go within it. And it is my 
understanding that a greater percentage of the chemicals used 
to make API are coming from China. Is that correct?
    Dr. Throckmorton. This is Dr. Throckmorton. I am not 
familiar with those data. We know substantially less about the 
sources of those products than we do about API and, as I think 
was mentioned earlier, we know less about API and its 
manufacturing and distribution than we do about finished dosage 
forms.
    Senator Cassidy. I will ask Mr. Abdoo, because he is 
involved with trade. Mr. Abdoo, are you familiar with the 
percentage of starting materials or fine chemicals coming from 
China?
    Mr. Abdoo. I am not familiar with that data, but we can 
look into it and get back to you.
    Senator Cassidy. That actually seems to be the critical 
thing here, because API is one step, but the chemicals are 
another. And so that actually seems to be our point of 
vulnerability unless we have a stockpile thereof.
    For example, is the high percentage of production in China 
of starting materials? Because it is my understanding that 
there is a higher percent of starting materials produced in 
China. What would be the reason for that? Is it cost, or is it 
access to a base mineral, or some other issue? It does not 
sound like you all are familiar with this, but I would ask you 
to get back to us regarding that.
    I think GAO, though, has made a point that, even in normal 
times, it is difficult to get a clear line of sight into 
Chinese manufacturing. So just to say, I do think it is 
important for us to consider establishing a strategic API or 
starting material reserve.
    Let me go on to you, Mr. Abdoo. Brazil and Mexico both have 
a presence in U.S. pharmaceuticals. Clearly, if there is 
geopolitical tension, it is probably better to have 
pharmaceutical manufacturing in Mexico and Brazil than in 
China, for a variety of reasons. Can you give me a sense of the 
challenges for pharmaceuticals in Mexico and Brazil? And how is 
the foreign drug inspection process going there? And would that 
be an alternative for us?
    Mr. Abdoo. I do not have data on that at the moment, but 
again, I can look into it and get back to you. Regardless, our 
inspection protocols remain the same globally, and we hold 
foreign and domestic manufacturers to the same standards.
    Senator Cassidy. Let me finish with this. Dr. McMeekin, you 
went through a kind of elaborate why we cannot do inspections 
as we normally would in foreign countries, in terms of it is 
jurisdictional and therefore we have to notify them. There are 
two things about that.
    In a response right after that, Mr. Abdoo suggested that 
we, when we were doing this in 2015, we indeed were doing 
inspections but that there was a bias about how these companies 
were selected, and that bias therefore may have biased the 
results. But the point was, we were doing spot inspections.
    And secondly, the FDA has the ability to say, ``If you do 
not let us in, your goods are not coming to the United 
States.'' And so, give me a sense of why your response to 
jurisdictional issues is different than what Mr. Abdoo said. 
And then also, why can't FDA just demand to be let in or else 
we are not letting your product come over?
    Dr. McMeekin. Thank you very much. Actually, you are 
correct. If we go to inspect a foreign facility and they refuse 
our inspection, we do have the authority and have used the 
authority to put the firm and those products on import alert, 
which would prevent those products from entering U.S. commerce.
    And just so folks know, we do have unannounced inspections. 
In a foreign space, they are generally on for-cause basis. When 
there is a reason that is identified, such as an informant, or 
there is a trade complaint, we will go in and conduct an 
inspection. We have, and we do, conduct unannounced inspections 
in the foreign space.
    And again, if they deny an inspection, we do have authority 
to place the facility, along with the products, on the import 
alert.
    Senator Cassidy. How many unannounced inspections did FDA 
do on manufacturing plants in China and India last year?
    Dr. McMeekin. Predominantly, they were announced. I do not 
have the exact figures. Remember that we do not--we are just 
implementing in our IT system the capability to record whether 
an inspection has been announced or unannounced. So once we 
have that data, we will be able to identify what those 
inspections are.
    Senator Cassidy. I am a little bit surprised that you do 
not have a list of how many, but I will yield back in the 
interest of time.
    Thank you, Mr. Chairman.
    The Chairman. Senator Thune?
    Senator Thune. Thank you, Mr. Chairman. And thanks to our 
witnesses for being here today.
    Ensuring the safety and quality of our Nation's supply of 
prescription drugs is a key priority in the Nation's work to 
respond to the coronavirus pandemic and the issue of the supply 
chain for both prescription drugs and PPE that has been brought 
to the forefront, and so I appreciate the discussion today.
    To Dr. Throckmorton, as we continue discussions on the 
coronavirus response efforts, what updates can the FDA provide 
with respect to provisions needed to address supply chain 
issues, namely, requirements for greater transparency regarding 
supply chain disruptions?
    Dr. Throckmorton. Thank you, Senator. I appreciate that 
question. One, I would say in general we are very grateful for 
the provisions that we got in the legislation. We are in the 
process of implementing the legislation. As you likely know, it 
implements in September. And so we anticipate that we are going 
to be able to make use of the legislative authorities that were 
granted in CARES to expand the amount of information that we 
get, and information is power in this setting, as we have 
discussed throughout this hearing. The more we know about 
products moving in the manufacturing chain, the better we can 
do as far as preventing shortages, or anticipating spot needs, 
or something like that.
    So CARES is a very important piece for us, and I am looking 
forward to being able to come back and give you an update on 
exactly what we were able to do with it. But we have every 
expectation that it is going to be really helpful.
    Senator Thune. Okay.
    Dr. Denigan-Macauley, are you aware of that provision in 
the CARES Act?
    Dr. Denigan-Macauley. I am, but I do not have any further 
information.
    Senator Thune. Okay. So, just as sort of a follow-up to 
some of the lines of questions--and I am sure much of this 
ground has been covered already--but the perception has been 
through the course of the pandemic that there have been these 
shortages, or disruptions in the supply chain, particularly 
with regard to pharmaceuticals and PPE, as relates to those 
that are manufactured in, particularly China, but other places 
around the world.
    So I am wondering if you all could just comment about the 
accuracy of those reports, and whether or not in fact the 
concerns that people have about the future with respect to 
those supply chains are valid, and whether or not we ought to 
be providing incentives to bring many of those capabilities 
back here and to stand up those capabilities in the United 
States. How reliable are these supply chains with the 
manufacturers that are operating currently in foreign 
countries?
    Dr. Throckmorton?
    Dr. Throckmorton. Yes, I might start, Senator, if that is 
all right. Without any question, COVID is an unprecedented 
demand on our drug supply chain. It is layered on top of the 
problem with regards to drug shortages, one that we have been 
working to confront for several years.
    But superimposed on that were unprecedented needs for 
medicines. And that has required that the FDA change our 
approaches, create new structures to identify and respond 
quickly to those drug shortages when they occur, whether it's 
propofol in the hospitals in the New York State area, or it is 
some other medicine.
    We have had to adapt our procedures to put in place ways to 
respond quickly, within hours, wherever we can to find new 
sources of product for the population, whether it is in a State 
or even in the smaller localities.
    Going forward, we've got to think about the next challenge. 
So COVID will not be the last time we are asked to respond to a 
natural emergency, or an emergency of this size. And so we need 
to find ways to strengthen the supply chain, find ways to 
incentivize a supply chain that is robust and reliable, and 
bring things into the U.S. as a way to address that. And we are 
firmly supportive of things like advanced manufacturing, 
because the U.S. has the advantage in those areas, an advantage 
that could well help to steer firms onto the U.S. shore, 
helping all of us both with regards to security, availability, 
and quality for medicines that we need now, and medicines we 
are likely going to need for the next emergency.
    Senator Thune. Okay. Mr. Chairman, my time has expired. 
Thank you.
    The Chairman. The next person is Senator Daines.
    [No response.]
    The Chairman. If Senator Daines does not speak up, I will 
call on Senator Young.
    [No response.]
    The Chairman. If Senator Young does not speak up, I will 
call on September Crapo.
    [No response.]
    The Chairman. Then the next one is Senator Cortez Masto.
    Senator Cortez Masto. Thank you, Mr. Chairman. Thank you, 
everyone, for the conversation today. Let me just say that I am 
from a State that seems to be experiencing enormous impact of 
COVID-19 that is devastating our economy. I too would ask that 
the chair consider having a further oversight hearing that 
pertains to our nursing homes. Our nursing homes in Nevada have 
been ravaged by COVID-19 as well, and I think at this point, 
I'd like to follow up on this area and many others.
    So I would just put that in and echo the request from some 
of my colleagues as well.
    Let me start with Mr. Abdoo. As we look ahead to the 
development of mass production of a COVID-19 vaccine, how does 
the agency expect to balance the efforts to gear up production 
quickly with the need for the oversight of these manufacturing 
facilities?
    Mr. Abdoo. So, thank you, Senator, for that question. As 
you know, vaccines are regulated through our Center for 
Biologics Evaluation and Research, and our experts there would 
be the best situated to get you that information. I am happy to 
bring the question back to them.
    Senator Cortez Masto. Thank you. I appreciate that. I think 
that is going to be very helpful for us in planning for the 
future.
    Let me ask you this. And also I appreciate Senator 
Cassidy's line of questioning, because I too have questions. I 
have read through the GAO report about these unannounced 
inspections and announced inspections. So whatever information 
you can provide as a follow-up, please provide it to my office.
    It is my understanding after reading the GAO report that 
most of the unannounced inspections--when we are talking about 
unannounced inspections, it is giving them 12 weeks or more 
that you were going to be presenting to their facility? Is that 
correct? So they have enough time to prepare for knowing that 
an inspection is going to occur? Is that correct?
    Dr. McMeekin. Thank you for the question. It is not a 
matter of giving them enough time to prepare. It is really 
having enough time for us to prepare to make sure that we have 
the visas available, and that our staff have actually been able 
to take the State Department clearance training. A foreign 
inspection requires more time to plan, and investigators must 
complete the necessary documentation for obtaining official 
passports, visas, and complete required State Department 
training. Any delays in this can actually put it in jeopardy, 
or require a last-minute change in travel.
    Senator Cortez Masto. Can I ask--and I appreciate that; it 
is very helpful. But by giving them advance notice of your 
coming, do you have concerns that they are going to take action 
in response to that notice? And what type of action would you 
have concerns that the facility would be taking?
    Dr. McMeekin. Again, remember that the firms, the foreign 
and the domestic firms, are inspected the exact same way, using 
the same standards and requirements, whether they are domestic 
or foreign.
    So the expectation is for the firms to be able to have 
quality products developed at any time during that process.
    Senator Cortez Masto. Right. So what is your distinction 
between then a spot inspection versus an unannounced 
inspection? To me, there are concerns that something is going 
on there and you do not want them to correct it just while you 
are there inspecting, and then go back to that practice.
    Dr. McMeekin. The firms have a responsibility to have 
processes in place so that they can develop quality products. 
The inspection is one--it is a moment in time. So they have to 
have the quality systems in place throughout the life cycle of 
the product. It is not just, you know, while we are there.
    But while we are there, we are looking at these quality 
systems. But it is up to the individual facilities and 
manufacturers to have a role and an ownership in making and 
providing quality products.
    Senator Cortez Masto. So then why have an unannounced 
inspection?
    Dr. McMeekin. The unannounced inspections, think of--so if 
we are going to do a preapproval inspection, something that is 
tied to the application, it is important that we do give notice 
on those preapproval inspections because we want to make sure 
that they have the data available, that we have the people to 
talk to at the firm who can talk to the types of processes that 
they have, or the manufacturing capabilities so that we can 
talk with them to see how they are prepared to manufacture the 
product that is associated with the application. So that is 
what we do with a preapproval inspection. So we do announce 
that.
    And then we will not announce if we have concerns that 
there might be issues that have been brought to our attention 
from manufacturing, or if there have been patient complaints, 
or consumer complaints, or manufacturing complaints. We will 
want to go in there unannounced.
    Senator Cortez Masto. And why would you want to go in 
unannounced?
    Dr. McMeekin. You know, sometimes just to not give them any 
specific insight, primarily.
    Senator Cortez Masto. Because you have concerns that they 
might do something in response to the notice that you are 
coming?
    Dr. McMeekin. There may be some, but what we have seen from 
our outcomes is that in general there is not a huge difference 
when we have an announced inspection or we do not. If we look 
at our ``official action indicated'' where there have been 
violations, from our domestic standpoint that is at about 7 
percent for drug products versus in the foreign arena, that is 
more about 10 percent.
    Senator Cortez Masto. Thank you. I notice my time is up. 
Thank you. It looks like I have gone over. I appreciate the 
indulgence.
    Senator Daines [presiding]. Thank you.
    Well, I guess I will wrap up here with this first panel, 
and I want to thank you for coming to the committee today and 
providing your perspective and expertise on this very important 
topic.
    China's cover-up and their response to the coronavirus 
outbreak set the world behind and caused this pandemic to rage 
across the globe and devastate the economies and public health. 
The Chinese Community Party's reckless actions to downplay and 
lie about the severity of this virus has changed the lives of 
every American.
    Montanans across our State are losing their jobs. 
Businesses are closing their doors. Working moms and dads are 
struggling to put food on the table. As more information comes 
to light on the deadly Chinese cover-up of this virus, we must 
hold China accountable to ensure this never happens again.
    It is long overdue to end our reliance on China to produce 
medical supply equipment like PPE, as well as life-saving 
drugs. Over 70 percent of personal protective equipment and 
over one-third of our antibiotics are imported from China. 
Being dependent on China is a threat to our national health and 
our national security. America will be safer, and America will 
be stronger when we bring our pharmaceutical and medical 
manufacturing supply chains and those jobs back to America.
    Commissioner Abdoo, there are substantial concerns that 
China's pharmaceutical industry is not effectively regulated by 
its government. China's regulatory apparatus is inadequately 
resourced to oversee thousands of Chinese drug manufacturers 
even if Beijing made such oversight a greater priority. This 
has resulted in significant drug safety scandals. What are the 
most challenging aspects of maintaining quality control of 
Chinese pharmaceutical imports into the United States?
    Mr. Abdoo. Thank you for that question, Senator, and I will 
start off and then turn to my colleagues. Through our office in 
Beijing, we work extensively with the National Medical Products 
Administration in China to raise the standard of their ability 
to regulate products within their jurisdiction.
    We do this by recommending harmonization with international 
standards, by promoting membership in pharmaceutical inspection 
cooperative schemes, which help create standards for 
inspections, and we do this also in addition to work with the 
FDA through educating the industry about requirements for FDA 
so that they can better comply and improve the quality of the 
product that they are exporting to the United States.
    With regard to what we do here domestically in terms of 
importation and so forth, I am going to turn to Dr. McMeekin.
    Dr. McMeekin. So, as Mr. Abdoo mentioned, FDA's 
jurisdiction over foreign firms' products begins when the 
products arrive at our borders and attempt to enter into 
interstate commerce.
    And so FDA uses additional tools to complement those 
inspections. And this includes utilizing our import screening 
tool called PREDICT, and we can and have adjusted that 
accordingly. We also conduct physical examinations and/or 
product testing at the borders to make sure of that as products 
come in.
    We are also requesting--we can request records from some 
facilities. So we can request records; we have received 
authority to request records in advance so that evidence 
inspections are actually in lieu of inspection. So we are 
collecting these to look at batch records, program data, to be 
able to see if they are complying with GMPs.
    Thank you.
    Senator Daines. Yes; so you are not actually monitoring the 
process of operations in the plant for GMPs? You are looking at 
documentation but not actually having any physical presence on 
their site?
    Dr. McMeekin. During the pandemic.
    Senator Daines. Okay. And a follow-up question, back to the 
Commissioner: what are the biggest impediments to drug 
manufacturing in America? And what would be the benefits of 
having a stable domestic supply chain for our most critical 
drugs?
    Mr. Abdoo. Thanks for the question, Senator. I think Dr. 
Throckmorton might be in a better position to talk about drug 
manufacturing in the United States.
    Dr. Throckmorton. Thank you, Senator. When we talked before 
about this, we identified a few factors. One obviously is labor 
costs. Another factor relates to the environmental regulations. 
In parts of the world, there obviously are very different 
standards in that regard. And third is the economics of drug 
manufacturing.
    So, if you look back at the drug shortage report that we 
created last fall, we believe there is fundamentally a 
disconnect in terms of the incentives to create high quality, 
and the reimbursements for the products that are of high 
quality. And we think we can change that if we could provide 
additional transparency, potentially grading, identifying 
products that are made to a very high quality, and make those 
known to the American public so that buyers would know that 
they could potentially choose those products over products that 
barely meet the mark. And we would be very happy to talk to you 
about the ideas we have along those lines.
    Senator Daines. Thank you. I am out of time as well, and so 
this will conclude our first panel. I want to thank our 
witnesses for being here today and sharing their very 
insightful testimony in answering these questions.
    With that, we are now ready to seat panel two.
    [Pause.]
    Senator Daines. Okay. We'll get started with the second 
panel. I'd like to start with the introduction of, first of 
all, David Light.
    David is a biotech entrepreneur and scientist with over 10 
years' experience in the field. He is the founder and CEO of 
Valisure. Valisure tests its drugs for toxins, carcinogens, and 
dilution rate before dispensing to patients. David helped 
found, fund, and invent the core technology at Valisure and is 
named inventor on numerous patents.
    Our second member of the panel today is Martin VanTrieste, 
who is president and CEO of Civica, Inc. Civica, Inc. is a 
nonprofit, non-stock corporation founded in 2018 and is part of 
a new U.S. Government-funded partnership to produce essential 
generic medicines and their ingredients in the U.S.
    The immediate priority for the partnership will be a COVID-
19 response. Today over 50 health systems are Civica members, 
representing more than 1,200 U.S. hospitals and over 30 percent 
of all licensed U.S. hospital beds. Since we do not have time 
restraints, each witness has 5 minutes for their opening 
statement, and we will begin with Mr. Light.

          STATEMENT OF DAVID LIGHT, FOUNDER AND CEO, 
                    VALISURE, NEW HAVEN, CT

    Mr. Light. Chairman Grassley, Ranking Member Wyden, and 
members of the committee, thank you for the honor of being able 
to speak before you today. I am the founder and CEO of 
Valisure, where our mission is to help ensure the safety, 
quality, and transparency of medications, and we do this with a 
very simple but novel approach: we check. Valisure is the only 
pharmacy that checks the chemistry of every batch of every 
medication at no additional cost to patients. This is 
particularly important, given our Nation's heavy reliance on 
overseas manufacturing and COVID-19 putting additional strain 
on an already stressed system.
    Valisure currently rejects over 10 percent of the 
medication batches we test due to a variety of product defects. 
The pharmaceutical supply chain is extremely complex and 
heavily reliant on the self-regulation of overseas 
manufacturers. When you buy a bottle of medication, it is like 
buying a used car. Those pills are often already a year or two 
old, have traveled thousands of miles and touched dozens of 
hands. No one buying a used car is satisfied to know that the 
original manufacturer said, ``It's good.'' You want a CARFAX 
report. You want to see a 100-point inspection on that car. 
None of that transparency is available for medications.
    While the FDA cannot do everything or be everywhere, we 
strongly believe that more can and must be done. The idea of 
independently checking drugs may be new to industry, but not to 
the academic world. However, warnings from academics have 
unfortunately been largely ignored. A grim example of this is 
the drug Zantac. In 1977, Senators sat in this very building 
and listened to testimony that certain drugs are unstable and 
form the extremely potent carcinogen NDMA.
    Similar concerns were raised a year later at a summit held 
by the World Health Organization and the United Nations. Zantac 
has the exact chemical structure to form NDMA that the 
scientific community warned about, and yet the drug was 
approved only a few years later. In the following decade, 
dozens of studies implicated Zantac as chemically unstable and 
easily prone to forming NDMA, but these papers had practically 
zero impact. By the 1990s, Zantac had become the top-selling 
drug globally and among the most commonly prescribed to treat 
acid reflux in pregnant women and infants.
    It was not until 2019, 36 years after the drug's approval, 
that Valisure performed the simple action of independently 
checking generic Zantac syrup prescribed to our co-founder's 
infant daughter. The results were so dramatic we immediately 
took the drug off our formulary. But we were not satisfied by 
simply publishing our findings in a journal.
    We petitioned the FDA directly. We spoke to the press. We 
did not back down from the crystal-clear science that Zantac is 
fundamentally unstable and should be taken off the market. Two 
months ago, after dozens of countries had already banned this 
dangerous drug, the FDA finally granted our petition, and 
Zantac was officially taken off the U.S. market.
    Without independent testing and the drive to make it 
broadly transparent, Zantac would have remained on the market 
for many more decades to come. The immense value of independent 
testing does not have to be limited just to Valisure's 
pharmacy.
    I believe there are two clear paths to applying independent 
analysis throughout the U.S. First is a data-driven approach: 
drug quality scores. Results from independent chemical analysis 
can be combined with broad regulatory data and boiled down into 
quality scores that can be as simple as a red, yellow, green 
rating that provides transparency to any drug purchaser. Buyers 
can use this guidance to buy green, occasionally yellow, and 
avoid red. A landmark paper by leaders from eight prominent 
health-care institutions was just published on this approach 
last week.
    Additionally, for a handful of important drugs that are 
particularly vulnerable to quality issues, there is a more 
definitive solution: what we call ``certified drugs.'' By 
employing independent batch testing of drugs up to the 
manufacturer level, we can weed out poor-quality batches and 
bring certified medications to millions of Americans regardless 
of which pharmacy they go to.
    This is entirely reasonable to do for critical drugs such 
as metformin. Metformin is the top diabetes drug and the fourth 
most prescribed medication in the U.S., with over 80 million 
prescriptions a year. Valisure has published two studies 
showing that approximately 40 percent of metformin products are 
contaminated with the carcinogen NDMA above FDA acceptable 
limits. This means millions of Americans are taking a drug 
every day that contains a carcinogen that absolutely should not 
be there.
    In summary, we have very serious problems in the drug 
supply chain that are caused by a very complex set of factors, 
all of which are made worse by COVID-19. It is imperative that 
we act quickly to better protect the American public. And above 
all, independent scientific analysis cannot continue to be 
ignored and must be a part of a new, transparent path forward.
    Thank you very much, and I look forward to your questions.
    [The prepared statement of Mr. Light appears in the 
appendix.]
    The Chairman. We will now go to Martin Van Trieste.

             STATEMENT OF MARTIN VanTRIESTE, RPh, 
           PRESIDENT AND CEO, CIVICA, INC., LEHI, UT

    Mr. VanTrieste. Thank you, Chairman Grassley, Ranking 
Member Wyden, and members of the committee. I am Martin 
VanTrieste, the CEO of Civica. I am honored to be here and to 
follow a group of dedicated public servants. Civica is a 
nonprofit 501(c)(4) established by health systems and 
philanthropies to reduce chronic drug shortages in the United 
States. Our mission is to serve patients by making quality 
medications that are always available and affordable. More than 
1,200 U.S. hospitals and 50 U.S. health systems have joined 
Civica. We also supply the Veterans Administration, Department 
of Defense, as well as 340B-
eligible hospitals.
    Many of our drugs are used in the management of COVID, and 
we have been able to supply them without fail. We even 
contributed 1.6 million vials of medication to the strategic 
national stockpile. Several features of the Civica model may 
offer insights into the broader supply chain.
    We rely on long-term take-or-pay contracts to provide the 
certainty for us and our suppliers to invest in quality 
systems, capacity, and staff. We have backup suppliers to 
create redundancy. And we maintain 6 months of safety stock.
    Civica prefers to buy American where possible, then from 
other highly regulated economies, avoiding Chinese ingredients 
in all our drugs, if possible. Finally, Civica selects 
medicines to make based on the needs identified by pharmacists 
and physicians on the front lines.
    To further support a resilient supply chain, Civica 
recently entered partnership with Flo and the Federal 
Government to make essential drugs here in the United States. 
This agreement will result in an end-to-end U.S. manufacturing 
supply chain for essential drugs which will be sold at Civica's 
nonprofit pricing.
    As Congress considers other measures to improve the supply 
chain, we urge you to keep these principles in mind: define and 
focus on a set of essential drugs; support U.S. manufacturing; 
ensure redundant supplies and stockpiles; and purchase from 
companies with robust quality systems.
    My written statement addresses specific policy tools, and I 
welcome your questions. Thank you.
    [The prepared statement of Mr. VanTrieste appears in the 
appendix.]
    The Chairman. Before I ask questions, I want to make a 
comment--not to you two people on this panel, but to my 
colleagues on this committee raising issues of whether or not 
this committee, with this hearing or anything else that has 
been done since the pandemic hit, whether or not we have been 
putting our attention in the proper direction. And obviously a 
lot of my Democrat colleagues feel otherwise.
    So it appears that these number of Democrat colleagues who 
commented today--and maybe some who did not comment, because 
the usual courtesy that goes on in this committee was absent 
today--whether it is the colleagues who commented or not, they 
surely have been out of touch with what the committee has been 
doing recently, based on their comments.
    I mentioned in a previous response to Senator Brown the 
billions of dollars this committee was involved in with 
responding to the COVID crisis and the economic turmoil that 
has resulted from it. And I guess some of my colleagues think 
that you just somehow pass a bill and then you forget about it. 
But our staffs, and at least some members, have spent weeks 
following up and assisting in implementing the $3-trillion 
relief package that we passed.
    In addition, I have heard other complaints today. So I 
guess these colleagues on other issues are not aware that I 
have been working with Ranking Member Wyden to have an 
unemployment insurance hearing next week.
    I also have sent oversight letters regarding the nursing 
homes that I am awaiting information on before any potential 
hearing, because you ought to have your ducks lined up before 
you take all the action that goes into a hearing, if you want 
that hearing to be productive.
    So the bottom line is this: I request, before complaining 
in the future, it would be helpful to talk to me or have your 
staff talk to the staff of this committee. So in the end, then, 
if you did that, you would have a better idea of what we are 
talking about and what we have been doing, besides what is 
already on the public record, in regard to our response to the 
pandemic and our response to the economic turmoil caused by the 
shutting down of the economy by our government and our efforts 
now to bring it back up.
    So I am going to start my questions with Mr. VanTrieste of 
Civica, who collaborated with HHS, Veterans Affairs, Department 
of Defense, CMS, and is working with the Trump administration 
Biomedical Advanced Research and Development Authority on a new 
manufacturing plant in the United States. What the purpose of 
the plant is, as I understand it, is to expand generic 
pharmaceutical manufacturing in the United States and create 
stockpiles of active pharmaceutical ingredients for public 
health agencies, which I guess in turn would make us less 
dependent on China and other countries.
    So my first question is, has the Trump administration been 
a good partner in trying to overcome the issues of generics in 
short supply?
    Mr. VanTrieste. I started my testimony today by 
acknowledging the hard work and dedication of many public 
servants who are working to protect the American people. Even 
before the pandemic hit, we had been talking with officials at 
BARDA, ASPR, and HHS who were focused on securing the 
pharmaceutical supply chain who have been interested and very 
helpful.
    Because we have a direct relationship with pharmacists and 
physicians on the front lines of the pandemic, we have been 
able to provide information that helped inform their priorities 
concerning what are the essential generic medications during 
COVID.
    I have to also add that since COVID, my faith in public 
servants has only gone up. These individuals have worked 24/7 
around the clock to make sure that they can do the best job 
possible to bring good PPE, medical devices, testing, and drugs 
to those in the American public who need them the most.
    The Chairman. My last question to you would be this: based 
upon your experience working with various government agencies, 
how could Congress assist in strengthening and promoting U.S. 
drug manufacturing companies to return to the United States?
    Mr. VanTrieste. So I think clearly--I hear frequently of 
organizations or individuals interested in starting their own 
nonprofit pharmaceutical company. Some are interested in the 
trouble with drug shortages; others in reducing drug prices; 
and still others are looking to solve a market failure, such as 
a need for new antibiotics or therapies for neglected diseases 
in which the traditional commercial model is not working.
    Nonprofit pharma has a great potential, not as an 
alternative to for-profit industry but as an adjunct for or a 
complement to it. But there are several things that would help 
this emerging model succeed. We should recognize that 
nonprofits cannot raise capital the same way that the private 
sector does. Civica benefits from the financial commitments of 
our health systems and philanthropies, but in some cases the 
government itself may want to look at the model as a solution 
to the problem.
    Using grants, low-interest loans, or other public/private 
mechanisms would help the nonprofit pharma industry blossom. 
But in addition, there are a great number of bills that have 
been introduced in Congress recently, some very bipartisan like 
with Senator Warner and Senator Rubio, that talk about 
incentives to re-shore the American pharmaceutical industry and 
bolster the supply chain. Civica has publicly said that they 
acknowledge and applaud those efforts.
    The Chairman. I thank you very much, and my last two or 
three questions will be to Mr. Light. So I will ask you, do I 
understand that your business model includes testing drugs 
before dispensing them to patients? Would you provide the 
committee a couple of examples of toxins and other impurities 
your testing process has detected in drugs to make them safer 
and more effective?
    Mr. Light. So we test, actually, for a whole variety of 
components in drugs, including dosage; the inactive 
ingredients; the dissolution rate, which is how a pill 
dissolves in one's stomach or intestines; and a variety of 
carcinogens, such as NDMA, which has been discussed 
extensively.
    I will say that everything that we have looked for, we have 
found problems with, some more than others, and I think there 
has been a lot of attention--rightly so--to the carcinogens. 
Just last week there have been recalls on a new drug, 
metformin, due to the same carcinogen, NDMA. And we test for a 
variety of these on all the batches through our pharmacy.
    The Chairman. My second question would be about your 
relationship with FDA. When you discover contaminated drugs, do 
you report it to the FDA? And if so, what has been the FDA's 
response?
    Mr. Light. Because we are actually outside of the 
manufacturing system, we are not a good manufacturing facility 
because we do not manufacture. We are a pharmacy that has a 
laboratory. And so the guidance we receive from the FDA is to 
report these findings to industry, which has the freedom not to 
pay close attention to them, given that we are not a GMP 
facility.
    I think it really underscores the point that independent 
analyses, certainly a lot from academics, have been largely 
ignored because we are not part of this pharmaceutical 
regulatory bubble. However, we have effectively utilized the 
mechanism FDA has of an FDA citizen petition where, when we 
have sufficient data in-depth on particular problems like 
Zantac or metformin, we file a petition with this data and ask 
for actions of the FDA, such as to make these recalls.
    The Chairman. Can you describe the process you use to test 
those drugs, and how much does the process cost?
    Mr. Light. The process we use will certainly depend on the 
particular analysis. We have some amount of proprietary 
technology that we also use industry-standard technologies 
with. We have optimized these systems so that we add less than 
a penny per pill of cost generally, and we sell these 
medications at no additional cost to patients. So this cost of 
independent analysis adds very little to the actual pill cost 
of being able to dispense it to a patient at the pharmacy 
level, and we believe that at larger levels, potentially even 
doing this with manufacturers, there is a very small additional 
cost.
    The Chairman. My last question to you: how do you see your 
system impacting drug manufacturing?
    Mr. Light. We certainly hope to improve the system as a 
whole. I think we have already seen the proof of principle in 
key drugs like metformin and Zantac, and we certainly hope that 
quality manufacturers will see this as an opportunity, which 
has been discussed a few times during this hearing, of 
rewarding quality manufacturers, whether that is through 
advanced quality management maturity or, from our perspective, 
a science- and evidence-based approach where we can actually 
infuse this independent analysis in addition to what the 
manufacturers already do, and make that transparent to 
patients, buyers, and payers throughout the United States.
    The Chairman. Before I close, I want to thank the two 
witnesses right now who are still here. But I was away voting 
on the Senate floor when the first panel left. I did not get a 
chance to thank them, as chairman of this committee. I want to 
do that.
    So, whether you are government or private-sector witnesses, 
we appreciate your attendance today. COVID has created many 
logistical hurdles in making today's hearing--oh, did I forget 
Senator Wyden?
    Senator Wyden. Yes, Mr. Chairman, I have a couple of 
additional questions.
    The Chairman. I really apologize. I am sorry. I will leave 
my closing statement to when you get done.
    Senator Wyden. Okay. I just have a couple of questions here 
for the gentleman from Civica, Mr. VanTrieste, if I am 
pronouncing that right. And then I want to make a comment to 
see if we can take some constructive measures going forward.
    Let me just make sure we have got this. Mr. VanTrieste, 
your company is part of a contract that the Trump 
administration recently awarded to make COVID-19 drugs. Which 
drugs are you manufacturing right now?
    Mr. VanTrieste. So the intent of the grant that was given 
to us by BARDA was not to be making drugs or APIs, it was to 
put the infrastructure in place for the next pandemic, or the 
next crisis.
    However, Civica already had a series of drugs that we 
provide our members for use during a pandemic, and those 
include antibiotics, cross-spectrum antibiotics, sedation 
agents, heart medications, and local anaesthetics. We have sent 
over 1.6 million vials at the request of the government to the 
strategic national stockpile, and we are prepared to provide 
more if asked.
    Senator Wyden. So I just want to make sure we are clear. 
You got this contract, and you said something about working on 
infrastructure for the future--always useful--but I am not 
clear what you are doing with this contract as it relates to 
COVID-19 drugs now. Have you given some COVID drugs to the 
government that we do not know about?
    Mr. VanTrieste. Yes. We provided over 1.6 million vials of 
drugs to support COVID patients like cross-spectrum 
antibiotics, sedation agents, heart medications, and local 
anaesthetics. These are the same products that we provide our 
members on a routine basis. They include vancomycin, ketamine, 
lidocaine----
    Senator Wyden. You were doing that before the COVID-19 
pandemic, were you not?
    Mr. VanTrieste. We were not supplying the national 
stockpile.
    Senator Wyden. But you had the drugs?
    Mr. VanTrieste. We had the drugs.
    Senator Wyden. Okay. I am just trying to find what value-
added the government got for its money, and I would like to 
know what drugs is the prime contractor making?
    Mr. VanTrieste. So the prime contractor is making an API 
facility that will produce active pharmaceutical ingredients 
and their precursors, which we are really dependent on China 
for, as people talked about earlier, especially the precursors. 
And this is using brand new technology called ``advanced 
manufacturing,'' but it is not for today, it is for the future. 
And this contract has not been designed to set up manufacturing 
for today, but in the future, Senator.
    Senator Wyden. I appreciate that, and I am always 
interested in the future. But I am interested in the urgency of 
communities devastated by COVID-19 now and getting them help 
now, and I am still unclear how anything you are going to do 
with these new efforts addresses that. My time is short, and I 
am going to have to just make one last point that addresses 
what the chairman talked about.
    Mr. Chairman? I am looking for where the chairman is. Is 
the chairman still----
    The Chairman. Yes?
    Senator Wyden. Okay, there is the chairman, all right.
    I want to just make a brief comment to my friend with 
respect to the afternoon. Because I have been here, like the 
chairman, for about 3\1/2\ hours, and I think that what my 
colleagues and I have raised is not a question primarily of 
courtesy--because I think all have been reasonable in tone--but 
it reflects an urgency.
    The racial injustice, for example, in American health care 
is an immediate need. The African American community, as we 
have been talking about, has been hit by COVID-19 like a 
wrecking ball. And on our side of the aisle, we want to make 
sure the Finance Committee--which has such enormous power in 
health care over Medicare and Medicaid and the exchanges, and 
literally $2 trillion annually--is going to use its 
extraordinary muscle in order to make sure the African American 
community that has been hit so hard, that is responding right 
now to injustices all across the country, is going to see us 
use our influence to get those communities of color a fair 
shake in American health care.
    And so we had colleagues on our side raise this repeatedly, 
and unless I am missing something--because I could have been 
out for a minute--no one on the other side of the aisle raised 
it. I think that is unfortunate.
    So to try to see if we could end on a positive note, Mr. 
Chairman, can we agree, you as the chair and I as the ranking 
minority member, that we will task our staffs and members on 
both sides to move very quickly to put together a hearing and 
an agenda, an actual specific action agenda, to use the muscle 
of our committee to deal with these racial injustices? You and 
I are the only ones left. We have been here for 3\1/2\ hours, 
and that is something that we can take from this in a positive 
way that, going forward, we will work together with our staff, 
with our colleagues, to put together a hearing quickly and an 
action agenda to deal with these racial injustices that so many 
African Americans are telling us about, literally for hours 
each day.
    Is that something we can agree on?
    The Chairman. We can always sit down and discuss anything 
you want to discuss, as you will sit down with me any time I 
suggest we discuss things. I guess the only thing I would ask 
you to take into consideration is, almost every program that we 
are involved in on this committee, whether it is Social 
Security going back to 1936, whether it is Medicare and 
Medicaid going back to 1966, or whether it is unemployment 
compensation that has been around I think since the 1930s, all 
of these programs are color-blind. You have to realize that. 
And we will continue to work in a color-blind way, because we 
are all Americans, and we have to pull together, and we should 
not leave anybody behind. And my goal is not to leave anybody 
behind.
    Senator Wyden. Mr. Chairman, just, if I might, I will tell 
you, respectfully, it is very clear that these health-care 
programs are not color-blind. We have seen study after study 
showing that communities of color are disproportionately 
affected by these health problems that we are talking about, 
and that services, for example, do not even come to their 
communities.
    We have been hearing, as I have in the last few days, that 
in the health legislation, the affluent hospitals did 
incredibly well. And in communities of color, there were not 
very many hospitals, and those there did not have the services 
that folks need.
    So I will leave this, and I hope that we can work this out 
quickly. And, respectfully, I will say again, Mr. Chairman, the 
facts show that these programs are not color-blind. The hard 
evidence shows the disproportionate effects on communities of 
color by these health programs. And for that reason, we would 
like to work as the Finance Committee has always done in a 
constructive way to get a hearing quickly to develop an action 
plan to reverse these injustices.
    The Chairman. It is against the law for all these programs 
to discriminate against anybody.
    I will close with this. Before we formally close today, I 
once again, for the second time, thank our witnesses, 
government and private-sector, for their attendance today.
    COVID has created many logistical hurdles in making today's 
hearing happen. I appreciate all that people have done, for 
being a part of this very important discussion. In addition, I 
want to thank the clerk staff for their hard work, time, and 
attention in making this hearing happen.
    Today we have discussed many important issues that have 
existed for decades. However, because of the pandemic they are 
now more important than ever before. Congress must ensure that 
the executive branch takes all the necessary steps to properly 
oversee the drug supply chain. We must work together to ensure 
safe and effective drugs. We have a good idea of who the bad 
actors are in the drug supply chain. We also know that 
aggressive and unannounced inspections provide the best way to 
catch those bad actors.
    I fully expect HHS and its subcomponents to laser-focus on 
them aggressively, engaging in inspections as well as 
enforcement. Today we have highlighted one aspect of the drug 
supply chain: that supply chain ends in the United States. 
Going forward, we must entertain serious policy discussions 
about how we can efficiently and safely bring manufacturing 
back to the United States. In the coming weeks, I will be 
working on the next focus: the personal protective equipment 
supply chain.
    With that, the hearing is over, and members have 1 week to 
provide questions for the record. And whether it is this panel 
or the previous panel, I hope you will respond appropriately 
and as quickly as you can.
    Meeting adjourned.
    [Whereupon, at 5:30 p.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


  Prepared Statement of Mark Abdoo, Associate Commissioner for Global 
Policy and Strategy; Judith McMeekin, Pharm.D., Associate Commissioner 
   for Regulatory Affairs; and Douglas C. Throckmorton, M.D., Deputy 
   Director for Regulatory Programs, Center for Drug Evaluation and 
Research, Food and Drug Administration, Department of Health And Human 
                                Services
    Chairman Grassley, Ranking Member Wyden, and members of the 
committee, thank you for the opportunity to testify today on a matter 
of the utmost importance to the agency: protecting the safety, quality, 
and availability of medicines for Americans.

    The U.S. drug supply is among the safest in the world. FDA 
thoroughly reviews drug applications to ensure that medications are 
safe and effective before they reach the market and oversees drug 
quality post-approval. The agency inspects drug manufacturing 
facilities located around the world with comparable depth and rigor 
based on an assessment of risk to public health. FDA laboratories test 
for drug quality, using testing standards set by the United States 
Pharmacopeia, or standards submitted in marketing applications, or 
methods developed by FDA. This testing has consistently shown that 
medicines manufactured in foreign countries that are imported into the 
United States meet U.S. market quality standards. When FDA identifies 
significant manufacturing or safety issues, it quickly acts to protect 
Americans.

    During the COVID-19 pandemic, FDA is continuing to utilize and 
implement additional alternative inspection tools and approaches while 
postponing foreign and domestic routine surveillance facility 
inspections. This will continue as conditions warrant, with the 
exception of certain mission critical inspections, including pre-
approval and for-cause assignments. Mission critical inspections are 
identified on a case-by-case basis and conducted with appropriate 
safety measures in place.

    Importantly, during this interim period we're evaluating additional 
ways to conduct our inspectional work that would not jeopardize public 
safety and protect both the firms and the FDA staff. This can include, 
among other things, evaluating records in advance of or in lieu of 
conducting an onsite inspection when travel is not permissible, when 
appropriate. We want to assure the American public that we have full 
confidence in the safety and quality of the products we all use every 
day and that the FDA will continue to leverage all available 
authorities to continue to ensure the integrity of the products we 
regulate.

    Today we will provide the committee with an overview of the history 
of FDA's foreign drug inspection program, and the ways it has evolved 
in response to the industry's globalization and changes in law and 
regulation. We will also explain our approach when our inspections 
indicate that a facility does not operate in keeping with established 
quality standards. These standards are known as current good 
manufacturing practices (CGMPs). We will also describe some potential 
enhancements that would enable FDA to complement our foreign drug 
inspection program. The agency believes that over the longer term, we 
should encourage investment in advanced manufacturing technology and in 
strengthening the approach by which manufacturers assure the quality of 
their products. This approach, which we call quality management 
maturity, would provide a safer and more secure drug supply because it 
can help prevent many quality problems from occurring in the first 
place. Advanced technology, which can be more cost-effective and 
environmentally friendly than traditional manufacturing technology, may 
also enable the United States to play a larger role in pharmaceutical 
manufacturing.
           the globalization of pharmaceutical manufacturing
    Over the past 30 years, pharmaceutical manufacturing has become an 
increasingly global enterprise. Beginning in the 1970s, industry moved 
away from the mainland U.S., first to Puerto Rico in response to tax 
incentives, and then to Europe and nations that were developing at the 
time, such as China and India. Developing nations can provide 
significant cost savings to pharmaceutical companies because of their 
lower labor, energy, and transportation costs. In addition, they often 
have weaker environmental regulations than more developed countries. A 
World Bank study estimated that in 2004, China and India held a cost 
advantage of about 40 percent when compared with the U.S. and 
Europe.\1\ FDA's 2011 report, ``Pathway to Global Product Safety and 
Quality,'' also noted that both China and India enjoy a labor cost 
advantage and that manufacturing active pharmaceutical ingredients 
(APIs) in India can reduce costs for U.S. and European companies by an 
estimated 30 percent to 40 percent.\2\
---------------------------------------------------------------------------
    \1\ Bumpas, Janet; Betsch, Ekkehard. Exploratory study on active 
pharmaceutical ingredient manufacturing for essential medicines 
(English). Health, Nutrition and Population (HNP) discussion paper. 
Washington, DC: World Bank: 12-13, Figure 2. http://
documents.worldbank.org/curated/en/848191468149087035/Exploratory-
study-on-active-pharmaceutical-ingredient-manufacturing-for-essential-
medicines. Accessed September 30, 2019.
    \2\ U.S. Food and Drug Administration, ``Pathway to Global Product 
Safety and Quality,'' A Special Report, p. 20. Accessed October 4, 2019 
at https://www.hsdl.org/?view&did=4123.

    As the U.S. drug market shifted toward lower-priced generic drugs, 
manufacturers came under increasing cost pressure and found these 
efficiencies compelling reasons to locate more of their facilities 
overseas, particularly in developing parts of the world. This shift is 
reflected in the Center for Drug Evaluation and Research's (CDER's) 
Site Catalog (``Catalog''), which lists all drug manufacturing 
facilities worldwide that are subject to routine FDA inspections.\3\ As 
of May 2020, 26 percent of facilities manufacturing APIs and 46 percent 
of the facilities producing finished dosage forms (FDFs) of human drugs 
for the U.S. market were located in the U.S. (See Figures 1 and 2)
---------------------------------------------------------------------------
    \3\ The agency updates the Catalog continually, so the information 
it provides is a snapshot in time.

 [GRAPHIC] [TIFF OMITTED] T6220.007


    This movement accelerated in the 2000s, but due to statutory 
mandates for biennial domestic inspections and limited staffing, FDA's 
inspectorate remained focused on domestic manufacturing. Until passage 
of the Food and Drug Administration Safety and Innovation Act (FDASIA) 
in 2012 (Pub. L. 112-144), the agency was legally required to inspect 
manufacturing facilities in the U.S. every 2 years but had no similar 
mandate for the inspection frequency of foreign facilities. This 
resulted in more frequent inspections for domestic facilities.
The Globalization of FDA's Drug Inspection Program
    In response to the move from domestic to global manufacturing and 
the passage of FDASIA, FDA developed and implemented a comprehensive 
strategy to facilitate greater coordination and oversight of medical 
products. In addition to increasing foreign inspections, our efforts 
have included:

        Developing new enforcement and regulatory tools;
        Increasing collaboration with foreign regulators and other 
stakeholders;
        Developing internationally harmonized standards and standards 
convergence;
        Educating foreign industry about FDA requirements;
        Increasing transparency and accountability in the supply 
chain; and
        Establishing foreign offices with an overseas footprint in 
China, India, Europe, and Latin America.

    Responsibility for addressing these global issues is distributed 
across the agency. The Office of Regulatory Affairs (ORA) conducts 
inspections and reviews imported products offered for entry into the 
United States. FDA's product centers focus on international policy and 
outreach that touches on their portfolio of regulated products. The 
Office of Global Policy and Strategy serves as a focal point for FDA-
wide coordination and information-sharing and a point of access to 
multilateral organizations; addresses issues related to international 
trade of regulated products and mutual recognition agreements; enters 
into arrangements that facilitate the sharing of information with 
global regulatory counterparts; and manages FDA's foreign offices 
around the world.

    FDA's drug inspection program shifted from one focused heavily on 
U.S.-based facilities through the early 2000s to a program that, since 
2015, has conducted more foreign than domestic drug inspections. (See 
Figure 3) FDA's drug inspection program is now risk-based. FDA 
prioritizes for inspection facilities deemed higher-risk based on 
specific, defined criteria.

 [GRAPHIC] [TIFF OMITTED] T6220.008


Types of Inspections
    The types of inspections performed in both domestic and foreign 
facilities include pre-approval, surveillance, and for-cause 
inspections.

        Pre-approval inspections: conducted as part of the review of 
an application to market a new brand or generic drug.

        Surveillance inspections: Used to monitor the manufacturing 
process and the quality of distributed drugs. FDA uses the findings to 
evaluate whether a manufacturer is complying with CGMPs. In general, 
the agency does not announce domestic surveillance inspections to the 
company in advance but usually announces foreign surveillance 
inspections in advance, partly due to logistics such as arranging 
travel and access to facilities, securing visas, and partly because of 
the high costs of conducting foreign inspections. Whether inspections 
are announced often depends on particular cases and the history of 
specific facilities.

        For-cause inspections: Triggered when FDA has reason to 
believe that a facility has serious manufacturing quality problems or 
when FDA wants to evaluate corrections that have been made to address 
previous violations. For-cause inspections can be announced or 
unannounced, whether domestic or international, depending on the 
specific situation.

    When the agency has determined the need to do an unannounced 
inspection, FDA has conducted such operations. Over the past several 
years, FDA investigators have conducted unannounced inspections at 
foreign manufacturing facilities, including in India and China. When 
significant issues are uncovered at a foreign manufacturing facility, 
the agency uses additional tools to protect patients including placing 
the facility on import alert, which is used to prevent potentially 
violative products from entering the U.S. market.
                        the site selection model
    To address the need to prioritize use of limited resources, in 2005 
FDA implemented a risk-based approach to drug facility surveillance 
inspections. A mathematical model, the Site Selection Model (SSM), was 
designed to select facilities with the greatest potential for public 
health risk should they not comply with established manufacturing 
quality standards. FDA uses results of the model to prepare a 
prioritized list of facilities for inspection.

    The passage of FDASIA ratified our risk-based approach and removed 
the requirement to inspect domestic facilities on a fixed biennial 
schedule. FDASIA also enhanced our inspectional authority by requiring 
facilities to provide, upon request, records or other information in 
lieu of or in advance of an inspection. Additionally, under another 
provision added by FDASIA, if the owner or operator of a foreign 
facility delays, denies, or refuses to permit inspection, all drugs 
manufactured at that facility would be deemed ``adulterated.''\4\ The 
agency thanks Congress for enacting this law.
---------------------------------------------------------------------------
    \4\ The Federal Food, Drug, and Cosmetic Act (FD&C Act) describes 
different circumstances in which a drug may be considered adulterated. 
For example, a drug might be adulterated where it is contaminated with 
filth, where its purity departs from certain compendial standards, or 
where the conditions of its manufacturing are not consistent with 
current good manufacturing practice (CGMP).

    In 2007, FDA began planning the shift of its investigator workforce 
to cover foreign facilities and to balance allocation between domestic 
and foreign inspections. Both the Generic Drug User Fee Amendments 
(GDUFA) of 2012 and its reauthorization in 2017 provided new resources 
to FDA for inspecting foreign facilities, which as we have noted are 
---------------------------------------------------------------------------
often the source for APIs and FDFs of generic drugs.

    With new resources, FDA has been able to inspect some facilities 
that previously had not been inspected. Catalog showed that as of 
December 2016, there were 963 foreign manufacturing facilities that had 
never been inspected by FDA. All of the 963 \5\ foreign manufacturing 
facilities that GAO reported to be uninspected (as of December 2016) 
have now been addressed. By the end of FY 2019, FDA had inspected 496, 
or approximately 52 percent, of these previously uninspected 
facilities. (See Figure 4) An additional 361 facilities (37 percent) 
were removed from the Catalog because they were no longer part of FDA's 
inspection obligations for a number of reasons, e.g., they had gone out 
of business, were not serving the U.S. market, or had been registered 
with FDA erroneously. In addition, 52, or 5 percent, of the facilities 
had refused inspection;\6\ 34, or 4 percent, of the facilities were 
inaccessible to FDA investigators because they were unable to travel to 
them (e.g., as a result of travel warnings); and 20, or 2 percent, had 
no imported drug shipments to the U.S.
---------------------------------------------------------------------------
    \5\ The 2016 GAO report identifies 965 firms that, at that time, 
had not been inspected. Since then, there were two separate mergers of 
facilities in that count, dropping the number from 965 to 963.
    \6\ Under the FD&C Act, as amended by FDASIA, a drug product will 
be deemed adulterated if it has been manufactured, processed, packed, 
or held in any factory, warehouse, or establishment which delays, 
denies, or limits an inspection, or refuses to permit entry or 
inspection. In such a case, FDA typically will place the firm on import 
alert.

 [GRAPHIC] [TIFF OMITTED] T6220.009


    The SSM is at the core of FDA's surveillance inspection 
prioritization program and ensures a uniform approach for domestic and 
foreign facility inspections. The agency uses the model to calculate a 
score for every facility in its Catalog using risk-based factors. 
---------------------------------------------------------------------------
Factors in the SSM include:

        Inherent product risk. Different types of products carry 
different levels of risk based on characteristics such as dosage form, 
route of administration, or whether the product is intended to be 
sterile. For example, a manufacturing facility that makes sterile 
injectable drug products will have a higher inherent product risk than 
a facility that makes oral capsules.

        Facility type. Risk levels can vary depending on the 
operations that a facility performs. A facility that manufactures drug 
product or active ingredients is higher in risk than a facility that 
only packages drug product.

        Patient exposure. The more products a facility manufactures, 
the more likely a patient is to encounter products made at that 
facility. This refers to both number and types of products 
manufactured. A facility that manufactures many products will have a 
higher exposure factor than a facility that makes few products.

        Inspection history. A facility that has not met established 
quality standards when previously inspected is considered higher risk 
than those that have met standards in the past.

        Time since last inspection. As the time since a facility was 
last inspected increases, the risk that it may not meet established 
quality standards increases, as does the need for re-inspection.

        Hazard signals. Events such as product recalls or 
manufacturers' or patients' reports of quality problems associated with 
a facility increase the risk score when compared with facilities that 
have fewer or no major hazard signals.

    FDA compares a facility's score to others in the Catalog and ranks 
them by risk, with the highest risk assigned for inspection regardless 
of location.

    If the three factors that are fairly static for a facility 
(inherent product risk, facility type and patient exposure) are used to 
risk rank facilities, for inspections conducted from December 2011 to 
May 2020, the median time between inspections was 2.1 years for high-
risk facilities. In general, all high-risk facilities were inspected 
with about the same frequency regardless of location. (See Figure 5)

[GRAPHIC] [TIFF OMITTED] T6220.010


Inspection Outcomes
    Following inspection of a manufacturing facility, FDA classifies 
the inspection as ``no action indicated'' (NAI), ``voluntary action 
indicated'' (VAI), or ``official action indicated'' (OAI).

        No Action Indicated (NAI) means that no objectionable 
conditions or practices (e.g., quality problems) were found during the 
inspection (or they were minor problems that do not justify further 
regulatory action).

        Voluntary Action Indicated (VAI) means objectionable 
conditions or practices were found but the agency is not prepared to 
take or recommend any administrative or regulatory action.

        Official Action Indicated (OAI) means regulatory and/or 
administrative actions will be recommended.\7\
---------------------------------------------------------------------------
    \7\ See ``What Is a Classification?'' at https://www.fda.gov/
inspections-compliance-enforcement-and-criminal-investigations/
inspection-references/inspections-database-frequently-asked-questions.

    Not surprisingly, with more frequent inspections directed to 
higher-risk facilities since 2012, FDA uncovered more deficiencies, 
particularly in foreign facilities that had not been inspected as 
frequently as domestic ones prior to the inception of FDASIA and GDUFA. 
Notably these were foreign inspections that were generally announced to 
facilities in advance (pre-announced). Nevertheless, 90 percent or more 
of the final outcomes of inspections were acceptable (NAI or VAI) in 
all countries or regions except India. (See Figure 6) 
[GRAPHIC] [TIFF OMITTED] T6220.011

    Both foreign and domestic drug manufacturers must meet the same 
regulatory requirements in terms of complying with established quality 
standards (CGMPs). If a facility doesn't meet CGMP standards upon 
inspection, FDA has an array of regulatory tools it can use to 
encourage a company to remediate their manufacturing processes and 
achieve compliance. These tools include warning letters, import alerts, 
injunctions, and seizures.\8\ If the agency observes on a follow-up 
inspection that a facility still does not meet CGMP standards, it can 
escalate the matter as appropriate.
---------------------------------------------------------------------------
    \8\ Import Alert: Import alerts inform the FDA's field staff and 
the public that the agency has enough evidence to allow for Detention 
Without Physical Examination (DWPE) of products that appear to be in 
violation of the FDA's laws and regulations. These violations could be 
related to the product, manufacturer, shipper and/or other information.

    If a foreign facility is found to have quality problems serious 
enough for FDA to classify it as OAI, the agency can place a facility 
on Import Alert, which is used to prevent potentially violative drugs 
from the facility from entering the U.S. Generally, FDA will remove a 
facility from a CGMP-related Import Alert after an onsite re-inspection 
demonstrates that the problems have been remediated and the firm is in 
---------------------------------------------------------------------------
compliance with CGMP.

    Despite the tools at FDA's disposal, we still face some challenges 
in ensuring the safety of imported drugs entering our drug supply. 
Current mandates for facility inspection prior to import or marketing 
of a drug in the U.S. are typically in the context of premarket 
approval requirements. For drugs that are subject to premarket approval 
requirements, FDA has an opportunity to evaluate and inspect the 
manufacturing facilities as part of the application review process. 
However, for drugs that are not subject to premarket approval 
requirements, manufacturers may not be subject to FDA inspection before 
such products are shipped to or distributed in the U.S. Drugs in this 
category typically include OTC monograph drugs and APIs used in 
pharmacy compounding. FDA may be required to engage in more challenging 
and resource intensive efforts to identify and respond to any problems 
that arise subsequently; however, patients may have already been 
exposed to the drugs. For example, in 2019 we issued a warning letter 
to a discount retailer for receiving OTC drugs produced by foreign 
manufacturers with serious violations of CGMPs. The majority of the 
foreign facilities involved had distributed drugs to the U.S. prior to 
FDA inspections.\9\
---------------------------------------------------------------------------
    \9\ https://www.fda.gov/inspections-compliance-enforcement-and-
criminal-investigations/warning-letters/greenbrier-international-inc-
dba-dollar-tree-574706-11062019.
---------------------------------------------------------------------------
FDA's Program Alignment Initiative and Concept of Operations Agreement
    The inspection of drug manufacturing facilities relies on the 
collaboration of two organizations within FDA: ORA, which includes the 
field force of investigators who conduct the inspections, and CDER, 
which includes policy and regulatory experts who establish the policies 
governing drug quality, assess risks, and review action 
recommendations, including OAI recommendations from ORA and for-cause 
inspections to determine the final classification and whether 
appropriate regulatory action is required. CDER also includes assessors 
who evaluate applications for marketing approval and post-marketing 
changes. In May 2017, as part of a broader agency initiative called 
Program Alignment, ORA implemented a program-based management structure 
aligning staff by FDA-regulated product. This created a specialized 
inspectorate focused on human drugs.

    FDA modeled its oversight of the increasingly complex and global 
drug manufacturing supply chain to better integrate facility 
evaluations and inspections for human drugs--to improve our efficiency, 
reach, and the public health. In June 2017, CDER and ORA entered into a 
Concept of Operations \10\ (ConOps) agreement to more effectively 
manage the growing complexity of the pharmaceutical landscape. The 
agreement, Integration of FDA Facility Evaluation and Inspection 
Program for Human Drugs: A Concept of Operations, outlines the 
responsibilities and the workflow for pre-approval, surveillance, and 
for-cause inspections at domestic and international facilities.
---------------------------------------------------------------------------
    \10\ See https://www.fda.gov/media/107225/download.

    As part of ConOps the decision classification workflow process was 
redesigned. (See Figure 7) Under the ConOps agreement, when ORA 
initially recommends classifying the inspection as OAI, CDER reviews 
the report along with any remediation plan or response submitted by the 
company. CDER evaluates the evidence supporting inspection 
observations, potential impact to patient safety, the company's 
responses to the observations, and the adequacy of proposed corrective 
actions. CDER may reclassify the inspection based on this review. CDER 
also can, and has, upgraded classifications to OAI, even when initial 
recommendations from the field are for an acceptable classification. 
This typically occurs with for-cause inspections where the proposed 
---------------------------------------------------------------------------
corrective actions by the firm are determined by CDER to be inadequate.

[GRAPHIC] [TIFF OMITTED] T6220.012


    Implementation of the ConOps has improved consistency in evaluation 
of inspection observations and classifications and has reduced the time 
frames for taking enforcement action. The percentage of cases in which 
CDER concurs with ORA's initial recommendation is known as the 
``concurrence rate.'' (See Figure 8) In 2019, the concurrence rate had 
risen to 73 percent.
[GRAPHIC] [TIFF OMITTED] T6220.013


    The median time for FDA to issue a warning letter for drug 
manufacturing issues has decreased since ConOps was implemented, even 
though the number of warning letters FDA has issued has increased 
during that same time period. (See Figure 9)

[GRAPHIC] [TIFF OMITTED] T6220.014


Building an Investigator Work Force
    Since 2015, FDA has performed more foreign than domestic 
inspections. The agency has done so by using a mixed investigator work 
force consisting of (1) U.S.-based investigators who perform both 
domestic and foreign inspections; (2) a dedicated foreign cadre of 
U.S.-based drug investigators who conduct foreign inspections 
exclusively; and (3) foreign office-based experienced investigators who 
inspect facilities manufacturing human drugs. (See Table 1) The 
majority of foreign inspections are performed by U.S.-based 
investigators.

    Table 1. FDA's Investigator Work Force for Inspections of Foreign
                Facilities Producing Human Drugs, FY 2019
------------------------------------------------------------------------
                                           Number of
                                            Foreign         Estimated
                        Number of      Inspections Each   Percentage of
     Type of        Qualified Foreign   Investigator is    All Foreign
   Investigator    Drug Investigators     Expected to      Inspections
                       in FY 2019        Perform Each    Performed in FY
                                             Year              2019
------------------------------------------------------------------------
U.S.-Based         188                 3-6 foreign       90%
 Investigators                          inspections per
 Performing                             year
 Foreign and
 Domestic
 Inspections
------------------------------------------------------------------------
Dedicated Foreign  11 (included in     16-18             16% (part of
 Drug Cadre Based   the 188 listed      inspections per   the 90% above)
 in U.S.            above)              year
------------------------------------------------------------------------
Foreign Office-    10                  15 inspections    10%
 Based                                  per year
 Investigators
------------------------------------------------------------------------

    During calendar year 2019 ORA successfully hired and on-boarded 24 
pharmaceutical investigators. In 2020 our investigator hiring efforts 
are continuing, and with our new direct hire authority we anticipate 
filling all our pharmaceutical investigator vacancies in 2020. In 
recent years, the Office of Global Policy and Strategy, which oversees 
FDA's foreign offices, has made progress in developing the foreign 
office-based inspectorate. At the same time, FDA's participation in the 
Mutual Recognition Agreement with the European Union has enabled us to 
focus more of our investigator work force on higher-risk facilities 
around the world.

    The agency continues to face challenges, however, in developing the 
investigator work force due to the rigorous nature of the job (e.g., 
foreign travel restrictions and hardship) and competition for qualified 
candidates. Once the agency succeeds in hiring a new investigator, it 
can take 1.5 to 2 years of training to bring them to a fully proficient 
level. FDA also faces challenges to achieving optimum staffing levels, 
such as negotiated agreements with host countries that affect the 
number of investigators who can permanently attach to a foreign office.
COVID-19 and Inspection Impact
    As noted at the beginning of this testimony, as a result of the 
COVID-19 pandemic, most foreign and domestic surveillance facility 
inspections are currently postponed. Only inspections deemed mission-
critical will be considered on a case-by-case basis as this outbreak 
continues to unfold.

    We employ additional tools to ensure the safety of products 
imported to the U.S., which have proved effective in the past. These 
include:

        Denying entry of unsafe products into the U.S.;

        Physical examinations and/or product sampling at our borders;

        Reviewing a firm's previous compliance history;

        Using information sharing from foreign governments as part of 
mutual recognition and confidentiality agreements; and

        Requesting records ``in advance of or in lieu of'' on-site 
drug inspections.

    Through our risk-based import screening tool (PREDICT), FDA has the 
ability to focus our examinations and sample collections based on 
heightened concerns of specific products being entered into U.S. 
commerce. The PREDICT screening continues to adjust risk scores as 
necessary throughout the COVID-19 outbreak.

    FDA investigators remain on the front lines at ports of entry, 
quickly examining and reviewing import entries to help ensure goods 
being imported are consistent with FDA requirements and/or policies. We 
are in close communication with our partners at U.S. Customs and Border 
Protection to proactively identify and mitigate any potential backlogs.

    FDA participates in FEMA Supply Chain Task Force meetings, 
providing regulatory support and subject matter expertise to respond to 
questions concerning medical products identified by FEMA, to facilitate 
the lawful entry and use of imported medical products coordinated 
through FEMA, and to inform medical product supply chain discussions.

    FDA remains committed to using all available tools to oversee the 
safety and quality of FDA-regulated products for American patients and 
consumers. As this remains a dynamic situation, we will continue to 
assess and calibrate our approach as needed and we stand ready to 
resume any postponed inspections as soon as feasible.
FDA's Sampling and Testing Program
    Although application assessments and inspections are a foundation 
of FDA's efforts to maintain a safe, reliable drug supply, the safety 
and effectiveness of drugs depends on a multipronged approach, of which 
quality checks by FDA and manufacturers are a part. To help ensure that 
safe and effective drugs are sold in the U.S., we test selected drugs 
in state-of-the-art FDA laboratories and through research contracts and 
grants. This testing program includes APIs and finished drug products. 
We test using the same standards that are part of the drug approval 
process for identity, strength, and purity.

    Some have questioned why we do not test every drug product before 
it enters the U.S. FDA performs thousands of tests a year pre- and 
post-market. Only a small percentage (about one percent) of drugs that 
are tested fail to meet the established quality specifications.\11\ 
Testing by FDA or third parties of each batch of drug product in U.S. 
commerce, which amounts to millions of batches and trillions of 
individual tablets, capsules, and other dosage forms, before they enter 
the U.S. market would not be feasible at a practical level (in 2018, 
there were almost 186 trillion tablets and capsules on the U.S. market 
\12\) and the current approach is effective and efficient.
---------------------------------------------------------------------------
    \11\ These are established in approved applications, and for many 
drugs also by USP (https://qualitymatters.usp.org/what-usp-standard).
    \12\ IQVIA. National Sales Perspective. 2014-2018. Extracted: 
August 2019.
---------------------------------------------------------------------------
Additional Drug Safety and Surveillance Efforts
    Ongoing review and surveillance efforts can identify new safety 
concerns that require quick action. When they do, the agency makes 
every effort to investigate potential health risks and provide our 
recommendations to the public based on the best available science.

    As an example, in April, FDA requested that manufacturers withdraw 
all prescription and over-the-counter (OTC) ranitidine drugs from the 
market immediately. This was the latest step in an ongoing 
investigation of a contaminant known as N-Nitrosodimethylamine (NDMA) 
in ranitidine medications (one commonly known brand name is Zantac). 
FDA began an investigation into potential NDMA contamination in drug 
products containing ranitidine when it first obtained information that 
there was a possibility of impurities in those products. NDMA is a 
probable human carcinogen (a substance that could cause cancer).

    Last summer, the agency became aware of independent laboratory 
testing that found NDMA in ranitidine. Low levels of NDMA are commonly 
ingested in the diet; for example, NDMA is present in foods and in 
water. These low levels would not be expected to lead to an increase in 
the risk of cancer. However, sustained higher levels of exposure may 
increase the risk of cancer in humans. The agency conducted thorough 
laboratory tests and found NDMA in ranitidine at low levels. At the 
time, the agency did not have enough scientific evidence to recommend 
whether individuals should continue or stop taking ranitidine 
medicines. FDA continued its investigation and warned the public last 
fall of the potential risks and to consider alternative OTC and 
prescription treatments.

    New FDA testing and evaluation confirmed that NDMA levels increase 
in ranitidine even under normal storage conditions, and NDMA has been 
found to increase significantly in samples stored at higher 
temperatures, including temperatures the product may be exposed to 
during distribution and handling by consumers. The testing also showed 
that the older a ranitidine batch is, or the longer the length of time 
since it was manufactured, the greater the level of NDMA, possibly 
resulting in ranitidine product being above the acceptable daily intake 
limit.

    Based on this information, FDA took swift action to assure that 
ranitidine products will no longer be available for new or existing 
prescriptions or OTC use in the U.S.
FDA Encourages Industry to Invest in Mature Quality Management Systems 
        and Advanced Manufacturing Technology
    FDA inspects manufacturing facilities and takes action, if needed, 
to enforce CGMP quality standards and applicable regulations. The 
agency's investigators look for deficiencies in meeting CGMP standards, 
but these assessments do not measure how far the facility is above the 
minimum CGMP. Simple adherence to CGMP standards does not indicate that 
a firm is investing in improvements or planning or deploying advanced 
quality control techniques that could better enable it to prevent 
quality problems leading to supply disruptions.

    This is why it is critical that industry evolve from meeting the 
minimum manufacturing quality threshold to achieving quality management 
maturity. Some pharmaceutical firms have been slow to implement robust, 
mature quality systems and the accompanying quantitative measures of 
quality that have been the foundation of success in other industries, 
such as automotive and aerospace.\13\ These industries exercise quality 
oversight by continuously monitoring quality in real time during 
manufacturing of their products, and promptly correcting operations 
when needed. Numerous organizations and quality experts have worked to 
develop conceptual models and standards for advancing the maturity of 
industrial quality management systems. These models could be used more 
broadly in the pharmaceutical industry to improve the quality and 
reliability of the drug supply.
---------------------------------------------------------------------------
    \13\ Fuhr, Ted, et al., 2015, Flawless--From Measuring Failure to 
Building Quality Robustness in Pharma, McKinsey and Company.

    Many pharmaceutical manufacturers, whether domestic or foreign, 
have been slow to invest in these mature quality management systems 
because the market currently has no visibility into manufacturing 
facilities' quality. This lack of transparency reinforces competition 
based solely on price and disincentivizes companies from making 
investments in upgrading their facilities and quality practices until 
problems become frequent and severe enough to result in supply 
disruptions and drug shortages. As we have stated in our recent report, 
``Drug Shortages: Root Causes and Potential Solutions,''\14\ a way to 
create incentives for manufacturers to invest in product quality is to 
develop and implement a rating system for quality management maturity 
that is based on objective criteria. Such a rating system could enable 
purchasers to compare differences in quality and choose whether to 
reward more reliable manufacturers financially and with increased 
market share.
---------------------------------------------------------------------------
    \14\ https://www.fda.gov/drugs/drug-shortages/agency-drug-
shortages-task-force.

    In addition to quality management maturity, the agency encourages 
pharmaceutical manufacturers to invest in advanced manufacturing 
technology to improve their products and processes. Although widely 
used in some other industries, such as automotive, aerospace, and 
semiconductors, advanced manufacturing is now just beginning to be used 
by pharmaceutical companies. New technologies include ``continuous 
manufacturing'' (CM), wherein the finished drug product or active 
pharmaceutical ingredient is produced as a continuous stream, as 
opposed to traditional batch manufacturing where breaks or stops exist 
between different processing steps. In some examples of advanced 
pharmaceutical manufacturing, production can be continuous from 
chemical synthesis of the active ingredient through production of the 
tablets or other dosage forms. Product quality can be precisely 
controlled with modern automation and control systems and can be 
closely monitored during production by using highly sensitive 
analytical tools. Other examples of advanced manufacturing include 3D 
printing, isolator technology, miniaturization, and robotics.
                               conclusion
    Thank you for the opportunity to discuss FDA's oversight of 
pharmaceutical manufacturing. COVID-19 has provided yet more proof that 
to protect the reliability and availability of drugs to treat Americans 
is of vital importance. We look forward to working with the committee 
and others to strengthen investment in modern manufacturing technology, 
establish incentives for mature quality management systems, and 
consider additional measures.

    We are happy to answer any questions.

                                 ______
                                 
  Questions Submitted for the Record to Mark Abdoo; Judith McMeekin, 
              Pharm.D.; and Douglas C. Throckmorton, M.D.
               Questions Submitted by Hon. Chuck Grassley
                announced versus unannounced inspections
    Question. The Government Accountability Office has noted that 
almost all domestic inspections are unannounced; however, the FDA often 
pre-announces foreign inspections. In some cases, the FDA has provided 
12 weeks of notice before a foreign inspection.

    By providing advanced warning that an inspection will take place, 
doesn't it give bad actors time to hide the true nature of problems at 
their facilities? If not, why not?

    Wouldn't unannounced inspections provide a more accurate view of 
whether or not foreign manufacturers are complying with quality control 
standards? If not, why not?

    Answer. There are many critical variables that are weighed and 
assessed to determine whether an announced or an unannounced inspection 
approach will lead to the best inspectional information.

    Unannounced inspections can facilitate the detection of facility 
violative conditions when firms are intentionally seeking to deceive 
the agency by falsifying records or by hiding violations in advance of 
an inspection. However, FDA investigators are trained to review records 
and to uncover data integrity issues and fraudulent data with 
techniques such as searching data audit trails. Therefore, both the 
hiding of reportable deviations and violations, and falsification of 
records may be uncovered. When the agency receives complaints, reports 
from confidential informants, or other information that suggests that 
serious violations are occurring, unannounced inspections may be used.

    In many cases there are benefits to announced inspections and these 
include fostering a culture of cooperative continuous improvement for 
many establishments. Prior notice of an upcoming inspection ensures the 
correct subject matter experts will be available for an efficient, 
productive inspection and that appropriate firm representatives with 
the right expertise are available during the inspection.

    Furthermore, unannounced inspections become impractical when 
conducting most foreign inspections. Foreign inspections require weeks 
of planning, with additional costs and administrative requirements, 
such as special visas and country permissions. Foreign travel to many 
countries can be difficult due to distance and means of travel, often 
involving many flights, plus train or car travel with one-way travel 
times encompassing entire days. This time and resource investment may 
be wasteful and unproductive if, upon arrival at the facility, FDA 
determines that the firm has ceased manufacturing the product of 
interest, or the firm is not operational (e.g., shut down for 
cleaning), the facility has closed, or key manufacturer representatives 
are not available to participate in the inspection and therefore 
unavailable to respond to investigator questions. This expenditure of 
resources, when unproductive, is a lost resource that would have 
potentially been utilized as capacity to conduct other inspections 
(indirect cost of lost productivity). It is also important to note that 
foreign inspections require visa applications and other notifications 
of foreign governments as noted above. This leads to a possibility that 
manufacturers may become aware through informal channels of an upcoming 
unannounced inspection, eliminating the potential benefits of 
unannounced inspections.

    We strategically continue unannounced inspection on a for-cause 
basis even in the foreign arena. FDA's in-country investigators who are 
attached to FDA's foreign offices conduct unannounced FDA inspections, 
but those resources are limited due to the challenges of recruiting and 
retaining experienced FDA investigators in these positions.

    FDA will continue to actively evaluate establishing criteria to 
assess unannounced inspections in the foreign arena and how those can 
be practically incorporated into operations, balancing the requirements 
necessary to carry out inspectional assignments successfully while 
being good stewards of U.S. government resources to achieve the 
intended public health outcomes.

    Question. When an inspection identifies manufacturing quality 
problems, what does the FDA do to inform entities along the supply 
chain that manufacturing problems have been found?

    Answer. Drug product manufacturers have existing requirements to 
evaluate the quality of components before use in drug product 
manufacturing and conduct investigations and associated follow-up, as 
appropriate.

    When quality problems are identified, FDA may issue warning letters 
to multiple responsible stakeholders within a supply chain. FDA also 
posts warning letters on its website and may also add the firm and 
product to import alerts, which are available to the public and 
industry to inform their compliance decisions. In some instances, FDA 
also maintains an Inspection Classifications Database,\1\ which shows 
inspections conducted by FDA and assessments of regulated facilities. 
It can be used by entities along the supply chain to identify firms 
with a final inspection classification indicating whether the firm is 
in compliance with applicable laws and regulations.
---------------------------------------------------------------------------
    \1\ https://www.fda.gov/inspections-compliance-enforcement-and-
criminal-investigations/inspection-classification-database.

    Seizure and injunction are other possible actions that may be 
considered.
                         cder reclassifications
    Question. This committee has talked with individuals associated 
with FDA's inspection and reporting process and CDER's review of those 
inspections reports. Some have told us that CDER tends to downgrade, or 
reclassify, inspections reports from ``Official Action Indicated'' to 
``Voluntary Action Indicated.''

    Why does CDER have a tendency, according to information provided to 
this committee, to reclassify inspection reports?

    Answer. In June 2017, CDER and ORA entered into a Concept of 
Operations (ConOps) agreement to more effectively manage the growing 
complexity of the pharmaceutical landscape. As part of ConOps, the 
decision classification workflow process for inspections was 
redesigned. Under the ConOps agreement, when ORA initially recommends 
classifying an inspection as Official Action Indicated (OAI), CDER 
reviews the report along with any remediation plan or response 
submitted by the company. CDER evaluates the evidence supporting 
inspection observations, potential impact to patient safety, the 
company's responses to the observations, and the adequacy of proposed 
corrective actions. CDER may reclassify the inspection based on this 
review. CDER also can, and has, upgraded classifications to OAI, even 
when initial recommendations from the field are for an acceptable 
classification. This typically occurs with for-cause inspections where 
the proposed corrective actions by the firm are determined by CDER to 
be inadequate.

    Implementation of the ConOps has improved consistency in evaluation 
of inspection observations and classifications and has reduced the 
timeframes for taking compliance actions, even as the volume of 
compliance actions has increased. The percentage of cases in which CDER 
concurs with ORA's initial recommendation is known as the ``concurrence 
rate.'' The concurrence rate has steadily increased over the last 10+ 
years, indicating a corresponding decrease reclassifications; 
concurrence rates on foreign drug inspections designated OAI were 50 
percent in 1996 and rose to 73 percent in 2019.

    Question. Do you have data on how many inspection reports have been 
reclassified by CDER? If not, why not? If so, will you commit to 
sharing that data with the committee?

    Answer. Since ConOps was implemented, for FY18 and FY19, CDER 
received 351 classification recommendations from ORA. There were 74 
downgrades (25 percent of initial OAI recommendations) as well as 17 
upgrades (30 percent of initial NAI/VAI classifications).

    Question. Please describe the factors CDER considers when 
reclassifying a finding from ``Official Action Indicated'' to a lower 
level.

    Answer. Under the ConOps agreement, when ORA initially recommends 
classifying the inspection as OAI, CDER reviews the report along with 
any remediation plan or response submitted by the company. CDER 
evaluates the evidence supporting inspection observations, potential 
impact to patient safety, the company's responses to the observations, 
and the adequacy of proposed corrective actions. CDER may reclassify 
the inspection based on this review. If CDER determines an enforcement 
action is not warranted, ORA is notified of the downgraded 
classification and provided a written description of the reason(s) for 
downgrade within 40 days. CDER may make this determination based on 
analyses that included evaluation of the evidence to support the 
inspection observations, the impact to patient safety, and the firms' 
responses to the observations and whether their proposed corrective 
actions were adequate.

    Question. In light of the safety issues surrounding foreign drug 
manufacturing discussed during this and previous congressional 
hearings, is the FDA researching any alternative models of monitoring 
the drug supply chain? If so, please explain.

    Answer. Several FDA proposals included in the FY 2021 President's 
Budget request would help the agency in its efforts to further 
strengthen the supply chain and address drug shortages. In particular, 
the request included the proposal, ``Improving Critical Infrastructure 
Through Improved Data Sharing: Requiring More Accurate Supply Chain 
Information.''

    This proposal would help FDA better anticipate and react more 
expeditiously to drug shortages by enabling us to quickly identify all 
manufacturing sites impacted, analyze potential bottlenecks, and 
develop options to remediate shortage risks to the product supply 
chain. For example, having this information available would reduce the 
time FDA staff must spend to determine if a facility is the only 
facility distributing a drug product or API, or to determine which 
firms rely on an API supplier located in an area impacted by a natural 
disaster.

    In addition, FDA works to improve its evaluation of the 
effectiveness of our inspection programs to ensure that our inspection 
capacity, procedures, and techniques are suitable in addressing the 
risks and challenges we face in ensuring drug quality for U.S. 
consumers.

    FDA's Office of Regulatory Affairs (ORA) has an established quality 
management system (QMS) that aims to provide consistent investigational 
processes and work products, meet organizational requirements, and 
enable continual improvement of inspectional operations. The QMS 
ensures investigators can access procedures and instructions necessary 
to perform operational activities in a consistent manner, and provides 
a risk-based approach for capturing, analyzing, and addressing issues. 
The system includes quality control activities to review work products 
and quality assurance activities (such as audits and management 
reviews).

    FDA also evaluates the significance of the findings from each 
inspection to assess the need for further regulatory activity to 
address non-compliance.
                             drug shortages
    Question. In certain instances, the FDA has approved medication 
under Medicare and later discovered that manufacturers have not 
complied with relevant statutes and regulations. In those instances 
where withdrawing approval of a drug would create a shortage, does the 
FDA suspend approval of the drug until compliance is met? If not, what 
steps does the FDA take to bring the manufacturer back into compliance?

    Does the FDA treat drug compliance enforcement action differently 
based on the scarcity of a drug?

    Answer. FDA does not approve drugs specifically for or under 
Medicare; FDA approves drugs for the American public based on the 
safety and efficacy standards established in the Federal Food, Drug, 
and Cosmetic Act, and the Centers for Medicare and Medicaid Services 
(CMS) decides whether and how it will be covered in the programs they 
administer. However, below, we explain the coordination that occurs 
within FDA with respect to compliance actions and the potential for 
shortages of drugs subject to the shortage notification requirement in 
section 506C(a) of the Federal Food, Drug, and Cosmetic Act (FD&C Act).

    As described in FDA's Drug Shortage Management Manual of Policies 
and Procedures (MAPP) (https://www.fda.gov/media/72447/download), the 
Center for Drug Evaluation and Research's (CDER's) Office of Compliance 
works closely with the Drug Shortage Staff before taking any 
enforcement action or issuing a warning letter to determine if the 
action or letter could cause or exacerbate a drug shortage. If it is 
determined that an action or warning letter could lead to or exacerbate 
a shortage, the Office of Compliance works with the Drug Shortage Staff 
and other appropriate offices to evaluate the risks to patients 
associated with a potential shortage and the risks associated with the 
violation involved. As appropriate, the agency may then decide to 
exercise enforcement discretion, as a temporary measure, to help 
prevent or mitigate the potential shortage.

    FDA has used temporary regulatory flexibility and discretion for 
the distribution of certain medically necessary products (as defined in 
the Drug Shortage Management MAPP) that present quality issues with 
measures to mitigate risk in light of the risk to patients of not 
receiving the drug, as follows: filters are supplied with a product to 
remove particulate matter; extra testing for product quality or 
identity is done at the manufacturing facility before releasing the 
product into the marketplace; third-party oversight of production is 
instituted to monitor quality issues; and special instructions are 
provided to health-care professionals/patients.

    FDA has also exercised temporary regulatory flexibility and 
discretion with regard to continued distribution of a drug product to 
mitigate or resolve a drug shortage while FDA reviews a supplement/
proposed change to address a problem with the drug product.

    During a drug shortage, whether or not such mitigating measures are 
taken as a temporary measure, FDA's priority is to restore supplies of 
FDA-approved drugs that comply with applicable standards, and we use 
all of our authorities toward this end. This may include, for example, 
working with sponsors to resolve quality issues, expediting review of 
applications that could address a shortage, or seeking additional 
sources of a drug in shortage.

    Question. What forms of non-compliance does the FDA consider to be 
material to the approval status of a drug?

    Answer. FDA-approved drugs have been shown to be safe and effective 
under applicable provisions of the FD&C Act and its implementing 
regulations. To be legally marketed, approved drugs must meet all 
applicable legal requirements. See generally sections 501, 502, 503 and 
505 of the FD&C Act (21 U.S.C. 351-53, 355). Approval may be withdrawn 
if the standard for withdrawing an approval is met. See section 505(e) 
of the FD&C Act (21 U.S.C. 355(e)); see also 21 CFR 314.150-153.
                              drug testing
    Question. You testified that ``only a small percentage, about 1 
percent, of drugs that are tested [by FDA] fail to meet the established 
quality specifications.''

    How does the FDA commonly procure batches of pharmaceutical 
products for analysis?

    If these products are procured directly from manufacturers, does 
this present the potential for fraud and abuse?

    Describe FDA's programs, if any, to acquire medication samples 
without voluntary submission from manufacturers, including what 
percentage of the FDA's testing comes from such programs.

    Answer. FDA has a long-standing program to regularly sample and 
test marketed drugs and active pharmaceutical ingredients (APIs) for 
conformance to specifications. We select hundreds of samples each year 
based on certain criteria.

        Some testing decisions are event-driven. For example, we might 
test product samples after receiving a pattern of complaints about 
adverse events, quality issues or reduced effectiveness. These reports 
come to FDA consumer complaints, field alert reports and MedWatch: The 
FDA Safety Information and Adverse Event Reporting Program.

        We also rely on the experience of internal and external 
experts to alert us to emerging safety, effectiveness, or quality 
issues with currently marketed drug products. For example, results from 
independent research may require FDA testing and investigation.

    Sometimes, manufacturing or facility concerns may trigger 
additional FDA monitoring and testing. For instance, FDA may sample 
products with difficult manufacturing processes or drug products with 
complex dosage forms such as patches, drugs designed to target a 
specific area, and drugs that release the active ingredient in a 
controlled manner.

    FDA may also sample drugs produced by manufacturing processes that 
require additional controls to assure each dosage unit will perform as 
expected, such as delivering a precise amount of active ingredient 
within a narrower range, because even slight deviations could cause 
quality issues.

    We use a risk-based approach to quality testing. This means that in 
cases where there is a known or likely safety, effectiveness, or 
quality issue with a product, FDA scientists perform tests specifically 
for this vulnerability. For example, if an API is likely to become 
contaminated with a harmful impurity during the manufacturing process, 
FDA tests for that specific impurity, rather than testing for all 
potential impurities.

    Through our risk-based import screening tool, PREDICT (Predictive 
Risk-based Evaluation for Dynamic Import Compliance Targeting), FDA 
focuses agency import resources, including activities such as 
examinations and sample collections, on higher-risk products being 
offered for entry into U.S. commerce. PREDICT uses automated data 
mining, pattern discovery, and automated queries of FDA databases to 
determine the potential risk of a shipment. The analytics tool takes 
into consideration the inherent risk of a product and information about 
the previous history of importers, manufacturers, and shippers. As part 
of our COVID-19 response, FDA has adjusted PREDICT screening to account 
for firms whose foreign inspection was postponed due to COVID-19 travel 
restrictions.

    FDA labs acquire samples for testing by a number of different 
mechanisms, including directly from consumers and purchases from the 
U.S. market via distributors, wholesalers, and retail pharmacies. FDA 
has found that approximately one percent of samples tested, both 
foreign and domestic, fail to meet quality standards. In addition, FDA 
investigators can collect the samples directly at drug manufacturing 
sites and deliver or send them to FDA testing labs (maintaining chain 
of custody). If required, FDA also has the ability to purchase samples 
online while retaining anonymity. Finally, some samples are sent to FDA 
labs directly from manufacturers as the result of information request 
(IR) letters from FDA assessor staff. In many cases, such samples are 
requested to verify test results on the same batches the firms supply 
to FDA. Using this ``trust but verify'' approach, the agency can use 
the most accurate available data to make regulatory decisions.
                          india pilot program
    Question. In 2013 the FDA implemented the India Pilot Program that 
eliminated announced inspections or provided a couple days' worth of 
notice, instead of weeks. The result was an increase in the FDA's most 
serious finding, ``Official Action Indicated.''

    This pilot program was shut down in 2015 by the Obama 
administration without explanation and FDA returned to the previous 
practice of announcing inspections.

    Do any of you know why the Obama administration shut down the India 
Pilot Program?

    Who at the FDA made the decision to end the India Pilot Program?

    Would you describe the pilot program as a success? If not, why not?

    What lessons have you learned from the program that have been 
implemented into FDA practices today?

    Answer. FDA's Office of International Programs, in collaboration 
with FDA's Office of Regulatory Affairs, conducted an initiative 
between January 2014 and August 2015 to reduce the notification time 
for a drug inspection in India to one business day or less. This 
initiative (often referred to as a pilot) allowed for the utilization 
of in-country FDA and State Department resources for logistics (e.g., 
visa invitation letters, hotel reservations).

    In August 2015, FDA decided not to extend the initiative due to the 
following: (1) the lack of a sufficient protocol and evaluation 
criteria for such an initiative limited to a single country and (2) the 
need to analyze the dataset generated during the initiative up until 
that point in order to consider its impact on agency resources, on 
industry operating within India, and on other aspects of FDA's foreign 
inspections program. At this time, FDA is evaluating establishing 
criteria to assess unannounced inspections in the foreign arena.

    As we have stated, the inspection initiative in India was not a 
true ``pilot,'' but we have implemented some best practices that we 
determined were useful from our experiences with the initiative. First, 
we stopped having firms issue letters so that we could get visas for 
our investigators. We also no longer have firms involved in making 
hotel selections or help with other travel arrangements. Finally, we 
began a program where the investigator receives a pre-inspection 
briefing from his or her colleagues at ORA headquarters to improve the 
efficiency and effectiveness of the inspection.
                        supply chain visibility
    Question. According to testimony from the FDA in October 2019, the 
FDA ``has no visibility into which active pharmaceutical ingredient 
supplier a final dosage form manufacturer uses at any given time.'' 
Should FDA have that type of visibility to better ensure quality and 
safety? If not, why not?

    Answer. Yes, it is important for FDA to have this information to 
ensure quality and safety because the lack of adequate information on 
the identity of sites involved in the manufacture of drugs, including 
API suppliers, for U.S. consumers makes it difficult for FDA to 
identify the scope of products that could be implicated, should a 
problem arise.

    In 2017, because this information was not readily available, FDA 
had to expend significant resources to gather this critical 
distribution and supply chain information to address supply disruptions 
caused by the multiple hurricanes in Puerto Rico. This lack of adequate 
insight is particularly an issue with respect to foreign sites as well 
as manufacturers of API used in non-application drugs, such as over-
the-counter (OTC) monograph drugs, (i.e., those for which marketing is 
governed by 505G of the FD&C Act). At least with respect to products 
with approved applications, we have some insight into which API sources 
may be used by the FDF facilities.

    All domestic finished dosage form (FDF) and API establishments are 
required to register with FDA, and all foreign FDF and API 
establishments that manufacture drugs (including APIs) that are 
imported or offered for import into the United States are required to 
register with FDA. However, some foreign API and FDF establishments 
that ship to other foreign establishments prior to the drugs being 
imported or offered for import into the United States currently do not 
register with FDA. Ensuring that all foreign establishments involved in 
the manufacturing of drugs for the U.S. market register with FDA is 
important because, among other things, our risk-based inspection 
paradigm is based on establishment registration.

    Additionally, API intermediate facilities (foreign or domestic) are 
not currently required to register with FDA. The lack of registration 
of a portion of the drug supply chain leaves the agency with 
significant blind spots when working to predict, mitigate, and address 
drug shortages. Without sufficient insight into the upstream supply 
chain for drug products, the agency is often unaware of whether an 
event affecting a particular country or region could potentially 
disrupt the U.S. drug supply, and unable to conduct appropriate 
oversight of potential risks in the drug supply chain.

    Clarifying that registration is required for all foreign 
establishments involved in manufacturing drugs for the U.S. market and 
expressly requiring the registration of API intermediate establishments 
would close a major information gap and help to prevent foreign 
manufacturers from introducing unsafe drugs into the U.S. supply chain. 
FDA is requesting explicit statutory authority along these lines so 
that we can expeditiously collect critical distribution and supply 
chain information and more rapidly improve our ability to address the 
critical public health issue of drug shortages before the next natural 
disaster or unforeseen hazard impacts U.S. patients.

    Question. What has the FDA done to solve these limitations? Please 
describe in detail what FDA could do to shore up these limitations and 
provide greater visibility into the drug supply chain.

    Answer. On March 27, 2020, the President signed into law, the 
``CARES Act,'' Pub. L. 116-136. Among the provisions included was a 
requirement added to the FD&C Act that manufacturers annually report to 
FDA on the ``amount of each drug . . . that was manufactured, prepared, 
propagated, compounded, or processed'' for commercial distribution.

    FDA is leveraging this reporting requirement under the CARES Act so 
that registered drug establishments will submit data in a uniform 
format regarding the volume of APIs and finished dosage forms 
manufactured at each registered facility. However, the volume data 
reporting provided for in the CARES Act did not include the level of 
detail needed for FDA to accurately assess our reliance on certain 
countries to supply APIs for drugs manufactured for distribution in the 
United States.

    During consideration of legislation ultimately enacted as the CARES 
Act, FDA proposed a more extensive set of policy priorities for 
inclusion in the legislation, and still maintains that these policies 
would position the agency to better predict and mitigate drug 
shortages. These policies were included in the FY 2021 President's 
Budget and propose to require more detailed and timely information 
about a product's current supply chain and distribution to help the 
agency better anticipate and react more expeditiously to drug 
shortages. The additional information would enable us to quickly 
identify all manufacturing sites impacted, analyze potential 
bottlenecks, and develop options to remediate shortage risks to the 
product supply chain. For example, having this information available 
would reduce the time FDA staff must spend to determine if a facility 
is the only facility distributing a drug product or API, or to 
determine which firms rely on an API supplier located in an area 
impacted by a natural disaster.

    Specifically, this President's Budget proposal was titled, 
``Improving Critical Infrastructure Through Improved Data Sharing: 
Requiring More Accurate Supply Chain Information.'' This proposal, if 
enacted, would ensure that each FDF facility, API facility, and API 
intermediate facility is registered with FDA, including foreign 
facilities that manufacture products that are indirectly imported into 
the United States. Additionally, the proposal would require regular 
(quarterly) reporting of certain disaggregated manufacturing volume 
data and supply chain information. Specifically, FDF establishments 
would be required to provide information about the volume of each drug 
manufactured for the U.S. market, including the source and amount of 
API from each source used to manufacture the FDFs. API establishments 
would be required to provide information about the volume of API 
manufactured for the U.S. market, including the source and amount of 
API intermediate from each source used to manufacture the APIs.

    Question. What risks to the drug supply chain have been exposed 
and/or increased during the COVID-19 pandemic? What has FDA done to 
bring solutions to mitigate those risks?

    Answer. At this time, FDA is aware that there is an acute demand 
for certain products and disruptions in the supply chain due to COVID-
19, and we are taking proactive steps to make sure that patients can 
access the medications that are medically appropriate and necessary. We 
work with our Federal partners, industry, professional organizations, 
and other stakeholders to identify and address supply chain issues. FDA 
provides technical assistance to other Federal agencies that are 
seeking to prevent and mitigate supply chain disruptions and are 
considering a variety of solutions including increasing U.S. 
manufacturing when possible. We are also working closely with 
stakeholders to establish mitigation strategies and prevent long-term 
supply shortages.

    We work closely with manufacturers to make sure they continue to 
notify FDA, as early as possible, of a permanent discontinuance or an 
interruption in manufacturing that is likely to lead to a meaningful 
disruption in supply to the extent required under section 506C of the 
FD&C Act. This communication and the full cooperation of companies 
providing specific and necessary information is imperative for us to 
have an accurate understanding of the supply landscape and work to take 
proactive steps to mitigate shortages. To help human drug manufacturers 
submit timely and informative notifications, the agency published a 
guidance \2\ in March about these notifications, the timelines that 
manufacturers should follow when notifying FDA, and the details they 
should provide about the discontinuance or interruption of 
manufacturing. We recognize that although some supply disruptions and 
shortages cannot be predicted or prevented, early communication and 
detailed notifications from manufacturers to the agency play a 
significant role in decreasing their incidence, impact, and duration.
---------------------------------------------------------------------------
    \2\ https://www.fda.gov/regulatory-information/search-fda-guidance-
documents/notifying-fda-permanent-discontinuance-or-interruption-
manufacturing-under-section-506c-fdc-act.

    FDA's public drug shortages lists are up-to-date with human \3\ and 
animal \4\ drugs and biological products \5\ that we have determined to 
be in shortage. These shortages are not all the result of COVID-19, 
with many existing prior to the public health emergency as the result 
of market changes and supply challenges. We are updating these lists 
regularly and communicating in real-time so that patients and 
healthcare providers have the most current information on product 
shortages in the United States.
---------------------------------------------------------------------------
    \3\ https://www.accessdata.fda.gov/scripts/drugshortages/
default.cfm.
    \4\ https://www.fda.gov/animal-veterinary/product-safety-
information/current-drug-shortages.
    \5\ https://www.fda.gov/vaccines-blood-biologics/safety-
availability-biologics/cber-regulated-products-current-shortages.

    The pharmaceutical sector relies heavily on foreign sourcing for 
critical components, materials, and finished products. However, use of 
foreign-sourced materials can create vulnerabilities in the U.S. drug 
---------------------------------------------------------------------------
supply chain as evidenced by the COVID-19 public health emergency.

    In response to the presidential executive order on Buy American and 
Hire American (EO 13944), FDA is identifying those essential medicines, 
medical countermeasures, and critical inputs that are essential to have 
available at all times. Additionally, FDA continues its efforts to 
facilitate that use of advanced manufacturing because FDA believes that 
advanced manufacturing technologies could enable U.S.-based 
pharmaceutical manufacturing to regain its competitiveness with foreign 
countries, and potentially ensure a stable supply of drugs critical to 
the health of U.S. patients. Advanced manufacturing offers many 
advantages over traditional pharmaceutical manufacturing, and if the 
United States invests in this technology, it can be used to reduce the 
Nation's dependence on foreign sources of active pharmaceutical 
ingredients (APIs), increase the resilience of our domestic 
manufacturing base, and reduce quality issues that trigger drug 
shortages or recalls.

    In FY 2020, FDA's Center for Drug Evaluation and Research received 
$9M of one-time, supplemental funding that will be used to continue to 
modernize and enhance science in areas related to advanced 
pharmaceutical manufacturing. Knowledge generated from these 
activities, together with the information provided by sponsors or 
applicants, could help enable science- and risk-based assessment and 
inspection; establish best assessment and inspection practices; support 
standard, policy and guidance development; and provide important 
training on novel manufacturing technologies.

    All domestic finished dosage form (FDF) and API establishments are 
required to register with FDA, and all foreign FDF and API 
establishments that manufacture APIs or FDFs that are imported or 
offered for import into the United States are also required to 
register. However, some foreign API and FDF facilities that ship to 
other foreign facilities prior to the drugs reaching the United States 
currently do not register with FDA.

    Foreign or domestic facilities producing API intermediates are not 
required to register with FDA. (An API intermediate is a material 
produced during steps of the processing of an API that undergoes 
further molecular change or purification before it becomes an API.) The 
lack of registration of a portion of the drug supply chain leaves the 
agency with significant blind spots when working to predict, mitigate, 
and address drug shortages. Without sufficient insight into the 
upstream supply chain for drug products, the agency is unaware of 
whether an event affecting a particular country or region could 
potentially disrupt the U.S. drug supply, and is unable to effectively 
conduct appropriate oversight of potential risks in the drug supply 
chain. This is particularly the case for APIs used in non-application 
products (such as over-the-counter (OTC) monograph drugs, i.e., those 
marketed under section 505G of the FD&C Act) because, at least with 
respect to products with approved applications, we have some insight 
into which API sources may be used by the FDF facilities as part of the 
application assessment process.

    Additionally, there are importers that appear to be registering 
manufacturers without their knowledge. As a result, when the agency 
identifies that a potentially hazardous product is in the market or at 
the border pending evaluation, our investigation and discussion with 
the importer and manufacturers are unnecessarily delayed while we work 
to determine the facts of the case, the responsible parties, and the 
most effective path to minimize harm to consumers and patients.

    Another important challenge discussed in the hearings concerns our 
oversight of APIs and FDFs coming into the United States, including 
non-sterile and sterile drugs that do not require an application to be 
marketed, such as APIs for compounding, and APIs for OTC monograph 
drugs as well as FDFs of such drugs. For such drugs not subject to 
premarket approval requirements, manufacturers may not be inspected by 
FDA before such products are shipped to or distributed in the United 
States. FDA can take action if we become aware of a quality problem 
with these drugs; however, patients may have already been exposed to 
the drugs. Compounding this problem, if the agency identifies problems 
with the facilities after the drugs are already on the market, the 
agency lacks authority to mandate recalls for most drugs.

    Question. What percent of total volume of API used to make 
pharmaceuticals intended for the U.S. market comes from China? Please 
answer the same with respect to India.

    Answer. For the reasons described in more detail below, we are 
unable to provide data on the percent of total volume of APIs used to 
make pharmaceuticals intended for the U.S. market that comes from China 
or India. The best data we are able to provide are the percent of 
registered API manufacturers in these countries.

        As of May 2020, 13 percent of the API facilities that supply 
all product types to the United States were located in China.

        As of May 2020, 19 percent of the API facilities that supply 
all product types to the United States were located in India.

    Prior to enactment of the CARES Act on March 27, 2020, registered 
drug establishments were not required to submit consistent data 
regarding the volume of APIs and finished dosage forms manufactured at 
each registered facility. The CARES Act imposed annual volume data 
submission requirements on all drug establishments registered with FDA 
(section 510(j)(3) of the FD&C Act).

    During consideration of the CARES Act, FDA proposed a more 
extensive set of legislative enhancements, reflecting the agency's 
policy priorities, and still maintains that these policies would 
provide the agency with more information about drug supply chains, 
bolstering our ability to predict, prevent, and mitigate shortages. The 
key elements of this proposal are to amend the FD&C Act to:

        Ensure that each finished dosage form (FDF) facility, API 
facility, and API intermediate facility is registered with FDA, 
including foreign facilities that manufacture products that are 
indirectly imported into the United States (i.e., used in foreign 
manufacturing of drug products that are subsequently shipped to the 
U.S.); and

        Require regular (quarterly) reporting of certain disaggregated 
manufacturing volume data and supply chain information. Specifically, 
FDF establishments would be required to provide information about the 
volume of each drug manufactured for the U.S. market, including the 
source and amount of APIs from each source used to manufacture the 
FDFs. API establishments would be required to provide information about 
the volume of APIs manufactured for the U.S. market, including the 
source and amount of API Intermediate from each source used to 
manufacture the APIs.

    However, the additional volume data provided for in the CARES Act 
did not include this level of detail and limits our ability to 
accurately assess our reliance on certain countries to supply APIs for 
drugs manufactured for the United States.

    Question. What percentage of registered fine chemical facilities 
used in the production of API for pharmaceuticals intended for the U.S. 
market are located in China, and what percent of total volume of fine 
chemicals used to make API for pharmaceuticals intended for the U.S. 
market come from China? Please answer the same with respect to India.

    Answer. We are unable to provide this information because as noted 
above, manufacturers of fine chemicals (what we generally refer to as 
API intermediates) are not required to register with FDA, and API 
manufacturers are not required to provide FDA with information about 
the extent of their reliance on their sources of API intermediates. FDA 
has asked for express statutory authority to begin collecting this 
information.

    The CARES Act imposed annual volume data submission requirements on 
all drug establishments registered with FDA (section 510(j)(3) of the 
FD&C Act). However, it did not require the submission of certain 
disaggregated volume data regarding drugs produced by API and FDF 
establishments, such as information about the sources of APIs and API 
intermediates, nor about the amount of APIs and finished dosage forms 
manufactured from each source. Additionally, the CARES Act did not 
impose registration or listing requirements on fine chemical (API 
intermediate) manufacturers.
                           national security
    Question. Please describe the relationship that each of your units 
has with the Office of National Security within the Department of 
Health and Human Services.

    Answer. FDA's Office of Global Policy and Strategy (OGPS) has a 
strong relationship with the Office of National Security (ONS) within 
the Department of Health and Human Services. When appropriate, OGPS 
leadership receives classified briefings from ONS, including briefings 
related to counterintelligence. OGPS leadership also receives a weekly 
unclassified briefing document from ONS. OGPS shares information 
generated at headquarters as well as at the FDA foreign offices with 
ONS when relevant.

    CDER engagement with other Agencies focused on national security is 
coordinated through the Office of Counter-Terrorism and Emerging 
Threats (OCET) in the Office of the Commissioner. Through them, we have 
extensive contacts on matters relating to drug manufacturing and the 
integrity of the supply chain.

    Question. Please describe the steps that you will take to create a 
better relationship between your units and the Office of National 
Security. If such a relationship is not needed, please explain why that 
is the case.

    Answer. Currently OGPS engages with ONS when a specific situation 
requires it to do so. OGPS plans to establish regular meetings with ONS 
to discuss issues of mutual interest. OGPS will work with ONS to 
determine the frequency of such meetings.

    CDER engagement with other Agencies focused on national security is 
coordinated through the Office of Counter-Terrorism and Emerging 
Threats (OCET) in the Office of the Commissioner. Through them, we have 
extensive contacts on matters relating to drug manufacturing and the 
integrity of the supply chain.

    Question. Please describe the national security risks that China 
presents to the drug supply chain.

    Answer. As a sole source for certain essential pharmaceuticals, 
such as crude heparin, antibiotics, essential APIs and API starting 
materials/critical intermediates, China presents as a vulnerability and 
security risk to the U.S. drug supply chain. This has been made clear 
earlier in 2020 as China's role as a major U.S. and global supplier of 
certain medical products led to shortages of critical medical supplies 
during the COVID-19 pandemic.

    The following is a list of potential conditions that could lead to 
further security risks. The list is broken out by short-term/less 
predictable risks and long-term/government policy- or trade-related 
risks.

Short-Term Risks:

      Unexpected supply chain disruptions (e.g., COVID-19, flooding, 
shutdowns, explosions).
      In the event of a natural disaster or pandemic, requirements in 
China to focus on domestic supply, limiting exports to countries like 
the United States.
      Introduction of falsified or substandard products into the 
supply chain.
      Diversion of the supply chain within China or shipping from 
China to an alternate location before arriving in the United States.

Longer-Term Risks:

      Politically motivated shutdown of exports from China.
      Politically motivated price controls by China.
      Lack of intellectual property protection of innovative products.
      Subsidies given to domestic firms in China causing an imbalance 
in competition, driving foreign companies out of the market.

                                 ______
                                 
                Questions Submitted by Hon. John Cornyn
                       supply chain transparency
    Question. Congress took important action as part of the Coronavirus 
Aid, Relief, and Economic Security (CARES) Act (H.R. 748) enacted in 
March. The CARES Act includes several important steps intended to help 
strengthen the pharmaceutical supply chain. Specifically, section 3112 
of the CARES Act increases the transparency of the pharmaceutical 
supply chain by providing FDA with additional information on potential 
disruptions in the supply chain, on manufacturers' contingency plans to 
ensure continued supply and on the volume of medicines manufactured.

    FDA was provided with 180 days to implement these new requirements. 
What is FDA's plan for issuing guidance and ensuring these provisions 
are implemented in a timely manner?

    Answer. The CARES Act amended the Federal Food, Drug, and Cosmetic 
Act (FD&C Act) to require that manufacturers provide FDA with certain 
information about permanent discontinuances and interruptions in 
manufacturing of finished products and active pharmaceutical 
ingredients (APIs). In addition, the CARES Act amended the FD&C Act to 
require that manufacturers develop, maintain, and implement, as 
appropriate, a redundancy risk management plan for certain drugs, APIs, 
and associated devices. These requirements took effect on September 23, 
2020. FDA staff are working to issue guidance for industry to assist 
manufacturers in complying with these new requirements.

    The CARES Act also includes authorities that enhance FDA's ability 
to identify, prevent, and mitigate possible drug shortages by, among 
other things, enhancing FDA's visibility into drug supply chains. 
Specifically, section 3112(e) amends the FD&C Act to require that each 
registered drug establishment annually report the ``amount of each drug 
. . . that was manufactured, prepared, propagated, compounded, or 
processed'' by the registrant for commercial distribution. This CARES 
Act amendment also provides that such ``information may be required to 
be submitted in an electronic format.''

    FDA staff are working to define the data to be reported, create an 
electronic portal for the submission of this information, and determine 
when to begin collecting this information. We will provide further 
updates as our implementation planning continues.
                active pharmaceutical ingredient testing
    Question. Before active pharmaceutical ingredients (APIs) are used 
in finished dosage form manufacture, are they generally tested?

    Answer. Current regulations require drug product manufacturers to 
test all components (ingredients) before use in manufacturing. 
Manufacturers are required to test representative samples of each lot 
of drug product before releasing the product to market. Testing 
requirements also include testing raw materials and API batches before 
use and, where appropriate, testing during the processing of APIs and 
final products. Generally during CGMP inspections, we review the 
records that manufacturers must maintain regarding required testing, 
including testing for the expected and controlled impurities and 
degradation compounds.

    Question. Mr. Abdoo, testimony states that FDA has conducted more 
foreign inspections than domestic since 2015.

    Is there a focus on facilities that produce final dosage forms 
(FDFs) over active pharmaceutical ingredients (APIs)?

    Answer. Any facility that registers their establishment in FDA's 
electronic drug registration and listing system (eDRLS) is subject to 
an inspection as soon as possible following initial registration. If 
the establishment is only associated with a pending NDA, ANDA, or BLA, 
FDA may conduct a pre-approval facility evaluation and inspection as 
part of the application assessment process. If the application is 
approved, all manufacturing facilities identified in the approved 
application that are required to register annually with FDA will be 
included in CDER's Catalog of Manufacturing Sites and will be subject 
to a surveillance inspection on a risk-based schedule in accordance 
with section 510 of the FD&C Act.

    FDA has a publicly available Manual of Policies and Procedures 
(MAPP) 5014.1 that describes the agency's risk-based approach to 
prioritizing and scheduling manufacturing sites for CGMP surveillance 
inspections. One goal of this approach is to achieve parity in 
inspection frequency, meaning equal frequency for sites with equivalent 
risk, regardless of geography (foreign versus domestic). API and FDF 
facilities are prioritized for inspection in accordance with the same 
Site Selection Model.

    Question. If a foreign facility is subject to a for-cause 
inspection, are facilities that source their products notified, and 
what is the procedure for doing so?

    Answer. No, firms that source products from companies that undergo 
a for-cause inspection are not notified of the inspection. FDA 
considers a for-cause inspection to include: (i) follow-up compliance 
inspections performed to verify corrective actions after a regulatory 
action has been taken; (ii) inspections performed in response to 
specific events or information (Field Alert Reports (FARs)), Biological 
Product Defect Reports (BPDRs), industry complaints, recalls, and other 
indicators of defective products, etc.) that bring into question the 
compliance and/or quality of a manufacturing practice, facility, 
process, or drug.

    Follow-up compliance inspections provide focused coverage and 
include the areas of concern, the proposed corrective action plan for 
impacted operations, any implemented corrective actions, and/or the 
deficiencies noted on the Form FDA 483.
                     pharmaceutical product testing
    Question. What percentage of drugs that are sampled and tested by 
FDA fail to meet the established quality specifications?\6\
---------------------------------------------------------------------------
    \6\ Only about 1 percent of drugs that are tested fail to meet 
quality specifications (http://www.fda.gov/news-events/congressional-
testimony/securing-us-drug-supply-chain-oversight-fdas-foreign-
inspection-program-12102019).

---------------------------------------------------------------------------
    Do the products that fail tend to be domestically manufactured?

    Answer. FDA has found that approximately one percent of samples 
tested, both foreign and domestic, fail to meet quality standards. As 
noted in a recent JAMA article authored by FDA scientists, difficult-
to-make prescription pharmaceuticals marketed in the U.S. consistently 
meet quality standards whether they are manufactured in the United 
States or elsewhere. Please see https://jamanetwork.com/journals/
jamanetworkopen/fullarticle/2769690.
                        focus on china and india
    Question. In recent years, the agency has prioritized India and 
China with respect to inspections. This inspectional emphasis is 
further supported by the facts that China and India account for 13 
percent and 18 percent of the global API manufacturing, respectively. 
However, the U.S. and EU still account for 28 percent and 26 percent of 
the global API manufacturing.

    Can you discuss the factors that FDA considers when prioritizing 
inspections in certain countries?

    Answer. The agency utilizes a risk-based mathematical model, the 
Site Selection Model (SSM), to select facilities with the greatest 
potential for public health risk should they not comply with 
established manufacturing quality standards. FDA uses results of the 
model to prepare a prioritized list of facilities for inspection from 
its Catalog of Manufacturing Sites. Factors in the SSM include inherent 
product risk, facility type, patient exposure, inspection history, time 
since last inspection, and hazard signals. FDA compares a facility's 
score to others in the Catalog of Manufacturing Sites and ranks them by 
risk, with the highest risk assigned for inspection regardless of 
location (foreign versus domestic).

    Question. In 2013, FDA created the India Pilot Program that 
eliminated the practice of advanced notice inspections and implemented 
short notice or unannounced examinations of Indian drug manufacturing. 
The new inspection program exposed numerous safety issues and FDA 
issued a nearly 60 percent increase in Official Action Indicated 
findings. The program was shut down in 2015.

    Has FDA applied any lessons learned from the India Pilot Program in 
their approach to foreign inspections since 2015?

    Answer. We have implemented some best practices that we determined 
were useful from our experiences with the initiative. First, we stopped 
having firms issue letters so that we could get visas for our 
investigators. We also no longer have firms involved in making hotel 
selections or help with other travel arrangements. And finally, we 
began a program where the investigator receives a pre-approval briefing 
from his or her colleagues at ORA headquarters to improve the 
efficiency and effectiveness of the inspection.
            access to translators for foreign investigators
    Question. GAO found that FDA was not generally providing 
translators on foreign inspections and was relying on those provided by 
the establishments being inspected.

    Does FDA provide guidelines to foreign facilities for the 
qualifications of the translators they provide?

    Answer. No, FDA does not have formal guidelines for the 
qualifications of translators present at inspections. FDA's current 
practice is to use firm personnel for interpreter/translation services 
when possible. If firm personnel do not primarily speak English, FDA 
will use other sources, such as FDA staff fluent in the language 
appropriate to the inspection or using an agency-contracted interpreter 
through an Interagency agreement with the U.S. Department of State.

    Question. Do you believe there could be a conflict of interest when 
the establishment being investigated is employing the translator?

    Answer. At this time, we rely on information provided by the firm 
during all inspections, including those inspections in the United 
States. As mentioned earlier, investigators are skilled to detect 
inconsistencies in data. We currently do not have data to show that 
firm translation activities have negatively impacted the accuracy of 
information provided. We do intend to evaluate this issue and had 
planned a study to evaluate using our own translation services; this 
has been delayed due to the current public health emergency.

             Questions Submitted by Hon. Patrick J. Toomey
    Question. How did the FDA gather the information necessary to make 
the following statement in March posted to its website: ``The FDA has 
identified about 20 other drugs, which solely source their active 
pharmaceutical ingredients (API) or finished drug products from China. 
We have been in contact with those firms to assess whether they face 
any drug shortage risks due to the outbreak. None of these firms have 
reported any shortage to date. Also, these drugs are considered non-
critical drugs.''

    Answer. FDA conducted a resource-intensive data analysis to gather 
this information. We used multiple FDA sources that maintain data on 
approved application products (New Drug Application (NDA), Abbreviated 
New Drug Application (ANDA), and Biologics License Application (BLA)) 
and sites. These data sources include the Orange Book, CDER Product and 
Site Catalogs, CDER Informatics Platform (Integrity and Panorama), 
Document Archiving, Reporting and Regulatory Tracking System (DARRTS), 
and Electronic Drug Registration and Listing Systems (EDRLS). In 
addition, information was extracted from application forms (356H PDF 
files) submitted by applicants for changes in manufacturing facilities 
linked to applications to verify data accuracy. To identify facilities, 
the data used include the FDA Establishment Identifier (FEI), Data 
Universal Numbering System (DUNS), and location of facility. FDA 
contacted firms, as appropriate, to make assessments about potential 
impacts. Despite our rigorous process to gather this information, there 
continue to be gaps in the visibility that FDA has into foreign supply 
chains.

    Question. Did the FDA gather information on drugs either solely 
made or API solely sourced in any other countries? If not, why? If so, 
what is the comparable data from those other countries?

    Answer. In February 2020, FDA conducted sole source analysis to 
identify drugs whose APIs and/or FDFs were only available from China. 
As the outbreak spread, we began to focus on other impacted and 
potentially impacted countries, such as India, Italy, and the Republic 
of Korea. However, the outbreak quickly became a global pandemic and 
there were many impacted countries. At that point, our analysis changed 
from focusing on individual countries to focusing on drugs deemed 
essential and their global supply chain with any vulnerabilities.

    Question. Can the FDA perform a broader review of drugs that are 
either solely made or contain an API solely sourced outside of the U.S. 
and provide this information on a monthly basis to the public?

    Answer. We monitor all drugs with the potential for shortage, 
including those products which are sole source. Any of these products 
that do fall into shortage are then posted to FDA's shortage list and 
closely monitored, and their status is regularly updated on the drug 
shortage website.

    Question. What are the primary reasons for drug shortages during 
the COVID-19 pandemic?

    Answer. The primary reasons for drug shortages during the COVID-19 
public health emergency are basically two-fold: (1) Increased demand 
for certain drugs to treat patients with COVID-19; and (2) drug supply 
chain disruptions. For the latter, supply chain problems can result 
from interruptions in manufacturing that may be caused by disruptions 
in supply of ingredients, labor shortages, or quality problems.

    Question. Was the information required of manufacturers in the 
CARES Act enough (it required manufacturers to report volume of 
particular medicines by manufacturing site) or is more data needed for 
FDA to fully and accurately determine which drugs have particularly 
vulnerable supply chains?

    Answer. The additional volume data provided for in the CARES Act 
does not include enough detail to enable FDA to accurately assess 
reliance on certain countries to supply APIs for drugs manufactured for 
the United States. The CARES Act imposed annual volume data submission 
requirements on all drug establishments registered with FDA (section 
510(j)(3) of the FD&C Act). However, it did not require the submission 
of certain disaggregated volume data regarding drugs produced by API 
and FDF establishments, such as information about the sources of APIs 
and API intermediates, nor about the amount of APIs and finished dosage 
forms manufactured from each source. Additionally, the CARES Act did 
not impose registration or listing requirements on manufacturers of API 
intermediates.

    During consideration of the CARES Act, FDA proposed a more 
extensive set of legislative enhancements, reflecting the agency's 
policy priorities, and still maintains that these policies would 
provide the agency with more information about drug supply chains, 
bolstering our ability to predict, prevent, and mitigate shortages. The 
key elements of this proposal are to amend the FD&C Act to:

        Ensure that each finished dosage form (FDF) facility, API 
facility, and API intermediate facility is registered with FDA, 
including foreign facilities that manufacture products that are 
indirectly imported into the United States (i.e., used in foreign 
manufacturing of drug products that are subsequently shipped to the 
U.S.); and

        Require regular (quarterly) reporting of certain disaggregated 
manufacturing volume data and supply chain information. Specifically, 
FDF establishments would be required to provide information about the 
volume of each drug manufactured for the U.S. market, including the 
source and amount of APIs from each source used to manufacture the 
FDFs. API establishments would be required to provide information about 
the volume of APIs manufactured for the U.S. market, including the 
source and amount of API Intermediates from each source used to 
manufacture the APIs.

    Question. Given a large percentage of API manufacturers are located 
outside of the U.S., what are the options for increasing data 
reporting? Has FDA engaged with their European counterparts and other 
internal regulatory bodies to triangulate data on API? Is there 
information that other regulatory bodies are requiring or collecting 
that could or should be shared to provide a more complete picture of 
potential API dependence on other countries?

    Answer. FDA participates in the International Active Pharmaceutical 
Ingredient Inspection Programme \7\ that began operating in 2008. The 
international collaboration allows FDA to work with the European 
Medicines Agency (EMA), European Union (EU) authorities, the European 
Directorate for the Quality of Medicines (EDQM), Australia's 
Therapeutic Goods Administration (TGA), Health Canada, the Japanese 
Ministry of Health, Labour and Welfare (MHLW) and Pharmaceuticals and 
Medical Devices Agency (PMDA), and the World Health Organization (WHO) 
to share information on good manufacturing practice (GMP) inspections 
of manufacturers of APIs that are located outside of the participating 
countries. These facilities are largely in India, China, Mexico, and 
southeast Asia.
---------------------------------------------------------------------------
    \7\ https://www.ema.europa.eu/en/news/increasing-oversight-api-
manufacturing-through-international-collaboration.

    In 2018, the group published the Report on the International Active 
Pharmaceutical Ingredient Inspection Programme 2011--2016.\8\ Over 6 
years, 1,333 inspections were carried out at 458 manufacturing sites of 
common interest. These sites were located in 18 different countries, 
most of them in India (49 percent) and China (36 percent). Although the 
group focuses on site-level information, they often discuss product-
level data as needed. The collaboration is ongoing.
---------------------------------------------------------------------------
    \8\ https://www.ema.europa.eu/en/documents/report/report-
international-active-pharmaceutical-ingredient-api-inspection-
programme-2011-2016_en.pdf.

    Additionally, FDA relies on our Mutual Recognition Agreements (MRA) 
with the EU and confidentiality agreements that we have in place with 
other foreign countries with comparable inspectorates to share 
information from drug inspections conducted within each other's 
borders. A full list of countries with whom we have these agreements 
can be found on FDA's website.\9\ MRAs are a tool FDA employs during 
the COVID-19 pandemic when FDA has not been able to conduct onsite 
inspections.
---------------------------------------------------------------------------
    \9\ https://www.fda.gov/international-programs/international-
arrangements/mutual-recognition-agreement-mra.

                                 ______
                                 
                 Questions Submitted by Hon. Todd Young
                   dependence on china/india for apis
    Question. According to FDA's own data, the number of registered 
facilities making active pharmaceutical ingredients (APIs) in China 
more than doubled between 2010 and 2019--and according to Dr. Woodcock, 
the Director of FDA's Center for Drug Evaluation and Research, the 
``increasing number of API manufacturing sites in China and other 
countries suggests that the United States' reliance on Chinese and 
other foreign sources of API is growing.''

    How dependent are we on China, India, or other countries for the 
APIs used in drugs produced for patients in the United States?

    Answer. As of May 2020, the breakdown of facilities manufacturing 
APIs for human drugs in the U.S. market are as follows:


------------------------------------------------------------------------
     Country or Region         Percent of API Manufacturing Facilities
------------------------------------------------------------------------
United States                                                         26
------------------------------------------------------------------------
European Union                                                        26
------------------------------------------------------------------------
India                                                                 19
------------------------------------------------------------------------
China                                                                 13
------------------------------------------------------------------------
Canada                                                                 2
------------------------------------------------------------------------
Rest of world                                                         14
------------------------------------------------------------------------


    This does not include data on the volume of APIs manufactured, but 
rather the number of sites actively manufacturing APIs.

    Prior to enactment of the CARES Act on March 27, 2020, registered 
drug establishments were not required to submit consistent data 
regarding the volume of APIs and finished dosage form drug products 
manufactured at each establishment. However, the CARES Act imposed 
annual volume data submission requirements on all drug establishments 
registered with FDA (section 510(j)(3) of the FD&C Act).

    Question. Through the COVID pandemic, what risks have been exposed 
by China's increasing manufacturing presence?

    Answer. Response included in the answer to the question below.

    Question. Is it the FDA's assessment that we would improve our 
healthcare in the U.S. and increase our resiliency in future pandemics 
by decreasing our reliance on China's manufacturing these drugs?

    Answer. Redundancy and geographic diversity are important keys to 
ensuring a robust drug supply chain. Manufacturers that have multiple 
establishments in different geographic regions have more resilient 
supply chains. A manufacturer's supply chain is even more resilient if 
the manufacturer sources its active pharmaceutical ingredients (APIs) 
from multiple, geographically diverse sources. The resiliency lies in 
the fact that if a natural disaster or disease outbreak affects 
establishments or suppliers in one geographic region, or one of its 
suppliers leaves the market, the manufacturer can utilize other 
establishments not affected by the natural disaster or outbreak or can 
source the API from one of its other suppliers.

    However, FDA cannot prevent manufacturing concentration or require 
redundancy of manufacturing capability and capacity. Nor can FDA 
require a company to manufacture a drug, maintain a certain level of 
inventory of drug product, or reverse a business decision to cease 
manufacturing. We note that the CARES Act amended the FD&C Act to 
require manufacturers of certain drugs, APIs, and associated medical 
devices to develop, maintain, and implement, as appropriate, redundancy 
risk management plans, and FDA recommends that manufacturers of all 
drugs and APIs do so. Such plans can include opportunities for building 
redundant manufacturing capacity, holding spare capacity, or increasing 
inventory levels to lower the risks of shortages; and other 
stakeholders might explore how to incentivize such practices.
                            data limitations
    Question. According to the Director of FDA's Center for Drug 
Evaluation and Research's (CDER) October 2019 Testimony, there are 
significant data limitations relating to manufacturing facilities 
making drugs for the U.S. market--one being that we ``cannot determine 
with any precision the volume of API that China is actually producing, 
or the volume of APIs manufactured in China that is entering the U.S. 
market, either directly or indirectly by incorporation into finished 
dosages manufactured in China or other parts of the world.''

    What has the FDA done to address these limitations?

    Answer. The CARES Act imposed annual volume data submission 
requirements on all drug establishments registered with FDA (section 
510(j)(3) of the FD&C Act). FDA has leveraged data required under the 
CARES Act for registered drug establishments to submit consistent data 
regarding the volume of APIs and finished dosage forms manufactured at 
each registered facility. The CARES Act did not require the submission 
of certain disaggregated volume data regarding drugs produced by API 
and FDF establishments, such as information about the sources of APIs 
and API intermediates, nor about the amount of APIs and finished dosage 
forms manufactured from each source. Additionally, the CARES Act did 
not impose registration or listing requirements on fine chemical (API 
intermediate) manufacturers. The additional volume data provided for in 
the CARES Act did not include information needed for FDA to accurately 
assess our reliance on certain countries to supply APIs for drugs 
manufactured for the United States.

    Question. What needs to be done?

    Answer. The additional volume data provided for in the CARES Act 
does not include enough detail to enable FDA to accurately assess 
reliance on certain countries to supply APIs for drugs manufactured for 
the United States. The CARES Act imposed annual volume data submission 
requirements on all drug establishments registered with FDA (section 
510(j)(3) of the FD&C Act). However, it did not require the submission 
of certain disaggregated volume data regarding drugs produced by API 
and FDF establishments, such as information about the sources of APIs 
and API intermediates, nor about the amount of APIs and finished dosage 
forms manufactured from each source. Additionally, the CARES Act did 
not impose registration or listing requirements on manufacturers of API 
intermediates.

    During consideration of the CARES Act, FDA proposed a more 
extensive set of legislative enhancements, reflecting the agency's 
policy priorities, and still maintains that these policies would 
provide the agency with more information about drug supply chains, 
bolstering our ability to predict, prevent, and mitigate shortages. The 
key elements of this proposal are to amend the FD&C Act to:

        Ensure that each finished dosage form (FDF) facility, API 
facility, and API intermediate facility is registered with FDA, 
including foreign facilities that manufacture products that are 
indirectly imported into the United States (i.e., used in foreign 
manufacturing of drug products that are subsequently shipped to the 
U.S.); and

        Require regular (quarterly) reporting of certain disaggregated 
manufacturing volume data and supply chain information. Specifically, 
FDF establishments would be required to provide information about the 
volume of each drug manufactured for the U.S. market, including the 
source and amount of API from each source used to manufacture the FDFs. 
API establishments would be required to provide information about the 
volume of APIs manufactured for the U.S. market, including the source 
and amount of API Intermediates from each source used to manufacture 
the APIs.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
    Question. On March 28, the FDA issued an Emergency Use 
Authorization (EUA) allowing the Strategic National Stockpile (SNS) to 
distribute chloroquine phosphate that was not approved by FDA for any 
indication, and hydroxychloroquine for COVID-19 treatment. The EUA also 
waived requirements Good Manufacturing Practices (GMP) otherwise 
applicable to the manufacture, processing, packing, or holding of the 
drugs.\10\ The EUA authorized receipt of hydroxychloroquine from Bayer 
originating from uninspected manufacturing facilities in Pakistan. A 
second company, IPCA Laboratories Ltd., manufacturing the drug, and 
reportedly donating 50 million tabs, has been on the FDA Import Alert 
list since 2015, but is now been allowed to export hydroxychloroquine 
sulfate and chloroquine phosphate to the U.S.\11\
---------------------------------------------------------------------------
    \10\ https://www.fda.gov/media/136534/download.
    \11\ https://www.accessdata.fda.gov/cms_ia/importalert_189.html

    Please list all facilities that were allowed to import chloroquine 
and hydroxychloroquine into the United States pursuant to the EUA, 
---------------------------------------------------------------------------
noting those that were had CGMP requirements waived.

    Answer. Authorization was given to import donated chloroquine 
phosphate tablets into the United States twice, as follows:
First Donation of One Million Chloroquine Phosphate Tablets (Original 
        EUA)

API Facility:
IPCA Laboratories Limited (CGMP requirements were waived)
89A-B/90/91
Industrial Estate
PoloGround, Indore--452003
India

Finished Drug Product Facility:
IPCA Laboratories LTD (Unit-I) (CGMP requirements were waived)
C-6, Sara industrial Estate
Chakrata Road
Rampur, Dehradun
248197, Uttarakhand, India
Second Donation of Two Million Chloroquine Phosphate Tablets (Amended 
        EUA)
API Facility:
IPCA Laboratories Limited (CGMP requirements were waived)
89A-B/90/91
Industrial Estate
PoloGround, Indore--452003
India

Finished Drug Product Facility:
Bayer Pakistan Private Limited (CGMP requirements were waived)
C-21, S.I.T.E. Area, Karachi--75700
Karachi, Pakistan

    Bayer donated 3 million tablets of chloroquine phosphate. For the 
first million tablets, the API and product were manufactured at IPCA 
facilities in India. The API manufacturer has not been inspected by 
FDA. IPCA's facilities have had various compliance actions taken 
against them. All known IPCA facilities previously inspected by FDA are 
Official Action Indicated (OAI) and on import alert.

    For the additional 2 million tablets donated, the API was 
manufactured at the same IPCA facility in India as for the first 
donation, while the finished drug product was produced at a Bayer 
facility in Pakistan. Neither facility had been inspected by FDA. As 
FDA has limited information regarding the facility that manufactured 
the API, it is presumed that it may also have a similar or worse 
compliance profile. The agency did not have information from another 
regulatory agency regarding the CGMP status of the Bayer, Pakistan 
facility.

    Given the lack of an approved application and any inspection 
history, FDA conducted tests on samples of the donated chloroquine 
phosphate tablets to help determine their level of quality. The product 
passed compendial testing requirements. In addition, FDA reviewed 
facility and manufacturing information provided by the manufacturers. 
All samples met specifications for compendial testing including 
identity, assay, organic impurities, dissolution, residual solvents, 
and heavy metal analysis. Unknown impurities were identified as ester 
flavorants in the samples. The ester compounds were subsequently 
identified as being associated with fruit flavoring (banana), in 
quantities consistent with low-level contamination. Additional 
screening of the tablets was conducted using LC-MS and no indication of 
any gross contamination was seen. As such, FDA permitted import of 
Bayer's donated chloroquine phosphate tablets into the United States.

    We note that none of the chloroquine phosphate donated was ever 
distributed from the SNS for use under the EUA.

    Question. Please provide all memos and other decision documents 
that support the issuance of the EUA, and the need for GMP to be 
waived.

    Please provide all memos and other decision documents that support 
the removal of hydroxychloroquine sulfate and chloroquine phosphate 
manufactured by IPCA Laboratories Ltd. from the Import Alert list.

    Answer. The import alert has not been lifted for any of the IPCA 
FDA-registered facilities. Prior to ``carving out'' these drugs from an 
import alert, FDA put in place controls for the chloroquine phosphate 
API and hydroxychloroquine sulfate API and tablets from IPCA 
facilities.

    When FDA implements a ``carve-out'' to an import alert, FDA 
stipulates additional controls to balance any particular concerns. The 
following conditions were established of IPCA:

        Independent third-party certification of all batches prior to 
release from site or within 90 days of being released by IPCA's Quality 
Unit; FDA must be immediately notified if the third-party review 
identified any quality defect or data integrity breach.

        None of the batches should involve an OOS result/failure or 
breach of data integrity.

        Each batch must be tested in triplicate and meet the 
appropriate quality standards prior to its release for distribution.

    Separate from the donations to the SNS, there was an existing 
carve-out for chloroquine phosphate API. Also separate from the 
donations to the SNS, FDA subsequently carved out hydroxychloroquine 
sulfate API and hydroxychloroquine sulfate tablets manufactured by IPCA 
to try to help resolve a potential shortage. Hydroxychloroquine sulfate 
tablets and chloroquine phosphate tablets were added to FDA's drug 
shortage list on March 31, 2020. The shortage of chloroquine phosphate 
tablets was resolved May 8, 2020. Consequently, the carve-out for 
chloroquine phosphate was removed on June 22, 2020. The shortage of 
hydroxychloroquine sulfate API and tablets resolved on June 26, 2020. 
The carve-out for hydroxychloroquine sulfate API and tablets was 
therefore removed on June 30, 2020.

    On March 28, 2020, FDA issued an Emergency Use Authorization (EUA) 
to allow hydroxychloroquine and chloroquine products donated to the 
Strategic National Stockpile (SNS) to be distributed and used for 
certain hospitalized patients with COVID-19. These drugs were 
authorized to be distributed as appropriate from the SNS to States for 
doctors to prescribe to certain adolescent and adult patients 
hospitalized with COVID-19, as appropriate, when a clinical trial was 
not available or feasible. The EUA required that fact sheets with 
important information about using chloroquine and hydroxychloroquine in 
treating COVID-19 be made available to health care providers and 
patients, including the known risks and drug interactions. The EUA also 
had mandatory reporting on adverse events.

    The March 2020 EUA was reserved for emergency use only and is not 
the same as an FDA approval or licensure. At the time the EUA was 
issued, the drugs were shown in the lab to prevent growth of the virus 
that causes COVID-19 and there were reports of patients who received 
these drugs and improved. Because of the possibility that chloroquine 
and hydroxychloroquine might have helped very sick COVID-19 patients, 
FDA permitted the drugs to be provided only to certain hospitalized 
patients under the EUA who were unable to be enrolled in clinical 
trials. However, as noted in the authorization letter, clinical trial 
data results, and any information derived from clinical trials, as well 
as clinical trial results from studies of other investigational medical 
products to treat COVID-19, would continue to inform the 
appropriateness of the EUA.

    The Biomedical Advanced Research and Development Authority (BARDA) 
within the U.S. Department of Health and Human Services originally 
requested the EUA covering chloroquine and hydroxychloroquine, and FDA 
granted the EUA on March 28, 2020, based on the science and data 
available at the time. FDA revoked this EUA on June 15, 2020, when it 
determined that the legal criteria for issuing an EUA were no longer 
met. Based on its ongoing analysis of the EUA and emerging scientific 
data, including new clinical trial data, FDA determined that 
chloroquine and hydroxychloroquine are unlikely to be effective in 
treating COVID-19 for the authorized uses in the EUA. Additionally, in 
light of ongoing serious cardiac adverse events and other potential 
serious side effects, the known and potential benefits of chloroquine 
and hydroxychloroquine no longer outweigh the known and potential risks 
for the authorized use. Therefore, the statutory standard for issuance 
of an EUA was no longer met. On June 15, in consultation with FDA, 
BARDA sent a letter to FDA requesting revocation of the EUA based on 
up-to-date science and data. A copy of the letter, FDA's letter 
revoking the EUA, and a memorandum outlining the scientific rationale 
for this decision can be found on the FDA website.

    Question. On April 3, 2020, the FDA issued an EUA for N-95 
respirators which included an Appendix A identifying foreign 
manufacturers authorized to export these devices to the U.S. On May 7, 
2020, the FDA amended the EUA and removed several manufacturers from 
Appendix A.\12\ At the time of the modification, millions of dollars' 
worth of these previously authorized devices had already been imported 
into the U.S.
---------------------------------------------------------------------------
    \12\ https://www.fda.gov/medical-devices/letters-health-care-
providers/certain-filtering-facepiece-respirators-china-may-not-
provide-adequate-respiratory-protection-letter.

    Please provide all memos and other decision documents that 
---------------------------------------------------------------------------
supported the issuance of the April 3, 2020 EUA and the appendix.

    Please provide all memos and other decision documents that 
supported the May 7, 2020 amendment the EUA, and the appendix.

    Answer. The Food and Drug Administration (FDA) has used its 
authority to help increase the availability of personal protective 
equipment (PPE), including respirators, while helping to ensure 
patients and health care workers on the front lines can depend upon 
these products to protect them. One way in which FDA has helped to 
increase the supply of PPE in the United States is by issuing multiple 
emergency use authorizations (EUAs) for filtering facepiece respirators 
(FFRs), surgical masks, face shields, and associated decontamination 
systems when we determine that the statutory standard has been met. FDA 
has continued to evaluate these EUAs and has revised them when 
appropriate based on the available information to meet the changing 
needs of the public health emergency and to help ensure that patients 
and health-care providers have access to the PPE they need.

    In terms of the EUA in question, FDA issued the EUA for Non-NIOSH-
Approved Disposable Filtering Facepiece Respirators (FFRs) manufactured 
in China on April 3, 2020 to authorize the emergency use of certain 
FFRs for use by health-care personnel in health-care settings in 
accordance with CDC recommendations during FFR shortages caused by 
COVID-19. Respirator models were authorized by the April 3, 2020 EUA 
when they were shown to meet the eligibility criteria which included 
respirator particular product standards used in other countries that 
are similar to the standard NIOSH uses for NIOSH-approved N95 
respirators.

    FDA first issued an EUA in March to CDC-NIOSH for authorization of 
NIOSH approved respirators that appeared in NIOSH's CEL list. FDA also 
issued an EUA for ``Imported non-NIOSH-approved disposable FFRs'' based 
on respirator standards used in other countries that are similar to the 
standard used for NIOSH-approved N95 respirators but excluded 
respirator models manufactured in China from this second EUA at the 
time because FDA was concerned about substandard respirators 
manufactured in China being imported into the U.S. However, as 
respirator shortage concerns for healthcare personnel worsened, FDA 
sought additional mitigations to increase availability of respirators. 
One of those actions included issuing a third FFR-related EUA in April, 
2020, the scope of which was limited to respirators manufactured in 
China, with narrow parameters (also referred to as eligibility 
criteria). FDA has revised these parameters and reissued this EUA as 
appropriate based on new information that showed, among other things, 
that unscrupulous actors had been using the dire need for PPE to take 
advantage of the unprecedented pandemic. For transparency, FDA has 
maintained a list of respirator models on its website that FDA has 
confirmed meet the eligibility criteria and that are authorized by this 
EUA: https://www.fda.gov/media/136664/download.

    FDA's activities in connection with this EUA demonstrate FDA's 
vigilance in adapting to changing circumstances to help ensure quality 
products are available for health-care providers. Among other things, 
FDA's reissuances of this EUA have been based on new information 
collected as a result of FDA's increased screening of imported 
respirators and coordination with CDC/NIOSH to test certain lots of 
imported respirators. A summary of the reissuances of this EUA follows:

        On May 7, 2020, FDA revised and reissued this EUA in response 
to new information from CDC/NIOSH as follows:
          Revised the eligibility criterion that authorized 
respirator models based on performance to standards documented by 
independent laboratory testing. As a result of this revision, some 
respirator models were no longer within the scope of the authorization 
and so were accordingly removed from Appendix A.
          Revised the scope to add a third eligibility 
criterion that authorized respirator models previously listed in 
Appendix A under the April 3, 2020 letter of authorization if:
            The respirator model was tested by NIOSH within 45 
calendar days of the EUA issuance; and
            Testing results indicated a minimum and maximum 
filtration efficiency greater than or equal to 95 percent.
          Removed the ability of importers to request 
addition of respirator models to Appendix A of the EUA and added a 
requirement directing manufacturers to provide a list of authorized 
importers to FDA; and
          Added recognition of the Chinese National Medical 
Products Administration (NMPA) registration certification that can be 
verified by the FDA as an eligibility criterion to the scope of 
authorization.
          As explained in the reissued May 7, 2020, Letter 
of Authorization, manufacturers who had respirators that were no longer 
authorized had up to 45 days to have their respirators tested by NIOSH 
per the revised third criterion. FDA and NIOSH tested respirators from 
already-imported lots of respirators or once they arrived at a U.S. 
port of entry. Final test results are posted on the NIOSH website,\13\ 
Respirator Assessments to Support the COVID-19 Response.
---------------------------------------------------------------------------
    \13\ https://www.cdc.gov/niosh/npptl/respirators/testing/
default.html.

        On June 6, 2020, FDA again revised and reissued the EUA based 
on the available information at the time to change the Scope of 
Authorization by revising the eligibility criteria to narrow the 
jurisdictions under which respirator models would be authorized and to 
provide that authorized respirators under this EUA will would no longer 
---------------------------------------------------------------------------
be authorized if they had been decontaminated.

        On October 15, 2020, FDA again reissued the EUA. Under the 
June 6, 2020 version of this EUA, a respirator was authorized if it met 
any of three predetermined eligibility criteria. Effective October 15, 
2020, the EUA no longer includes the three eligibility criteria, 
meaning FDA will no longer review requests nor add to the list of 
authorized respirators--known as Appendix A--of this EUA based on those 
criteria. Specifically, FDA reissued the EUA to revise the Scope of 
Authorization to authorize only those respirators listed in the EUA's 
Appendix A as of the date of this reissuance. This reissuance was 
prompted, in part, by a respirator shortage assessment conducted by FDA 
to understand current product availability for both NIOSH-approved N95s 
and KN95 respirators and use practices for each. The assessment showed 
that the KN95 respirator models authorized by this EUA meet the demand 
for these respirators. As part of this assessment, the agency heard 
directly from health-care personnel that the KN95 design has limited 
adoption in health-care settings; from distributors that imported, non-
NIOSH-approved product from China is sitting in warehouses unused; and 
from manufacturers that NIOSH-approved N95 production is increasing. 
Additionally, CDC/NIOSH continues to issue more N95 approvals.

    As a result of this EUA's latest reissuance, FDA expects that staff 
and agency resources that were devoted to reviewing submissions to be 
added to Appendix A under the June 6, 2020 EUA's eligibility criteria 
can instead focus on other critical needs during the COVID-19 public 
health emergency, including continuing to work with CDC/NIOSH to help 
facilitate the availability of respiratory protection that meets the 
applicable standards and demands of health-care personnel.

    FDA continues to evaluate EUAs and its policies for medical 
products during the pandemic and will make additional updates as 
appropriate to meet the needs of patients and our health care workers 
on the front lines of the United States response. If the committee 
would like more information on the FDA EUA for Non-NIOSH Approved 
Disposable Filtering Facepiece Respirators Manufactured in China, the 
agency would be happy to discuss a follow-up briefing.

    Question. The Government Accountability Office has noted the FDA's 
history of issuing exceptions that may allow poor quality drugs to be 
imported into the United States. Please provide lists of the following:

    All instances since October 1, 2015 when the FDA downgraded a field 
inspector's recommended Official Action Indicated.

    Answer. The data included in this response are limited to foreign 
inspections to ensure the data reflects the intent of the question as 
posed by the opening paragraph's mention of imported drugs. A downgrade 
is defined as an initial ORA recommendation of OAI and a final 
classification of VAI or NAI.


------------------------------------------------------------------------
 Fiscal Year        Concur             Downgrade             Total
------------------------------------------------------------------------
2014                    40 (43%)            52 (57%)                  92
------------------------------------------------------------------------
2015                    36 (45%)            44 (55%)                  80
------------------------------------------------------------------------
2016                    75 (51%)            73 (49%)                 148
------------------------------------------------------------------------
2017                    83 (70%)            35 (30%)                 118
------------------------------------------------------------------------
2018                   106 (69%)            47 (31%)                 153
------------------------------------------------------------------------
2019                    69 (71%)            28 (29%)                  97
------------------------------------------------------------------------

    Question. All instances since October 1, 2015 when the FDA has 
allowed imports from a facility that has received an Official Action 
Indicated finding.

    Answer. If a foreign facility is found to have quality problems 
serious enough for FDA to classify it as OAI, the agency can place a 
facility on Import Alert, which is used to prevent potentially 
violative drugs from the facility from legally entering the United 
States. As part of the OAI evaluation process, FDA considers if any 
drug shortages could occur or if any existing shortages could be 
exacerbated as a result of potential compliance actions. If needed, FDA 
will consider Import Alert product carve-outs to alleviate potential or 
existing drug shortages. When FDA implements a product carve-out to an 
Import Alert, FDA stipulates additional controls to balance any 
particular concerns with importing such products. Generally, FDA will 
remove a facility from a CGMP-related Import Alert after an onsite re-
inspection demonstrates that the problems have been remediated and the 
firm is in compliance with CGMP.

    Question. All instances when the FDA has allowed a facility under 
Import Alert to import drugs into the United States.

    Answer. From FY2016 through FY2019, CDER issued 74 Import Alert 
product carve-outs associated with 14 facilities. These products 
include drug products, active ingredients, and starting materials. Of 
the 14 facilities with Import Alert product carveouts, nine facilities 
imported drugs to the United States when the carveout was active. In 
this same time period, CDER removed 63 product Import Alert carve-outs 
associated with seven facilities.

                                 ______
                                 
             Questions Submitted by Hon. Benjamin L. Cardin
                    covid-19-related drug shortages
    Question. Prescription drug shortages have been a persistent and 
troubling occurrence, with at least 200 drugs currently in shortage. In 
February, I wrote to FDA Commissioner Hahn on the issue of drug 
shortages related to the COVID-19 pandemic. I was concerned then that 
COVID-19 would worsen domestic drug shortages.

    We have also seen new drug shortages tied directly to COVID-19. 
Hospitals have struggled to secure an adequate supply of drugs for 
intubating COVID-19 patients who require ventilators as well as common 
antibiotics and other drugs used for general surgery.

    How is the FDA planning to ensure commonly used, multi-purpose 
drugs that are currently in COVID-19 clinical trials, are still 
available for people who rely on these medications? For example, the 
antibiotic azithromycin is being reported as in shortage by Maryland's 
hospitals and the FDA.

    Some of the critical medications identified by Maryland's hospitals 
have been identified by the FDA as being in shortage for over a month. 
As more States begin to re-open and hospitals resume non-emergent 
procedures, what is the FDA's plan for supporting the supply chain, 
especially for medications used in general surgery and mechanical 
ventilation?

    Given the increasing cases of Multi-inflammatory Syndrome in 
children, how is the FDA planning to ensure certain medications used 
for pediatric mechanical ventilation and the treatment of these 
patients, are in sufficient supply?

    Answer. When FDA identifies potential shortages or supply 
disruptions of medical products, we use all available tools to help 
prevent the shortage when we can, to mitigate the impact on U.S. 
patients and health-care professionals, and to share information with 
them.

    We work closely with manufacturers to make sure that, to the extent 
required by section 506C of the FD&C Act, they notify FDA, as early as 
possible, of a permanent discontinuance or an interruption in 
manufacturing that is likely to lead to a meaningful disruption in 
supply in the U.S. This communication and the full cooperation of 
companies providing specific and necessary information is imperative 
for us to have an accurate understanding of the supply landscape and 
work to take proactive steps to prevent and mitigate shortages. To help 
human drug manufacturers submit timely and informative notifications, 
the agency published a guidance \14\ in March about these 
notifications, the timelines manufacturers should follow when notifying 
FDA, and the details they should provide about the discontinuance or 
interruption of manufacturing.
---------------------------------------------------------------------------
    \14\ https://www.fda.gov/media/136486/download.

    In addition to the requirement that certain manufacturers submit 
timely notification of discontinuances and interruptions in 
manufacturing, we have asked manufacturers to evaluate their entire 
supply chain, including active pharmaceutical ingredients, finished 
dosage forms, and any components that may be impacted in any area of 
---------------------------------------------------------------------------
the supply chain due to the COVID-19 outbreak.

    COVID-19 has led to an increased population with critical illness, 
necessitating sedation drug products for mechanically ventilated 
patients. As a result, there is a shortage of FDA-approved propofol 
available for use in mechanically ventilated critically ill patients, 
as well as shortages of alternative FDA-approved drugs like 
dexmedetomidine, which is approved for sedation of mechanically 
ventilated patients in the ICU setting. On May 8th, FDA issued an 
Emergency Use Authorization (EUA) for emergency use of the Fresenius 
Propoven 2 percent Emulsion to maintain sedation via continuous 
infusion in patients older than 16 who require mechanical ventilation 
in an ICU during the COVID-19 public health emergency. This was 
because, based on the totality of scientific evidence available, FDA 
concluded that it is reasonable to believe that the Fresenius Propoven 
2 percent Emulsion may be effective to maintain sedation via continuous 
infusion in patients greater than 16 years old with suspected or 
confirmed COVID-19 who require mechanical ventilation in an ICU 
setting.

    Additionally, FDA has issued guidances setting forth: (1) a 
temporary policy for outsourcing facilities to compound certain human 
drugs for hospitalized patients when hospitals experience difficulties 
accessing certain drugs to treat patients with COVID-19 and (2) 
temporary limited flexibility for State-licensed pharmacies (including 
hospital pharmacies), Federal facilities and outsourcing facilities 
that repackage or combine FDA-approved propofol products for hospitals 
that are having difficulty obtaining adequate supplies of the FDA-
approved version in the sizes they use to support or treat patients 
with COVID-19. In anticipation of increased demand for certain drugs, 
FDA has also published product-specific guidances to support generic 
drug development, including for azithromycin, propofol, and 
hydroxychloroquine, among others.

    FDA prioritizes review of any newly submitted Abbreviated New Drug 
Applications (ANDAs) to ensure efficient allocation of limited agency 
resources to areas where priority review is most likely to meaningfully 
increase generic drug access and ensure fairness to applicants, such as 
was done for chloroquine phosphate and hydroxychloroquine sulfate. 
Where appropriate we have expedited application assessments--including 
supplements--to help ensure adequate drug supply for COVID-19 patients.

    Finally, per the executive order issued on August 6, 2020, FDA is 
working to identify vulnerabilities in the supply chain for essential 
medicines, medical countermeasures, and critical inputs and to mitigate 
those vulnerabilities.
                 national security supply chain lessons
    Question. Coronavirus is a wake-up call to the United States to 
begin to reclaim the control of our medical supply chain.

    What are the key lessons we have learned from crises affecting our 
supply chain and how they may impact national security?

    Answer. In October 2019, the FDA-led Drug Shortage Task Force 
published its report, ``Drug Shortages: Root Causes and Potential 
Solutions'' (updated February 2020),\15\ which examines the underlying 
factors responsible for drug shortages and recommends enduring 
solutions. The report identifies economic forces behind the three root 
causes for drug shortages, summarized as: (1) lack of incentives to 
produce less profitable drugs, (2) lack of market recognition and 
rewards for manufacturers with mature quality management systems, and 
(3) logistical and regulatory challenges that make it difficult for the 
market to recover from a disruption.
---------------------------------------------------------------------------
    \15\ https://www.fda.gov/media/131130/download.

    In October 2019 \16\ and again in December 2019,\17\ Dr. Janet 
Woodcock, Director, FDA Center for Drug Evaluation and Research (CDER), 
testified on safeguarding our pharmaceutical supply chains before the 
Health Subcommittee of the House Energy and Commerce Committee. Dr. 
Woodcock stated, ``The security of the Nation's supply rests on three 
main factors: freedom from dependence on foreign sources of API; the 
resilience of our domestic manufacturing base; and the reliability of 
the facilities that make products for the U.S. market.'' The COVID-19 
pandemic has highlighted the need to repatriate some manufacturing to 
the United States and to increase the resilience and reliability of the 
supply chain by adopting advanced manufacturing technology.
---------------------------------------------------------------------------
    \16\ https://energycommerce.house.gov/committee-activity/hearings/
hearing-on-safeguarding-pharmaceutical-supply-chains-in-a-global-
economy.
    \17\ https://energycommerce.house.gov/committee-activity/hearings/
hearing-on-securing-the-us-drug-supply-chain-oversight-of-fda-s-
foreign.

    All domestic finished dosage form (FDF) and API establishments are 
required to register with FDA, and all foreign FDF and API 
establishments that manufacture APIs or FDFs that is imported or 
offered for import into the United States are also required to 
register. However, many foreign FDF and API establishments incorrectly 
interpret the establishment registration requirements to only apply to 
those foreign establishments that directly ship to the United States. 
As a result, some foreign API and FDF facilities that ship to other 
foreign facilities prior to the drugs reaching the United States 
---------------------------------------------------------------------------
currently do not register with FDA.

    Foreign or domestic facilities producing API intermediates are not 
required to register with FDA. (An API intermediate is a material 
produced during steps of the processing of an API that undergoes 
further molecular change or purification before it becomes an API.) The 
lack of registration of a portion of the drug supply chain leaves the 
agency with significant blind spots when working to predict, mitigate, 
and address drug shortages. Without sufficient insight into the 
upstream supply chain for drug products, the agency is unaware of 
whether an event affecting a particular country or region could 
potentially disrupt the U.S. drug supply and is unable to effectively 
conduct appropriate oversight of potential risks in the drug supply 
chain. This is particularly the case for non-application products (such 
as products marketed pursuant to an over-the-counter (OTC) monograph) 
because, at least with respect to products with approved applications, 
we have some insight into which API sources may be used by the FDF 
facilities.

    Additionally, there are importers that appear to be registering 
manufacturers without their knowledge. As a result, when the agency 
identifies that a potentially hazardous product is on the market or at 
the border pending evaluation, our investigation and discussion with 
the importer and manufacturers are unnecessarily delayed while we work 
to determine the facts of the case, the responsible parties, and the 
most effective path to minimize harm to consumers and patients.

    Another important challenge discussed in the hearings concerns our 
oversight of APIs and FDFs coming into the United States, including 
non-sterile and sterile drugs that do not require an application to be 
marketed, such as API for compounding, and API for OTC monograph drugs 
as well as FDFs of such drugs. Under current law, these drugs can be 
distributed to the U.S. market even if FDA has not yet had an 
opportunity to evaluate and inspect the manufacturing facilities. This 
situation puts patients at risk since they may end up taking these non-
application drugs before the agency can evaluate whether or not the 
manufacturing facility is conforming with current good manufacturing 
practice (CGMP) requirements. Examples of products include OTC 
eyewashes, hand sanitizers, and ointments. In addition, the agency does 
not have authority to mandate recalls for most drugs.

    Question. How do we protect our supply chain from these issues?

    Answer. The Drug Shortage Task Force Report, mentioned above, also 
recommended enduring solutions for drug shortages, including: (1) 
creating a shared understanding of the impact of drug shortages on 
patients and the contracting practices that may contribute to 
shortages; (2) developing a rating system to incentivize drug 
manufacturers to invest in quality management maturity for their 
facilities; and (3) promoting sustainable private sector contracts 
(e.g., with payers, purchasers, and group purchasing organizations) to 
make sure there is a reliable supply of medically important drugs. 
While these recommendations are not directed specifically toward supply 
chain disruptions, they may serve to encourage supply redundancy and 
more robust supply chains.

    These are long-term solutions that will require private as well as 
public efforts and a change in business practices. Over the shorter 
term, FDA has supported the development of ICH Guideline Q12: Technical 
Regulatory Considerations for Pharmaceutical Product Lifecycle 
Management, which will improve the resilience of the manufacturing base 
by reducing the regulatory burden on companies wishing to expand 
production capacity or upgrade their facilities. FDA is also developing 
guidances for industry on risk management plans to prevent or mitigate 
the risk of drug shortages and improved information sharing.

    In 2014, FDA launched the Emerging Technology Program (ETP), which 
encourages and supports the adoption of innovative technology to 
modernize pharmaceutical development and manufacturing through close 
collaboration with industry and other stakeholders starting with early 
technology development.

    Question. Looking ahead, how do we diversify the American health-
care system's manufacturing supply chain?

    Answer. As Dr. Janet Woodcock mentioned in her October 2019 
testimony, adoption of advanced manufacturing technologies would 
support the repatriation of some of pharmaceutical manufacturing to 
U.S. soil. Using traditional manufacturing, the United States is at a 
significant disadvantage to China and India because of their lower 
labor, materials, transportation, and real estate costs and weaker 
environmental regulations. Advanced manufacturing, which is much more 
efficient and has a smaller environmental impact, can offset foreign 
countries' advantages and enable the United States to rebuild its 
pharmaceutical manufacturing base.

    Question. How do we incentivize domestic manufacturing?

    Answer. FDA continues to work with relevant stakeholders (e.g., 
other Federal agencies and drug manufacturers) to facilitate the 
adoption of advanced manufacturing technologies as one of the proactive 
approaches to prevent drug shortages and ensure continuous supply of 
critical drugs in the United States. Advanced manufacturing technology, 
which can be more cost-effective and environmentally friendly than 
traditional manufacturing technology, may enable the United States to 
play a larger role in pharmaceutical manufacturing. These include 
initiatives to enhance the efficiency of drug manufacturing by 
utilizing technology (such as through the use of 3D printing, 
miniaturization, continuous manufacturing, and other techniques). By 
supporting education for a domestic workforce trained in these areas, 
skilled U.S. workers would be able to be part of this emerging trend in 
drug manufacturing. By moving from batch-to-batch production to 
continuous manufacturing, drugs can be produced much more quickly, and 
the quality is much more uniform. As part of the COVID-19 response, the 
Department has engaged companies to help promote domestic manufacturing 
and additional sources of medical products.

                                 ______
                                 
              Questions Submitted by Hon. Robert Menendez
    Question. The FDA's contradictory statements and actions related to 
hydroxychloroquine and chloroquine have sown confusion and potentially 
caused harm and even death among COVID-19 patients. Will the FDA be 
revaluating how they issue Emergency Use Authorizations (EUAs) for 
other potential COVID-19 treatments to ensure the issues surrounding 
the EUAs for hydroxychloroquine and chloroquine are not repeated?

    Answer. Under the criteria set forth in section 564 of the Federal 
Food, Drug, and Cosmetic Act, FDA considers the totality of scientific 
data available when determining whether to issue an Emergency Use 
Authorization (EUA). If, based on the totality of the scientific 
evidence available, it is reasonable to believe that the product may be 
effective for the specified use, FDA may authorize its emergency use, 
provided that other statutory criteria for issuing an EUA also are met. 
For example, FDA must determine whether the known and potential 
benefits of the product, when used to diagnose, prevent, or treat the 
identified disease or condition, outweigh the known and potential risks 
of the product.

    When FDA issued the March 28, 2020, EUA for chloroquine and 
hydroxychloroquine, the results of clinical trials were not yet 
available; however, lab data and anecdotal clinical evidence suggested 
that those drugs could potentially be effective in treating severe 
cases of COVID-19. Applying the section 564 criteria to assess the 
evidence available at that time, as well as to assess the known and 
potential benefit of the products versus the known and potential risks 
at that time, FDA issued the EUA.

    As further required under section 564, FDA continued to review the 
appropriateness of the EUA as the results of clinical trials and other 
evidence became available. Based on this continuing review, on June 15, 
2020, FDA determined that these drugs were unlikely to be effective in 
treating severe cases of COVID-19 and that statutory criteria for 
issuance were no longer met. Therefore, FDA revoked the EUA. The agency 
notes that during a public health emergency, EUAs are processed 
expeditiously to permit the availability of promising treatments. Each 
EUA is evaluated independently, as products and circumstances are 
unique to each EUA.

    Question. Please describe, in detail, the FDA's decision-making 
process to issue an EUA for hydroxychloroquine and chloroquine on March 
28, 2020, including all communications with White House officials on 
this topic. Additionally, please provide copies of any relevant 
communications.

    Answer. On March 28, 2020, FDA issued an Emergency Use 
Authorization (EUA) to allow hydroxychloroquine and chloroquine 
products donated to the Strategic National Stockpile (SNS) to be 
distributed and used for certain hospitalized patients with COVID-19. 
These drugs were authorized to be distributed from the SNS to States 
for doctors to prescribe to certain adolescent and adult patients 
hospitalized with COVID-19, as appropriate, when a clinical trial was 
not available or feasible. The EUA required that fact sheets with 
important information about using chloroquine and hydroxychloroquine in 
treating COVID-19 be made available to health-care providers and 
patients, including the known risks and drug interactions. The EUA also 
had mandatory reporting on adverse events.

    The March 2020 EUA was reserved for emergency use only and is not 
the same as an FDA approval or licensure. At the time the EUA was 
issued, the drugs were shown in the lab to prevent growth of the virus 
that causes COVID-19 and there were reports of patients who received 
these drugs and improved. Because of the possibility that chloroquine 
and hydroxychloroquine might have helped very sick COVID-19 patients, 
FDA permitted the drugs to be provided only to certain hospitalized 
patients who were unable to be enrolled in clinical trials under the 
EUA. However, as noted in the authorization letter, clinical trial data 
results, and any information derived from clinical trials, as well as 
clinical trial results from studies of other investigational medical 
products to treat COVID-19, would continue to inform the 
appropriateness of the EUA.

    The Biomedical Advanced Research and Development Authority (BARDA) 
within the U.S. Department of Health and Human Services originally 
requested the EUA covering chloroquine and hydroxychloroquine, and FDA 
granted the EUA on March 28, 2020, based on the science and data 
available at the time. FDA revoked this EUA on June 15, 2020, when it 
determined that the legal criteria for issuing an EUA were no longer 
met. Based on its ongoing analysis of the EUA and emerging scientific 
data, including new clinical trial data, FDA determined that 
chloroquine and hydroxychloroquine are unlikely to be effective in 
treating COVID-19 for the authorized uses in the EUA. Additionally, in 
light of ongoing serious cardiac adverse events and other potential 
serious side effects, the known and potential benefits of chloroquine 
and hydroxychloroquine no longer outweigh the known and potential risks 
for the authorized use. Therefore, the statutory standard for issuance 
of an EUA was no longer met. On June 15, in consultation with FDA, 
BARDA sent a letter to FDA requesting revocation of the EUA based on 
up-to-date science and data. A copy of the letter, the FDA letter 
revoking the EUA, and a memorandum outlining the scientific rationale 
for this decision can be found on the FDA website.

    Regarding your question about communications with the White House 
in the decision process for the March 28, 2020, EUA, FDA notes that its 
role is to make independent, science-based decisions to bring new 
therapies to sick patients as quickly as possible, while at the same 
time supporting research to further evaluate whether these therapies 
are safe and effective for treating patients infected with this novel 
virus. The March 2020 EUA authorizing the drugs' use for certain 
hospitalized patients with COVID-19 was prepared by expert FDA career 
staff and reflects internal scientific discussion.

    Question. Pharmaceutical and diagnostic companies are investing in 
the development of products to diagnose and treat COVID-19. In an 
effort to assist these companies in bringing a potential vaccine to 
market and mitigate the spread (and subsequent deaths) from COVID-19, 
has the FDA relaxed or changed any of its regulations or guidance 
regarding human clinical trials? If so, please explain these changes 
and how they diverge from FDA's normal clinical trial practices.

    Answer. Clinical trials are being impacted by the COVID-19 public 
health emergency. Challenges may arise, for example, from self-
isolation, site closures, travel limitations, interruptions to the 
supply chain for the investigational product, or other considerations 
if site personnel or trial subjects become infected with COVID-19. 
These challenges may lead to difficulties in meeting protocol-specified 
procedures, including administration or use of the investigational 
product or adhering to protocol-mandated visits and laboratory/
diagnostic testing.

    FDA has not changed any of its regulations regarding the conduct of 
clinical trials during the COVID-19 pandemic. However, to address these 
and other challenges, FDA promptly issued guidance to assist sponsors 
conducting clinical trials during the COVID-19 public health emergency 
in meeting regulatory requirements. See FDA Guidance on Conduct of 
Clinical Trials of Medical Products during COVID-19 Pandemic.\18\ This 
guidance was issued on March 18, 2020, and then updated multiple times, 
most recently on September 21, 2020. Since the guidance was issued, FDA 
has added 25 question and answers, many in response to the over 500 
inquiries to the mailbox [email protected] that 
FDA set up with the issuance of the first guidance to assist the 
clinical trial community.
---------------------------------------------------------------------------
    \18\ http://wcms-internet.fda.gov/media/136238/download.

    FDA also established the Coronavirus Treatment Acceleration Program 
(CTAP) to facilitate communications with sponsors developing a host of 
therapies to treat and prevent COVID-19. CTAP uses every available 
method to move new treatments to patients as quickly as possible, while 
maintaining our focus on determining whether they are helpful or 
harmful. We continue to support clinical trials that are testing new 
treatments for COVID-19 so that we gain valuable knowledge about their 
---------------------------------------------------------------------------
safety and effectiveness.

    In CTAP, CDER and CBER scientific experts, such as virologists, 
allergists, pulmonologists, and critical care specialists, continue to 
take the lead to advise sponsors how to advance drug development 
programs and of course to review actual incoming submissions. These 
clinical review teams are supported by a new, robust administrative 
backbone to receive a high volume of incoming proposals and inquiries 
and make sure they go to the right place. Sometimes the inquiry is from 
someone who needs very basic regulatory advice--about the difference 
between NIH and FDA, for example--whereas other inquiries may be from 
drug developers who are well down the road with clear scientific 
rationales and strong evidence. We have posted additional information 
about these efforts, including the number of drug development programs 
and clinical trials reviewed by FDA for COVID-19, on the CTAP 
website.\19\
---------------------------------------------------------------------------
    \19\ https://www.fda.gov/drugs/coronavirus-covid-19-drugs/
coronavirus-treatment-acceleration-program-ctap.

    CTAP does not change pre-existing roles, responsibilities, or 
decision rights concerning drug development and approval; instead, CTAP 
provides much more robust support to our scientists so they can work 
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the science in a more swift, nimble, and focused manner.

    Question. The FDA has issued guidance to promote diversity in 
clinical trials. However, certain populations continue to be 
underrepresented in many clinical trials. With these challenges in 
mind, what recent guidance or policies has FDA instituted to ensure 
diversity in clinical trials for potential COVID-19 vaccine candidates?

    If any written policy or guidance has been issued, please forward 
that information to my office. If no new policies or guidance have been 
issued, please explain why, particularly in light of FDA's recognition 
of diversity in drug trial testing as an issue.

    Answer. A significant step in spurring the development of the data 
needed to demonstrate the safety and efficacy of vaccines to prevent 
COVID-19 was the issuance of FDA's guidance, Development and Licensure 
of Vaccines to Prevent COVID-19.\20\ The guidance document outlines 
FDA's expectations for the development of these vaccines, including 
design of clinical trials, trial populations, safety and efficacy 
considerations, and information needed for our assessment of 
manufacturing and facility information.
---------------------------------------------------------------------------
    \20\ https://www.fda.gov/regulatory-information/search-fda-
guidance-documents/development-and-licensure-vaccines-prevent-covid-19.

    We are often asked about clinical trials for COVID-19 vaccines and 
the importance of diversity in clinical trial participants. It is 
critical for vaccines to work for everyone in the indicated 
populations. That is why FDA strongly encourages enrollment of all 
people--including racial and ethnic minorities, older adults, pregnant 
women and women of childbearing age, and, as appropriate, children--in 
clinical trials to test COVID-19 vaccines, as outlined in the 
---------------------------------------------------------------------------
recommendations in our guidance.

    Similarly, FDA's Guidance COVID-19: Developing Drugs and Biological 
Products for Treatment or Prevention Guidance for Industry \21\ states 
that racial and ethnic minority persons should be represented in 
clinical trials. Sponsors should ensure that clinical trial sites 
include geographic locations with a higher concentration of racial and 
ethnic minorities to recruit a diverse study population.
---------------------------------------------------------------------------
    \21\ https://www.fda.gov/media/137926/download.

    Question. In 2018, FDA released expectations and recommendations on 
the collection of racial and ethnic data to create a standardized 
approach for collecting and reporting race and ethnicity data in 
submissions for clinical trials for FDA regulated medical products. 
Since the release of these expectations and recommendations, has FDA 
seen an increase in the standardized collection of racial and ethnic 
data? If so, please provide concrete examples of when the collection of 
this information has substantially influenced FDA's approval of a 
particular drug. If FDA has not seen an improvement of racial and 
ethnic data collection, please provide concrete steps the agency 
intends to take to improve collection and further incentivize 
---------------------------------------------------------------------------
pharmaceutical companies to collect this information.

    Answer. In response to the FDA Safety and Innovation Act of 2012, 
FDA issued Guidance for Industry in October 2016 on the Collection of 
Race and Ethnicity Data in Clinical Trials. The guidance provides FDA's 
expectations for and recommendations on collecting and reporting race 
and ethnicity data in submissions for clinical trials for FDA-regulated 
medical products conducted in the United States and abroad. The 
guidance also states that FDA's expectations are that sponsors enroll 
participants who reflect the demographics for clinically relevant 
populations with regard to age, gender, race, and ethnicity.

    Furthermore, the results of FDA's routine review of a medical 
product's safety and effectiveness by race and ethnicity can identify 
essential information needed for the safe and effective use of the 
product. For example, the labeling for ACE inhibitors, a class of 
antihypertensive drugs, inform prescribers that controlled trials have 
shown that these drugs are less effective in black patients than non-
black patients. These drugs have also been associated with a higher 
rate of angioedema in black than in non-black patients. Another drug, 
BiDil (isosorbide dinitrate/hydralazine HCl), was approved for the 
treatment of heart failure only in self-identified black patients 
because there was little evidence of effect among white patients.

    Question. Does the FDA have a plan to improve racial and ethnic 
data collection from pharmaceutical companies during clinical drug 
trials?

    Answer. FDA is committed to encouraging diverse participation in 
research used to support marketing applications for regulated medical 
products. Following the FDA Safety and Innovation Act of 2012, 
specifically section 907, and the priorities set forth in FDA's Action 
Plan to Enhance the Collection and Availability of Demographic Subgroup 
Data, the agency has continued its ongoing efforts to support diverse 
participation in clinical trials through hosting public meetings, 
developing tools, and issuing guidance documents. Over the past few 
decades, FDA policy initiatives have focused on promoting enrollment 
practices that lead to clinical trials better reflecting the population 
most likely to use the product if the product is approved.

    FDA's Office of Minority Health and Health Equity (OMHHE) has 
continued to work to advance racial and ethnic minority participation 
in clinical trials through its Diversity in Clinical Trials Initiative, 
including a variety of culturally and linguistically competent 
strategies and resources. This includes an ongoing campaign to provide 
positive reinforcements and raise awareness on the need for racial and 
ethnic minority populations to participate in clinical trials.

    Additionally, FDA issued a draft guidance to assist sponsors in 
enrolling and retaining a diverse clinical trial population that 
reflects the patient population most likely to use the drug if it is 
approved. See Enhancing the Diversity of Clinical Trial Populations--
Eligibility Criteria, Enrollment Practices, and Trial Designs Guidance 
for Industry (June 2019).\22\
---------------------------------------------------------------------------
    \22\ https://www.fda.gov/regulatory-information/search-fda-
guidance-documents/enhancing-diversity-clinical-trial-populations-
eligibility-criteria-enrollment-practices-and-trial.

    Question. What resources does the FDA need to ensure the United 
States is at the forefront of advanced manufacturing for 
---------------------------------------------------------------------------
pharmaceuticals?

    Answer. FDA believes that advanced manufacturing technologies could 
enable U.S.-based pharmaceutical manufacturing to regain its 
competitiveness with foreign countries, and potentially ensure a stable 
supply of drugs critical to the health of U.S. patients. Advanced 
manufacturing offers many advantages over traditional pharmaceutical 
manufacturing, and if the United States invests in this technology, it 
can be used to reduce the Nation's dependence on foreign sources of 
APIs, increase the resilience of our domestic manufacturing base, and 
reduce quality issues that trigger drug shortages or recalls.

    In FY 2020, FDA's Center for Drug Evaluation and Research received 
$9M of one-time supplemental funding which will be used to continue to 
modernize and enhance science in areas related to advanced 
pharmaceutical manufacturing. Knowledge generated from these 
activities, together with the information provided by sponsors or 
applicants, can help enable science- and risk-based assessment, 
inspection and surveillance, establish best practices, support 
standard, policy and guidance development, and provide important 
training on novel manufacturing technologies.

    Although the success to date demonstrates that the adoption of 
advanced manufacturing technology allows for domestic manufacturers to 
be competitive in the market place, the limited number of approved 
applications demonstrates there are still barriers to entry beyond the 
regulatory barriers the Emerging Technology Program is designed to 
reduce. Therefore, it is important for other incentives to be made 
available to address the non-regulatory barriers to the adoption of 
advanced manufacturing. However, FDA does not have significant 
expertise in determining what incentives might be effective in spurring 
industry adoption of new technology.

                                 ______
                                 
               Questions Submitted by Hon. Sherrod Brown
                        diversified supply chain
    Question. How important is it for the U.S. to diversify sources for 
APIs and finished drug products?

    Answer. FDA understands the significant impact of the drug supply 
chain on patient care. Redundancy and geographic diversity are 
important keys to ensuring a robust drug supply chain. A drug supply 
chain that has multiple establishments in different geographic regions 
is a more resilient supply chain. A supply chain is even more resilient 
if there are multiple, geographically diverse sources of active 
pharmaceutical ingredients (APIs). The resiliency lies in the fact that 
if a natural disaster or disease outbreak affects establishments or 
suppliers in one geographic region, or one of the suppliers leaves the 
market, there are other establishments not affected by the disruption 
that can still supply the market.

    Question. Does the FDA have any strategies or policies in place to 
ensure the U.S. does not rely on a single source for any APIs or 
finished drug products?

    Answer. FDA cannot prevent manufacturing concentration or require 
redundancy of manufacturing capability and capacity. Nor can FDA 
require a company to manufacture a drug, maintain a certain level of 
inventory of drug product, or reverse a business decision to cease 
manufacturing.

    However, the Coronavirus Aid, Relief, and Economic Security Act 
(the CARES Act) amended the Federal Food, Drug, and Cosmetic Act (the 
FD&C Act) to require that manufacturers develop, maintain, and 
implement, as appropriate, a redundancy risk management plan for 
certain drugs, APIs, and associated devices. FDA staff are working to 
issue guidance for industry to provide manufacturers with information 
concerning this new requirement.

    Question. What are some ways Congress could facilitate the 
diversification of sources for APIs and finished drug products, 
particularly for more essential medicines?

    Answer. As noted above, FDA cannot prevent manufacturing 
concentration or require redundancy of manufacturing capability and 
capacity. Nor can FDA require a company to manufacture a drug, maintain 
a certain level of inventory of drug product, or reverse a business 
decision to cease manufacturing.

    The lack of more comprehensive pharmaceutical reporting limits 
FDA's insights into the supply chain, including FDA's ability to assess 
critical infrastructure as well as manufacturing quality and capacity 
for pharmaceuticals. FDA does not currently receive detailed 
manufacturing volume information on a quarterly basis from either human 
or animal drug manufacturers.

    The adoption of advanced manufacturing could enable U.S.-based 
pharmaceutical manufacturing to regain its competitiveness with China 
and other foreign countries, and potentially ensure a stable supply of 
drugs critical to the health of U.S. patients. Advanced manufacturing 
technology, which FDA supports through, among other things, its 
Emerging Technology Program (ETP), has a smaller facility footprint, 
lower environmental impact, and more efficient use of human resources 
than traditional manufacturing.
                            mandatory recall
    Question. Does FDA agree that mandatory recall authority could help 
expedite the FDA's recall process and get potentially harmful drugs off 
the market faster, even when a pharmaceutical company would otherwise 
comply with a voluntary recall request?

    Answer. The main benefit of mandatory drug recall authority is that 
it would expedite the initiation of a recall and get potentially 
harmful drugs off the market when a drug company either refuses or is 
reluctant to comply with a voluntary recall request. In addition, 
although FDA generally prefers not to require a recall when a company 
is otherwise willing to comply with a voluntary recall request, there 
can be circumstances where the potential for FDA to require a recall 
may allow FDA and a drug company to reach an agreement on the scope of 
a recall faster.

    When companies undertake recalls, they are an effective method of 
removing defective FDA-regulated products that have been distributed 
commercially, particularly when those products present a danger to 
health. Recall actions are conducted by manufacturers and distributors 
to protect the public health from products that present a risk of 
injury. A recall may be undertaken voluntarily at any time by 
manufacturers and distributors, or initiated at the request of FDA. FDA 
generally directs a recall request to the firm that has primary 
responsibility for the manufacture and marketing of the product. The 
Agency works with manufacturers and distributors to develop a recall 
strategy and to publicize information to the public. FDA also monitors 
the effectiveness of any recall and takes additional actions as 
appropriate.

    Consumers can be exposed to risks for extended periods of time when 
firms refuse to or delay the recall of defective or harmful drugs. 
Below we provide examples of hand sanitizers, homeopathic teething 
tablets and gels, and other non-application products where mandatory 
recall authority would have been helpful to our efforts to remove 
dangerous products from the market expediently.

    During the COVID-19 pandemic, FDA determined that some hand 
sanitizer products distributed or offered for import in the United 
States, particularly those manufactured in Mexico, were contaminated 
(e.g., contained methanol) and/or subpotent. Methanol is poisonous and 
can cause adverse events, such as dizziness, blindness, and death. In 
these cases the methanol-contaminated hand sanitizer led to the deaths 
of U.S. consumers. FDA quickly reached out to manufacturers to recall 
these dangerous drugs. Some of the manufacturers cooperated, but many 
did not. Some examples include:
Delayed Recalls of Hand Sanitizers
        Eskbiochem was contacted by FDA on June 17, 2020, to recommend 
the company recall its hand sanitizer products from the market due to 
the risks associated with methanol poisoning. The company took no 
action and actually requested its detained product be sent back so the 
firm could distribute it to the domestic Mexican market. Some, but not 
all product, was eventually recalled 5 weeks later by distributors. 
(96,613 liters of hand sanitizer were distributed and distributors were 
able to recall 36,886 liters; see: https://www.fda.gov/drugs/drug-
safety-and-availability/fda-advises-consumers-not-use-hand-sanitizer-
products-manufactured-eskbiochem).

        Soluciones Cosmeticas was contacted by FDA on July 1, 2020, to 
recommend recall of adulterated hand sanitizer but was reluctant to 
recall. Only after additional communication in which FDA notified the 
firm that a State department of health had reported cases of death 
linked to the use of their product did the firm agree on July 10, 2020, 
to voluntarily recall 3.3 million liters of hand sanitizer. (See: 
https://www.fda.gov/inspections-compliance-enforcement-and-criminal-
investigations/warning-letters/soluciones-cosmeticas-sa-de-cv-609057-
08042020.)
Refusals to Recall Hand Sanitizers
        Since June 2020, there have been more than five manufacturers 
who have refused to recall their subpotent (including lack of active 
ingredient) and/or methanol contaminated hand sanitizer. These 
manufacturers had produced over 206,766 liters of adulterated hand 
sanitizer. The following warning letters provide more information on 
recent incidents relating to hand sanitizers where mandatory recall 
authority would have aided our efforts:

https://www.fda.gov/inspections-compliance-enforcement-and-criminal-
investigations/warning-letters/quimica-magna-de-mexico-sa-de-cv-608751-
10152020.

https://www.fda.gov/inspections-compliance-enforcement-and-criminal-
investigations/warning-letters/grupo-insoma-sapi-de-cv-608768-10232020.

https://www.fda.gov/inspections-compliance-enforcement-and-criminal-
investigations/warning-letters/real-clean-distribuciones-sa-de-cv-
608900-10272020.

https://www.fda.gov/inspections-compliance-enforcement-and-criminal-
investigations/warning-letters/asiaticon-sa-de-cv-609162-10292020.

        In January 2017, FDA contacted a manufacturer of homeopathic 
infant teething tablets to convey serious concerns about the 
inconsistent amounts of belladonna alkaloids (also known as deadly 
nightshade) contained in the tablets sometimes far exceeding the amount 
claimed on the label. Belladonna alkaloids have anticholinergic 
effects, including disorientation, hallucinations, fast heart rate, and 
may also cause drowsiness in infants. (See: https://www.fda.gov/news-
events/press-announcements/fda-confirms-elevated-levels-belladonna-
certain-homeopathic-teething-products.)

        After FDA contacted the firm with these serious concerns, the 
firm sent a letter stating it declined to take action on those 
products, further stating its belief ``that the public is amply 
protected.'' FDA subsequently sent a Requested Recall letter signed by 
the Associate Commissioner of Regulatory Affairs to the firm, which 
announced a recall almost four months after FDA had initially contacted 
the firm. (See: https://www.fda.gov/drugs/drug-safety-and-availability/
fda-announces-standard-homeopathic-companys-nationwide-voluntary-
recall-hylands-teething-tablets.)

        In August 2020, FDA twice contacted a repacker of goldenseal 
root powder to discuss laboratory findings of high counts of various 
bacteria, including multiple pathogens in its product and to request a 
voluntary recall. The product was distributed nationwide and purchased 
between the dates of January 25, 2015, and August 4, 2020. Because the 
firm failed to take action, FDA issued a press release warning the 
public about use of the contaminated product, which could lead to 
serious infections and death in infants and individuals with weak 
immune systems. The firm had received a report from FDA of one infant 
death associated with use of this product on the umbilical cord stump. 
The firm initiated a voluntary recall three days after FDA issued the 
press release.

https://www.fda.gov/drugs/drug-safety-and-availability/fda-advises-
consumers-not-use-goldenseal-root-powder-distributed-maison-terre.

https://www.fda.gov/safety/recalls-market-withdrawals-safety-alerts/
maison-terre-issues-voluntary-nationwide-recall-organic-goldenseal-
root-powder-due-microbial.

        In June 2016, FDA alerted both the own-label distributor and 
the contract manufacturer of a potentially contaminated Diocto docusate 
(oral liquid docusate sodium) product, and the firms agreed to 
quarantine the product. The product was suspected as a link to a 
Burkholderia cepacia outbreak of pediatric ICU patients in five states. 
Use of these contaminated products in patients whose immune system is 
compromised could result in infections, which may be life-threatening. 
In July 2016, FDA laboratory testing revealed the contamination of 
Diocto docusate with B. cepacia, demonstrating a direct link between 
the drug and the outbreak. The investigation also detected B. cepacia 
in the water system used to manufacture the product. Days later, the 
contract manufacturer agreed to recall the Diocto docusate product; 
three weeks later, it agreed to recall all of its liquid drug products.

        In July 2017, a second outbreak of B. cepacia in oral liquid 
docusate sodium products occurred. The contract manufacturer was 
uncooperative and FDA extended communication to distributors. While a 
voluntary recall was eventually initiated by the five distributors, the 
contract manufacturer's lack of cooperation delayed the recall and 
lengthened the exposure of hospital patients to the contaminated 
product.

https://www.fda.gov/drugs/drug-safety-and-availability/fda-updates-
multistate-outbreak-burkholderia-cepacia-infections.

https://www.fda.gov/drugs/drug-safety-and-availability/fda-updates-
2017-burkholderia-cepacia-contamination.

    These are some examples involving serious risks where firms delayed 
recall of harmful products putting consumers and patients at risk. If 
the Agency had mandatory recall authority, the Agency could have 
facilitated removal of the drugs from the market months earlier, 
reducing the time that consumers, including infants, were potentially 
exposed to harmful drugs.
                       api reporting/inspections
    Question. Does FDA know what percent of API is produced in the 
U.S.? Not the facilities manufacturing, but the percent of actual API 
product that comes from the U.S. versus other countries?

    Answer. No. As noted above, the lack of comprehensive 
pharmaceutical reporting limits FDA's insights into the supply chain. 
Although FDA can describe the locations of API manufacturing 
facilities, we cannot determine the volume of API produced in a given 
location. For a detailed walkthrough of the limitations of FDA's data, 
please see Dr. Janet Woodcock's testimony before the House Energy and 
Commerce Committee's Subcommittee on Health at an October 2019 hearing 
available here: https://www.fda.gov/news-events/congressional-
testimony/safeguarding-pharmaceutical-supply-chains-global-economy-
10302019.

    Question. Does FDA know what percent of chemical materials used to 
manufacture API are produced in the U.S. versus other countries?

    Answer. No; see responses to questions above.

    Question. Does the FDA know what percent of FDF of human drugs is 
produced in the U.S.?

    Answer. No; see responses to questions above.

    Question. What more could and should the FDA do to collect 
additional information on API and its manufacturing and distribution 
under current law?

    Answer. The CARES Act amended section 510(j) of the FD&C Act to 
require ``Each person who registers with the Secretary under this 
section with regard to a drug shall report annually to the Secretary on 
the amount of each drug listed under paragraph (1) that was 
manufactured, prepared, propagated, compounded, or processed by such 
person for commercial distribution . . .'' which when implemented, will 
give the agency information about how much and which APIs are 
manufactured at different facilities.

    Question. What additional authorities could Congress provide the 
FDA that would be helpful in collecting additional information on the 
manufacturing and distribution of API?

    Answer. The agency still needs information to better connect the 
API and FDF manufacturers as noted in the responses to questions three 
and five. It would also be helpful for FDA to be better able to obtain 
information about the API intermediates used to manufacture the API.

    Question. What would it take to initiate a strategic API reserve, 
as discussed by Senator Cassidy during the June 2020 Senate Finance 
Committee hearing?

    Answer. The agency understands the significant impact of the drug 
supply chain on patient care and does everything within its authority 
to help prevent interruptions in the supply chain. Taking steps to 
ensure patients have an adequate supply of critical drugs is an 
important endeavor. However, care must be taken with respect to any 
effort to shore up the supply chain so as not to create new, unintended 
risks to the supply chain. The major risks with creating a stockpile or 
reserve of specific medicines are that the announcement of the creation 
of the stockpile could cause a supply disruption by diverting 
production toward particular ingredients and products and it could 
cause others to seek to create their own stockpile.

    Question. What additional information related to the drug supply 
chain would be helpful for FDA to have, but that the agency doesn't 
currently have the authority to collect?

    Answer. See responses to questions above.
                                testing
    Question. What percent of drugs does the FDA currently test for 
established quality specifications?

    Answer. Pharmaceutical manufacturers, no matter where they are 
located, are responsible for ensuring that quality products reach U.S. 
patients. Manufacturers are required to test drug materials and final 
APIs and final drug products to verify they conform with existing 
standards before distribution. FDA's role is to provide sufficient 
oversight to help ensure that companies fulfill their responsibilities 
and to take appropriate action when they do not. This oversight 
includes testing selected finished drug products and the APIs used to 
make these products after they are on the market. See our response to 
the question below for more information on our risk-based approach to 
quality testing.

    Question. Has the FDA ever required a pharmaceutical manufacturer 
to provide proof of batch testing or test results for established 
quality specifications post-
market?

    Answer. Current regulations require drug product manufacturers to 
test representative samples of all components (ingredients) from each 
lot of each shipment before use in manufacturing the drug product. Drug 
product manufacturers are required to test representative samples of 
each lot of finished drug product to verify it meets specifications 
before releasing the lot to market. Testing requirements also include 
testing during the processing of APIs and final products to confirm 
quality after significant stages of production. Generally during 
current good manufacturing practice (CGMP) inspections, we review the 
records that manufacturers must maintain regarding required testing, 
including testing for known impurities and degradation compounds, and 
we evaluate the implementation of other manufacturing controls and 
practices designed to prevent unexpected and objectionable impurities 
in a drug.

    The FDA has the authority to conduct examinations and/or sample 
collections to determine if the product offered for import is in 
compliance with the FDA regulations and laws. As part of the entry 
review process, the FDA entry reviewers designate entries for 
examination. This examination may consist of any combination of a field 
examination, label examination, and/or sample collection. For example, 
for importation of heparin, FDA routinely reviews test results and 
other data accompanying the importation entry on a case-by-case basis. 
FDA also tests samples to verify purity.

    Question. Is it accurate to say that the FDA is unable to identify 
the full range of drugs that fail to meet the established quality 
specifications as a result of its limited testing capacity?

    Answer. FDA has a longstanding program to regularly sample and test 
marketed drugs and APIs for conformance to specifications. We select 
hundreds of samples each year based on certain criteria.

        Some testing decisions are event-driven. For example, we might 
test product samples after receiving a pattern of complaints about 
adverse events, quality issues, or reduced effectiveness. These reports 
come to FDA through consumer complaints, field alert reports, and 
MedWatch: The FDA Safety Information and Adverse Event Reporting 
Program.
        We also rely on the experience of internal and external 
experts to alert us to emerging safety, effectiveness, or quality 
issues with currently marketed drug products. For example, results from 
independent research may require FDA testing and investigation.

    Sometimes, manufacturing or facility concerns may trigger 
additional FDA monitoring and testing. For instance, FDA may sample 
products with difficult manufacturing processes or drug products with 
complex dosage forms such as patches, drugs designed to target a 
specific area, and drugs that release the active ingredient in a 
controlled manner.

    FDA may also sample drugs produced by manufacturing processes that 
require additional controls to ensure each dosage unit will perform as 
expected, such as delivering a precise amount of active ingredient 
within a narrower range, because even slight deviations could cause 
quality issues.

    We use a risk-based approach to quality testing. This means that in 
cases where there is a known or likely safety, effectiveness, or 
quality issue with a product, FDA scientists perform tests specifically 
for this vulnerability. For example, if an API is likely to become 
contaminated with a harmful impurity during the manufacturing process, 
FDA tests for that specific impurity, rather than testing for all 
potential impurities. Additional reasons products may warrant testing 
under FDA's testing program include: products that are the most used 
drugs (including prescription brand-name and generic drugs); drugs 
considered critical to countering terrorism attacks; and newly approved 
or first-time generic prescription drugs.

    Through our risk-based import screening tool, PREDICT (Predictive 
Risk-based Evaluation for Dynamic Import Compliance Targeting), FDA 
focuses agency import resources, including activities such as 
examinations and sample collections, on 
higher-risk products being offered for entry into U.S. commerce. 
PREDICT uses automated data mining, pattern discovery, and automated 
queries of FDA databases to determine the potential risk of a shipment. 
The analytics tool takes into consideration the inherent risk of a 
product and information about the previous history of importers, 
manufacturers, and shippers. As part of our COVID-19 response, FDA has 
adjusted PREDICT screening to account for firms whose foreign 
inspection was postponed due to COVID-19 travel restrictions.

    FDA labs acquire samples for testing by a number of different 
mechanisms, including directly from consumers and purchases from the 
U.S. market via distributors, wholesalers, and retail pharmacies. FDA 
has found that approximately 1 percent of samples tested, both foreign 
and domestic, fail to meet quality standards. In addition, FDA 
investigators can collect the samples directly at drug manufacturing 
sites and deliver or send them to FDA testing labs (maintaining chain 
of custody). If required, FDA also has the ability to purchase samples 
online while retaining anonymity. Finally, some samples are sent to FDA 
labs directly from manufacturers as the result of information request 
(IR) letters from FDA assessor staff. In many cases, such samples are 
requested to verify test results on the same batches the firms supply 
to FDA. Using this ``trust but verify'' approach, the agency can use 
the most accurate available data to make regulatory decisions.

    Question. If the FDA and its third-party partners batch-tested all 
of the drugs on the market, do you expect the percent of drugs that 
fail to meet the established quality specifications would be greater 
than 1 percent, and closer to that of Valisure's 10 percent?

    Answer. The agency itself does not have the ability to test samples 
from every batch of all drug APIs and drug products on the market. No 
lab has that capacity. Millions of drug product batches are sold in the 
U.S. every year, which can amount to trillions of individual tablets, 
capsules, and other dosage forms. Approximately 800,000 different lots 
of API and/or drug product are imported each year. FDA instead utilizes 
a risk-based approach to quality testing as described above and 
oversees compliance to the required testing performed by each 
manufacturer. FDA also works with other national drug regulatory 
agencies to leverage resources and testing done outside the U.S., which 
can help inform testing priorities of the U.S. drug supply. If the 
findings of third-party laboratory testing alert FDA to a quality 
issue, FDA may investigate.

    The agency has greater confidence in the reliability of its own 
testing methods and results. Testing methods developed by FDA are 
validated and the results are repeatable.

    Sound science is critical for effective action, and even well-
intentioned testing should be confirmed for accuracy before alerting 
the public or taking action. FDA has posted testing methods on the FDA 
website for industry, third-party laboratories, and international 
regulators. We welcome others to use them or to ensure they use 
similarly sound and validated methods.

    Manufacturers may choose to use an independent third party to 
perform certain tests if, for example, they have reason to be concerned 
about the reliability of their own results or to access sophisticated 
methods or equipment that may not otherwise be available to them. 
However, FDA does not believe that independent chemical batch-level 
testing and verification of the chemical content of all pharmaceuticals 
is necessary or feasible. As a general principle, the degree of 
regulatory scrutiny over batch-level testing should be commensurate 
with the degree of risk, and an independent tester cannot evaluate the 
risk without sufficient knowledge of all manufacturing processes. 
Additionally, testing methods can only be developed with a target 
analyte in mind; testing of all possible chemical impurities or 
contaminants is not feasible. Beyond the problem of the volume of 
potential impurities to test, an independent third party would need 
information concerning the formulation and manufacturing of a product 
to determine which chemical tests are appropriate and to develop 
suitable methods for detection of impurities.

    As part of FDA's risk-based approach, the agency does take 
complaints or third-party laboratory results into account when deciding 
which drugs to analyze. However, third-party laboratories may not use 
standards as outlined in the USP, or follow scientifically sound 
procedures for validating an analytical method. Improper development 
and validation of analytical methods can result in inaccurate results. 
An example is outlined in the following manuscript, which can be 
accessed at https://pubmed.ncbi.nlm.nih.gov/32613429/:

        Yang J., Marzan T.A., Ye W., Sommers C.D., Rodriguez J.D. and 
        Keire D.A. ``A Cautionary Tale: Quantitative LC-HRMS analytical 
        procedures for the analysis of N-Nitrosodimethylamine in 
        metformin.'' AAPS J., 22(4), 89- (2020).

    Question. Are there additional authorities or funds that would 
enable the FDA or its third-party partners to test a greater percent of 
the drug product in U.S. commerce?

    Answer. Quality cannot be tested into products. Drug manufacturers 
must have validated processes and methods, and follow CGMPs to ensure 
the quality of the drugs they are manufacturing. While CGMPs require 
testing by the manufacturer and FDA has a longstanding program to 
regularly sample and test marketed drugs and APIs, testing alone is not 
adequate to ensure quality. It is important that drugs are manufactured 
under conditions and practices required by the CGMP regulations to 
assure that quality is built into the design and manufacturing process 
at every step. Facilities that are in good condition, equipment that is 
properly maintained and calibrated, employees who are qualified and 
fully trained, and processes that are reliable and reproducible are a 
few examples of how CGMP requirements help to ensure the safety and 
efficacy of drug products.

    Question. What other procedures, other than batch testing, could 
help ensure all drugs in U.S. commerce meet established quality 
specifications?

    Answer. It is the responsibility of all drug manufacturers to 
ensure their products are of acceptable quality, that is, consistently 
safe, effective, and free of objectionable contamination and defects. 
Drug manufacturers must ensure that the methods used in, or the 
facilities and controls used for, the manufacture, processing, and 
packing of drugs are adequate to assure and preserve identity, 
strength, quality, and purity. FDA continues to review the quality of 
drug products throughout the life cycle of the products, and may take 
regulatory action when the agency determines that a product in the 
market violates provisions of the FD&C Act or presents a danger to 
health.
                          additional questions
    Question. What practices/alternative tools (like sampling, using 
authority under 704(a)(4), etc.) do you see carrying forward past 
pandemic? In other words, are there practices you use now that you 
anticipating continuing even after the public health threat dissipates 
and you're able to return to more normal evaluations?

    Answer. Prior to the COVID-19 pandemic, FDA had utilized 
alternative tools such as sampling and testing of drugs in commerce, 
and requesting records and other information under section 704(a)(4) of 
the FD&C Act. During the COVID-19 pandemic, FDA expanded the use of 
records requests under section 704(a)(4) to evaluate firms and 
regulated products to address health concerns, travel restrictions and 
advisories which postponed routine on-site inspections. In addition, we 
expanded the use of Mutual Recognition Agreements (MRAs) to include use 
of third country reports from capable authorities and product sampling 
programs. FDA has also begun to add new tools to facilitate remote 
interactive evaluations of firms, including live streams, 
teleconferences, and screen sharing. FDA expects to continue to utilize 
these tools as part of a comprehensive oversight approach beyond the 
COVID-19 pandemic and will continue to evaluate these novel tools to 
employ best practices in the future.

    Question. The two pilot programs mentioned at the very end related 
to quality management maturity--what is the timeline for those programs 
and next steps on building that assessment system out?

    Answer. FDA has formed a multidisciplinary multi-center working 
group to facilitate the development of the quality management maturity 
(QMM) rating program for drug manufacturers. A framework will be 
developed that is intended to objectively assess and rate the QMM of 
manufacturing sites using facilitated assessments along with other 
surveillance intelligence related to the site. In development of the 
framework, FDA will need to consider such things as standardized 
assessment tools, policies and regulations, industry incentives, 
transparency, and communication.

    To better inform the development of a framework for objectively 
assessing and rating the QMM of manufacturing sites, the Office of 
Pharmaceutical Quality (OPQ) has contracted with two third-party 
vendors to conduct two pilot programs. One pilot is focused on domestic 
manufacturers of finished dosage form products (FDFs), and the other 
pilot is focused on foreign manufacturers of active pharmaceutical 
ingredients (APIs). Each vendor will develop a QMM assessment tool, 
train FDA staff on performing and scoring QMM assessments, and conduct 
facilitated assessments of manufacturing sites. Due to the ongoing 
COVID-19 pandemic, most if not all the assessments will be conducted 
virtually.

    As an incentive for participating in these pilot programs, 
volunteer sites will receive QMM reports that can empower their 
continuous improvement programs. In addition, these participating 
manufacturers could benefit in the future by better understanding QMM 
ratings when they roll out and begin to enable health systems, other 
purchasers, and payers of drugs to differentiate among drug 
manufacturers.

    Pilot participants have agreed to share best practices and 
experience with the program with FDA and amongst each other to support 
the pilot program initiatives and gain a better understanding of QMM.

    The information gathered as part of these pilot programs will be 
used to shape the future of the QMM program but will not impact or 
influence any regulatory decisions, or inspection planning. OPQ will 
share aggregated learnings from the pilot programs with the public 
through workshops and conferences.

    OPQ will use the information learned from the two pilot programs 
along with other previous and ongoing research to formalize criteria 
that can be used in an assessment tool to objectively measure a 
manufacturing site's QMM. Data from assessments will be curated into 
FDA data systems to allow for further analysis and use.

    Seven manufacturing sites have been selected to participate in the 
domestic pilot and seven in the foreign pilot. FDA's multi-center 
working group is currently engaged with the two contractors for the 
pilot programs in development of the assessment tools. Site assessments 
are expected to begin in May 2021 with the final closeout of the pilot 
programs at the end of September 2021. More information can be found on 
the FDA webpage, https://www.fda.gov/drugs/news-events-human-drugs/
sbia-webinar-fda-announces-quality-management-maturity-programs-
11122020-11122020.

                                 ______
                                 
     Prepared Statement of Mary Denigan-Macauley, Ph.D., Director, 
             Health Care, Government Accountability Office

   Drug Safety: COVID-19 Complicates Already Challenged FDA Foreign 
                           Inspection Program

                         why gao did this study
    The outbreak of COVID-19 has called greater attention to the United 
States' reliance on foreign drug manufacturers and further highlighted 
the importance of ensuring a safe pharmaceutical supply chain. Much of 
the manufacturing of drugs for treating COVID-19 occurs overseas, which 
is also true of the majority of other drugs marketed in the United 
States. While the volume of drugs manufactured overseas for the U.S. 
market is not fully known, FDA reports that about 70 percent of 
establishments manufacturing active ingredients and more than 50 
percent of establishments manufacturing finished drugs for the U.S. 
market were located overseas, as of August 2019.

    FDA is responsible for overseeing the safety and effectiveness of 
all drugs marketed in the United States, regardless of where they are 
produced, and conducts inspections of both foreign and domestic drug 
manufacturing establishments.

    GAO has had longstanding concerns about FDA's ability to oversee 
the increasingly global pharmaceutical supply chain, an issue 
highlighted in GAO's High Risk Series since 2009. In particular:

        GAO recommended in 2008 (GAO-08-970) that FDA increase the 
number of inspections of foreign drug establishments.

        GAO found in 2010 (GAO-10-961) that FDA continued to conduct 
relatively few foreign inspections than domestic inspections.

        GAO found in 2016 (GAO-17-143) that FDA was conducting more of 
these foreign drug inspections, and GAO closed its 2008 recommendation 
to conduct more foreign inspections. However, GAO also reported that 
FDA may have never inspected many foreign establishments manufacturing 
drugs for the U.S. market.

    In addition, in the summer of 2018, FDA began announcing recalls of 
blood pressure medications manufactured overseas that were tainted with 
a potential carcinogen, raising further questions about FDA's oversight 
of foreign-manufactured drugs.

    This statement is largely based on GAO's December 2019 testimony 
(GAO-20-262T) and discusses:

    1.  The number of foreign inspections FDA has conducted;

    2.  Inspection staffing levels; and

    3.  Challenges unique to foreign inspections.

    For that testimony, GAO examined FDA data from fiscal years 2012 
through 2018 and interviewed investigators from FDA's 2019 cadre of 
investigators (who are based in the United States but exclusively 
conduct foreign drug inspections) and from FDA's foreign offices in 
China and India.
                             what gao found
    In December 2019, GAO found that a growing number of foreign drug 
manufacturing inspections conducted by the Food and Drug Administration 
(FDA) were in China and India (43 percent in 2018), where most 
establishments that manufacture drugs for the United States were 
located. In fiscal year 2015, FDA, for the first time, conducted more 
foreign inspections than domestic inspections. However, from fiscal 
year 2016 through 2018, both foreign and domestic inspections 
decreased--by about 10 percent and 13 percent, respectively. FDA 
officials attributed the decline, in part, to vacancies among 
investigators available to conduct inspections. In March 2020, FDA 
announced that, due to Coronavirus Disease 2019 (COVID-19), it was 
postponing almost all inspections of foreign manufacturing 
establishments. While FDA has indicated it has other tools to ensure 
the safety of the U.S. drug supply, the lack of foreign inspections 
removes a critical source of information about the quality of drugs 
manufactured for the U.S. market.

[GRAPHIC] [TIFF OMITTED] T6220.001


    GAO also found that FDA had vacancies among each of the groups of 
investigators who conduct foreign inspections. FDA had 190 
investigators in the United States who conduct the majority of foreign 
inspections, but an additional 58 positions were vacant. At the time of 
GAO's December 2019 testimony, FDA was in the process filling 26 of 
these vacancies, with 32 remaining. However, according to FDA 
officials, it could be 2 to 3 years before new staff are experienced 
enough to conduct foreign inspections. FDA also faced persistent 
vacancies among investigators in its foreign offices.

    GAO further found in December 2019 that FDA investigators 
identified persistent challenges conducting foreign inspections, 
raising questions about the equivalence of foreign to domestic 
inspections. Specifically, GAO found:

        While FDA inspections performed in the United States were 
almost always unannounced, FDA's practice of preannouncing foreign 
inspections up to 12 weeks in advance may have given manufacturers the 
opportunity to fix problems ahead of the inspection. Investigators from 
FDA's China and India offices had conducted some unannounced 
inspections, but these staff do not perform most of the inspections in 
these countries (27 percent and 10 percent, respectively).


     FDA Estimates of the Amount of Notice Provided to Foreign Drug
          Establishments PPrior to Inspection, Fiscal Year 2018
------------------------------------------------------------------------
                                            Percentage of inspections
       Type of        Amount of notice    involving  this investigator
    investigator          provided                    type
------------------------------------------------------------------------
China office          0-5 days          Involved in 27 percent of total
 Pinvestigator                           number of inspections in China
------------------------------------------------------------------------
India office          0-5 days          Involved in 10 percent of total
 Pinvestigator                           number of inspections in India
------------------------------------------------------------------------
U.S.based             Generally 12      Involved in:
 Pinvestigator         weeks               73 percent of total number
                                         of inspections in China
                                           90 percent of total number
                                         of inspections in India
                                           100 percent of total number
                                         of inspections in other foreign
                                         countries
------------------------------------------------------------------------
Source: Interviews with Food and Drug Administration (FDA) officials and
  GAO analysis of FDA data. | GAO-20-626T.


        FDA was not generally providing translators on foreign 
inspections. Rather, FDA continued to rely on translators provided by 
the foreign establishments being inspected, which investigators said 
raised questions about the accuracy of information FDA investigators 
collected. For example, one investigator said there was more risk of 
conflict of interest if the establishment used its own employees to 
translate. In addition, the establishment representative providing the 
translation may be someone who does not have the technical language 
needed, which can make it harder to communicate with establishment 
staff and facilitate the inspection.

        The overseas travel schedule can present challenges for FDA's 
domestically based investigators, who conduct the majority of foreign 
inspections. Domestically based investigators told us there is little 
flexibility for them to extend foreign inspections during an overseas 
trip. The inspections they conduct on an overseas trip are scheduled 
backto-back in 3-week trips and may involve three different countries. 
Therefore, extending one inspection would limit the amount of time the 
investigator has to complete their other scheduled inspections. FDA 
officials said that inspections conducted by investigators based in 
China or India (and domestic inspections in the United States) are 
generally scheduled one at a time and can thus more easily be extended 
if the investigator needs additional time to pursue potential 
deficiencies. However, these in-country investigators are not involved 
in the majority of FDA inspections conducted in China or India.
_______________________________________________________________________

    Chairman Grassley, Ranking Member Wyden, and members of the 
committee:

    I am pleased to be here today to discuss our work on the Food and 
Drug Administration's (FDA) oversight of drugs manufactured 
overseas.\1\ The outbreak of Coronavirus Disease 2019 (COVID-19) has 
called greater attention to the United States' reliance on foreign drug 
manufacturers and further highlighted the importance of ensuring a 
secure pharmaceutical supply chain. Like the majority of other drugs 
manufactured for the U.S. market, much of the manufacturing of drugs 
for treating COVID-19 occurs overseas.
---------------------------------------------------------------------------
    \1\ Drugs are defined to include, among other things, articles 
intended for use in the diagnosis, cure, mitigation, treatment, or 
prevention of disease and include components of those articles. See 21 
U.S.C. Sec. 321(g)(1)(B), (D). An active pharmaceutical ingredient 
includes, among other things, any component that is intended to provide 
pharmacological activity or other direct effect in the diagnosis, cure, 
mitigation, treatment, or prevention of disease. See 21 CFR Sec. 207.1 
(2019). In this testimony, we refer both to drug products--drugs in 
their finished dosage forms--and to active pharmaceutical ingredients 
as ``drugs.'' Our work focuses on human drugs and not on most 
biologics, veterinary medicines, or other items or products for which 
FDA conducts inspections. (Biologics are materials, such as viruses, 
therapeutic sera, toxins, antitoxins, vaccines or analogous products, 
to prevent, treat, or cure human diseases or injuries and are derived 
from natural sources, such as humans, animals, and microorganisms. See 
42 U.S.C. Sec. 262(i); 21 CFR Sec. 600.3(h) (2019).)

    We have had longstanding concerns about FDA's ability to oversee 
the increasingly global pharmaceutical supply chain, an issue 
highlighted in our High Risk Series since 2009.\2\ A critical element 
in FDA's oversight of overseas manufacturing is the inspections it 
conducts of foreign manufacturing establishments. For more than 2 
decades, we have raised concerns about FDA's foreign drug inspection 
program. In 1998, and again in 2008, we found that FDA inspected 
relatively few foreign drug manufacturing establishments--an estimated 
8 percent of those subject to inspection for our 2008 report--and that 
challenges unique to foreign inspections influenced the manner in which 
FDA conducted such inspections.\3\ In our 2008 report we recommended 
that FDA increase the number of foreign inspections it conducts.\4\ In 
2010, and again in 2016, we found that FDA was conducting more 
inspections of foreign establishments (inspecting about 11 percent and 
21 percent of those subject to inspection for our 2010 and 2016 
reports, respectively). However, in 2010 we reported that FDA continued 
to conduct relatively fewer foreign drug inspections than domestic 
inspections, and in 2016 we also reported that many foreign 
establishments manufacturing drugs for the U.S. market may never have 
been inspected by FDA.\5\ In addition, in the summer of 2018, FDA began 
announcing recalls of blood pressure medications manufactured overseas 
that were tainted with a potential carcinogen, raising further 
questions about FDA's oversight of foreign-manufactured drugs.\6\
---------------------------------------------------------------------------
    \2\ See GAO, High-Risk Series: Substantial Efforts Needed to 
Achieve Greater Progress on High-Risk Areas, GAO-19-157SP (Washington, 
DC: Mar. 6, 2019).
    \3\ See GAO, Food and Drug Administration: Improvements Needed in 
the Foreign Drug Inspection Program, GAO/HEHS-98-21 (Washington, DC: 
Mar. 17, 1998) and Drug Safety: Better Data Management and More 
Inspections Are Needed to Strengthen FDA's Foreign Drug Inspection 
Program, GAO-08-970 (Washington, DC: Sept. 22, 2008).
    \4\ See GAO-08-970, 43. FDA agreed with our recommendation and then 
started conducting more foreign inspections and changed how it selects 
establishments for inspection to ensure that foreign establishments be 
inspected at a frequency comparable to domestic establishments with 
similar characteristics. As a result, we closed this recommendation.
    \5\ See GAO, Drug Safety: FDA Has Conducted More Foreign 
Inspections and Begun to Improve Its Information on Foreign 
Establishments, but More Progress is Needed, GAO-10-961 (Washington, 
DC: Sept. 30, 2010) and GAO, Drug Safety: FDA Has Improved Its Foreign 
Drug Inspection Program, but Needs to Assess the Effectiveness and 
Staffing of Its Foreign Offices, GAO-17-143 (Washington, DC: Dec. 16, 
2016).
    \6\ Food and Drug Administration, FDA Updates and Press 
Announcements on Angiotensin II Receptor Blocker (ARB) Recalls 
(Valsartan, Losartan, and Irbesartan), accessed December 1, 2019, 
https://www.fda.gov/drugs/drug-safety-and-availability/fda-updates-and-
press-announcements-angiotensin-ii-receptor-blocker-arb-recalls-
valsartan-losartan.

    My remarks today primarily discuss the findings from our December 
2019 testimony on FDA's foreign drug inspection program.\7\ 
Accordingly, this statement provides observations on:
---------------------------------------------------------------------------
    \7\ See GAO, Drug Safety: Preliminary Findings Indicate Persistent 
Challenges With FDA Foreign Inspections, GAO-20-262T (Washington, DC: 
Dec. 10, 2019).

    1. The number of FDA's foreign inspections;
    2. Inspection staffing levels; and
    3. Challenges unique to foreign inspections.

    For our December 2019 testimony, we analyzed FDA data from fiscal 
year 2012 through fiscal year 2018 on inspections of foreign drug 
manufacturing establishments. We also interviewed FDA drug 
investigators from FDA's 2019 cadre of investigators, who are based in 
the United States but exclusively conduct foreign drug inspections, and 
investigators based in FDA's foreign offices in China and in India. 
More detailed information on our objectives, scope, and methodology for 
that work can be found in the December 2019 testimony. The work on 
which this statement is based was conducted in accordance with 
generally accepted government auditing standards. Those standards 
require that we plan and perform the audit to obtain sufficient, 
appropriate evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the evidence 
obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives.
                               background
Globalization of Drug Manufacturing
    Drugs sold in the United States--including active pharmaceutical 
ingredients (APIs) and finished dosage forms--are manufactured 
throughout the world. According to FDA, as of August 2019 about 70 
percent of establishments manufacturing APIs and more than 50 percent 
of establishments manufacturing finished drugs for the U.S. market were 
located overseas.\8\ As of March 2019, FDA data showed that India and 
China had the most manufacturing establishments shipping drugs to the 
United States, with about 40 percent of all foreign establishments in 
these two countries. (See fig. 1.)
---------------------------------------------------------------------------
    \8\ Janet Woodcock, M.D., Director, Center for Drug Evaluation and 
Research, Food and Drug Administration, Securing the U.S. Drug Supply 
Chain: Oversight of FDA's Foreign Inspection Program, testimony before 
the House Committee on Energy and Commerce, Subcommittee on Oversight 
and Investigations, 116th Congress, December 10, 2019. According to 
FDA, although the agency has information on the location of drug 
manufacturing establishments, it does not have information on the 
volume of drug ingredients these establishments manufacture for the 
U.S. market.

[GRAPHIC] [TIFF OMITTED] T6220.002

Types of Inspections
    FDA is responsible for overseeing the safety and effectiveness of 
all drugs marketed in the United States, regardless of where they are 
manufactured. Drugs manufactured overseas must meet the same statutory 
and regulatory requirements as those manufactured in the United States. 
FDA's Center for Drug Evaluation and Research (CDER) establishes 
standards for the safety, quality, and effectiveness of, and 
manufacturing processes for, over-the-counter and prescription drugs. 
CDER requests that FDA's Office of Regulatory Affairs (ORA) inspect 
both domestic and foreign establishments to ensure that drugs are 
produced in conformance with applicable laws of the United States, 
including current good manufacturing practice (CGMP) regulations.\9\
---------------------------------------------------------------------------
    \9\ CGMPs provide for systems that assure proper design, 
monitoring, and control of manufacturing processes and facilities. See 
21 CFR pts. 210, 211, 212 (2019). FDA considers nearly all drug 
establishment inspections to include an assessment of CGMPs.

    FDA investigators generally conduct three main types of drug 
manufacturing establishment inspections: preapproval inspections, 
surveillance inspections, and for-cause inspections, as described in 
table 1. At times, FDA may conduct an inspection that combines both 
preapproval and surveillance inspection components in a single visit to 
an establishment.\10\
---------------------------------------------------------------------------
    \10\ Most combined inspections occur when FDA conducts a 
surveillance inspection at an establishment where a preapproval 
inspection was also being conducted.


Table 1: Types of Drug Manufacturing Establishment Inspections Conducted
               by the  Food and Drug Administration (FDA)
------------------------------------------------------------------------
     Type of inspection                  Purpose of inspection
------------------------------------------------------------------------
Preapproval inspections       FDA conducts preapproval inspections
                               before approving a new brand name or
                               generic drug to be marketed in the United
                               States. These inspections are designed to
                               verify the accuracy and authenticity of
                               drug application data (such as
                               manufacturing records) and assess whether
                               the establishment can manufacture the
                               product in the application in conformance
                               with applicable regulations to assure a
                               drug's identity, strength, quality, and
                               purity.a
------------------------------------------------------------------------
Surveillance inspections      Surveillance inspections are conducted at
                               establishments when drugs are already
                               marketed in the United States--either
                               after FDA approval or after marketing for
                               drugs that do not require FDA
                               preapproval--and focus on compliance with
                               system-wide controls for ensuring that
                               the manufacturing processes produce high-
                               quality drugs.b Systems examined during
                               these inspections include those related
                               to materials, quality control,
                               production, facilities and equipment,
                               packaging and labeling, and laboratory
                               controls. These systems may be involved
                               in the manufacture of multiple drugs.
------------------------------------------------------------------------
For-cause inspections         For-cause inspections are conducted to
                               investigate specific issues, such as
                               those raised in consumer complaints,
                               indications of potential manufacturing
                               problems submitted by the manufacturers
                               themselves, or to follow up on previous
                               FDA regulatory action, among other
                               reasons.
------------------------------------------------------------------------
Source: GAO analysis of FDA information. | GAO-20-626T.
a When FDA receives an application for drug approval (or a supplement to
  that application related to a manufacturing change), officials review
  the inspection history of each establishment listed on the
  application, among other things. According to FDA officials, if an
  establishment listed on the application has received a satisfactory
  good manufacturing practices inspection in the previous 2 years for a
  similar or more complex product, and the agency has no new concerns,
  FDA may consider this inspection sufficient and not perform a
  preapproval inspection of this establishment.
b Certain drugs, such as some over-the-counter drugs, may not require
  FDA approval before marketing in the United States.

    FDA uses multiple databases to select foreign and domestic 
establishments for surveillance inspections, including its registration 
database and inspection database. Because the establishments are 
continuously changing as they begin, stop, or resume marketing products 
in the United States, CDER creates a monthly catalog of establishments. 
The establishments in the catalog are prioritized for inspection twice 
each year.

    In our 2008 report we found that, because of inaccurate information 
in FDA's databases, the agency did not know how many foreign drug 
establishments were subject to inspection.\11\ For example, some 
establishments included in FDA's registration database may have gone 
out of business and did not inform FDA that they had done so, or they 
did not actually manufacture drugs for the U.S. market. In our report, 
we noted that some foreign establishments may register because, in 
foreign markets, registration may erroneously convey an ``approval'' or 
endorsement by FDA, when in fact the establishment may never have been 
inspected by FDA.\12\ We recommended that FDA take steps to improve the 
accuracy of this registration information. In our 2010 and 2016 reports 
we found that FDA had taken steps to improve the accuracy and 
completeness of information in its catalog of drug establishments 
subject to inspection, such as using contractors to conduct site visits 
to verify the existence of registered foreign establishments and 
confirm that they manufacture the products that are recorded in U.S. 
import records.\13\
---------------------------------------------------------------------------
    \11\ GAO-08-970.
    \12\ Foreign and domestic establishments that manufacture drugs for 
the U.S. market are required to register annually with FDA. 
Establishments provide FDA with, among other things, their names and 
addresses and a listing of the drugs that they manufacture for the U.S. 
market. 21 U.S.C. Sec. 360(b), (i), (j).
    \13\ See GAO-10-961 and GAO-17-143.

    To prioritize establishments for surveillance inspections, CDER 
applies a risk-based site selection model to its catalog of 
establishments to identify those establishments (both domestic and 
foreign) that, based on the characteristics of the drugs being 
manufactured, pose the greatest potential public health risk should 
they experience a manufacturing defect. This model analyzes several 
factors, including inherent product risk, establishment type, 
inspection history, and time since last inspection, to develop a list 
of establishments that FDA considers to be a priority for 
inspection.\14\ Through this process, CDER develops a ranked list of 
foreign and domestic establishments selected for inspection that is 
submitted to ORA. To be efficient with its resources, ORA staff may 
shift the order of establishments to be inspected on CDER's prioritized 
list based on geographic proximity to other planned inspection trips, 
according to FDA officials.
---------------------------------------------------------------------------
    \14\ Establishments may also be selected for surveillance 
inspections for other reasons, such as FDA's focus on a particular 
product.
---------------------------------------------------------------------------
FDA Inspection Workforce
    Investigators from ORA and, as needed, ORA laboratory analysts with 
certain expertise are responsible for inspecting drug manufacturing 
establishments.\15\ FDA primarily relies on three groups of 
investigators to conduct foreign inspections:
---------------------------------------------------------------------------
    \15\ ORA investigators lead inspections and are responsible for 
performing or overseeing all aspects of an inspection. ORA laboratory 
analysts are chemists or microbiologists and have expertise in 
laboratory testing. In some instances, staff from CDER, such as subject 
matter experts or drug application reviewers, may participate in 
inspections.

        ORA investigators based in the United States, who primarily 
conduct domestic drug establishment inspections but may sometimes 
---------------------------------------------------------------------------
conduct foreign inspections.

        Members of ORA's dedicated foreign drug cadre, a group of 
domestically based investigators, who exclusively conduct foreign 
inspections.

        Investigators assigned to and living in the countries where 
FDA has foreign offices, who include both staff based in the foreign 
offices full time and those on temporary duty assignment to the foreign 
offices. FDA began opening offices around the world in 2008 to obtain 
better information on the increasing number of products coming into the 
United States from overseas, to build relationships with foreign 
stakeholders, and to perform inspections.\16\ FDA full-time foreign 
office staff are posted overseas for 2-year assignments. FDA staff can 
also be assigned to the foreign offices on temporary duty assignments 
for up to 120 days. In fiscal year 2019, there were full-time and 
temporary duty drug investigators assigned to FDA foreign offices in 
China and India.
---------------------------------------------------------------------------
    \16\ Currently, FDA has foreign offices in China, Europe, India, 
and Latin America but does not have drug investigators in the Europe or 
Latin America offices.
---------------------------------------------------------------------------
Post-Inspection Activities
    FDA's process for determining whether a foreign establishment 
complies with CGMPs involves both CDER and ORA. During an inspection, 
ORA investigators are responsible for identifying any significant 
objectionable conditions and practices and reporting these to the 
establishment's management. Investigators suggest that the 
establishment respond to FDA in writing concerning all actions taken to 
address the issues identified during the inspection.

    Once ORA investigators complete an inspection, they are responsible 
for preparing an establishment inspection report to document their 
inspection findings. Inspection reports describe the manufacturing 
operations observed during the inspection and any conditions that may 
violate U.S. statutes and regulations. Based on their inspection 
findings, ORA investigators make an initial recommendation regarding 
whether regulatory actions are needed to address identified 
deficiencies using one of three classifications: no action indicated 
(NAI); voluntary action indicated (VAI); or official action indicated 
(OAI).\17\ Inspection reports and initial classification 
recommendations for regulatory action are to be reviewed within ORA. 
For inspections classified as OAI--where ORA identified serious 
deficiencies--such inspection reports and classification 
recommendations are to be reviewed within CDER. CDER is to review the 
ORA recommendations and determine whether regulatory action is 
necessary. CDER also is to review inspection reports and initial 
classification recommendations for all for-cause inspections, 
regardless of whether regulatory action is recommended by ORA.
---------------------------------------------------------------------------
    \17\ FDA officials told us that investigators are responsible for 
checking on previously identified deficiencies in any subsequent 
inspections of the same establishment. Officials told us that repeated 
identification of the same deficiency could result in regulatory 
action.
    Inspection classifications are publicly available for some 
inspections on FDA's website: https://www.fda.gov/inspections-
compliance-enforcement-and-criminal-investigations/inspection-
references/inspection-classification-database/.

    According to FDA policy, inspections classified as OAI may result 
in regulatory action, such as the issuance of a warning letter. FDA 
issues warning letters to those establishments manufacturing drugs for 
the U.S. market that are in violation of applicable U.S. laws and 
regulations and may be subject to enforcement action if the violations 
are not promptly and adequately corrected. In addition, warning letters 
may notify foreign establishments that FDA may refuse entry of their 
drugs at the border or recommend disapproval of any new drug 
applications listing the establishment until sufficient corrections are 
made.\18\ FDA may take other regulatory actions if it identifies 
serious deficiencies during the inspection of a foreign establishment. 
For example, FDA may issue an import alert, which instructs FDA staff 
that they may detain drugs manufactured by the violative establishment 
that have been offered for entry into the United States.\19\ In 
addition, FDA may conduct regulatory meetings with the violative 
establishment. Regulatory meetings may be held in a variety of 
situations, such as a follow-up to the issuance of a warning letter to 
emphasize the significance of the deficiencies or to communicate 
documented deficiencies that do not warrant the issuance of a warning 
letter.
---------------------------------------------------------------------------
    \18\ Warning letters are publicly available on FDA's website: 
https://www.fda.gov/inspections-compliance-enforcement-and-criminal-
investigations/compliance-actions-and-activities/warning-letters.
    \19\ An import alert can apply to specific drugs or all drugs 
manufactured by an establishment. Import alerts are publicly available 
on FDA's website: https://www.fda.gov/industry/actions-enforcement/
import-alerts.
---------------------------------------------------------------------------
      the number of foreign inspections declined in recent years, 
      and the majority of such inspections identified deficiencies
Total Number of FDA Foreign Drug Inspections Has Decreased Since Fiscal 
        Year 2016 After Several Years of Increases
    In December 2019, we found that from fiscal year 2012 through 
fiscal year 2016, the number of FDA foreign drug manufacturing 
establishment inspections increased but then began to decline after 
fiscal year 2016. In fiscal year 2015, the total number of foreign 
inspections surpassed the number of domestic inspections for the first 
time. However, from fiscal year 2016 through 2018, both foreign and 
domestic inspections decreased--by about 10 percent and 13 percent, 
respectively. FDA officials attributed this decrease to vacancies in 
the number of investigators available to conduct inspections (which we 
discuss later in this testimony statement) and to inaccurate data used 
to select establishments for inspection in fiscal years 2017 and 2018.

    Despite steps taken to improve the accuracy and completeness of FDA 
data on foreign establishments, in December 2019, we found that the 
data challenges we identified in our 2008 report continue to make it 
difficult for FDA to accurately identify establishments subject to 
inspection. Specifically, since 2017, FDA had pursued an initiative to 
inspect approximately 1,000 foreign establishments that lacked an 
inspection history. As of November 2019, officials said all of these 
establishments had either been inspected or were determined not to be 
subject to inspection because it was determined they did not actually 
manufacture drugs for the U.S. market, or had not recently shipped 
drugs to the United States.\20\ However, officials told us that this 
effort contributed to the decline in the number of foreign inspections 
conducted because of how data inaccuracies affected the process for 
selecting establishments for inspection. Specifically, after selecting 
uninspected foreign establishments for inspection, FDA determined that 
a sizeable percentage of these establishments were not actually subject 
to inspection (e.g., about 40 percent of those assigned to the China 
Office in fiscal years 2017 and 2018).\21\ These foreign establishments 
were thus removed from the list for inspection for the given year. FDA 
officials told us that the next highest priority establishments 
identified through the risk-based model to replace those establishments 
were domestic establishments. As a result, the number of foreign 
establishments actually inspected decreased. As part of our ongoing 
work, we plan to examine the accuracy and completeness of information 
FDA maintains about foreign establishments and the application of its 
risk-based site selection process.
---------------------------------------------------------------------------
    \20\ We previously reported that as of 2016, FDA lacked the 
inspection history of 33 percent of the foreign establishments in its 
catalog of establishments subject to inspection.
    \21\ FDA officials said that some of these establishments were 
registered with FDA but did not actually manufacture drugs for the U.S. 
market, and others were drug manufacturers but had not shipped drugs to 
the United States in the previous 3 years. FDA officials told us that, 
once identified, they removed such establishments from the catalog of 
establishments subject to surveillance inspection to which the agency 
applies its risk-based model each year, but they retained information 
on these establishments in the larger inventory of establishments 
should these establishments begin shipping drugs to the United States 
in the future.

    We further found that FDA continued to conduct the largest number 
of foreign inspections in India and China, with inspections in these 
two countries representing about 40 percent of all foreign drug 
inspections from fiscal year 2016 through 2018. (See table 2.) In 
addition to India and China, the rest of the countries in which FDA 
most frequently conducted inspections has generally been the same since 
---------------------------------------------------------------------------
our 2008 report.


   Table 2: Total Number of FDA Foreign Drug Inspections, by Country,
                     Fiscal Years 2012 through 2018
------------------------------------------------------------------------
     Country       2012    2013    2014    2015    2016    2017    2018
------------------------------------------------------------------------
India                140     110     114     204     207     219     252
------------------------------------------------------------------------
China                 59      74     113     127     173     165     153
------------------------------------------------------------------------
Germany               59      60      72      68      72      69      68
------------------------------------------------------------------------
Canada                49      51      39      52      56      72      48
------------------------------------------------------------------------
Italy                 38      45      50      41      69      46      45
------------------------------------------------------------------------
Japan                 49      28      47      31      65      46      43
------------------------------------------------------------------------
South Korea            4       7       8       5      13      56      40
------------------------------------------------------------------------
France                25      37      44      45      55      42      36
------------------------------------------------------------------------
Switzerland           23      23      37      31      37      25      32
------------------------------------------------------------------------
United Kingdom        29      27      33      43      41      40      12
------------------------------------------------------------------------
All other            150     175     222     193     247     213     206
 countries
------------------------------------------------------------------------
Total foreign        625     637     779     840   1,035     993     935
------------------------------------------------------------------------
Total domestic     1,184   1,030     897     784     882     772    742
------------------------------------------------------------------------
Source: GAO analysis of Food and Drug Administration (FDA) data. | GAO-
  20-626T.
Note: The total number of inspections includes those conducted for
  preapproval, surveillance, and for-cause purposes.

    Since we last reported on this issue, FDA announced in March 2020 
that, due to COVID-19, it was postponing most inspections of foreign 
manufacturing establishments. Only inspections deemed mission-critical 
would still be considered on a case-by-case basis.\22\ According to the 
announcement, while the pandemic has added new complexities, FDA has 
other tools to ensure the safety of the U.S. drug supply. For example, 
FDA announced that it was evaluating additional ways to conduct its 
inspectional work that would not jeopardize public safety and would 
protect both the establishments and the FDA staff. Such ways, according 
to FDA, could include reviewing the compliance histories of 
establishments, using information shared by foreign regulatory 
partners, and evaluating establishment records in lieu of an onsite 
inspection. In addition, the FDA Commissioner's May 11, 2020 press 
statement stated that while FDA's regulatory oversight is vital to the 
long-term health of America, product safety and quality are ultimately 
the establishment's responsibility.\23\ Most firms, according to FDA, 
strive to reliably provide quality products and maintain the integrity 
of the supply chain. However, the lack of foreign inspections removes a 
critical source of information about the quality of drugs manufactured 
for the U.S. market.
---------------------------------------------------------------------------
    \22\ According to FDA, the agency's assessment of mission-critical 
drug inspections includes consideration for whether the products are 
innovative breakthrough products or are considered medically necessary. 
FDA indicated that both for-cause and pre-approval inspections can be 
deemed mission critical.
    \23\ Food and Drug Administration, Coronavirus (COVID-19) Update: 
FDA Updates on Surveillance Inspections During COVID-19, FDA press 
announcement (May 11, 2020).

    It is not clear when FDA will resume regular inspections. The 
agency originally announced the postponement would last through April 
2020. However, on May 11, 2020, it stated that the postponement would 
continue. According to FDA, the agency continues to closely monitor the 
global situation. FDA stated that it remains in contact with its 
foreign regulatory counterparts and would work with the Centers for 
Disease Control and Prevention to develop a process that would govern 
how and where to return to on-site facility inspections as conditions 
improve.
Most Foreign Inspections Were for Surveillance
    In December 2019, we found that each year from fiscal year 2012 
through 2018 at least 50 percent of FDA's foreign inspections were 
surveillance inspections. In contrast to preapproval inspections, 
surveillance inspections are used to ensure drugs already on the market 
are manufactured in compliance with FDA regulations. In recent years, 
the proportion of foreign surveillance inspections has increased. As 
figure 2 shows, in fiscal year 2012, 56 percent of foreign inspections 
were surveillance-only inspections; in contrast, from fiscal year 2016 
through 2018, about 70 percent of foreign inspections were 
surveillance-only, which was comparable to the percentage for domestic 
inspections during that period. This is a significant increase from the 
13 percent of foreign inspections that were surveillance-only when we 
made our 2008 recommendation that FDA inspect foreign establishments at 
a comparable frequency to their domestic counterparts (85 percent of 
which were surveillance-only at that time).\24\
---------------------------------------------------------------------------
    \24\ See GAO-08-970, 27. 
    [GRAPHIC] [TIFF OMITTED] T6220.003
    
    In our December 2019 testimony, we also reported that FDA 
implemented changes to its foreign drug inspection program since our 
2008 report that may have contributed to the increase in surveillance 
inspections. Prior to 2012, FDA was required to inspect domestic 
establishments that manufacture drugs marketed in the United States 
every 2 years, but there was no similar requirement for foreign 
establishments. As a result, and as we reported in 2008, foreign 
inspections were often preapproval inspections driven by pending 
applications for new drugs. FDA thus conducted relatively few 
surveillance-only inspections to monitor the ongoing compliance of 
establishments manufacturing drugs that were already on the market, 
with just 13 percent of foreign inspections conducted for surveillance 
purposes at the time of our 2008 report. However, in 2012, the Food and 
Drug Administration Safety and Innovation Act eliminated the 2-year 
requirement for domestic inspections, directing FDA to inspect both 
domestic and foreign establishments on a risk-based schedule determined 
by an establishment's known safety risks, which was consistent with our 
2008 recommendation.\25\
---------------------------------------------------------------------------
    \25\ Pub. L. No. 112-144, Sec. 705, 126 Stat. 993, 1066 (2012) 
(codified at 21 U.S.C. 360(h)). This established a comparable 
inspection frequency for foreign and domestic establishments with 
similar characteristics, consistent with our 2008 recommendation.
---------------------------------------------------------------------------
FDA Identified Deficiencies During the Majority of Foreign Inspections
    In December 2019, we found that from fiscal year 2012 through 2018, 
FDA identified deficiencies in approximately 64 percent of foreign drug 
manufacturing establishment inspections (3,742 of 5,844 inspections). 
This includes deficiencies necessitating a classification of VAI, or 
the more serious OAI, as described in the text box.


------------------------------------------------------------------------
                       Inspection Classifications
-------------------------------------------------------------------------
Based on their inspection findings, FDA investigators make an initial
 recommendation regarding the classification of each inspection:
 
 No action indicated (NAI) means that insignificant or no deficiencies
 were identified during the inspection.
 
 Voluntary action indicated (VAI) means that deficiencies were
 identified during the inspection, but the agency is not prepared to
 take regulatory action, so any corrective actions are left to the
 establishment to take voluntarily.
 
 Official action indicated (OAI) means that serious deficiencies were
 found that warrant regulatory action.
------------------------------------------------------------------------
Source: GAO | GAO-20-626T.


    About 59 percent of domestic inspections (3,702 out of 6,291) 
identified deficiencies during this time period. (See fig. 3.) This 
proportion is similar to what we found when we last looked at this 
issue in 2008, when FDA identified deficiencies in about 62 percent of 
foreign inspections and 51 percent of domestic inspections from fiscal 
years 2002 through 2006.\26\
---------------------------------------------------------------------------
    \26\ In our 2008 report we found that FDA's data did not provide 
reliable information about the number of foreign inspections with 
serious deficiencies classified specifically as OAI. Therefore, we 
reported data on the percentage of inspections classified as either VAI 
or OAI together. See GAO-08-970, 29. We recommended that FDA correct 
this issue, and they did so beginning in October 2011, but, for 
comparison purposes, we continue to report combined VAI and OAI 
inspection data here.

[GRAPHIC] [TIFF OMITTED] T6220.004


    Our December 2019 analysis showed that serious deficiencies 
identified during foreign drug inspections classified as OAI--which 
represented 8 percent of inspections from fiscal year 2012 through 
2018--include CGMP violations such as those related to production and 
process controls, equipment, records and reports, and buildings and 
facilities.\27\ For example:
---------------------------------------------------------------------------
    \27\ The identification of serious deficiencies is not unique to 
foreign inspections. For example, at a domestic establishment producing 
finished drug products, the investigator observed brown stains, white 
residues, and brown stagnant water in manufacturing equipment.

        Failure to maintain the sanitation of the buildings used in 
the manufacturing processing, packing, or holding of a drug product (21 
CFR Sec. 211.56(a) (2019)). At an establishment in India producing 
finished drug products, the investigator reported observing a live moth 
floating in raw material used in the drug production, and that the 
facility staff continued to manufacture the drug products using the raw 
material contaminated by the moth, despite the investigator pointing 
---------------------------------------------------------------------------
out its presence.

        Failure to perform operations relating to the manufacture, 
processing, and packing of penicillin in facilities separate from those 
used for other drug products (21 CFR Sec. 211.42 (d) (2019)). At an 
establishment in Turkey that manufactured penicillin and other drugs, 
the investigator reported that the manufacturer had detected penicillin 
outside the penicillin manufacturing area of the establishment multiple 
times. According to FDA, penicillin contamination of other drugs 
presents great risk to patient safety, including potential anaphylaxis 
(even at extremely low levels of exposure) and death.

    Some investigators who conduct foreign inspections expressed 
concern with instances in which ORA or CDER reviewers reclassified the 
investigator's initial inspection classification recommendations of OAI 
to the less serious classification of VAI.
          fda continued to face challenges filling vacancies 
               among staff conducting foreign inspections
    In December 2019, we found that FDA's foreign inspection workforce 
had staff vacancies, which FDA officials said contributed to the recent 
decline in inspections. As previously mentioned, FDA used multiple 
types of staff resources to conduct foreign drug inspections--including 
ORA investigators based in the United States, members of ORA's 
dedicated foreign drug cadre based in the United States, and 
investigators assigned to FDA's foreign offices.\28\ However, we found 
that each of these groups had current vacancies. At the time of our 
December testimony, FDA officials told us that the agency was trying to 
fill vacancies in each of these groups, but the lower staff numbers may 
limit FDA's ability to conduct more foreign inspections.
---------------------------------------------------------------------------
    \28\ In addition to these categories, there are a variety of other 
FDA staff who, on occasion, may participate in an inspection if certain 
subject matter expertise is needed.

    ORA investigators based in the United States. This group of 
investigators conducted the majority of foreign inspections; about 76 
percent of foreign inspections in fiscal year 2018 involved an ORA 
investigator based in the United States who conducts both foreign and 
domestic inspections.\29\ FDA officials said that the more experienced 
investigators from this group are expected to conduct three to six 
foreign inspections per year, and investigators hired using generic 
drug user fees are expected to inspect nine to 12 foreign 
establishments per year.\30\ As of June 2019, there were 190 
investigators eligible to conduct foreign drug inspections, but 
officials said that as of November 2019, the agency had an additional 
58 vacancies in this group. At the time of our December 2019 testimony, 
officials said that the agency was in the process of hiring 26 ORA 
investigators based in the United States to fill these vacancies, with 
32 vacancies remaining.\31\
---------------------------------------------------------------------------
    \29\ Inspections can be conducted by one investigator or multiple 
investigators. Therefore, investigators from more than one group could 
be involved with a single inspection.
    \30\ Beginning in 2014, FDA began to use the user fees collected 
from manufacturers of generic drugs to hire additional investigators 
focused on inspecting generic drug manufacturers. According to FDA 
officials, these investigators have primarily been assigned to conduct 
foreign inspections.
    \31\ FDA officials indicated that filling these vacancies was a 
priority for the agency and noted that their recent implementation of 
direct-hire authority has helped them fill these positions.

    FDA officials attributed the vacancies to multiple factors: 
investigator retirements, investigator movement to other parts of FDA, 
and the need to hire to additional investigator positions using generic 
drug user fees. Officials also said that a reorganization within ORA 
led to a reduced number of investigators who conduct drug manufacturing 
establishment inspections. While FDA had recently filled several of the 
vacancies, officials told us that new investigators are not typically 
used for foreign inspections until they have been with the agency for 2 
---------------------------------------------------------------------------
to 3 years.

    ORA dedicated foreign drug cadre. About 15 percent of foreign 
inspections in fiscal year 2018 involved an investigator from ORA's 
dedicated foreign drug cadre--a group of ORA investigators based in the 
United States who exclusively conduct foreign inspections. FDA 
officials said that members of the cadre are expected to conduct 16 to 
18 foreign inspections each year. According to FDA, the cadre had 20 
investigators in 2012 and 15 investigators in 2016. However, the cadre 
had only 12 investigators as of November 2019, out of 20 available 
slots. At the time of our December 2019 testimony, FDA officials told 
us that the agency was attempting to fill these positions from the 
current ORA investigator pool, but officials were not confident that 
all 20 slots would be filled.

    Investigators assigned to FDA's foreign offices. Approximately 7 
percent of foreign inspections in fiscal year 2018 involved 
investigators from FDA's foreign offices. The investigators conducting 
these inspections were those based in the China and India foreign 
offices--the countries where most drug inspections occur--and also 
included those investigators on temporary duty assignment to these 
offices.\32\ According to FDA officials, these investigators are 
expected to conduct 15 foreign inspections each year. We have noted 
high vacancy rates for these foreign offices in past reports.\33\ While 
these vacancy rates have decreased over time, vacancies persist. As of 
November 2019, FDA's China office had three of 10 drug investigator 
positions vacant (a 30-percent vacancy rate), while FDA's India office 
had two of six drug investigator positions vacant (a 33-percent vacancy 
rate).

    \32\ The percentage of inspections involving these groups of 
investigators do not equal 100 percent because some inspections may 
involve only non-investigator staff, such as CDER drug application 
reviewers.
    \33\ See GAO, Food and Drug Administration: Overseas Offices Have 
Taken Steps to Help Ensure Import Safety, but More Long-Term Planning 
Is Needed, GAO-10-960 (Washington, DC: Sep. 30, 2010), and GAO-17-143.

    In our December 2019 testimony, we reported that FDA had taken 
steps to address vacancies in the foreign offices but continued to face 
challenges. In our 2010 report, we recommended that FDA develop a 
strategic workforce plan to help recruit and retain foreign office 
staff.\34\ FDA agreed with our recommendation and released such a plan 
in March 2016, but the long-standing vacancies in the foreign offices 
raise questions about its implementation. FDA officials told us that 
one challenge in recruiting investigators for the foreign offices is 
that well-qualified investigators for those positions need foreign 
inspection experience. For example, an official in FDA's India office 
told us that foreign inspections can be challenging, and the India 
office does not have the resources to develop or train new 
investigators. Therefore, it is important to recruit investigators who 
have experience conducting foreign inspections, and such investigators 
are recruited from ORA. Thus, vacancies in the other two groups of 
investigators can influence the number of staff available to apply for 
positions in the foreign offices.
---------------------------------------------------------------------------
    \34\ GAO-10-960.

    Further, according to FDA officials, after employees have accepted 
an in-country position, the agency can experience significant delays 
before they are staffed in the office due to delays in processing 
assignments. For example, an official in FDA's India office said that 
investigators need to complete a week-long security training program 
and must obtain the security clearance needed to work at the U.S. 
Embassy, which is where FDA's foreign office is located. However, the 
official told us that there are limited availabilities for that 
training, and background checks for security clearances can take 
time.\35\ According to this official, FDA investigators did not usually 
receive first priority for the training. FDA estimated that it can take 
as little as 1 month to over 2 years for an investigator to clear 
background and medical checks and arrive at a foreign office. For 
example, an investigator in FDA's China office told us that as a result 
of these requirements and other issues, it took nearly 2 years for the 
investigator to arrive at the office after FDA had accepted the 
investigator's application. According to FDA's own strategic workforce 
plan for the foreign offices, these types of delays have resulted in 
staff changing their decision after accepting a position in the foreign 
offices.
---------------------------------------------------------------------------
    \35\ We have highlighted timeliness concerns with the government-
wide personnel security clearance process in our High Risk series. See 
GAO-19-157SP.
---------------------------------------------------------------------------
 persistent challenges unique to foreign inspections raised questions 
            about their equivalence to domestic inspections
    In December 2019, we found that FDA continues to face unique 
challenges when inspecting foreign drug establishments that raise 
questions about whether these inspections are equivalent to domestic 
inspections. Specifically, based on our interviews with drug 
investigators in the dedicated foreign drug cadre and in FDA's foreign 
offices in China and India, we identified four challenge areas related 
to conducting foreign inspections, which are described below. Of the 
four challenge areas identified, three areas--preannouncing 
inspections, language barriers, and lack of flexibility--were also 
raised in our 2008 report.\36\
---------------------------------------------------------------------------
    \36\ GAO-08-970.

    Preannouncing Inspections. As we reported in 2008, the amount of 
notice FDA generally gives to foreign drug establishments in advance of 
an inspection is different than for domestic establishments.\37\ Drug 
establishment inspections performed in the United States are almost 
always unannounced, whereas foreign establishments generally receive 
advance notice of an FDA inspection. According to FDA officials, FDA is 
not required to preannounce foreign inspections. However, they said the 
agency generally does so to avoid wasting agency resources, obtain the 
establishment's assistance to make travel arrangements, and ensure the 
safety of investigators when traveling in country.
---------------------------------------------------------------------------
    \37\ GAO-08-970.

    In our December 2019 testimony, we found that FDA does conduct some 
unannounced foreign inspections, particularly if the investigators 
conducting the inspection are based in FDA's foreign offices. However, 
FDA officials told us that FDA does not have data on the frequency with 
which foreign drug inspections are unannounced, nor the extent to which 
the amount of notice provided to foreign establishments varies. 
According to FDA officials, this is because FDA does not have a data 
field in its database to systematically track this information.\38\ 
However, the officials estimated that the agency generally gives 12 
weeks of notice to establishments that investigators are coming when 
investigators are traveling from the United States. While investigators 
in FDA's China and India offices do conduct unannounced or short-notice 
inspections, these staff do not perform most of the inspections in 
these countries. (See table 3.)
---------------------------------------------------------------------------
    \38\ According to FDA officials, FDA planned to add a new variable 
to its data to identify preannounced and unannounced inspections.


  Table 3: FDA Estimates of the Amount of Notice It Provides to Foreign
 Drug Establishments Prior to Inspection, by Investigator Type, and the
     Percentage of Inspections in Which These Investigator Types Are
                       Involved, Fiscal Year 2018
------------------------------------------------------------------------
                                                         Percentage of
                                                          inspections
    Type of                                             involving this
  investigator        Amount of notice provided        investigator type
                                                        in fiscal year
                                                             2018a
------------------------------------------------------------------------
China office     Announcement: 0-5 days               Involved in 27
 investigator    FDA officials stated that             percent of total
                  investigators based in FDA's China   number of
                  office will announce surveillance    inspections in
                  inspections (those related to        China
                  drugs already on the U.S. market)
                  to drug establishments 5 business
                  days in advance of an inspection.
                  According to FDA officials, for-
                  cause inspections (those conducted
                  in response to specific issues or
                  concerns) conducted by
                  investigators based in the China
                  office are unannounced, meaning
                  that they are not preannounced to
                  the drug establishments in
                  advance.
------------------------------------------------------------------------
India office     Announcement: 0-5 days               Involved in 10
 investigator    FDA officials stated that             percent of total
                  investigators based in FDA's India   number of
                  office will announce inspections     inspections in
                  to drug establishments 3 to 5 days   India
                  in advance of an inspection and
                  can conduct short-notice
                  inspections that are announced 30
                  minutes before the inspection.
------------------------------------------------------------------------
U.S.-based       Announcement: generally 12 weeks     Involved in:
 investigator    FDA officials said that the agency    73 percent of
 (including       generally announces foreign          total number of
 dedicated        inspections conducted by             inspections in
 foreign drug     domestically based investigators     China
 cadre)           about 12 weeks in advance.           90 percent of
                                                       total number of
                                                       inspections in
                                                       India
                                                       100 percent of
                                                       total number of
                                                       inspections in
                                                       other foreign
                                                       countries
------------------------------------------------------------------------
Source: Interviews with Food and Drug Administration (FDA) officials and
  GAO analysis of FDA data. | GAO-20-626T.
a These percentages add up to over 100 percent as some inspections may
  involve more than one type of investigator.


    Our work indicated that preannouncing foreign inspections can 
create challenges and raises questions about the equivalence to 
domestic inspections. Of the 18 investigators we interviewed, 14 said 
that there are downsides to preannouncing foreign inspections, 
particularly that providing advance notice gives foreign establishments 
the opportunity to fix problems before the investigator arrives. For 
example, when an inspection is preannounced, it gives establishments 
time to clean up their facility and update or generate new operating 
procedures ahead of the inspection. However, establishments are 
expected to be in a constant state of compliance and always ready for 
an FDA inspection, and several investigators told us seeing the true 
day-to-day operating environment for an establishment is more likely 
during an unannounced inspection.

    Of the 18 investigators we interviewed for our December 2019 
testimony, 12 said that unannounced inspections are generally 
preferable to preannounced inspections. One investigator told us that, 
although they believed the best way to ensure industry compliance to 
CGMPs was for establishments to not know when FDA is coming for an 
inspection, there was no data that would allow the agency to evaluate 
whether unannounced inspections were better than preannounced 
inspections. In addition, some investigators told us that it was still 
possible to identify serious deficiencies during preannounced 
inspections. For example, investigators could still identify issues by 
looking at the firm's electronic records, including time-stamped data 
relating to the creation, modification, or deletion of a record. Three 
investigators also told us that in some cases there could be benefits 
to announcing inspections in advance. For example, for preapproval 
inspections, announcing the inspection in advance gives the 
establishment time to organize the documentation and staff needed to 
conduct the inspection.

    Language Barriers. Work for our December 2019 testimony indicated 
that language barriers--which we first reported as a challenge to 
conducting foreign inspections in our 2008 report--can add time to 
inspections and raise questions about the accuracy of information FDA 
investigators collect and thus about the equivalence to domestic 
inspections.\39\ FDA generally does not send translators on inspections 
in foreign countries. Rather, investigators rely on the drug 
establishment to provide translation services, which can be an English-
speaking employee of the establishment being inspected, an external 
translator hired by the establishment, or an English-speaking 
consultant hired by the establishment.
---------------------------------------------------------------------------
    \39\ GAO-08-970.

    Of the 18 investigators that we interviewed, 14 said that language 
barriers can be a challenge to conducting foreign inspections and were 
especially challenging in parts of Asia, including China and Japan. 
Seven investigators told us this issue was less of a challenge for 
inspections conducted in other foreign countries, including India and 
countries in Europe, because workers at establishments in these 
countries were more likely to speak English, and documentation was also 
more likely to be in English. Investigators told us that compared to 
domestic inspections, it can be more challenging and take longer to 
complete typical inspection-related activities, such as reviewing 
documentation or interviewing employees, if the investigator needed to 
---------------------------------------------------------------------------
rely on translation.

    Fourteen of the 18 investigators we interviewed said that there can 
be concerns related to relying on establishment staff and independent 
translators. Specifically, 11 investigators told us there can be 
uncertainties regarding the accuracy of the information being 
translated, particularly when investigators rely on the translation 
provided by an employee of the establishment being inspected. For 
instance, one investigator said that there was more risk of conflict of 
interest if the establishment used its own employees to translate. 
Another investigator said that they went to a drug establishment in 
China that told FDA it had English-speaking employees to translate the 
inspection, but that was not the case, and the investigator had to use 
an application on their phone to translate the interviews. In addition, 
the firm representative providing the translation may be someone who 
does not have the technical language needed, which can make it harder 
to communicate with firm staff and facilitate the inspection. One 
investigator told us that the independent translators hired by firms 
were sometimes consultants and, in those instances, it can seem like 
the consultants are coaching the firm during the inspection.

    FDA officials told us that when they conduct unannounced for-cause 
inspections in China, investigators bring locally employed staff who 
work in FDA's China office to act as translators. The investigators we 
interviewed said that in such instances, they valued knowing that the 
translation they were getting was accurate. However, FDA does not have 
the resources to provide locally employed staff on every inspection, 
according to an FDA official.

    Lack of Flexibility. Work for our December 2019 testimony indicated 
that, as we first reported in 2008, the overseas travel schedule can 
present unique challenges for FDA's domestically based investigators--
including both ORA investigators and members of the dedicated foreign 
dug cadre--who conduct the majority of foreign inspections.\40\ Eight 
of the 12 dedicated foreign drug cadre investigators that we 
interviewed for our December 2019 testimony told us that there is 
little flexibility to extend foreign inspections conducted by 
domestically based investigators, because the inspections they conduct 
on an overseas trip are scheduled back-to-back in 3-week trips that may 
involve three different countries.\41\ This raises questions about 
their equivalence to domestic inspections. For instance, extending one 
inspection would limit the amount of time the investigator has to 
complete their other scheduled inspections, some investigators told us.
---------------------------------------------------------------------------
    \40\ GAO-08-970.
    \41\ According to FDA officials, investigators in the dedicated 
foreign drug cadre are expected to conduct 16 to 18 foreign inspections 
per year. To meet this expectation, cadre members travel overseas six 
times a year, with each trip lasting 3 weeks, and conduct two or three 
back-to-back inspections per trip.

    In addition, eight investigators told us that domestically based 
staff are generally unable to extend the total amount of time spent on 
an overseas trip--one investigator told us that an investigator would 
have to find something really bad to justify an extension. In contrast, 
FDA officials told us that inspections conducted by in-country 
investigators in China or India, and domestic inspections in the United 
States, are generally scheduled one at a time and can thus more easily 
be extended if the investigator needs additional time to pursue 
potential deficiencies. However, in-country investigators are not 
---------------------------------------------------------------------------
involved in the majority of inspections conducted in China or India.

    Three investigators from the dedicated foreign drug cadre told us 
that when they travel overseas, they adjust their inspection approach 
to help ensure they finish foreign inspections on time. For example, 
one investigator told us that an investigator may start the inspection 
in an area of the establishment that was noted as having issues during 
the last inspection. However, one investigator said that sometimes it 
is not possible to cover everything in depth during a foreign 
inspection. Another investigator told us that they focus on identifying 
the most serious issues during a foreign inspection, and that less 
serious issues can be identified in the establishment inspection report 
for reference in the next inspection. Five investigators also noted 
that they work long hours during their inspection to ensure they can 
complete the needed work.\42\ While FDA may assign more than one 
investigator to an inspection to complete needed work, one investigator 
said that FDA does not usually assign more than one person to an 
inspection because investigators are expected to have the experience to 
conduct inspections by themselves.
---------------------------------------------------------------------------
    \42\ According to FDA officials, members of the dedicated foreign 
drug cadre can receive up to 15 hours of overtime per week during an 
overseas week to complete inspection-related work. For example, 
investigators may use overtime hours to extend the amount of time on 
site or to review relevant data and documentation when they return to 
their hotel at night.

    FDA data show that from fiscal years 2012 through 2018, the 
majority of both foreign and domestic inspections were conducted by one 
person--77 percent and 66 percent, respectively.\43\
---------------------------------------------------------------------------
    \43\ In addition to the time pressures associated with sending only 
one investigator on a foreign inspection, two of the investigators we 
interviewed from the dedicated foreign drug cadre expressed a 
preference for conducting team inspections as it helps reduce risks to 
their personal safety.

    Post-Inspection Classification Process. According to FDA officials, 
starting in fiscal year 2018, FDA implemented a new post-inspection 
classification process: when an ORA investigator recommends an OAI 
classification following an inspection, ORA compliance is required to 
send that inspection report to CDER for review within 45 calendar days 
from the inspection closeout. Among other things, the process was 
intended to help ensure FDA can communicate inspection results to 
domestic and foreign establishments within 90 days of the inspection 
closeout, as committed to under the Generic Drug User Fee Amendments of 
2017 (GDUFA II).\44\ FDA officials told us that the changes also 
required an additional ORA review for foreign inspection reports to 
align that process with the process for domestic inspection 
reports.\45\ Although the 45-day reporting time frame for potential OAI 
classifications is a requirement for both domestic and foreign 
inspections, adding the additional level of review within ORA 
effectively shortened the amount of time investigators have to document 
findings for foreign inspections.
---------------------------------------------------------------------------
    \44\ Pub. L. No. 115-52, Sec. 301(b), 131 Stat. 1005, 1020 
(codified in pertinent part at 21 U.S.C. Sec. 379j-41 note). Prior to 
each user fee program reauthorization, FDA negotiates with 
representatives of the generic drug industry to identify goals for how 
FDA should spend those user fees over the next 5-year authorization 
period.
    \45\ Prior to this change, officials told us that all foreign 
inspection reports, regardless of classification type, were sent to 
CDER for review after being endorsed by ORA supervisors. Under the new 
process, all foreign inspections are reviewed by ORA compliance after 
being endorsed by ORA supervisors. Foreign inspection reports now only 
go to CDER compliance for review in certain circumstances, such as if 
there is an OAI recommended, which had been the process for domestic 
inspections.

    Our work indicated that the post-inspection reporting time frames 
can create challenges for domestic investigators who conduct foreign 
inspections and raise questions about the equivalence to domestic 
inspections. Eight of the 18 investigators we interviewed for our 
December 2019 testimony said shortening the time for completing reports 
and adding a level of review has made it more challenging to meet 
reporting requirements, especially if serious deficiencies are 
identified during the inspection. Investigators told us that for a 
potential OAI inspection, they now need to send the inspection report 
to their supervisor for endorsement within 10 days of the closeout of a 
foreign inspection, regardless of when the investigator's next 
inspection is scheduled for, or whether the investigator has to travel 
from overseas back to the United States after the inspection. For 
example, if a domestic investigator finds serious deficiencies on the 
first inspection of an overseas trip--thus indicating an initial OAI 
classification--the investigator needs to write and send the related 
inspection report to the ORA supervisor for endorsement before 
returning home from the 3-week overseas trip to meet the required time 
frame. One investigator told us that, as a result of the time 
pressures, post-inspection reports may be less thorough, and that some 
inspection observations could be better supported if investigators had 
---------------------------------------------------------------------------
more time to write the reports.

    In conclusion, foreign manufacturing establishments continue to be 
a critical source of drugs for millions of Americans, and FDA 
inspections are a key tool to ensure the quality of these drugs. Over 
the years since we first examined this issue, FDA has made significant 
changes to adapt to the globalization of the pharmaceutical supply 
chain and has greatly increased the number of inspections it conducts 
of foreign establishments. However, we found in December 2019 that the 
agency faced many of the same challenges overseeing foreign 
establishments that we identified over the last two decades. These 
included inspector vacancies and unique challenges when inspecting 
foreign drug establishments that raised questions about the equivalence 
of those inspections to domestic inspections. Since then, the outbreak 
of COVID-19 has added a layer of complexity. It also further highlights 
the global nature of our pharmaceutical supply chain.

    Chairman Grassley, Ranking Member Wyden, and members of the 
committee, this completes my prepared statement. I would be pleased to 
respond to any questions that you may have at this time.

                                 ______
                                 
   Questions Submitted for the Record to Mary Denigan-Macauley, Ph.D.
               Questions Submitted by Hon. Chuck Grassley
    Question. According to October 30, 2019, testimony from Janet 
Woodcock, former Director of CDER, ``although CDER can describe the 
locations of API manufacturing facilities, we cannot determine with any 
precision the volume of API that China is actually producing, or the 
volume of APIs manufactured in China that is entering the U.S. market, 
either directly or indirectly by incorporation into finished dosages 
manufactured in China or other parts of the world.'' What can the FDA 
do to bring greater transparency to the supply chain'?

    Answer. Congress took a step to fill a gap in FDA's knowledge about 
the U.S. drug supply chain with the Coronavirus Aid, Relief, and 
Economic Security (CARES) Act, which was enacted in March 2020. The Act 
requires domestic and foreign manufacturers to annually report on the 
amount of each drug manufactured for the U.S. market by each 
establishment. The new requirement goes into effect in September 2020, 
and some of its utility will depend on how FDA implements this 
requirement. We plan to examine the information FDA has on the supply 
chain of drugs marketed in the United States as part of ongoing work 
stemming from a request from Senators Schumer and Peters.

    Additionally, in its fiscal year 2020 budget request, FDA included 
a request for legislation to clarify its authority to require 
manufacturers to submit information that would improve its ability to 
assess manufacturing quality and capacity. For example, FDA proposed 
that manufacturers be required to submit detailed listings for finished 
drugs or drug ingredients regardless of whether the product was 
directly imported into the United States or was first sent to another 
country to be made into a finished drug before being imported to the 
United States. FDA uses this type of information as part of its 
selection of manufacturing establishments for inspection. We have 
ongoing work examining FDA's foreign drug inspection program for the 
House Committee on Energy and Commerce. As part of that work, we are 
examining: the extent to which FDA has inspected foreign establishments 
that the agency considers to be the highest priority for inspection, 
taken steps to address persistent challenges conducting foreign drug 
inspections and ensure a sufficient inspection workforce, and taken 
action to ensure serious deficiencies identified during foreign drug 
inspections are corrected.

    Question. GAO has noted that many administrations have had 
challenges hiring FDA personnel to work overseas. What actions can FDA 
take to solve that problem?

    Answer. FDA has taken some steps to address its workforce 
challenges. In our 2010 report, we recommended that FDA develop a 
strategic workforce plan for its foreign offices to help ensure that 
the agency is able to recruit and retain staff with the experience and 
skills necessary for the foreign offices and reintegrate returning 
staff into FDA's domestic operations. FDA finalized its plan in March 
2016, which included key activities to be performed, such as 
establishing a succession plan for anticipated vacancies, among other 
things.

    In addition, in our 2016 report, we recommended that FDA establish 
goals to achieve the appropriate staffing level for its foreign 
offices, which would include separating foreign office vacancies from 
overall vacancy rates for the Office of International Programs (now 
Office of Global Policy and Strategy) and setting goals by position 
type. In June 2018, FDA reported it had separated foreign office 
vacancies from the Office of International Programs-wide vacancy rate 
and also set staffing goals by position type, as we recommended. FDA 
also took other actions, including implementing pay incentives to 
recruit and retain foreign office staff as well as locality pay for 
those deployed overseas, and it temporarily assigned staff to short-
term rotations in the foreign offices.

    However, as we stated in our 2019 and 2020 testimonies, while 
vacancy rates among investigators assigned to FDA's foreign offices 
have decreased over time, these vacancies persist. We found that, as of 
November 2019, FDA's China office had a 30-percent vacancy rate among 
investigators, while FDA's India office had a 33-percent vacancy rate. 
FDA officials told us that one challenge in recruiting investigators 
for the foreign offices is that well-qualified investigators for those 
positions need foreign inspection experience. Therefore, the agency 
recruits investigators who have experience conducting foreign 
inspections from the pool of domestic investigators in FDA's Office of 
Regulatory Affairs (ORA), including those in FDA's foreign drug cadre. 
However, the vacancies we identified among both the cadre and this 
larger group of ORA investigators can influence the number of staff 
available to apply for positions in the foreign offices. Further, while 
FDA recently filled several of the vacancies for domestic 
investigators, officials told us that new investigators are not 
typically assigned to foreign inspections until they have been with the 
agency for 2 to 3 years. Therefore, it may be many years before a 
recently hired investigator is eligible to detail to a foreign office. 
In addition, the effort to fill vacancies is continuous, as FDA full-
time foreign office staff are posted overseas for 2-year assignments, 
and staff can also be assigned to the foreign offices on temporary duty 
assignments for up to 120 days. We plan to continue to examine FDA's 
efforts to ensure a sufficient inspection workforce in our ongoing 
review of FDA's drug inspection program.

    Question. Please describe the benefits to performing unannounced 
inspections. Would you recommend that FDA implement a policy that makes 
unannounced inspections standard operating procedure for domestic and 
foreign inspections?

    Answer. According to several of the investigators we interviewed 
for our December 2019 testimony, a benefit to performing unannounced 
inspections is that an investigator is more likely to see the true day-
to-day operating environment of a drug manufacturing establishment. 
Most investigators we spoke with told us unannounced inspections are 
preferable to preannounced inspections.\1\
---------------------------------------------------------------------------
    \1\ This is based on our interviews with investigators in FDA's 
2019 dedicated foreign drug cadre and investigators based in the 
agency's China and India offices.

    We also reported in our testimony that FDA's policy to generally 
announce foreign inspections in advance raises questions about the 
equivalence of foreign and domestic inspections. Both foreign and 
domestic drug manufacturers must meet the same regulatory requirements 
in terms of complying with established quality standards (CGMPs).\2\ 
However-unlike the FDA inspections of drug manufacturing establishments 
based in the United States, which are usually unannounced-FDA generally 
preannounces inspections to foreign drug establishments. Although some 
investigators stated that it was still possible to identify serious 
deficiencies during a preannounced inspection, the majority of 
investigators we interviewed said preannounced inspections can give 
foreign establishments the opportunity to fix some problems in advance 
of an inspection.\3\
---------------------------------------------------------------------------
    \2\ According to FDA, CGMPs provide for systems that assure proper 
design, monitoring, and control of manufacturing processes and 
facilities, and adherence to CGMP regulations assures the identity, 
strength, quality, and purity of drug products by requiring that 
manufacturers of medications adequately control manufacturing 
operations; https://www.fda.gov/drugs/pharmaceutical-quality-resources/
facts-about-current-good-manufacturing-practices-cgmps (accessed June 
22, 2020).
    \3\ In addition we reported three investigators told us in some 
cases, such as for preapproval inspections, there can be benefits to 
preannouncing inspections as the advanced notice gives establishments 
time to organize needed documentation and staff for the inspection.

    As noted in our 2019 and 2020 testimonies, FDA did not provide us 
with data on the frequency with which foreign inspections are 
preannounced and unannounced, nor the amount of notice that is provided 
when inspections are preannounced. According to FDA officials, FDA does 
not have these data because its database does not include a field to 
track whether an inspection is announced or unannounced. FDA officials 
indicated that FDA had plans to add a new data field to enable the 
agency to begin tracking whether an inspection is preannounced or 
unannounced. We are continuing our examination of this issue as part of 
---------------------------------------------------------------------------
our ongoing work for the House Energy and Commerce Committee.

    Question. What do you believe is behind the FDA's reluctance to 
implement a policy of unannounced inspections overseas?

    Answer. In our 2008 report we found that logistical challenges 
influenced the manner in which FDA conducted foreign inspections, 
including announcing foreign inspections in advance. We found that, 
unlike inspections of domestic establishments which are almost always 
unannounced, FDA routinely preannounced its inspections to foreign drug 
establishments. At the time of our 2008 report, FDA was still in the 
process of opening its overseas offices and solely relied on volunteers 
from its domestic staff based in the United States to conduct foreign 
inspections.\4\ FDA officials told us that the time and expense 
associated with conducting foreign establishment inspections required 
the agency to ensure in advance that establishment staff would be 
available and that the production line being inspected would be 
operational at the time of inspection.
---------------------------------------------------------------------------
    \4\ FDA opened its first office in China in November 2008, and its 
first office in India in December 2008. See GAO, Food and Drug 
Administration: Overseas Offices Have Taken Steps to Help Ensure Import 
Safety, but More Long-Term Planning is Needed, GAO-10-960 (Washington, 
DC: Sept. 30, 2010).

    In our 2019 and 2020 testimonies, we found that FDA continued to 
preannounce inspections to foreign drug establishments for the same 
reason. agency officials estimated that FDA generally notified foreign 
establishments of an inspection 12 weeks in advance when the 
investigator conducting the inspection was traveling from the United 
States-which we found was the case for most of the agency's foreign 
inspections in fiscal year 2018.\5\ According to FDA officials, FDA is 
not required to preannounce its foreign inspections, but the agency 
does so partly because of the logistics of traveling overseas and 
partly because of the cost of conducting foreign inspections. 
Specifically, FDA officials told us reasons to preannounce foreign 
inspections include to avoid wasting agency resources, to obtain the 
assistance of foreign establishments when making travel arrangements, 
and to ensure the safety of investigators when traveling in country.
---------------------------------------------------------------------------
    \5\ We reported that in fiscal year 2018 about 76 percent of 
foreign inspections involved an investigator based in the United States 
who conducts both foreign and domestic inspections, and about 15 
percent of foreign inspections involved an investigator from FDA' s 
dedicated foreign drug cadre--a group of investigators based in the 
United States that exclusively conduct foreign inspections.

    We also noted in our 2020 testimony that FDA does conduct some 
unannounced or short-notice foreign inspections (i.e., inspections 
announced no more than 5 days in advance). For instance, FDA officials 
told us that investigators based in FDA's China office do unannounced 
inspections when the inspection is being conducted in response to 
specific issues or concerns (i.e., for-cause inspections), and that 
investigators in its India office can conduct short-notice inspections 
that are announced 30 minutes before the inspection or 3 to 5 days in 
advance. However, we found that foreign office investigators were not 
involved in the majority of its foreign inspections in fiscal year 
2018, and that the agency faced persistent vacancies among available 
investigator positions in its China and India offices--which are the 
two countries where FDA continues to conduct the largest number of 
---------------------------------------------------------------------------
foreign inspections.

                                 ______
                                 
              Question Submitted by Hon. Patrick J. Toomey
    Question. Was the information required of manufacturers in the 
CARES Act enough (it required manufacturers to report volume of 
particular medicines by manufacturing site), or is more data needed for 
FDA to fully and accurately determine which drugs have particularly 
vulnerable supply chains?

    Answer. The new requirement goes into effect in September 2020, and 
some of its utility will depend on how FDA implements this requirement. 
We plan to examine the information FDA has on the supply chain of drugs 
marketed in the United States as part of ongoing work stemming from a 
request from Senators Schumer and Peters.

    In its fiscal year 2020 budget request FDA included a request for 
legislation to clarify the agency's authority to require manufacturers 
to submit information that would improve its ability to assess 
manufacturing quality and capacity. For example, FDA proposed that 
manufacturers be required to submit detailed listings for finished 
drugs or drug ingredients regardless of whether the product was 
directly imported into the United States or was first sent to another 
country to be made into a finished drug before being imported to the 
United States. FDA uses this type of information as part of its 
selection of manufacturing establishments for inspection. We have 
ongoing work examining FDA's foreign drug inspection program for the 
House Committee on Energy and Commerce. As part of that work, we are 
examining: the extent to which FDA has inspected foreign establishments 
that the agency considers to be the highest priority for inspection, 
taken steps to address persistent challenges conducting foreign drug 
inspections and ensure a sufficient inspection workforce, and taken 
action to ensure serious deficiencies identified during foreign drug 
inspections are corrected.

                                 ______
                                 
               Questions Submitted by Hon. Sherrod Brown
                    transparency and accountability
    Question. Based on GAO's work, are there any specific 
recommendations for enhanced transparency across our drug supply 
chain--particularly as it relates to APIs--that would facilitate better 
understanding of the safety of U.S. pharmaceuticals, and potential 
actions policymakers could take to diversify and protect the safety, 
quality, and quantity of prescription drugs?

    Answer. Congress took a step to fill a gap in FDA's knowledge about 
the U.S. drug supply chain with the Coronavirus Aid, Relief, and 
Economic Security (CARES) Act, which was enacted in March 2020. The Act 
requires domestic and foreign manufacturers to annually report on the 
amount of each drug manufactured for the U.S. market by each 
establishment. The new requirement goes into effect in September 2020, 
and some of its utility will depend on how FDA implements this 
requirement. We plan to examine the information FDA has on the supply 
chain of drugs marketed in the United States as part of ongoing work 
stemming from a request from Senators Schumer and Peters. This work 
will also examine the barriers to domestic manufacturing and Federal 
efforts to increase it.

    Additionally, in its fiscal year 2020 budget request, FDA included 
a request for legislation to clarify the agency's authority to require 
manufacturers to submit information that would improve its ability to 
assess manufacturing quality and capacity. For example, FDA proposed 
that manufacturers be required to submit detailed listings for finished 
drugs or drug ingredients regardless of whether the product was 
directly imported into the United States or was first sent to another 
country to be made into a finished drug before being imported to the 
United States. FDA uses this type of information as part of its 
selection of manufacturing establishments for inspection. We have 
ongoing work examining FDA's foreign drug inspection program for the 
House Committee on Energy and Commerce. As part of that work, we are 
examining: the extent to which FDA has inspected foreign establishments 
that the agency considers to be the highest priority for inspection, 
taken steps to address persistent challenges conducting foreign drug 
inspections and ensure a sufficient inspection workforce, and taken 
action to ensure serious deficiencies identified during foreign drug 
inspections are corrected.

    Lastly, both we and FDA previously reported on potential incentives 
to address the causes of drug shortages, which may also be relevant to 
the aim of increasing domestic manufacturing. Specifically, our 2014 
report identified multiple potential incentives,\6\ including:
---------------------------------------------------------------------------
    \6\ Our 2014 report included a synopsis of incentives we identified 
that were proposed by drug manufacturers and manufacturing associations 
or included in bills introduced in the 112th Congress and the first 6 
months of the 113th Congress, as well as comments from manufacturer and 
association representatives and FDA. See GAO, Drug Shortages: Public 
Health Threat Continues, Despite Efforts to Help Ensure Product 
Availability, GAO-14-194 (Washington, DC, Feb. 10, 2014).

        Increasing the transparency of domestic and foreign 
manufacturing establishments' compliance status, thereby giving 
manufacturers an additional incentive for the highest quality products 
---------------------------------------------------------------------------
and making quality-related supply disruptions less likely to occur.

        Guaranteed purchase , in which the Federal Government 
guarantees the purchase of a given volume of certain drugs thereby 
allowing manufacturers to ensure capacity for a given market volume 
regardless of whether there is sufficient market demand.

        Tax incentives or reductions in FDA fees could also be used to 
incentivize manufacturers to invest in redundant manufacturing 
capacity.

    FDA also reported similar incentives for addressing drug shortages 
in a 2019 report.\7\ Additionally, we plan on further examining FDA's 
preparedness and response to drug shortages related to the Coronavirus 
Disease 2019 (COVID-19) in the near future.
---------------------------------------------------------------------------
    \7\ U.S. Food and Drug Administration, Drug Shortages: Root Causes 
and Potential Solutions (2019).
---------------------------------------------------------------------------
                     racial and ethnic disparities
    Question. Following up on Senator Carper's line of questioning, can 
you please elaborate on the investigation and report GAO is planning to 
put out on COVID-19-related racial disparities? What is GAO's timeline 
for this report?

    Answer. We have a body of published work looking at health 
disparities in various populations, and we continue to look at issues 
of racial and ethnic disparities in health outcomes in ongoing GAO 
work, including work on Coronavirus Disease (COVID-19). For example, we 
are conducting ongoing work on the availability of data on COVID-19 
health outcomes by race and ethnicity as part of our work in response 
to the CARES Act, Public Law 116-136. This work is expected to be 
released in August 2020 as part of a larger report covering various 
topics related to monitoring and overseeing the activities of 
governmental entities, grantees, contractors, and others in connection 
with the COVID-19 pandemic. In addition, GAO plans to conduct future 
work related to racial disparities and COVID-19; however the specific 
objectives and timing of this work have not yet been determined.

    We have also previously reported on the topic of health 
disparities. For example, in a December 2019 report, we outlined steps 
the Department of Veterans Affairs (VA) had taken to reduce disparities 
in health outcomes linked to race and ethnicity but found that the 
agency lacked mechanisms to mea su re progress and ensure 
accountability for results . We also reported that VA funds research 
efforts that have identified disparities in health-care outcomes 
involving minority veterans but relies on data that VA officials and 
researchers noted have weaknesses in completeness and accuracy. In 
March 2020, we also reported on trends in maternal mortality and found 
that the leading causes of pregnancy-related deaths differed by racial 
and ethnic groups. For example, from 2007 through 2016, non-Hispanic 
black women were more than three times as likely to die than non-
Hispanic white women, while non-Hispanic American Indian/Alaska Native 
women were more than two times as likely to die than non-Hispanic white 
women. We are conducting ongoing work on maternal mortality and severe 
maternal morbidity in rural and underserved areas, which is expected to 
be issued in the Spring of 2021.

    Question. Knowing that the availability of timely, standardized 
data is critical to understanding trends and health outcomes, what are 
GAO's general recommendations to Federal agencies to improve on the 
quality, timeliness, and standardization of data reporting and 
collection? In its work, has GAO identified any areas where legislation 
or congressional action is necessary to bolster data collection 
practices?

    Answer. GAO has previously reported on the importance of high 
quality and standardized data and expressed concerns about such data 
related to health outcomes in a variety of contexts. For example, we 
previously reported on the importance of quality health outcome data in 
our December 2019 report on steps VA had taken to reduce disparities in 
health outcomes linked to race and ethnicity and our March 2020 report 
on trends in maternal mortality. Most recently, in a review of COVID-19 
required by the CARES Act, we determined that the testing data that the 
Centers for Disease Control and Prevention (CDC) had reported through 
May 31, 2020, had not provided sufficiently reliable information on the 
amount of COVID-19 viral testing because these data had been incomplete 
and inconsistent. CDC acknowledged limitations to these data while 
maintaining that they were the best testing data available and provided 
critical insights into how much testing had occurred. We also reported 
that a recent Department of Health and Human Services (HHS) action 
could improve testing data. On June 4, 2020, HHS issued guidance that 
requires all laboratories performing viral or other tests to diagnose a 
possible case of COVID-19 to submit data for all test results using 
consistent data elements. Required data also include patients' race, 
ethnicity, and other demographic information. We will continue to 
conduct work examining HHS and its component agencies' data reporting 
related to COVID-19 testing and make recommendations as appropriate.

                                 ______
                                 
             Questions Submitted by Hon. Benjamin L. Cardin
                 national security supply chain lessons
    Question. Coronavirus is a wake-up call to the United States to 
begin to reclaim the control of our medical supply chain.

    What are the key lessons we have learned from crises affecting our 
supply chain and how they may impact national security?

    How do we protect our supply chain from these issues?

    Looking ahead, how do we diversify the American healthcare system's 
manufacturing supply chain?

    How do we incentivize domestic manufacturing?

    Answer. The current Coronavirus Disease 2019 (COVID-19) has 
heightened the Nation's awareness of the United States' reliance on a 
global drug supply chain; however, supply chain disruptions affecting 
the U.S. drug supply are not new and occurred long before the COVID-19 
outbreak. The reasons for these disruptions are generally economic in 
nature. In 2014, we reported on the drug shortage causes that 
manufacturers reported to FDA. Based on January 2011 through June 2013 
data, we found that the most common reasons for drug shortages included 
quality problems (40 percent), manufacturing delays and capacity issues 
(30 percent), and issues with active pharmaceutical ingredient (API) or 
other drug components (9 percent). We also identified potential 
underlying causes specific to the economics of the generic sterile 
injectable drug market, such as that low profit margins have resulted 
in limited infrastructure investments by manufacturers or led some 
manufacturers to exit the market. In 2019, FDA also reported on the 
reasons for drug shortages from 2013 through 2017 and similarly found 
that manufacturing or product quality problems were behind 62 percent 
of shortages.\8\ FDA likewise reported that the root causes of drug 
shortages are a lack of incentives for manufacturers to produce less 
profitable drugs, a market that does not recognize and reward 
manufacturers for mature quality management systems, and logistical and 
regulatory challenges that make it difficult for the market to recover 
after a supply disruption.
---------------------------------------------------------------------------
    \8\ U.S. Food and Drug Administration, Drug Shortages: Root Causes 
and Potential Solutions (2019).

    Both we and FDA previously reported on potential incentives to 
address the causes of drug shortages, which may also be relevant to the 
aim of increasing domestic manufacturing. Specifically, our 2014 report 
identified multiple potential incentives,\9\ including:
---------------------------------------------------------------------------
    \9\ Our 2014 report included a synopsis of incentives we identified 
that were proposed by drug manufacturers and manufacturing associations 
or included in bills introduced in the 112th Congress and the first 6 
months of the 113th Congress, as well as comments from manufacturer and 
association representatives and FDA. See GAO, Drug Shortages: Public 
Health Threat Continues, Despite Efforts to Help Ensure Product 
Availability, GAO-14-194 (Washington, DC, Feb. 10, 2014).

        Increasing the transparency of domestic and foreign 
manufacturing establishments' compliance status, thereby giving 
manufacturers an additional incentive for the highest quality 
productions and making quality-related supply disruptions less likely 
---------------------------------------------------------------------------
to occur.

        Guaranteed purchase, where the Federal Government guarantees 
the purchase of a given volume of certain drugs, thereby allowing 
manufacturers to ensure capacity for a given market volume regardless 
of whether there is sufficient market demand.

        Tax incentives or reductions in FDA fees could also be used to 
encourage manufacturers to invest in redundant manufacturing capacity.

    In its 2019 report, FDA also reports similar incentives for 
addressing drug shortages.\10\ Additionally, we plan on further 
examining FDA's preparedness and response to drug shortages related to 
the Coronavirus Disease 2019 (COVID-19) in the near future.
---------------------------------------------------------------------------
    \10\ U.S. Food and Drug Administration, Drug Shortages: Root Causes 
and Potential Solutions (2019).

    Lastly, we have ongoing work examining the pharmaceutical supply 
chain in response to a request from Senators Schumer and Peters. As 
part of this work, we plan on further examining the barriers to 
---------------------------------------------------------------------------
domestic manufacturing and Federal efforts to increase it.

                                 ______
                                 
              Prepared Statement of Hon. Chuck Grassley, 
                        a U.S. Senator From Iowa
    This committee has an obligation to ensure drugs paid for by the 
taxpayer via Medicare and Medicaid satisfy quality standards and are 
safe and effective for patients. That responsibility, both of Congress 
and the FDA, is heightened now that we are living through the COVID 
pandemic. Whether we are in the midst of a pandemic or not, these 
supply chain issues must be shored up and solved.

    Starting June of last year, I began my oversight activities on this 
issue. I wrote letters to Secretary Azar and then Acting FDA 
Commissioner Dr. Sharpless. I asked a series of questions relating to 
manufacturing facilities overseas that manufacture final dosage form 
drugs and active pharmaceutical ingredients (APIs). I also asked about 
how the FDA manages its foreign inspections regime.

    The Government Accountability Office has said that the FDA does 
conduct some unannounced inspections overseas but they don't have data 
on frequency. However, GAO noted in 2019 that the FDA estimated that 
they generally provide 12 weeks of notice before the inspection. Simply 
said, you're undermining the ability of field inspectors to do their 
job. Twelve weeks is plenty of time to doctor up a facility to make 
sure that it passes.

    Yet, incredibly, some facilities still get caught. That's how bad 
it is. The end result is that the consumer is put at risk.

    According to the most recent FDA data, the United States has 46 
percent of finished dosage form facilities. That's where APIs are 
turned into the final form such as a tablet. That means over 50 percent 
of sites manufacturing finished drugs are located overseas.

    But, that's just part of the story. What we really need to know is, 
where did the API come from?

    According to the most recent FDA data, 13 percent comes from China, 
and 19 percent comes from India. Combined, that's more than any other 
country. And overall, more than 70 percent of facilities that make APIs 
are located overseas. These figures, coupled with the COVID pandemic, 
have garnered a lot of attention, including what might need to be done 
from a national security perspective. But, the figures do make clear 
what needs to be done from a drug safety perspective: we need to have a 
robust and aggressive foreign inspections program.

    Now, with respect to China and India, both those countries have had 
serious quality control problems. We all remember the valsartan recall 
where that drug was found to contain contaminants used in rocket fuel. 
Facilities in China and India produced that drug.

    Let's not forget about the Heparin scandal either. In that case, 
patients undergoing dialysis began to have severe and life-threatening 
side effects because a manufacturing plant in China introduced a toxin 
into the production chain. Hundreds of people died and hundreds were 
sickened.

    Then we have Ranbaxy, an Indian manufacturer. Ranbaxy's production 
chain exposed drugs to potential cross-contamination by penicillin and 
used APIs from facilities that were not approved by the FDA. Ranbaxy 
also manufactured Lipitor and was shut down because it could not 
explain why some of those tablets had pieces of glass in them.

    I fear these examples are just the tip of the iceberg. They show 
why the FDA must maintain an aggressive inspections regime to ensure 
drug quality but also impose a strong enforcement regime on bad actors. 
In February of this year, FDA Commissioner Hahn told me that in Fiscal 
Year 2018 the Center for Drug Evaluation and Research issued almost 
five times as many warning letters to human drug manufacturers as 
compared to 2015. He said that's a sign that FDA is better able to use 
its resources to identify problems. Good. Stay aggressive and don't 
hesitate to be more aggressive.

    On the front end, though, that process should include unannounced 
inspections overseas. After all, why would we give manufacturers time 
to prepare their facility for inspection? They ought to be looking over 
their shoulder every day. That keeps them honest.

    During the Obama administration, the FDA started what was called 
the India Pilot Program. It allowed for no-warning inspections or a 
couple days' worth of warning. Under it, the FDA issued a 60-percent 
increase in ``Official Action Indicated'' findings. In 2015, the Obama 
administration shut the pilot program down without explanation. It 
sounds like the program was a victim of its own success.

    Now, this issue is bipartisan. Republican and Democrat 
administrations have come up short. The Government Accountability 
Office has a body of work from multiple administrations that proves it. 
For example, both the Obama and Trump administrations have struggled to 
fill vacancies in foreign offices.

    Today, we have witnesses from the FDA who can speak to all of these 
issues and how the pandemic has impacted their work. On the first 
panel, we have FDA witnesses and a GAO witness. On the second panel, we 
have private-sector companies.

    It's important to note that I plan to follow up with another 
hearing soon examining another problematic aspect to our medical supply 
chain, specifically the increase in trade of fake and faulty personal 
protective equipment. That is separate from what we will discuss today.

    In closing, I want to say two things. First, thank you to the FDA 
officials who work tirelessly to inspect facilities overseas. Second, 
regardless of party, we must have an honest discussion of the 
government's shortcomings so that we can better understand what we, as 
Congress, can do to ensure drug safety for the taxpayer. After all, we 
work for them and must always answer to them.

                                 ______
                                 

                          United States Senate

                          committee on finance

                       Washington, DC 20510-6200

                             June 27, 2019

The Honorable Alex Azar
Secretary
Department of Health and Human Services

Dr. Norman Sharpless
Acting Commissioner
Food and Drug Administration

Dear Secretary Azar and Acting Commissioner Sharpless:

    For decades, safe and affordable drugs have been for sale across 
our border in Canada, as well as in the United States. I've pressed FDA 
on importation policies and introduced legislation to help American 
consumers purchase those drugs. With increasing prescription drug 
costs, it is important that Americans have options for their much-
needed medication. However, unbeknownst to many consumers, the majority 
of the active pharmaceutical ingredients (API) in drugs they take are 
produced not in Canada or the U.S., but in China and India. According 
to recent news reports and a GAO report highlighting safety and quality 
concerns at foreign drug manufacturing facilities, 80 percent of API 
are produced abroad, the majority in China and India; however, the FDA 
only inspected one in five registered human drug manufacturing 
facilities abroad last year.\1\
---------------------------------------------------------------------------
    \1\ Katherine Eban, Americans Need Generic Drugs. But Can They 
Trust Them?, The New York Times (May 11, 2019), available at https://
www.nytimes.com/2019/05/11/opinion/sunday/generic-drugs-safety.html. 
See also, U.S. Gov't Accountability Off., GAO-17-143, Drug Safety: FDA 
Has Improved Its Foreign Drug Inspection Program, but Needs to Assess 
the Effectiveness and Staffing of Its Foreign Offices 1 (Dec. 2016). 
Didi Martinez, Brenda Breslauer and Stephanie Gosk, Tainted drugs: Ex-
FDA inspector warns of dangers in U.S. meds made in China, India, NBC 
News (May 10, 2019, 1:01 PM EDT), available at https://www.nbcnews.com/
health/health-news/tainted-drugs-ex-fda-inspector-warns-dangers-u-s-
meds-n1002971.

    This committee has an obligation to ensure that the Food and Drug 
Administration (FDA) upholds its responsibility to protect the public's 
health by properly overseeing the Nation's drug supply and ensuring 
that the drugs Americans use are safe and effective. I am concerned 
that the FDA's foreign drug inspection program in China and India is 
not sufficient to identify and address key risks to the health and 
safety of Americans who rely on these drugs.\2\
---------------------------------------------------------------------------
    \2\ Didi Martinez, Brenda Breslauer and Stephanie Gosk, Tainted 
drugs: Ex-FDA inspector warns of dangers in U.S. meds made in China, 
India, NBC News (May 10, 2019, 1:01 PM EDT), available at https://
www.nbcnews.com/health/health-news/tainted-drugs-ex-fda-inspector-
warns-dangers-u-s-meds-n1002971. 

    For example, a recent New York Times article published in May of 
2019 calls into question the quality, safety and reliability of brand 
and generic drugs made overseas.\3\ The article chronicles a former FDA 
consumer safety officer's findings while inspecting foreign 
manufacturing plants in both China and India from 2012-2018.\4\ During 
the course of his 6 years in those countries, he discovered fraud and 
deception in 67 of the 86 drug manufacturing plants that he 
inspected.\5\ He routinely uncovered hidden laboratories, fake quality-
control, defective sterilization machines and toxic impurities.\6\ 
Equally alarming, the article outlines how, from 2013-2018, the FDA 
downgraded the regulatory sanctions against more than 100 Indian 
plants, changing the designation from ``official action indicated'' to 
``voluntary action indicated.''7
---------------------------------------------------------------------------
    \3\ Katherine Eban, Americans Need Generic Drugs. But Can They 
Trust Them?, The New York Times (May 11, 2019), available at https://
www.nytimes.com/2019/05/11/opinion/sunday/generic-drugs-safety.html.
    \4\ Id.
    \5\ Id.
    \6\ Id.
    \7\ Id.

    An additional news article from NBC News, also published in May of 
2019, highlights a different former FDA inspector who also spent time 
in China and India inspecting manufacturing facilities.\8\ One plant in 
Linhai, China, had numerous issues, including anomalies in testing and 
``unknown impurities.'' The inspector recommended a warning letter to 
the facility which would bar it from gaining approvals to produce new 
drugs at the facility. The FDA reportedly overruled his 
recommendation.\9\ After public criticism of how the FDA handled this 
case, the FDA said it would have been ``unlikely'' to catch the 
impurities at the source of the recall during a routine inspection and 
that, ``our inspections did reveal systemic problems of supervision 
that could have created the conditions for quality issues to 
arise.''\10\
---------------------------------------------------------------------------
    \8\ Didi Martinez, Brenda Breslauer and Stephanie Gosk, Tainted 
drugs: Ex-FDA inspector warns of dangers in U.S. meds made in China, 
India, NBC News (May 10, 2019, 1:01 PM EDT), available at https://
www.nbcnews.com/health/health-news/tainted-drugs-ex-fda-inspector-
warns-dangers-u-s-meds-n1002971.
    \9\ Id.
    \10\ Id.

    A Government Accountability Office (GAO) report in December of 2016 
revealed that the number of foreign drug facilities that have never 
been inspected by FDA inspectors was ``about 1,000 of the approximately 
3,000'' foreign manufacturing facilities.\11\ Moreover, for fiscal year 
2017, the report identified 189 of the 572 facilities in India and 243 
of the 535 facilities in China that ``may never have been 
inspected.''\12\ Lastly, the GAO report detailed, ``to address this 
persistent concern, the agency plans to inspect all establishments in 
its catalog with no prior surveillance inspection history over the next 
3 years (approximately one-third each year), beginning in fiscal year 
2017.''\13\
---------------------------------------------------------------------------
    \11\ Drug Safety, supra note 1, at 21.
    \12\ Id at 45.
    \13\ Id at 21.

    Despite the serious concerns with manufacturing quality in China 
and India, the FDA's data suggests that it does not seem to have 
sufficiently enhanced scrutiny of those countries. The FDA/CDER Office 
of Pharmaceutical Quality report from May 2019 suggests that the 
percentage of inspections in those two countries (22 percent) is on par 
with the number of facilities in those countries (23 percent)--not an 
outcome that would suggest increased scrutiny given the reported 
problems.\14\
---------------------------------------------------------------------------
    \14\ U.S. Food and Drug Admin., Report on the State of 
Pharmaceutical Quality 4, 6 (2019), available at https://www.fda.gov/
media/125001/download.

    The news articles and GAO report are troubling. In order to better 
understand the scope and nature these issues, please provide written 
---------------------------------------------------------------------------
responses to the following questions no later than July 17, 2019:

     1.  How many manufacturing plants in China and India currently 
manufacture drugs or APIs intended for the U.S. market?

        a.  For each facility, if the facility produces final dosage 
form drugs, please provide a list of drugs and the corresponding NDAs 
and ANDAs.
        b.  For each facility, if the facility produces API, please 
provide the name of the API as well as the associated NDAs and ANDAs 
for the finished dosage form using that API.

     2.  Please provide a list of all registered manufacturing 
facilities, either for API or final dosage form drugs, located outside 
of the United States. In addition, for all drug manufacturing 
facilities currently registered with the FDA in the United States, 
China, and India, please provide the following information for all 
inspections from 2010 to the present:

        a.  Facility identifier;
        b.  Whether the facility is an API or final dosage form 
facility;
        c.  The API or final dosage form that is manufactured;
        d.  Country where the facility is located;
        e.  The date of each inspection;
        f.  Inspection type;
        g.  Whether the inspection was unannounced;
        h.  Whether the inspection was conducted by an in-country 
inspector or an inspector who traveled from the United States or 
another country;
        i.  The initial recommendation of the inspector;\15\
---------------------------------------------------------------------------
    \15\ This request would include official action indicated, 
voluntary action indicated, and no action indicated results.
---------------------------------------------------------------------------
        j.  The final FDA recommendation;\16\ and a
---------------------------------------------------------------------------
    \16\ Id.
---------------------------------------------------------------------------
        k.  Description of the resolution to FDA's concerns.

     3.  If a foreign pharmaceutical manufacturing plant used 
subcontractors or imports API or dosage from other plants, does the FDA 
inspect these subcontractors or other plants before the primary plant 
is approved to export to the United States? If not, why not?

     4.  What criteria does the FDA use to determine which facilities 
to inspect for an initial inspection? In addition, does a change in 
ownership trigger a subsequent inspection? Do the criteria differ for 
API and finished dosage form facilities? Please explain.

     5.  After the FDA identifies problems at a facility, what steps 
does the FDA take to ensure that problems are corrected? For example, 
does the FDA conduct follow-up inspections to ensure that corrective 
action has been taken? If so, how often are follow-up inspections made 
to ensure compliance with FDA safety standards? Please provide all 
records relating to follow-up inspections at manufacturing facilities 
in China and India from 2010 to the present to the extent they are not 
covered by Question 2.

     6.  Does the inspection process in China and India differ from 
U.S.-based inspections? If so, how and why? In addition, does the 
approach differ for API and finished dosage form facilities?

     7.  Please explain the FDA's review process and grading criteria 
in changing a foreign manufacturing plant designation from ``official 
action indicated'' to ``voluntary action indicated.'' In addition, 
since 2010 to the present, please provide all instances of ``official 
action indicated'' being downgraded to ``voluntary action indicated'' 
and the rationale for those changes.

     8.  With regards to the 1,000 foreign manufacturing facilities 
that the GAO found had not been inspected as of December 2016, how many 
have been inspected since then? Please provide all records relating to 
the inspection findings for each facility to the extent they are not 
covered by Question 2. In addition, has the FDA changed any of its 
policies to increase the inspection rate at foreign facilities to 
ensure compliance with safety protocols? If so, please explain. If not, 
why not?

     9.  How many FDA personnel and investigative personnel have been 
stationed in China and India from 2010 to the present? How does it 
compare to FDA's planned staffing levels?

    10.  What is the average cost for a foreign inspection for fiscal 
years 2010-2019?

    I anticipate that your written reply and most responsive documents 
will be unclassified. Please send all unclassified material directly to 
the committee. In keeping with the requirements of Executive Order 
13526, if any of the responsive documents do contain classified 
information, please segregate all unclassified material within the 
classified documents, provide all unclassified information directly to 
the committee, and provide a classified addendum to the Office of 
Senate Security. Although the committee complies with all laws and 
regulations governing the handling of classified information, it is not 
bound, absent its prior agreement, by any handling restrictions.

    Thank you in advance for your prompt attention to these matters. 
Should you have any questions, please contact Joshua Flynn-Brown of my 
committee staff at (202) 224-4515.

            Sincerely,

            Charles E. Grassley
            Chairman
            Committee on Finance

                                 ______
                                 
department of health and human services          office of the 
secretary
_______________________________________________________________________
                                Assistant Secretary for Legislation
                                               Washington, DC 20201

                           September 24, 2019

The Honorable Chuck Grassley
Chairman
Committee on Finance
United States Senate
Washington, DC 20515-6115

Dear Chairman Grassley:

I write in response to your June 27, 2019 letter requesting information 
related to the Food and Drug Administration's (FDA) and HHS's efforts 
to protect the safety of the Nation's drug supply through its foreign 
oversight program. This first production includes 808 pages of 
documents bearing bates numbers GrasFDI-000001 to GrasFDI-000809.

Your specific requests for which responsive information or documents 
are being provided in this production are restated below, in bold type, 
followed by a description of the documents provided. We continue to 
collect and review documents responsive to your letter.

    1.  How many manufacturing plants in China and India currently 
manufacture drugs or APIs intended for the U.S. market?

       a.  For each facility, if the facility produces final dosage 
form drugs, please provide a list of drugs and the corresponding NDAs 
and ANDAs.

       b.  For each facility, if the facility produces API, please 
provide the name of the API as well as the associated NDAs and ANDAs 
for the finished dosage form using that API.

          This analysis was completed using information from the Center 
        for Drug Evaluation and Research (CDER) Catalog of 
        Manufacturing Sites and includes only those facilities involved 
        in manufacturing approved abbreviated new drug application 
        (ANDA) and new drug application (N'DA) products as of June 18, 
        2019. The list excludes: (1) outsourcing facilities (i.e., 
        facilities under section 503B of the Federal Food, Drug, and 
        Cosmetic Act (FD&C Act)), facilities that manufacture only 
        excipients (inactive ingredients), and facilities that make 
        drugs for clinical trials only (not subject to routine current 
        good manufacturing practice (CGMP) inspection); (2) certain 
        biologicals for human use that are regulated by the Center for 
        Biologics Evaluation and Research (CBER) (e.g., blood, plasma, 
        and cells/tissues); and (3) facilities that participate in some 
        aspect of pharmaceutical manufacturing but do not ship product 
        to the U.S. (e.g., contracted facilities such as micronizers, 
        sterilizers, repackers, and analytical labs).

          For purposes of this analysis, facilities that manufacture 
        the finished dosage form (FDF) only, or both the active 
        pharmaceutical ingredient (API) and the FDF, have been 
        categorized as FDF manufacturing facilities. Facilities that 
        manufacture only the API for a given drug product have been 
        categorized as API manufacturing facilities.

          Counts of FDF and API manufacturing facilities in China and 
        India that are associated with an ANDA or NDA, and counts of 
        all FDF and API facilities including non-application products, 
        are included in the table below.


Table 1. Counts of All FDF and API CDER Catalogued Facilities Manufacturing Human Drug for the United States (as
                                                of June 18, 2019)
----------------------------------------------------------------------------------------------------------------
                                  Application-related Facilities  (NDA       All Facilities  (Including Non-
            Country                            and ANDA)                               Application)
----------------------------------------------------------------------------------------------------------------
China                                                               180                                      331
----------------------------------------------------------------------------------------------------------------
India                                                               339                                      436
----------------------------------------------------------------------------------------------------------------

           The counts in response to questions 1a and 1b are enclosed.

     3.  If a foreign pharmaceutical manufacturing plant used 
subcontractors or imports API or dosage from other plants, does the FDA 
inspect these subcontractors or other plants before the primary plant 
is approved to export to the United States? If not, why not?

           FDA does not have the authority to license manufacturing 
        plants and cannot ``approve'' a manufacturing plant for 
        domestic commerce or for export to the U.S. For manufacturing 
        plants that are listed in an NDA, ANDA, or a biologics 
        licensing application (BLA) and that are making an API or FDF, 
        FDA can and does evaluate the manufacturing plants (facilities) 
        and their operations as described in the applications by 
        evaluating the content of the application and in many cases by 
        reviewing information in our files associated with the facility 
        (or facilities) named in the application that are associated 
        with manufacturing. FDA may also inspect a manufacturing plant 
        identified in the pending application as part of the 
        application assessment effort prior to a decision on 
        approvability. For non-application drug products, such as those 
        that may be legally marketed in conformance with the over-the-
        counter (OTC) monograph process, the FD&C Act requires 
        manufacturers to notify FDA of their manufacturing operation as 
        it commences to manufacture and distribute a drug in the U.S. 
        market.\1\ For manufacturers of OTC monograph products, there 
        is no pre-market assessment of the manufacturing facilities. 
        FDA strives to inspect such facilities as soon as possible 
        after the establishment has registered with FDA.
---------------------------------------------------------------------------
    \1\ See Section 510 of the FD&C Act on establishment registration 
and product listing requirements.

           Facilities that are contracted to perform testing and many 
        other types of operations or controls of the API or FDF in 
        fulfillment of the CGMP requirement \2\ are also required to 
        register with FDA and are subject to inspection. FDA expects 
        such arrangements to be described in NDAs, ANDAs, and BLAs, and 
        will evaluate the facilities in these arrangements while 
        assessing the application. The evaluation of a facility may 
        include an inspection.
---------------------------------------------------------------------------
    \2\ See Section 501(a)(2)(B) of the FD&C Act and 21 CFR part 211 or 
212 for FDFs.

           FDA does not generally know or seek to know the names and 
        addresses of all the suppliers of raw materials (e.g., solvents 
        and reagents) used in API manufacturing operations. However, 
        FDA does expect API manufacturers to identify the names and 
        addresses of sources of key materials, like API starting 
        materials and intermediates, because these, by definition, are 
        key structural fragments of the final API.\3\ FDA may inspect 
        such facilities and operations as part of the application 
        assessment. Generally, API starting material and intermediate 
        producers are exempt from annual establishment registration and 
        are not routinely inspected.
---------------------------------------------------------------------------
    \3\ See Internationally Harmonized Guidance (ICH) Q7, Good 
Manufacturing Practice Guidance for Active Pharmaceutical Ingredients 
(https://www.fda.gov/media/71518/download) and ICH Q11, Development and 
Manufacture of Drug Substances (https://www.fda.gov/media/80909/
download).

           For FDFs, FDA does require producers of in-process materials 
        (i.e., materials that are precursors to the final FDF, such as 
        granulated powders intended for compression into tablets or for 
        filling into capsules) to be registered and identified in 
        applications for marketing approval. FDA inspects such 
        operations on a risk-based schedule in accordance with section 
        510(h)(3) of the FD&C Act using the same site selection process 
        as used for APIs and FDFs. FDA requires FDF repackers, 
        relabelers, and contract sterilizers to register their 
        facilities with the agency, and such facilities are subject to 
---------------------------------------------------------------------------
        inspection on a risk-based schedule like other facilities.

     4.  What criteria does the FDA use to determine which facilities 
to inspect for an initial inspection? In addition, does a change in 
ownership trigger a subsequent inspection? Do the criteria differ for 
API and finished dosage form facilities? Please explain.

           Any facility that registers their establishment in the FDA 
        electronic drug registration and listing system (eDRLS) is 
        subject to an inspection as soon as possible following initial 
        registration. If the establishment is only associated with a 
        pending NDA, ANDA, or BLA, FDA may conduct a pre-approval 
        facility inspection as part of the application assessment 
        process. If the application is approved, all manufacturing 
        facilities identified in the approved application that are 
        required to register annually with FDA will be included in 
        CDER's Catalog of Manufacturing Sites and subject to a 
        surveillance inspection on a risk-based schedule in accordance 
        with section 510 of the FD&C Act. FDA has a publicly available 
        Manual of Policies and Procedures (MAPP) that describes the 
        agency's risk-based approach to selecting manufacturing sites 
        for CGMP inspections.\4\ API and FDF facilities are prioritized 
        for inspection in accordance with the same site selection 
        model; however, generally, FDF facilities are a higher priority 
        than API facilities as there are fewer opportunities to 
        identify a quality problem between the FDF facility's 
        operations and the patient. FDA CGMP regulations for finished 
        pharmaceuticals obligate the FDF facility to evaluate API 
        suppliers and to test each API shipment, and the CGMP 
        regulations require additional testing of the API during 
        processing and of the FDF before it can be released for 
        distribution.
---------------------------------------------------------------------------
    \4\ https://www.fda.gov/media/116004/download.

           A change in ownership does not itself trigger an inspection, 
        and certain changes in ownership may not always be known to FDA 
        or known to FDA on/about the time the ownership change is in 
        effect. FDA's expectations for the types of changes an 
        application holder should report are captured in 21 CFR 
        Sec. Sec. 314.70, 601.12 and further explained in guidance 
---------------------------------------------------------------------------
        documents.

     6.  Does the inspection process in China and India differ from 
U.S.-based inspections? If so, how and why? In addition, does the 
approach differ for API and finished dosage form facilities?

           FDA staff performing facility inspections, whether in the 
        U.S. or abroad, are expected to follow the standard procedures 
        governing inspections, which are in the Investigations 
        Operations Manual \5\ and the relevant inspection program, or 
        Compliance Program, among other procedural and program 
        documents. Compliance Programs for human drug inspections to 
        evaluate CGMP compliance do not recommend different types of 
        coverage based on country or location. What gets evaluated or 
        covered during an inspection is the same for U.S.- and foreign-
        based inspections, and depends primarily on the inspection 
        assignment (e.g., for surveillance purpose or for pre-approval 
        purpose), the specific operations at the facility (e.g., API 
        vs. FDF manufacturing, processing vs. testing, sterile vs. non-
        sterile), and the facility's compliance history (e.g., previous 
        violations or no previous inspection). An inspection team will 
        adjust the inspection strategy based on findings made while on-
        site performing an inspection.
---------------------------------------------------------------------------
    \5\ https://www.fda.gov/media/113432/download.

           FDA maintains a Compliance Program specific to APIs,\6\ and 
        there are a variety of Compliance Programs for FDFs.\7\ The 
        Compliance Program describes very similar approaches to 
        conducting the inspections, which is to permit either an 
        abbreviated or full inspection depending on past FDA 
        inspections, if any, and compliance history and changes to the 
        facility or operations. API inspections are generally planned 
        to take less time than an FDF inspection. FDA additionally 
        maintains a Compliance Program that governs the conduct, 
        approach, and objectives for Pre-Approval Inspections.\8\ 
        Further information about our Drug Compliance Programs is 
        available on the FDA website.\9\
---------------------------------------------------------------------------
    \6\ https://www.fda.gov/media/75201/download.
    \7\ E.g., https://www.fda.gov/media/75167/download (general) and 
https://www.fda.gov/media/75174/download (sterile).
    \8\ https://www.fda.gov/media/121512/download.
    \9\ https://www.fda.gov/drugs/guidance-compliance-regulatory-
information/drug-compliance-programs.

     10.  What is the average cost for a foreign inspection for fiscal 
---------------------------------------------------------------------------
years 2010-2019?

           The information below includes the average cost to FDA's 
        Office of Regulatory Affairs (ORA) per foreign drug inspection, 
        including travel costs. The inspection costs have been 
        determined by the average hours per inspection based on 
        completed inspections from each fiscal year; the average hours 
        per inspection changes from year to year.


            Table 2. Average Cost Per Foreign Drug Inspection
------------------------------------------------------------------------
            Fiscal Year                          Average Cost
------------------------------------------------------------------------
FY 2010                              $50,700
------------------------------------------------------------------------
FY 2011                              $56,800
------------------------------------------------------------------------
FY 2012                              $56,600
------------------------------------------------------------------------
FY 2013                              $57,100
------------------------------------------------------------------------
FY 2014                              $55,300
------------------------------------------------------------------------
FY 2015                              $57,400
------------------------------------------------------------------------
FY 2016                              $65,700
------------------------------------------------------------------------
FY 2017                              $72,300
------------------------------------------------------------------------
FY 2018                              $73,800
------------------------------------------------------------------------
FY 2019 Est.                         $75,400
------------------------------------------------------------------------

Please note that by releasing the documents with no redactions to the 
committee, the Department of Health and Human Services (HHS) is making 
an accommodation unique to the facts and circumstances of this 
particular matter; it is not a public disclosure, but instead is a good 
faith effort to assist the committee in its inquiry. We respectfully 
request that the committee not disseminate or otherwise disclose these 
documents outside of the committee without prior consultation with HHS. 
The production of these materials to the committee does not waive any 
applicable privilege. For questions, please contact Traci Vitek, HHS 
Senior Counselor, at (202) 620-7194.

            Sincerely,

            Traci Vitek
            Senior Counselor

cc: The Honorable Ron Wyden, Ranking Member

                                 ______
                                 

                          United States Senate

                          committee on finance

                       Washington, DC 20510-6200

                             August 6, 2019

The Honorable Alex Azar
Secretary
Department of Health and Human Services

Dr. Norman Sharpless
Acting Commissioner
Food and Drug Administration

Dear Secretary Azar and Acting Commissioner Sharpless:

    This committee has an obligation to ensure that the Food and Drug 
Administration (FDA) upholds its responsibility to protect the public's 
health by properly overseeing the nation's drug supply and ensuring 
that the drugs Americans use are safe and effective. I read with 
interest your ``Safe Importation Action Plan'' and am pleased that the 
administration continues to take steps to address high prescription 
drug prices while protecting innovation. As you are aware, I believe 
that drug importation will help to reduce drug costs for American 
consumers and patients. However, I have also noted that my position is 
predicated on the FDA ensuring the safety and efficacy of those drugs.

    Accordingly, I want to raise concerns with you that I originally 
raised with the FDA in an oversight letter on June 27, 2019, regarding 
the FDA's foreign drug inspection program.\1\ Unbeknownst to many 
consumers, according to recent news reports and a GAO report 
highlighting safety and quality concerns at foreign drug manufacturing 
facilities, 80 percent of Active Pharmaceutical Ingredients (API) are 
produced abroad, the majority in China and India; however, the FDA only 
inspected one in five registered human drug manufacturing facilities 
abroad last year.\2\
---------------------------------------------------------------------------
    \1\ Didi Martinez, Brenda Breslauer and Stephanie Gosk, Tainted 
drugs: Ex-FDA inspector warns of dangers in U.S. meds made in China, 
India, NBC News (May 10, 2019, 1:01 PM EDT), available at https://
www.nbcnews.com/health/health-news/tainted-drugs-ex-fda-inspector-
warns-dangers-u-s-meds-n1002971.
    \2\ Katherine Eban, Americans Need Generic Drugs. But Can They 
Trust Them?, The New York Times (May 11, 2019), available at https://
www.nytimes.com/2019/05/11/opinion/sunday/generic-drugs-safety.html. 
See also, U.S. Gov't Accountability Off., GAO-17-143, Drug Safety: FDA 
Has Improved Its Foreign Drug Inspection Program, but Needs to Assess 
the Effectiveness and Staffing of Its Foreign Offices 1 (Dec. 2016). 
Didi Martinez, Brenda Breslauer and Stephanie Gosk, Tainted drugs: Ex-
FDA inspector warns of dangers in U.S. meds made in China, India, NBC 
News (May 10, 2019, 1:01 PM EDT), available at https://www.nbcnews.com/
health/health-news/tainted-drugs-ex-fda-inspector-warns-dangers-u-s-
meds-n1002971.

    Under the administration's Action Plan, it would draft a Notice of 
Proposed Rulemaking (``NPRM'') that would address, in part, the 
implementation of section 804(b)-(h) in the Federal Food, Drug, and 
Cosmetic Act (Act). The Act allows for drug importation as long as 
certain conditions are met including drug quality, record-keeping, 
testing, and protections against counterfeiting. The Action Plan notes 
the ``NPRM would list those requirements and invite proposals as to how 
those conditions would be met by a demonstration project.'' The NPRM 
would also allow manufacturers of FDA-approved drugs to import versions 
of those drugs sold in foreign countries into the United States. 
However, it is not clear how track-and-trace would apply to such 
---------------------------------------------------------------------------
products, potentially exacerbating manufacturing quality concerns.

    Since my June 2019 letter to the FDA, I have learned that the FDA 
does not track in its databases whether a foreign inspection was 
subject to an announced or unannounced visit. Further, I have learned 
that the FDA generally does not perform unannounced visits of drug 
manufacturing facilities in foreign countries but does perform 
unannounced visits at facilities based in the United States. Should the 
Action Plan be put into effect, the administration must require more 
foreign inspections generally and unannounced inspections specifically, 
particularly compared to previous administrations.

    For example, in 2013 the FDA created a pilot program in India that 
eliminated advanced notice and instead used short notice or unannounced 
visits.\3\ The pilot program also arranged for FDA inspectors' travel 
to be arranged through the U.S. embassies instead of through FDA 
offices or manufacturer-arranged travel plans to provide more secrecy 
in the lead-up to inspections. According to reports, the new inspection 
regime ``exposed widespread malfeasance'' that had otherwise been 
hidden because of the advanced warning system.\4\ Among the findings, 
the inspections found bird infestations, missing samples, and fake 
laboratories, all of which negatively impact drug quality and 
safety.\5\ Under the pilot program, the FDA issued a 60 percent 
increase in ``Official Action Indicated'' findings.\6\ In 2015, the 
pilot program was shut down without explanation.
---------------------------------------------------------------------------
    \3\ Katherine Eban, Bottle X: Exposing Impurities in the Generic 
Drug Business, Newsweek Magazine (July 2, 2019).
    \4\ Id.
    \5\ Id.
    \6\ Id.

    It is unclear why the Obama administration shut the pilot program 
down in light of its apparent success. However, because of its reported 
successes, I strongly encourage the administration's demonstration 
projects to include unannounced inspections in foreign manufacturing 
facilities to determine whether they meet the required API and drug 
quality and safety standards to include sufficient record-
---------------------------------------------------------------------------
keeping, testing, and protections against counterfeiting.

            Sincerely,

            Charles E. Grassley
            Chairman
            Committee on Finance

                                 ______
                                 
U.S. FOOD AND DRUG ADMINISTRATION
10903 New Hampshire Avenue
Silver Spring, MD 20993
www.fda.gov

                           February 12, 2020

The Honorable Charles E. Grassley
Chairman
Committee on Finance
U.S. Senate
Washington, DC 20510

Dear Chairman Grassley:

Thank you for your letter regarding the Safe Importation Action Plan 
(Action Plan) and your interest in how the U.S. Food and Drug 
Administration (FDA or the agency) will ensure the safety and efficacy 
of drugs imported under the Action Plan. We appreciate hearing from you 
on this important issue.

As you are aware, in July 2019, the Department of Health and Human 
Services (HHS) and FDA released the Action Plan to describe steps HHS 
and FDA will take to allow the safe importation of certain drugs 
originally intended for foreign markets.\1\ The Action Plan describes 
two pathways to provide safe and effective drugs to consumers in the 
United States at a lower cost. On December 23, 2019, FDA published the 
Notice of Proposed Rulemaking (NPRM) and the Notice of Availability for 
the Draft Guidance associated with each respective pathway.
---------------------------------------------------------------------------
    \1\ See: https://www.fda.gov/about-fda/reports/fda-safe-
importation-action-plan.

Pathway 1 involves an NPRM that would implement an importation program 
under section 804 of the Federal Food, Drug, and Cosmetic Act. The 
rule, if finalized, would allow importation of certain prescription 
drugs from Canada under programs sponsored by States or certain other 
non Federal Governmental entities and authorized by FDA. The NPRM 
includes requirements to ensure that the importation poses no 
additional risk to the public's health and safety and that the program 
---------------------------------------------------------------------------
will achieve significant cost savings to the American consumer.

Pathway 2 involves a guidance which would provide recommendations to 
manufacturers for importing FDA-approved drug products they 
manufactured, and originally intended to sell, in foreign countries. To 
use this pathway, the manufacturer, or person authorized by the 
manufacturer, would establish with FDA that the foreign version is the 
FDA-approved product (e.g., it is manufactured in accordance with the 
specifications in the FDA-approved application). FDA would then allow 
the drug to be imported and labeled for sale in the United States. 
Manufacturers could acquire and use a new National Drug Code for those 
products, potentially permitting them to offer a lower price compared 
to what their current distribution contracts require.

Toward the goal of lowering prescription drug prices in the United 
States, we will be working hard to review comments made to the Federal 
Register dockets for the NPRM and draft guidance and to finalize these 
documents on an expedited basis.

Your letter also encouraged the use of unannounced inspections and 
stated that it was unclear how track-and-trace would apply to products 
under the Action Plan. HHS and FDA understand the vital importance of 
preserving the drug supply chain's security for continued patient 
access to safe and effective medicines. Under both proposed pathways 
outlined in the Action Plan, FDA could take action to protect patients 
when the agency finds violations of applicable requirements, including 
those that pose a significant risk to public health.

The U.S. drug supply chain is among the safest in the world. FDA 
prioritizes domestic and foreign inspections based on the facilities 
and medicines that have the potential to be the most problematic. The 
agency inspects drug manufacturing facilities around the world, and 80 
to 90 percent of them--regardless of location--are substantially 
compliant with good manufacturing practice requirements. When FDA 
identifies manufacturing issues, regardless of whether the facility is 
located in the United States or elsewhere in the world, we quickly take 
action to address such issues.

Drug manufacturing has become increasingly complex and global, 
requiring FDA to remodel its oversight of these tasks to improve the 
agency's efficiency and reach. In June 2017, the Center for Drug 
Evaluation and Research (CDER) and the Office of Regulatory Affairs 
(ORA) entered into an unprecedented concept of operations (ConOps) 
agreement to integrate FDA's facility evaluations and inspections for 
human drugs.\2\ The agreement, Integration of FDA Facility Evaluation 
and Inspection Program for Human Drugs: A Concept of Operations, 
outlines the responsibilities and the workflow for pre-approval, post-
approval, surveillance, and for-cause inspections at domestic and 
international facilities. ConOps enables CDER and ORA to effectively 
manage the growing complexity of the pharmaceutical landscape.
---------------------------------------------------------------------------
    \2\ For more information on the ConOps agreement, visit https://
www.fda.gov/drugs/pharmaceutical-quality-resources/integration-fda-
facility-evaluation-and-inspection-program-human-drugs-concept-
operations and https://www.fda.gov/media/107225/download.

Despite FDA's efforts, there may still be ``bad actors'' that fail to 
meet the good manufacturing practice obligations. Over the past 4 
years, CDER's Office of Compliance has substantially increased the 
number of warning letters issued to human drug manufacturers regulated 
by FDA. For example, in fiscal year (FY) 2018, the agency issued nearly 
five times as many warning letters to human drug manufacturers as in FY 
2015. FDA does not believe that the increased number of warning letters 
reflects a growing problem in drug quality but instead reflects the 
agency's ability to better utilize resources to target problem areas. 
The agency uses ``risk-based'' targeting to prevent, uncover, and 
combat data and manufacturing problems.\3\
---------------------------------------------------------------------------
    \3\ The Office of Pharmaceutical Quality's Manual of Policies and 
Procedures (MAPP) 5014.1, Understanding CDER's Risk-Based Site 
Selection Model, outlines the policies and procedures for the Site 
Selection Model used by CDER staff to prioritize manufacturing sites 
for routine quality-related (current good manufacturing practice) 
surveillance inspections. This MAPP is available at https://
www.fda.gov/media/116004/download.

FDA conducts both domestic and foreign inspections with comparable 
depth and rigor. For both inspections, the agency uses the same highly 
trained investigators who conduct each inspection in accordance with 
the same compliance programs. In many cases, FDA must announce its 
intention to conduct a foreign inspection in advance to be sure the 
firm is operational and to avoid wasting inspection resources. However, 
when the agency determines the need to do an unannounced inspection, 
FDA can and does conduct such operations. For example, over the past 
several years, FDA investigators have conducted unannounced inspections 
at foreign manufacturing facilities in India and China when needed. 
When significant issues are uncovered at a foreign manufacturing 
facility, regardless of whether the inspection was announced in 
advance, the agency acts expeditiously to protect patients by placing 
the facility on an import alert to block its medicines from reaching 
---------------------------------------------------------------------------
U.S. patients.

Although it takes only one bad actor to create a health issue for 
patients, it is important to note that most facilities and companies 
pass FDA's inspections and are manufacturing safe, effective, and high-
quality medicines. FDA' s laboratory testing for drug quality, using 
testing standards set by the United States Pharmacopeia or submitted in 
marketing applications, has consistently shown that medicines 
manufactured in foreign countries meet U.S. market quality standards.

Thank you again for your interest in this important matter. The agency 
looks forward to working with you as it executes this plan.

            Sincerely,

            Stephen M. Hahn, M.D.
            Commissioner of Food and Drugs

                                 ______
                                 
Prepared Statement of Harry M. Lever, M.D., Staff Cardiologist, Sydell 
  and Arnold Miller Family Heart, Vascular, and Thoracic Institute at 
                            Cleveland Clinic
Thank you, Chairman Grassley and Finance Committee members, for the 
opportunity to comment. My name is Harry Lever, and I am a cardiologist 
at the Cleveland Clinic. I am one of the country's leading experts in 
the treatment of hypertrophic cardiomyopathy, an abnormal thickening of 
the heart muscle which affects one in 500 people. It can cause 
shortness of breath, chest pain, dizziness, loss of consciousness, and 
in a small number of people, sudden death. Many are treated with 
medication while some require surgery. Early in my career my concern 
for the quality of generic drugs was occasional. With more generics 
coming to market and some manufacturing being moved to foreign 
factories that do not always follow good manufacturing practices, I now 
have concerns.

Many of the patients that I see are quite fragile and dependent on a 
combination of medication and surgery. I typically prescribe generic 
drugs for my patients because they are much less expensive than their 
brand name counterparts. Insurance companies can often rerequire that I 
prescribe a generic equivalent as they cost less and are often as just 
as effective as brand name medications. But I have found that not all 
generic drugs are of the same quality. I have seen inconsistent results 
with my patients taking generic drugs in terms of their response to the 
medication, particularly generic medications coming from countries with 
poor regulation, such as China and India.
             1. diuretics to treat congestive heart failure
I have found some diuretics for the treatment of heart failure that do 
not work adequately. Some of my patients who become stabilized in the 
hospital and then discharged can have a rapid readmission for heart 
failure. When I investigated these problems, I found that the patients 
were given an alternative generic manufacturer of the diuretic that 
doesn't consistently work. I have also had patients stable for a long 
period of time on a diuretic and then go into heart failure. Despite my 
role as the responsible physician, I am typically not informed that a 
generic substitution was made or told the identity of the new generic 
medication's manufacturer. The FDA rates generics as interchangeable 
and these can be changed at any time at a pharmacy. This works as long 
as the medications are of the same quality--but even the FDA 
acknowledges that manufacturers need to improve quality.
2. beta blockers to treat hypertrophic cardiomyopathy, coronary artery 
                       disease, and hypertension
Another drug that I have experienced as a problem is the beta blocker, 
metoprolol succinate, which is a sustained release drug for the 
treatment of patients with hypertrophic cardiomyopathy as well as those 
with coronary artery disease or hypertension. I have found for many 
patients only the authorized generic or the name brand drug works 
consistently. In the treatment of hypertrophic cardiomyopathy, at times 
I have had patients symptoms of shortness of breath, chest pain and 
dizziness no longer be managed. The question then is am I dealing with 
a poor quality drug or a patient whose disease is severe and simply is 
no longer responding to medical treatment? Some patients become 
symptomatic again for no apparent reason. After checking their drug's 
manufacturer, I frequently have found that the drug has been changed to 
a poor quality generic without my knowledge.

                   3. transplant rejection medication
Medications that prevent heart transplant rejections can also be a 
problem. Colleagues have seen patients who suddenly begin rejecting a 
new heart after their tacrolimus, a drug used to prevent rejection, is 
changed to a different manufacturer.
                                summary
We need solutions to this problem--I suggest quality ratings that are 
made public noting which generic products are effective and which 
should be avoided. More control is needed over the finished product to 
protect patients. To accomplish this, it will require the medical 
profession, the drug industry, the insurance companies, and the 
government working together as partners.

Thank you.

                                 ______
                                 
                  Prepared Statement of David Light, 
                       Founder and CEO, Valisure
    Chairman Grassley, Ranking Member Wyden, and distinguished members 
of the Senate Finance Committee, thank you for holding this important 
hearing. My name is David Light, and I am the founder and CEO of 
Valisure.

    At Valisure, our mission is to help ensure the safety, quality, and 
transparency of medications, and we do this with a very simple but 
novel approach: we check. Valisure is an online pharmacy attached to an 
analytical laboratory. We are the first and only pharmacy in America 
that chemically batch-validates every medication we sell, and we do it 
at no additional cost to consumers. Founded in 2015, Valisure is 
headquartered at Yale Science Park in New Haven, Connecticut. Valisure 
is ISO-17025 accredited by the International Organization for 
Standardization (ISO) and is registered with the Drug Enforcement 
Administration (Pharmacy: FV7431137, Laboratory: RV0484814) and the 
Food and Drug Administration (FDA) (FEI #: 3012063246).

    In response to rising concerns about medication quality, 
counterfeit medications, and overseas manufacturing, Valisure developed 
proprietary analytical technologies that we use in addition to the 
FDA's standard assays to test every batch of every medication we 
dispense. Valisure tests medications for correct dosage, major inactive 
ingredients, proper dissolution, and the presence of carcinogens such 
as N-Nitrosodimethylamine (NDMA). Currently, we reject over 10 percent 
of on-market medication batches based on these testing standards.

    With roughly 80 percent of ingredients in U.S. medications 
manufactured in India and China,\1\ medication quality is constantly 
called into question. There are roughly three drug recalls in the U.S. 
every day and about 100 of those recalls every year are ``Class I,'' 
which are considered potentially life-threatening. These recalls can be 
attributed, at least in part, to the fact that the chemical quality of 
medications is primarily checked by manufacturers, which self-report 
the results. Most manufacturers are located overseas, where oversight 
by the FDA is difficult and fraud is commonplace. These general 
difficulties are only made worse by the COVID-19 pandemic.

    A useful metaphor for understanding the immense complexity of the 
drug supply chain and the critical need for independent analysis is to 
think of a bottle of medication like a used car. When you go to pick up 
a medication from your local pharmacy, it will often be a year or two 
old, have traveled thousands of miles, and touched dozens of hands all 
around the world. No one who buys a used car is satisfied to know that 
the original manufacturer vouched for its quality. Buyers want a Carfax 
report; a 100-point inspection on that specific car, or more. None of 
that transparency is available for medications. To ensure quality, we 
must do more than just review a manufacturer's paperwork and 
facilities: we need independent chemical analysis of the medication 
itself.

    In a 2015 FDA white paper, the FDA acknowledged that it ``has no 
formal means for quality surveillance, except through inspections'' and 
conceded that ``inspection findings have not been a reliable predictor 
of the state of quality.''\2\ The paper also noted that ``product 
recall and defect reporting data demonstrate unacceptably high 
occurrences of problems attributed to inherent defects in product and 
process design; these data further indicate failures in the 
implementation of manufacturing process scale-up as well as routine 
production.''

    Inspections by FDA at overseas plants are often announced months in 
advance and are typically conducted less frequently than the 
inspections of U.S. facilities, which are unannounced.\3\ Even these 
infrequent overseas inspections have been halted as a result of the 
COVID-19 crisis,\4\ making the need for greater oversight and quality 
assurance of the drugs coming into our country more imperative than 
ever.

    Recent drug quality issues have threatened the health and safety of 
American consumers, including the widespread contamination of critical 
blood pressure medications,\5\ gastroesophageal reflux disease 
drugs,\6\ and diabetes medications \7\ tainted with carcinogens.\8\ Not 
only do drug quality issues place patients' lives at risk, they also 
account for over 60 percent of drug shortages \9\ and generate fear and 
mistrust that is a contributing factor to medication non-adherence.\10\

    We believe Valisure's work has only scratched the surface of the 
troubling drug quality issues in the U.S. supply chain. In less than a 
year, Valisure has identified a fourth major carcinogen in valsartan, 
discovered the fundamental instability of Zantac/ranitidine leading it 
to break down into a carcinogen, detected high levels of NDMA in 
roughly 40 percent of analyzed batches of the diabetes drug metformin, 
and uncovered many other serious issues. The immense impact of and 
critical need for independent chemical testing of medications has 
become extremely clear.
          the recall of zantac/ranitidine: case study in the 
                 need for independent chemical testing
    The idea of independently checking drug products may be new to 
industry, but in the academic world, it has been done for decades. 
However, warnings from academics have unfortunately largely been 
ignored. A grim but perfect example of this relates to the drug Zantac 
and its generics, ranitidine.

    In 1977, Senators sat in Dirksen Senate Office Building and 
listened to testimony from the prominent scholar Dr. William Lijinsky, 
Director of the Chemical Carcinogenesis Laboratory at Frederick Cancer 
Research Center. Dr. Lijinsky presented strong evidence that certain 
drugs are unstable and prone to forming the extremely potent 
nitrosamine carcinogen NDMA. In his opening remarks, Dr. Lijinsky 
testified:

        Methapyrilene, like many similar antihistaminic drugs, is a 
        tertiary amine. Being a tertiary amine, it reads [reacts] with 
        nitrites in mildly acid solution to form a nitrosamine, 
        dimethylnitrosamine [NDMA], which is one of the most potent 
        carcinogens known, inducing liver cancer in rats.\11\

    Like methapyrilene, Zantac is an antihistamine, has a tertiary 
amine, and it reacts with nitrites (commonly found in many foods) in 
mildly acid solution (like a full stomach) to form NDMA.

    A year later, in 1978, the World Health Organization (WHO) and the 
United Nations held a global summit on nitrosamine carcinogens \12\ 
where leading scientists from around the world expressed concern about 
NDMA and its formation from some common drugs.

    By 1979, methapyrilene, the drug Dr. Lijinsky used as an example in 
his testimony, was removed from the market after 25 years of use due to 
concerns that it was carcinogenic \13\ and forming 
NDMA.\14\, \15\

    Despite these multitudes of warnings, Zantac/ranitidine, which had 
practically the same, if not worse, chemical instability and NDMA 
formation issues, was approved in 1981 in the UK and in 1983 in the 
U.S.\16\ The first of many academic studies raising the possibility of 
Zantac/ranitidine being carcinogenic were published in 1982 and 
1983.\17\, \18\, \19\, \20\ Dozens of 
studies in top journals followed, including clinical\21\ and 
epidemiological studies.\22\ Another series of studies started in 1982 
and investigated the use of ``nitrosatable drugs'' (Zantac/ranitidine 
is highly ``nitrosatable'') being used during pregnancy and found links 
to childhood tumors,\23\, \24\ birth 
defects,\25\, \26\ and other serious negative 
effects.\27\, \28\ However, the multitude of studies had 
little, if any, practical impact on the pharmaceutical and regulatory 
world. Despite the loud warnings from academics, Zantac/ranitidine 
became one of the best-selling drugs in history\29\ and among the most 
commonly prescribed drugs to treat acid reflux in pregnant women \30\ 
and infants.\31\

    It was not until 2019, 38 years after Zantac/ranitidine was first 
approved and 42 years after Dr. Lijinsky delivered his warnings to the 
U.S. Senate, that Valisure's analytical pharmacy performed the simple 
act of independently checking a bottle of generic Zantac syrup 
prescribed to one of our co-founder's infant daughter. The results were 
so dramatic that we immediately took the drug off our formulary and 
tasked our full scientific staff to investigate.

    After we realized the magnitude of the problem, we were not 
satisfied by simply publishing our findings in a scientific journal. We 
petitioned the FDA directly;\32\ we spoke to press; and we did not back 
down from the crystal-clear science that Zantac/ranitidine is 
fundamentally unstable, forms a potent carcinogen, and should be taken 
off the market. Two months ago, after dozens of countries had already 
banned the drug,\33\ the FDA finally granted our petition,\34\ and this 
potentially dangerous drug was officially taken off the U.S. 
market.\35\

    Without independent testing and the drive to make it broadly 
transparent and recognized, Zantac/ranitidine could have remained on 
the market for many more decades to come.
 the prevalence of contaminants in medications in the u.s. supply chain
    Valisure's investigation into Zantac/ranitidine's link to NDMA was 
a result of our general interest in analyzing medications for 
carcinogens, which began as a response to the rampant recalls of the 
blood pressure medications valsartan, losartan, and irbesartan. These 
recalls, which began in the summer of 2018, eventually expanded to over 
1,000 lots of the sartan class of drugs from numerous manufacturers due 
to the presence of NDMA and other similar nitrosamines.\36\

    While there are an infinite number of possible impurities that a 
laboratory could test medications for, some, like NDMA, are obvious. 
NDMA has been studied in medications for decades,\37\ and the 
technology to detect it down to parts per billion and beyond has been 
widely available since at least 1970.\38\, \39\

    Other commonplace carcinogens are also logical to investigate, such 
as N,N-Dimethylformamide (DMF). DMF is an industrial solvent that was 
reclassified in 2018 by the WHO and International Agency for Research 
of Cancer (IARC) as a Group 2A ``probable human carcinogen,'' the same 
category as NDMA. The FDA classifies DMF as a Class 2 solvent, which 
``should be limited in pharmaceutical products because of their 
inherent toxicity.''\40\ However, DMF is nonetheless used in the 
production of pharmaceutical active ingredients, including valsartan. 
Residual solvents are known issues in pharmaceutical processing, and, 
because DMF was implicated as a source of NDMA formation in valsartan, 
it was one of the first impurities to be added to Valisure's standard 
impurities analysis. As soon as we started looking for DMF, we found 
it.

    Valisure tested over 30 batches of valsartan medications and found 
that approximately two-thirds contained high levels of DMF. We included 
these findings in a Citizen Petition filed with the FDA on June 13, 
2019.\41\ Our analysis suggests that although progress has been made to 
reduce NDMA in -sartan medications, even after 2 years of recalls, the 
fundamental manufacturing processes have not been significantly 
improved. In the absence of independent scrutiny and regulatory action, 
manufacturers continue to be motivated to use cheap solvents like DMF 
rather than investing in improving drug quality and safety.

    Valisure's analysis found DMF not just in medications produced by 
generic manufacturers but also in Diovan, the branded version of 
valsartan produced by Novartis. This finding illuminates the immense 
complexity of the drug supply chain and the difficulty faced even by 
manufacturers who are proactive about ensuring quality. A spokesperson 
for Novartis provided the following comment to Bloomberg News regarding 
the DMF finding:

        ``Novartis doesn't use DMF in making Diovan and documents 
        provided by suppliers it purchases ingredients from indicate 
        that they don't, either,'' said spokesman Althoff. ``But 
        companies that its suppliers buy from could.''\42\

    The vast and incredibly complex web of the pharmaceutical 
manufacturing industry has been recognized as a danger for many years, 
but it has resisted a slew of new technologies that attempted to 
``secure it.''\43\ Therefore, independent, proactive chemical analysis 
of medications that is made transparent to all in the health-care 
ecosystem is critical,and not just for generic manufacturers in a 
handful of overseas countries, but as an overall industry standard.
          metformin: a current crisis for roughly 18 million 
                      type 2 diabetics in the u.s.
    Metformin is an oral diabetes medication that helps control blood 
sugar levels in adults and adolescents with type 2 diabetes. Metformin 
is taken by over 18 million Americans and is prescribed over 90 million 
times a year, making it the fourth-most prescribed drug in the U.S.\44\

    Amid actions by regulators worldwide to step up vigilance on drug 
quality, the Ministry of Health of Singapore was the first to publicly 
identify NDMA contamination in metformin and issued recalls in early 
December 2019.\45\ Switzerland announced recalls weeks later \46\ and, 
by February 2020, Canada had followed suit.\47\

    The FDA announced it would investigate metformin contamination in 
December 2019.\48\ In February 2020, the FDA released a laboratory 
method for the analysis of metformin \49\ and published lab 
results.\50\ The FDA reported that it had analyzed 16 batches of 
metformin from seven companies and found no NDMA beyond acceptable 
levels. However, it is important to note that the FDA may have acquired 
the medication samples through voluntary submission direct from 
manufacturers, which can introduce significant sampling bias and would 
not be an independent measure of quality.

    To independently evaluate the state of metformin contamination, 
Valisure acquired 38 batches of metformin from 22 companies through our 
pharmacy's distributors. The results from this analysis were included 
in a FDA Citizen Petition filed on March 2, 2020.\51\ In our analysis, 
Valisure utilized the FDA's published testing protocol but modified it 
to improve sensitivity and, importantly, to add an internal 
control.\52\ Our results showed that 42 percent of the batches analyzed 
(16 of 38) contained NDMA exceeding the FDA's daily acceptable intake 
limit, with the highest detected amount over 16 times the permissible 
limit. To further validate this data, Valisure sent samples from a 
contaminated batch of metformin to be independently verified by Emery 
Pharma, an FDA registered/inspected, cGMP/GLP compliant analytical 
laboratory.\53\ Emery's results showed slightly higher NDMA levels than 
what Valisure found, confirming the severity of the contamination.

    Valisure's analysis of its pharmacy batches significantly widened 
the number of sampled products and companies beyond the FDA's original 
report and likely reduced the sampling bias but was still limited by 
the availability of the drug from Valisure's pharmacy distributors. 
Therefore, Valisure conducted a direct-to-
consumer crowdsourcing study in which we called for individuals to send 
us samples of metformin for free analysis. This effort resulted in the 
evaluation of 128 samples of metformin from individuals located in 30 
States. The results of Valisure's analysis of these samples were 
detailed in a study co-authored with a researcher at The University of 
Maryland School of Pharmacy and posted on medRxiv.org, a pre-
publication server maintained by Yale University.\54\ As summarized in 
the study abstract,

        42 percent of all medication samples contained detectable 
        levels of NDMA and, when scaled to maximum daily tablet dose, 
        36 percent of all medication samples contained NDMA levels 
        exceeding the FDA daily acceptable intake limit. The highest 
        NDMA detection from the tested samples was 1565 ng per tablet, 
        which, when commonly taken four times a day, is 65 times the 
        United States Food and Drug Administration (FDA) acceptable 
        daily intake limit. Results underscore the need for immediate 
        product recalls of tainted medications and an overall 
        investigation of metformin manufacturing practices.

    These results largely mirror the findings from the analysis of 
pharmacy samples in Valisure's FDA Citizen Petition, and again 
illustrate the importance of independent testing derived from 
independently sourced samples.

    The FDA recognized the importance of Valisure's Citizen Petition, 
and, in response, requested samples from the batches we analyzed. On 
April 1, 2020, Valisure voluntarily supplied tablets from each of the 
38 identified batches. On May 28, 2020, the FDA announced that it was 
in contact with five metformin manufacturers and was urging them to 
voluntarily recall their products.\55\ It appears that this action was 
spurred in large part by the agency's analysis of the samples provided 
by Valisure. Valisure applauds this decision and hopes there will be 
future opportunities for collaboration between the FDA and independent 
laboratories like ours. However, a disconnect regarding the severity 
and breadth of the metformin contamination issue unfortunately persists 
due to discord over analytical methodologies.

    In the case of metformin, the current FDA statements target only 
the extended release (ER) formulations of metformin, which account for 
about one quarter of prescriptions,\56\ and not the immediate release 
(IR) formulations, which have also been identified by Valisure to 
contain unacceptable levels of NDMA. Furthermore, the agency states 
that their findings of NDMA in metformin ``were generally lower than 
reported by the private laboratory [Valisure].'' Both these 
discrepancies are likely explained by the agency's published method for 
the analysis of metformin not including an internal control.

    Internal controls are considered scientific best practice by the 
International Council for Harmonisation of Technical Requirements for 
Pharmaceuticals for Human Use (ICH),\57\ and are industry standard for 
the analysis of NDMA in complex samples like drinking water,\58\ 
wastewater,\59\ soil,\60\ food \61\ and beverages,\62\ biological 
samples,\63\ and pharmaceutical products \64\ (including Singapore's 
published method for NDMA analysis in metformin \65\).

    To understand the importance of an internal control more simply, it 
is useful to employ the metaphor of taking a picture of a fish to show 
its size. To properly portray the size of the fish, one can place a 
penny or a dollar bill next to it. The penny is acting as an ``internal 
control'' because it is a known size, so now a person can properly 
appreciate the size of the fish in the picture.

    In Valisure's study of metformin, the internal control was highly 
influential to obtain proper quantification of NDMA and the internal 
control had the greatest influence on IR tablets.\66\ This implies that 
without the use of an internal control, NDMA levels will incorrectly 
appear significantly lower overall and, in particular for IR 
formulations, potentially to the point that unacceptable levels of 
contamination may not be detected at all in IR tablets if the control 
is not used.

    These details may sound overly technical, but the consequences are 
profound. While debate ensues over analytical methodologies, roughly 13 
million Americans are currently taking IR formulations of metformin and 
are at risk of continued exposure to unacceptable levels of NDMA. This 
situation is very similar to what occurred with Zantac/ranitidine 
nearly a year ago, in which the product remained on the market for 
months while the FDA contested analytical techniques.

    Another critical component of the importance of independent 
analysis is the flexibility to improve upon regulatory guidance for 
analytics which may not always follow the latest best practices.
       proposed solutions: certified drugs, drug quality scores, 
                      and regulatory interventions
    While the problems with the U.S. supply chain are significant, we 
believe there are several straightforward steps that would either stop 
these issues before products even leave the manufacturing plant or 
enable immediate, real-time action by buyers and payers to avoid 
purchasing low-quality products.
Certified Drugs
    As aforementioned, Valisure conducts batch-testing of every product 
dispensed to our customers before it leaves the pharmacy, and we do so 
without adding any cost to patients. We believe this could be 
replicated on a larger scale, creating ``certified drugs'' that are 
independently chemically analyzed and certified before being sold to a 
patient, pharmacy, wholesaler, or health-care system.

    Ideally, this independent analysis would be done immediately after 
the original manufacturer produces the product, when the full size of 
the batch is in one location and before the product is dispensed to 
wholesalers and other down-market entities. The results of this 
analysis--in the form of a simple certificate--could be a desired, 
value-add mark that follows the product through the supply chain and 
into the hands of the patient receiving the medication, thus ensuring 
transparency and recognition of quality.

    This independent analysis is already possible at less than a penny 
per pill at Valisure's pharmacy, and the cost could easily be borne by 
manufacturers or large entities in the supply chain. Manufacturers 
could stand to gain market share for these certified products either by 
standard market drivers or through new requirements or incentives by 
health systems and large private or government purchasers.

    Health systems are constantly plagued by drug quality issues and 
are impacted both tangibly (e.g., drug recalls) and intangibly (e.g., 
doctor and pharmacist time dealing with recalls; patient mistrust; 
readmissions; poor treatment of patients' conditions). Leading health 
centers like the Cleveland Clinic have identified so many issues that 
``Cleveland Clinic pharmacists developed a confidential black list of 
drugs it would no longer buy.''\67\ Prominent health systems or other 
major entities in the drug supply chain that are concerned about 
quality and patient safety could demand certified drugs and either 
require or incentivize having independent certification in their 
purchasing processes.

    Certified drugs not only have the advantage of removing potentially 
dangerous products from the market but would inject much-needed 
transparency into the U.S. drug supply chain. As noted by Professor 
John Gray of Ohio State University in a statement submitted for the 
record for this hearing:

        Unlike many consumer products, consumers/patients generally 
        cannot know if there is a problem with their drug by looking at 
        it. Further, even after taking the drug, it is hard to pinpoint 
        that any side effects are the result of drug quality. This lack 
        of quality visibility makes testing more critical in the drug 
        industry than in many other industries. It also increases the 
        risk that manufacturers, facing cost and delivery pressures, 
        allow drugs to be shipped that did not meet all process and/or 
        product specifications.

    The opacity of drug quality and the difficulty it can cause 
providers is exemplified by the many clinical examples observed by 
distinguished doctors at the Cleveland Clinic.\68\ In the book Bottle 
of Lies by Katherine Eban, a whole chapter is dedicated to a term 
coined by a Cleveland Clinic doctor called ``the X factor'':

        visualize each patient's case as an algebraic equation. A new 
        symptom put an unknown variable, an ``X,'' into the equation . 
        . . generics seemed to be a new X that threw off the whole 
        equation.

    In other words, potential quality problems resulting from drug 
manufacturing present a further ``X factor'' that can frustrate proper 
diagnosis and treatment. As such, the visible mark of quality a 
certified drug offers would provide immense value to patients, doctors, 
payers, and the broader health-care system.
Drug Quality Scores
    Although we believe that Valisure's independent chemical analysis 
of pharmaceuticals could be replicated on a larger scale, in the near 
term, certified drugs are likely only realistic for a handful of high-
volume, high-impact drugs. However, data is available today that 
provides valuable insights on practically all drug products in the U.S.

    On February 3, 2020, Valisure had the honor to be a plenary speaker 
at an event hosted by the Duke Margolis Center for Health Policy in 
partnership with FDA, Understanding How the Public Perceives and Values 
Pharmaceutical Quality.\69\ At this event, a broad group of leaders 
from health-care systems, the pharmaceutical supply industry, payers, 
universities, and non-profits strongly agreed there is a troubling lack 
of transparency into medication quality, and that the development of 
medication ``quality scores'' would be a powerful solution.

    The FDA's Task Force on Drug Shortages has endorsed the creation of 
a voluntary ``rating system. . . . to inform purchasers, group 
purchasing organizations (GPOs) for health-care systems, and even 
consumers, about the quality management maturity of the facilities 
making the drugs.''\70\ We believe that this would be an important 
first step. However, data on quality management maturity--in other 
words, a manufacturer's paperwork--falls far short of the transparency 
on drug quality demanded by supply chain stakeholders.

    Independent quality rating systems should be developed through a 
process that includes robust stakeholder feedback, including patients, 
providers, academic institutions, and health systems. These ratings 
systems should rely on objective, science-based data that is not solely 
voluntarily provided by manufacturers but generated by independent 
third parties. To accomplish this, results from independent chemical 
analysis of drug products could be combined with publicly available 
regulatory data and turned into drug quality scores that could be as 
simple as a ``red/yellow/green'' rating for each drug made by each 
manufacturer. Any buyer or payer could simply strive to buy green, 
occasionally yellow, and just avoid red.

A recent paper, Evidence-Based Quality Scores for Rating Drug Products 
and Their Utility in Health Systems,\71\ (Attachment B) written by 
authors from NYU Langone Health, Columbia University, Defense Health 
Agency, University of Utah Health Care, Cleveland Clinic, Yale School 
of Public Health, and University of Connecticut School of Pharmacy, 
illustrates how such an independent system of quality ratings could 
work. Valisure contributed data and expertise to this paper. As 
explained in the extract:

        The quality of drug products in the United States, which are 
        largely produced overseas, has been a matter of growing 
        concern. Buyers and payers of pharmaceuticals, whether they are 
        health-systems, insurers, PBMs, pharmacies, physicians, or 
        patients, have little to no visibility into any quality metrics 
        for the manufacturers of drug products or the products 
        themselves. A system of ``quality scores'' is proposed to 
        enable health-
        systems and other purchasers and payers of medication to 
        differentiate among drug products according to evidence-based 
        metrics. Metrics influencing the quality scores described 
        herein include both broadly applicable regulatory information 
        and more drug-specific, third-party chemical analysis 
        information. The aggregation of these metrics through a 
        proposed set of rules results in numerical values on a 0-100 
        scale that may be further simplified into a red/yellow/green 
        designation. The simplicity of such scores enables seamless 
        integration into existing healthcare systems and an integration 
        scheme is proposed. Using real-world data from currently on-
        market valsartan drug products, this proposed system generated 
        a variety of quality scores for six major manufacturers. These 
        scores were further evaluated according to their current market 
        price showing no significant correlation between quality score 
        and price. The implementation of drug quality scores at 
        healthcare institutions in the United States and their 
        potential utilization by regulators, could create a much-
        needed, market-driven incentive for pharmaceutical 
        manufacturers to produce quality medications that would reduce 
        drug shortages and improve public health.

    This landmark paper is attached to this testimony and offers the 
first real blueprint of how independently generated, evidence-based 
drug quality scores can be built and utilized by healthcare systems 
throughout the U.S.
Regulatory Interventions
    Finally, we believe there are a number of actions that the FDA and 
Congress could take that would bolster the effectiveness of the 
solutions above and further strengthen Federal oversight of drug 
quality.

    First, the proposed industry-driven solutions of certified drugs 
and drug quality scores could be significantly strengthened by 
incentives or requirements put in place by government payers. For 
example, the Department of Defense (DoD), which purchases its own 
medications, could require independent certification prior to purchase 
or provide incentives for manufacturers to do so. These concepts could 
also be included in legislation currently proposed to reform government 
purchasing of drugs (including for DoD) to incentivize sourcing from 
the U.S. and move pharmaceutical manufacturing to America.\72\

    Second, legislation could fill critical voids in the FDA's current 
ability to enforce appropriate measures for ensuring the safety and 
quality of the Nation's drug supply. In the aforementioned Duke 
Margolis Center event, representatives from the FDA presented data from 
a survey of physicians. When asked, ``Which, if any, of the following 
are functions of the FDA in terms of regulating drug quality?'' the top 
answer was, ``Remove a drug from market if unexpected risks are 
detected.''\73\ It is a sad irony that this is one power that the FDA 
does not have.

    Congresswoman Rosa DeLauro (D-CT) has introduced H.R. 1108, the 
Recall Unsafe Drugs Act,\74\ which would remedy this situation by 
providing the FDA with the authority it lacks to conduct the mandatory 
recalls of drugs. The bill was reintroduced in January 2020, along with 
a call from the Congresswoman to recall all ranitidine products.\75\ 
Valisure strongly supports this legislation, which would mirror the 
mandatory recall authority FDA already has over medical devices, food, 
and biological products, but lacks for drugs.

    Finally, another avenue where independent batch-level validation of 
drugs could easily be applied is drug importation. Drug importation is 
a unique opportunity to reimagine the drug supply chain and rebuild it 
in a way that helps ensure drug quality by incorporating independent 
chemical analysis of all imported products--essentially making all 
imported drugs certified drugs. We believe that drug importation is not 
only an important opportunity to provide lower-cost drugs to American 
consumers, but to enable even higher quality assurance than is 
presently possible in the current domestic drug supply.

    In general, Valisure supports the framework set forth in the 
administration's Importation of Prescription Drugs Proposed Rule, 
particularly the proposed batch-level testing of all imported products. 
However, it is critical that the rule is revised to ensure that this 
testing is performed by independent laboratories rather than requiring 
further cGMP testing conducted by manufacturers that would be subject 
to the same conflicts of interest and errors as under our current 
system.\76\ (Attachment A)

    Valisure is greatly honored by the engagement it has received from 
government agencies and legislators and is open to exploring any 
avenues in which it can help to increase quality assurance and 
transparency in medications.
             covid-19 and the impact on medication quality
    In addition to its devastating toll on global health and economies, 
the COVID-19 pandemic has had significant impacts on the drug supply 
chain. Although finding treatments and vaccines for the virus and 
caring for the sick are the immediate first-order problems to address, 
it is becoming increasingly clear that one of the biggest second-order 
issues will be serious disturbances to the U.S. pharmaceutical supply 
chain. Drug shortages are already affecting Americans prescribed 
medications being repurposed for COVID-19 treatment,\77\ and the 
shutdown of overseas manufacturing will likely create dozens of 
widespread shortages in the months to come--many of which we have 
little visibility into today.

    In addition to the challenge of drug shortages, existing 
pharmaceutical quality problems may be exacerbated by the COVID-19 
crisis. Many safety and quality issues stem from overseas manufacturers 
cutting corners, and it is certainly possible that many more corners 
will be cut in the scramble to ramp back up production and fill 
backorders. The potential for the market to be flooded with 
counterfeit, substandard, and tainted products is a serious concern, 
particularly in light of the suspension of routine FDA inspections,\78\ 
the approval of previously banned manufacturers, and dramatically 
increased demand for specific drugs.

    Through Emergency Use Authorization Act (EUA) authority, the FDA 
has chosen to make decisions now for the good of public health that 
will undoubtedly impact public safety in the future. For example, in 
its efforts to authorize production of large quantities of several 
drugs, the FDA has lifted its ban on one overseas manufacturer, Ipca 
Laboratories. The FDA had previously banned products from three Ipca 
manufacturing facilities because of rampant data manipulation and what 
the FDA in a warning letter called a ``cascade of failure'' at its 
plant in Silvassa.\79\ One potential solution could be a mandate that 
any drugs produced under an EUA should be independently tested and 
certified before entering the U.S. market.

    We are also concerned about quality problems resulting from 
escalated production of products used to treat COVID-19. Many of these 
drugs are also used broadly for the treatment of other medical issues 
by non-COVID patients. In the race to produce large amounts of these 
drugs, quality may be sacrificed for quantity, thereby exposing a large 
population to substandard products. Further, when new COVID treatments, 
preventives, and vaccines are developed, manufacturers will face 
enormous pressure to produce large volumes quickly. Without careful 
regulatory oversight and independent analysis, this could result in 
quality problems from rushed manufacturing.

    It is important to note that manufacturing problems that arise from 
the escalated production of drugs and a lack of FDA inspectors on the 
ground at foreign plants could produce a domino effect for years to 
come. The lifecycle of a drug in the supply chain is many years and it 
could be many more before significant and serious issues are found, let 
alone addressed.
                               conclusion
    Since Valisure's founding, our mission has been to bring quality 
assurance and increased transparency into the opaque world of the 
nearly $2 trillion global pharmaceutical industry. While we initially 
brought these benefits directly to patients through our online 
pharmacy, we are encouraged by the growing awareness of these problems 
by public and private stakeholders and increased opportunities for 
collaboration. By working together, we strongly believe that we can 
bring critically needed quality and transparency in medications to all 
Americans.

    We are grateful to the Senate Finance Committee's commitment to 
ensuring the safety and quality of the U.S. drug supply chain and hope 
to continue working with you towards this critical goal.

_______________________________________________________________________

End Notes

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Supply Chain From China Act; S. 3538, Strengthening America's Supply 
Chain and National Security Act; H.R. 6731, Securing America's 
Pharmaceutical Supply Chain Act; H.R. 6630, Securing America's Critical 
Minerals Supply Chain Act; and H.R. 4710, Pharmaceutical Independence 
Long-Term Readiness Reform Act.
    [73] https://healthpolicy.duke.edu/sites/default/files/atoms/files/
pharmaceutical_quality_
slides_final.pdf
    [74] H.R. 1108, Recall Unsafe Drugs Act. Rep. Rosa L. DeLauro (D-
CT-03). February 16, 2017. (https://www.congress.gov/bill/115th-
congress/house-bill/1108).
    [75] ``DeLauro Reiterates Call to Ban Ranitidine Sales, 
Reintroduces Bill Giving FDA Mandatory Recall Authority Over Drugs.'' 
January 10, 2020. (https://delauro.house.gov/media-center/press-
releases/delauro-reiterates-call-ban-ranitidine-sales-reintroduces-
bill-giving).
    [76] See Valisure's comments to the proposed rule, Importation of 
Prescription Drugs Proposed Rule, Docket No. FDA-2019-N-5711. (https://
www.regulations.gov/document?D=FDA-2019-N-5711-1247). See Attachment A.
    [77] Erman M. ``Potential coronavirus treatment touted by Trump 
already in shortage, pharmacists say.'' Reuters. March 19, 2020. 
https://www.reuters.com/article/us-health-coronavirus-usa-shortages-
excl/exclusive-potential-coronavirus-treatment-touted-by-trump-already-
in-shortage-pharmacists-idUSKBN2163JD
    [78] FDA Updates and Press Announcement on Coronavirus Disease 2019 
(COVID-19) Update: Foreign Inspections. March 10, 2020. https://
www.fda.gov/news-events/press-announcements/coronavirus-disease-2019-
covid-19-update-foreign-inspections.
    [79] FDA Warning Letters on Ipca Laboratories Limited. January 29, 
2016. https://www.fda.gov/inspections-compliance-enforcement-and-
criminal-investigations/warning-letters/ipca-laboratories-limited-
01292016.

                                 ______
                                 

                              ATTACHMENT A

Valisure

                                                      March 9, 2020
                                          VIA ELECTRONIC FILING TO:
                                                www.regulations.gov

Stephen M. Hahn, M.D.
Commissioner
Food and Drug Administration
Department of Health and Human Services
5630 Fishers Lane, Room 1061
Rockville, MD 20852

RE: Importation of Prescription Drugs Proposed Rule, Docket No. FDA-
2019-N-5711

Dear Dr. Hahn,

    On behalf of Valisure, the Nation's first and only analytical 
pharmacy, I appreciate the opportunity to comment on the FDA's proposed 
rule on the importation of prescription drugs. We commend the FDA's 
thoughtful approach to the rule, particularly the focus on batch-level 
testing of imported products. Drug importation is not only an important 
opportunity to provide lower-cost drugs for American consumers, but to 
enable even higher quality assurance than is presently possible with 
the domestic drug supply. We urge speedy implementation of the rule to 
allow States and stakeholders the opportunity to assemble Section 804 
Implementation Programs (SIPs) as quickly as possible.
                       i. background on valisure
    Valisure is an online pharmacy attached to an analytical 
laboratory, and is the first and only pharmacy in America that 
chemically batch-validates every medication it sells at no additional 
cost to consumers. Founded in 2015, Valisure is headquartered at Yale 
Science Park in New Haven, Connecticut. Valisure is ISO-17025 
accredited by the International Organization for Standardization (ISO) 
and is registered with the Drug Enforcement Administration (Pharmacy: 
FV7431137, Laboratory: RV0484814) and the FDA (FEI #: 3012063246).

    Valisure's mission is to help ensure the safety, quality, and 
consistency of medications and supplements in the market. In response 
to rising concerns about counterfeit medications, the quality of 
generics, and overseas manufacturing, Valisure developed proprietary 
analytical technologies that it uses in addition to FDA standard assays 
to test every batch of every medication it dispenses. Valisure tests 
medications for correct dosage, major inactive ingredients, proper 
dissolution, and for the presence of carcinogens such as N-
Nitrosodimethylamine (NDMA). Valisure currently rejects over 10 percent 
of medication batches based on these testing standards.

    Over the past year, Valisure identified a fourth major carcinogen 
in valsartan and discovered the presence of NDMA in Zantac/ranitidine, 
which led to recalls of the drug throughout the United States and the 
world. Most recently, Valisure detected high levels of NDMA in specific 
lots of the drug metformin.

    In an August 7, 2018 inspection of Valisure's facilities by the 
FDA, the FDA determined that since Valisure's unique testing facility 
is not a part of the pharmaceutical manufacturing system and does not 
perform release testing, stability testing, or any related services for 
pharmaceutical manufacturers, Valisure did not require FDA 
registration. However, Valisure has elected to maintain voluntary 
registration status with the FDA. Valisure also received guidance that 
since it operates outside of the manufacturing industry using the 
appropriate ISO guidelines as opposed to Good Manufacturing Practices 
(GMPs), any product failures or concerns that Valisure identifies 
should be reported back to the pharmaceutical industry. Valisure has 
complied with this guidance and regularly provides reports to 
applicable parties in the pharmaceutical industry.
                   ii. comments on the proposed rule
    Valisure supports the importation framework proposed by the rule. 
In particular, we support the rule's proposed batch-level testing of 
all imported products, which will help ensure the integrity and safety 
of the medication. Below, we offer specific comments on several key 
provisions of the rule, including suggestions to help ensure that 
importation can be done both efficiently and cost-effectively.
A. SIP Sponsors
    Valisure supports the proposal to allow pharmacies and wholesalers 
to co-sponsor SIPs. Pharmacies, in particular, have significant 
expertise acquiring and distributing prescription drugs, as well as 
ensuring the quality of these products; this makes pharmacies uniquely 
well-suited to partner with State SIP sponsors. We also believe that a 
pharmacy could safely serve as both a co-sponsor and an Importer within 
an SIP. To help safeguard these arrangements, we recommend requiring 
States to establish sufficient oversight mechanisms to ensure that this 
dual role does not present a conflict of interest.

    Valisure also supports the proposal to allow pharmacies and 
wholesalers to sponsor a SIP independent of a State (``Option 2'' under 
Sec. 251.2). We recommend limiting this option to pharmacies that can 
demonstrate the ability to manage the administrative aspects of the 
program, develop sustainable partnerships with reputable Foreign 
Sellers, and administer the required Statutory Testing with high-
quality independent laboratories.

    Finally, Valisure supports the proposal to allow pharmacies and 
wholesalers to serve as Importers, for all the reasons enumerated 
above. We agree that part of Importers' responsibilities should include 
an initial screening of imported products. In addition to a visual 
comparison of each product to the HPFB-approved drug, on-site laser 
spectroscopy-based techniques could be used to quickly screen products 
as a first-pass screening using handheld advices. This would require a 
relatively minimal investment by the Importer, but would add an 
additional level of security. However, this would not replace the need 
for significantly more detailed analysis by a qualified laboratory.
B. Covered Products
    Valisure believes that the rule's restrictions on covered products 
would still allow the importation of many commonly used medications 
that not only provide significant opportunities for price savings, but 
have already been subject to critical quality and safety issues (for 
example, valsartan, losartan, and metformin). The proposed Statutory 
Testing for imported products could result in even safer products than 
are currently available for sale in the United States.

    In particular, Valisure supports the FDA's decision not to exclude 
modified-release drugs and narrow-therapeutic index drugs from the 
definition of covered products. These are precisely the types of 
products that Valisure often hears quality complaints about from 
doctors and patients. Batch-to-batch variation in drug dissolution and 
dosage in narrow-therapeutic index drugs can translate into significant 
adverse events and negatively impact patients' clinical outcomes. 
Valisure's testing has revealed substantial quality and safety issues 
with many of these products: for example, products with significantly 
different dissolution rates across batches, and batches of narrow-
therapeutic drugs, like anticonvulsants, that fall outside the 
manufacturers' stated ranges. As noted above, we believe this rule is 
an opportunity to add an additional layer of testing that can actually 
improve the quality and safety of imported products versus the current 
domestic supply.
C. Statutory Testing
    Valisure believes that the Statutory Testing is a critical 
component of the proposed rule that will help ensure that imported 
products are safe and high quality. In particular, Valisure supports 
batch-level testing of all imported drugs, which will provide an 
important safeguard that goes beyond the requirements for domestically 
marketed drugs. However, Valisure has several suggestions to ensure 
that this testing is additive and not redundant and is conducted by 
independent third-party laboratories.
            a. Qualifying Laboratories
    Valisure strongly agrees with the proposal that all qualifying 
laboratories should have an inspection history and must have 
satisfactorily addressed any objectionable conditions or practices 
identified during its most recent inspection. Valisure agrees that 
qualifying laboratories should be held to rigorous standards, namely 
ISO 17025 accreditation.

    However, Valisure disagrees that qualifying laboratories should be 
required to hold Current Good Manufacturing Practice (CGMP) 
certification. CGMP laboratories, by definition, contract with 
pharmaceutical manufacturers. This raises a potential conflict of 
interest that could lead CGMP laboratories to compromise the integrity 
of their testing. Moreover, CGMP testing follows manufacturer 
specifications rather than scientific and physiological best practice. 
In the past year alone, academics and independent laboratories like 
Valisure have discovered serious drug quality issues that were missed 
by CGMP testing, including potent carcinogens found in losartan, 
valsartan, ranitidine, and metformin. In some cases, these carcinogens 
were found because FDA testing guidelines had not yet been updated; in 
other cases, carcinogen contamination was widespread but apparently 
missed during CGMP testing.\1\ Regardless, these lapses have profound 
consequences for patient health.
---------------------------------------------------------------------------
    \1\ See Valisure, Valisure Citizen Petition, June 19, 2019 (finding 
high levels of the carcinogen DMF in lots of valsartan); Valisure, 
Valisure Citizen Petition on Ranitidine, Sept. 9, 2019 (finding 
extremely high levels of NDMA in ranitidine); Valisure, Request that 
the FDA recall of identified batches of metformin on the basis that, 
due to contamination with a probable human human carcinogen, these 
drugs are adulterated under Section 501 of the FDCA (21 U.S.C. 
Sec. 351) and misbranded under Section 502 of the FDCA, March 2, 2020 
(finding high levels of the carcinogen NDMA in lots of metformin).

    In addition to raising a potential conflict of interest and 
possibly neglecting critical testing that is not prescribed by 
manufacturers, pharmaceutical companies placing their products for sale 
in the U.S. are already required to conduct a GMP analysis, making the 
testing in the proposed rule redundant in many cases. GMP testing is 
also particularly expensive; most contract research organizations 
(CROs) will charge more for a GMP test than a non-GMP test, even though 
the only substantive difference is the paperwork. As such, requiring 
qualifying laboratories to hold CGMP certification will unnecessarily 
raise the cost of the Statutory Testing and lower cost savings to 
---------------------------------------------------------------------------
American consumers.

    ISO-17025 accreditation is rigorous, and actually goes beyond GMP 
by not only setting standards for laboratory and analytical 
methodology, but also governing quality systems company-wide including 
business practices. As such, Valisure urges the FDA to eliminate the 
requirement that qualifying laboratories hold CGMP certification in 
order to ensure that the sponsors of SIPs have the option of 
contracting with truly independent and unbiased laboratories.
            b. Laboratory Testing Requirements
    Valisure recognizes that 21 U.S.C. Sec. 384 permits laboratory 
testing to be done by the Importer or by the manufacturer. However, 
Valisure remains concerned that permitting the testing to be conducted 
by the manufacturer significantly increases the risk of inadequate 
scrutiny (at best) and fraud (at worst). As discussed above, this is 
especially true if the testing is conducted by a CGMP laboratory that 
routinely contracts with the pharmaceutical industry or is itself owned 
or controlled by the manufacturer selling the product.

    To lower the risk that manufacturer testing might allow low-quality 
products to be imported into the U.S., Valisure reiterates its 
recommendation that testing should be permitted to be conducted by ISO-
17025 certified labs rather than restricted only to labs that hold CGMP 
certification. This would allow SIP sponsors the option of requiring 
any imported products to be tested by independent laboratories free of 
potential conflicts of interest. Additionally, Valisure urges that the 
rule clarify that manufacturers cannot satisfy the Statutory Testing 
requirements through pre-existing release or conformance testing. To 
the extent products have already undergone release or conformance 
testing at a qualifying laboratory in the U.S., the FDA should 
stipulate that the Statutory Testing should be conducted at a separate, 
independent laboratory to ensure thorough analysis before the products 
enter the United States market. Valisure also strongly supports the 
requirement in the proposed Sec. 251.16(e) that if testing is done by 
manufacturers, detailed data should be provided to the FDA.
D. Product Labeling
    Finally, Valisure supports labeling imported products appropriately 
to allow pharmacists to be able to distinguish them on a shelf. 
However, Valisure suggests that the required language on each box 
include the stipulation that each product was batch-tested to help 
ensure safety and quality.

                                 * * *

    Valisure appreciates the opportunity to provide comments on the 
proposed rule and looks forward to working with the FDA and States to 
help implement the safe and affordable importation of drugs from 
Canada. If you have any questions or if we can provide any further 
information that would be useful, please do not hesitate to contact me 
at [email protected] or 833-497-7370.

    Sincerely,
    David Light
    Founder and CEO
    Valisure

                                 ______
                                 

                              ATTACHMENT B

        evidence-based quality scores for rating drug products 
                  and their utility in health systems
Arash Dabestani, Pharm.D., MHA, FASHP,\1\ Carl W. Bazil, M.D., 
Ph.D.,\2\ Ryan C. Costantino, MS, Pharm.D., BCPS, BCGP,\3\ Erin Fox, 
Pharm.D., BCPS, FASHP,\4\ Joe Graedon MS,\5\ Harry Lever, M.D.,\6\ 
Robert Makuch, Ph.D.,\7\ C. Michael White, Pharm.D., FCP, FCCP \8\

    [1] Department of Pharmacy, NYU Langone Health, New York, NY
    [2] Columbia University Medical Center, New York, NY
    [3] USA MEDCOM Pharmacy Service Line, Defense Health Agency, San 
Antonio, TX
    [4] Department of Pharmacy, University of Utah Health Care, Salt 
Lake City, UT
    [5] People's Pharmacy, Durham, NC
    [6] Hypertrophic Cardiomyopathy Center, Heart and Vascular 
Institute, Cleveland Clinic, Cleveland, OH
    [7] Department of Biostatistics, Yale School of Public Health, Yale 
School of Medicine, New Haven, CT
    [8] University of Connecticut School of Pharmacy, Storrs, CT
                                abstract
The quality of drug products in the United States, which are largely 
produced overseas, has been a matter of growing concern.\1\ Buyers and 
payers of pharmaceuticals, whether they are health-systems, insurers, 
PBMs, pharmacies, physicians, or patients, have little to no visibility 
into any quality metrics for the manufacturers of drug products or the 
products themselves. A system of ``quality scores'' is proposed to 
enable health-systems and other purchasers and payers of medication to 
differentiate among drug products according to evidence-based metrics. 
Metrics influencing the quality scores described herein include both 
broadly applicable regulatory information and more drug-specific, 
third-party chemical analysis information. The aggregation of these 
metrics through a proposed set of rules results in numerical values on 
a 0-100 scale that may be further simplified into a red/yellow/green 
designation. The simplicity of such scores enables seamless integration 
into existing healthcare systems and an integration scheme is proposed. 
Using real-world data from currently on-market valsartan drug products, 
this proposed system generated a variety of quality scores for six 
major manufacturers. These scores were further evaluated according to 
their current market price showing no significant correlation between 
quality score and price. The implementation of drug quality scores at 
healthcare institutions in the United States and their potential 
utilization by regulators, could create a much-needed, market-driven 
incentive for pharmaceutical manufacturers to produce quality 
medications that would reduce drug shortages and improve public health.
---------------------------------------------------------------------------
    \1\ Conti RM, Berndt ER, Kaygisiz NM, Shivdasani Y. ``We Still 
Don't Know Who Makes This Drug,'' Health Affairs Blog, February 7, 
2020. (https://www.healthaffairs.org/do/10.1377/hblog20200203.83247/
full/).
---------------------------------------------------------------------------
                              introduction
    As most of the United States' complex drug supply chain has moved 
overseas, especially to countries such as India and China, quality and 
safety concerns have become more pressing. Eighty percent of active 
pharmaceutical ingredients (``API'') for products sold in the U.S. now 
come from outside the country, the vast majority from China.\2\ As Dr. 
Janet Woodcock, Director of the Food and Drug Administration (``FDA'') 
Center for Drug Evaluation and Research (``CDER''), has noted, this 
``use of foreign-sourced materials creates vulnerabilities in the U.S. 
drug supply.''\3\ Recent drug quality issues have threatened the health 
and safety of American consumers, including the widespread 
contamination of critical blood pressure medications,\4\ 
gastroesophageal reflux disease drugs,\5\ and diabetes medications \6\ 
with carcinogens.\7\ Not only do drug quality issues place patients' 
lives at risk, they also account for over 60 percent of drug shortages 
\8\ and generate fear and mistrust that is an important cause of 
medication non-adherence.\9\
---------------------------------------------------------------------------
    \2\ U.S.-China Economic and Security Review Commission, 2019 Report 
to Congress 250 (2019).
    \3\ Statement of Janet Woodcock, M.D., Director, Center for Drug 
Evaluation and Research, FDA, before the Subcommittee on Health, 
Committee on Energy and Commerce, U.S. House of Representatives, 
``Safeguarding Pharmaceutical Supply Chains in a Global Economy'' 2 
(Oct. 30, 2019), available at https://bit.ly/2SYjqqy.
    \4\ FDA Updates and Press Announcements on Angiotensin II Receptor 
Blocker (ARB) Recalls (Valsartan, Losartan, and Irbesartan). https://
bit.ly/38MRM6C.
    \5\ FDA Updates and Press Announcements on NDMA in Zantac 
(ranitidine) (February, 27, 2020). http://bit.ly/3b92dlP.
    \6\ Reuters. (March 2, 2020). ``Online Pharmacy Valisure Says Tests 
Show Carcinogen in Diabetes Drug Metformin.'' The New York Times. 
(https://nyti.ms/2UhtwDw).
    \7\ Edney A, Berfield S, Yu E. (September 12, 2019). ``Carcinogens 
Have Infiltrated the Generic Drug Supply in the U.S.'' Bloomberg 
Businessweek. (https://bloom.bg/2x7P11z).
    \8\ See Dr. Patrizia Cavazzoni, FDA, ``The Importance of 
Pharmaceutical Quality'' 11 (2020), at https://bit.ly/37LwrJB.
    \9\ Brown MT, Bussell J, Dutta S, Davis K, Strong S, Mathew S. 
``Medication Adherence: Truth and Consequences.'' Am J Med Sci. 
2016;351(4):387-399. doi:10.1016/j.amjms.2016.01.010. (https://
www.ncbi.nlm.nih.gov/pubmed/27079345).

    Certain manufacturers have exhibited substantive quality issues and 
even engaged in data manipulation. This issue is highlighted by the 
record $500 million fine imposed on the generics manufacturer, Ranbaxy, 
after it pleaded guilty to failing to report its drugs did not meet 
specifications. The firm also made false statements to the FDA. Ranbaxy 
knowingly manufactured drugs that tested out-of-specification, had 
unknown impurities, and would not maintain their expected shelf 
life.\10\
---------------------------------------------------------------------------
    \10\ White CM. ``Generic Drugs Not as Safe as FDA Wants You to 
Believe.'' Annals Pharmacotherapy 2020;54(3):283-286. (https://
journals.sagepub.com/doi/full/10.1177/1060028019881692).

    Although significant attention is given to overseas manufacturers, 
American companies are not immune from quality issues. Numerous cases 
exist of serious quality problems affecting American consumers caused 
by poor manufacturing practices at facilities in the United States.\11\
---------------------------------------------------------------------------
    \11\ FDA Updates on Multistate Outbreak of Burkholderia cepacia 
Infections.'' (August 2, 2017). (http://bit.ly/33pjhkK).

    For these reasons, we applaud the FDA's recent recognition of the 
need for more transparency with regard to drug manufacturing.\12\ 
Recalls and FDA investigations have made clear that not all 
manufacturers are alike in their capacity to reliably produce high-
quality pharmaceutical products. However, purchasers of pharmaceutical 
products--including drug distributors, pharmacies, and health systems--
often have no reliable way to distinguish between high- and low-quality 
manufacturers or their drug products.
---------------------------------------------------------------------------
    \12\ Woodcock J. FDA. To Help Reduce Drug Shortages, We Need 
Manufacturers to Sell Quality--Not Just Medicine. Oct. 24, 2019, at 
https://bit.ly/2SOEy3P.

    The FDA's Task Force on Drug Shortages has endorsed the creation of 
a voluntary ``rating system . . . to inform purchasers, group 
purchasing organizations (GPOs) for health care systems, and even 
consumers, about the quality management maturity of the facilities 
making the drugs.''\13\ This underscores the importance of the 
fundamental principle of having a quality score that can differentiate 
between manufacturers. However, since the FDA proposal is voluntary, it 
may not achieve broad implementation. Furthermore, it is important that 
the criteria used be evidence-based. Announcements have also been made 
by private industry for the creation of a commercially available drug 
quality scores platform intended for use by health systems.\14\
---------------------------------------------------------------------------
    \13\ Id.
    \14\ Press release. (January 8, 2020). ``Valisure and Govzilla 
Announce a Collaboration Focused on Creating a Platform for Evidence-
Based Quality Scores for Drug Products.'' PR Newswire. (https://prn.to/
2xAuZgw).

    Any reliable rating system should draw upon objective, science-
based, independently generated data that is not voluntarily provided by 
manufacturers but collected by independent parties. Although a quality 
score system may include voluntarily furnished data, it must be 
primarily based on independent data to be broadly applicable and thus 
optimally useful to healthcare systems. The American College of 
Cardiology stressed the need for ``independent testing and verification 
of the chemical content of batches of pharmaceuticals'' in a recent 
resolution \15\ that emphasizes the necessity to rely on more than just 
the manufacturer's self-reported data.
---------------------------------------------------------------------------
    \15\ American College of Cardiology resolution to the American 
Medical Association. (May, 9, 2019).

    These independent quality rating systems should be developed 
through a process that incorporates robust stakeholder feedback, 
including patients, providers, academic institutions, regulatory 
agencies and health systems. In order to spur such discussion and make 
meaningful progress towards establishing a viable system for use among 
an array of healthcare providers, the authors propose criteria for the 
creation of evidence-based quality scores, examples of use on existing 
drug products, and a mechanism for utilization exemplified by a 
proposed workflow for health systems.
                                methods
Quality Score Overview
    Evidence collected in this proposed system originates from both 
broad manufacturer-level data and from specific product information. 
The combination of this data is intended to influence scores for 
specific drug products of a particular drug from a specific 
manufacturer. Although the evidence can be aggregated to evaluate a 
given manufacturer as a whole, the greatest utility to healthcare 
purchasers and payers is likely achieved by focusing on specific 
products. This is due to the immense complexity and opacity of the 
pharmaceutical supply chain. The source of ingredients used in any one 
drug product is considered proprietary and is therefore not easily 
accessible.

    The specificity down to a drug product is not intended to directly 
describe a given National Drug Code (``NDC''), which further defines a 
drug product's dosage form and packaging. It is assumed that evidence 
gathered on a specific drug product will be applicable to all NDCs 
related to that drug product from the specific manufacturer, regardless 
of dosage level or packaging. As an illustrative example, if negative 
information is gathered for ``manufacturer X's'' valsartan 160mg 
tablets packaged in 100 count bottles, this will influence quality 
scores on NDCs for all valsartan tablets in all package sizes for 
manufacturer X. When substantially more data is available, future 
iterations of quality scores may directly describe individual NDCs or 
individual dosage forms.

    The proposed system would generate a quality score on a numerical 
scale from 0 to 100, with 100 being the most desirable and highest 
achievable score and 0 being the lowest and least desirable score. 
Since all drug products legally sold in the United States are FDA-
approved and produced at registered facilities certified as conforming 
to Current Good Manufacturing Practices (``CGMP''), the default 
assumption is that, absent evidence to the contrary, all products 
receive a default score of 100.

    Criteria proposed herein are all based on information that is 
negative in nature and thus produces evidence for reducing a starting 
score of 100. Future iterations of such quality scores may also include 
criteria based on positive information that generates evidence for 
raising a score. The default value of such scores may be subsequently 
lowered to add opportunity for particularly well-performing 
manufacturers or products to outperform the default. It is also 
contemplated that temporal considerations be given to modify the impact 
of negative information and to eventually remove or significantly 
reduce its influence. The intention for a reliable quality score system 
would be to continuously incorporate new regulatory and chemical 
analysis data to enable optimal, real-time, guidance of drug product 
quality.
Quality Score Criteria
    Proposed below are detailed criteria and their influence on a 
default score. These are based on independently gathered evidence from 
regulatory information and chemical analysis of on-market drug products 
obtained from a licensed pharmacy.


----------------------------------------------------------------------------------------------------------------
                                                                                                        Score
         Category                        Criteria                            Qualifiers               Influence
----------------------------------------------------------------------------------------------------------------
                           Warning Letter ratio to total        >1.5 3-yr industry average                  -10
                            inspections                         >2 3-yr industry average                    -30
                          --------------------------------------------------------------------------------------
                           Form 483 ratio to total inspections  >10% 3-yr industry average                   -10
                                                                >20% 3-yr industry average                   -30
                          --------------------------------------------------------------------------------------
Regulatory  Information    GMP related Consent Decree/CIA in                                                 -50
                            place
                          --------------------------------------------------------------------------------------
                           Public Product Quality complaints    e.g., % ``bad odor'' >2                     -10
                                                                 competitors                                 -30
                                                                e.g., % ``bad odor'' >4
                                                                 competitors
                          --------------------------------------------------------------------------------------
                           Serious adverse event                e.g., % ``death'' >2 competitors            -10
                                                                e.g., % ``death'' >4 competitors            -30
----------------------------------------------------------------------------------------------------------------
                           Dosage failure                       Single batch                                 -10
                                                                >33% of batches                              -30
                                                                All batches                                  -61
                          --------------------------------------------------------------------------------------
                           Dissolution failure of USP           Single batch                                 -10
                                                                >33% of batches                              -30
                                                                All batches                                  -61
                          --------------------------------------------------------------------------------------
                           Dissolution failure of               >33% of batches                              -10
                            Physiological Conditions            All batches                                  -30
                          --------------------------------------------------------------------------------------
                           Carcinogen failure of FDA levels     Single batch                                 -30
                                                                >33% of batches                              -61
                          --------------------------------------------------------------------------------------
Chemical  Analysis         Carcinogen failure at evidence-       Single batch                                -10
                            based, stricter levels              >33% of batches                              -30
                                                                All batches                                  -61
                          --------------------------------------------------------------------------------------
                           Heavy metals failure of FDA levels   Single batch                                 -30
                                                                >33% of batches                              -61
                          --------------------------------------------------------------------------------------
                           Microbial detection failure by FDA   Single batch                                 -30
                            method                              >33% of batches                              -61
                          --------------------------------------------------------------------------------------
                           Microbial detection failure by PCR   Single batch                                 -10
                            method                              >33% of batches                              -30
                                                                All batches                                  -61
                          --------------------------------------------------------------------------------------
                           Ingredients ID failure, API          Single batch                                 -30
                                                                >33% of batches                              -61
                          --------------------------------------------------------------------------------------
                           Ingredients ID failure, excipient    Single batch                                 -10
                                                                >33% of batches                              -30
                                                                All batches                                  -61
----------------------------------------------------------------------------------------------------------------


        Table 1. Proposed quality score criteria are categorized by 
        information derived from regulatory data and chemical analysis 
        data. For most criteria, the severity of negative influence on 
        the score is dependent on qualifiers on the information 
        gathered.

    The specific criteria proposed above are primarily self-
explanatory. Criteria requiring clarification are discussed below.

    Form 483 and Warning Letter Ratio of Inspections--The 3-year 
average of total drug industry inspections, Form 483 letters and 
warning letters is aggregated and the ratios of Form 483 letters to 
total inspections and warning letters to total inspections is 
calculated. These same values are also calculated for an individual 
manufacturer and if the ratios for the manufacturer are higher than the 
global average by a set qualifier, a negative score influence is 
triggered. Future iterations may utilize total drug industry 
inspections within geographic regions as opposed to a global average. 
This could be an important refinement given the differences in 
inspection practices within the United States and overseas; such as 
domestic inspections are unannounced whereas foreign inspections often 
come with months of advanced warning.\16\
---------------------------------------------------------------------------
    \16\ Government Accountability Office. (2019). ``Preliminary 
Findings Indicate Persistent Challenges With FDA Foreign Inspections.'' 
(https://www.gao.gov/assets/710/703077.pdf).

    Public Product Quality Complaints or Serious Adverse Events--The 
ratio of this complaint or event to all others for this product is 
compared to other manufacturers of the same product. If the ratio for a 
concerning complaint or serious event is significantly higher than the 
average ratio of its competitors, a negative score influence is 
---------------------------------------------------------------------------
triggered.

    Dissolution Failure of Physiological Conditions--This differs from 
dissolution failure of USP conditions for a variety of products where 
the registered USP monograph for dissolution testing does not conform 
to industry standard physiologically relevant conditions. For example, 
industry standard simulated gastric fluid is often used for 2 hours and 
has a pH of 1.2 and simulated intestinal fluid is often used for the 
remainder of dissolution testing thereafter and has a pH of 6.8. 
However, USP dissolution media for ibuprofen tablets prescribes using 
only one solution with a pH of 7.2 without any exposure to acid. 
Although testing ibuprofen tablets in USP solution may yield a passing 
test, performing dissolution testing in physiologically relevant media 
has been shown to yield certain specific products taking over 24 hours 
to dissolve whereas others dissolve quickly, as expected.\17\
---------------------------------------------------------------------------
    \17\ ``Your Medication May Not Be Dissolving Properly.'' (2018). 
The Valisure Notebook. http://bit.ly/38XVDNm (accessed March 15, 2020).

    Carcinogen Failure at Evidence-based, Stricter Levels--FDA 
regulations for acceptable daily exposures or intakes of various 
carcinogen compounds generally follow internationally accepted 
guidelines. However, there are cases where organizations such as the 
World Health Organization (``WHO'') and the International Agency for 
Research on Cancer (``IARC'') will provide guidance which differs from 
that listed by the FDA. This is currently the case with N,N-
Dimethylformamide \18\ (``DMF'') which is classified by WHO and IARC as 
a Group 2A probable human carcinogen.\19\ For the purposes of this 
proposed quality score system, a negative score influence is triggered 
when DMF levels exceed 96 nanogram but are less than 1,000 nanograms 
and a more severe negative score influence is triggered when DMF levels 
exceed 1,000 nanograms.
---------------------------------------------------------------------------
    \18\ Light D, Kucera K. (June, 13, 2019). ``Request that the FDA 
issue a regulation, revise industry guidance, and take such other 
actions.'' FDA Citizen Petition filed by Valisure, LLC. (https://
www.regulations.gov/docket?D=FDA-2019-P-2869).
    \19\ International Agency for Research on Cancer and World Health 
Organization. IARC Monographs on the Identification of Carcinogenic 
Hazards to Humans. Volume 47, 71, 115 (2018). (https://
monographs.iarc.fr/list-of-classifications-volumes/).


----------------------------------------------------------------------------------------------------------------
                                                                                                        Score
         Category                        Criteria                            Qualifiers               Influence
----------------------------------------------------------------------------------------------------------------
Chemical PAnalysis         Carcinogen failure: DMF >96 ng,      >33% of batches                              -10
                            <1,000ng                            All batches                                  -30
                          --------------------------------------------------------------------------------------
                           Carcinogen failure: DMF >1,000 ng    Single batch                                 -10
                                                                >33% of batches                              -30
                                                                All batches                                  -61
----------------------------------------------------------------------------------------------------------------


        Table 2. Quality score criteria definitions for ``Carcinogen 
        failure at evidence-based, stricter levels'' specific for DMF.

    Notably absent from the proposed quality score criteria is 
information regarding recalls. Although the existence of high volumes 
of recalls for a particular manufacturer of a drug product may 
intuitively induce a negative score influence, this may, in fact, be an 
indication of responsible quality surveillance. Furthermore, a lack of 
recalls may be indicative of overly lax quality assurance measures for 
a given manufacturer as opposed to a truly quality product. In the 
United States, drug product recalls are almost all voluntary and 
performed at the discretion of pharmaceutical manufacturers.\20\ This 
conundrum warrants a deeper investigation. A retroactive review of 
chemical data compared with recall data could potentially better inform 
the correct view of product recalls. While such insights are yet to be 
elucidated, it was deemed best to leave such information out of the 
currently proposed quality score system.
---------------------------------------------------------------------------
    \20\ Newkirk M, Berfield S. (December 13, 2019). ``The FDA Drug 
Recall System Is Voluntary, Haphazard, and Broken.'' Bloomberg 
Businessweek. (https://www.bloomberg.com/graphics/2019-voluntary-drug-
recalls-zantac/).

    Also absent from the quality score criteria is the FDA-proposed 
concept of quality management maturity. Indicators of quality 
management maturity have been proposed but appear to primarily rely on 
manufacturers' proprietary information.\21\ To the authors' knowledge, 
there is no existing metric that uses publicly available inputs other 
than recalls which are discussed above. The lack of available 
information to assess the merits of quality management maturity for use 
in an independently derived and broadly applicable, evidence-based 
quality score system precludes it from inclusion in this proposal; 
however, future iterations may add such criteria when the information 
required for evaluation is made available or new indicators are 
elucidated.
---------------------------------------------------------------------------
    \21\ ISPE Drug Shortages Prevention Plan. (October 2014). http://
www.ispe.org/Drug
ShortagesPreventionPlan.

    It is envisioned that a drug quality score system or platform could 
include a mechanism for health system users to report potential drug 
quality issues, adverse events or send suspect medication samples for 
chemical analysis. This could create a much broader net to identify 
quality issues and if broadly utilized, such information could be 
valuable for the creation of new criteria to influence quality scores.
Quality Score Mechanics
    To enable further ease of use and straightforward implementation 
within established healthcare systems, the proposed numerical quality 
score output can be categorized in a red/yellow/green fashion according 
to the following table:


----------------------------------------------------------------------------------------------------------------
                        Color Designation                                       Quality Score Range
----------------------------------------------------------------------------------------------------------------
Green                                                                                                     80-100
----------------------------------------------------------------------------------------------------------------
Yellow                                                                                                     40-79
----------------------------------------------------------------------------------------------------------------
Red                                                                                                         0-39
----------------------------------------------------------------------------------------------------------------


        Table 3. Quality scores receive a color designation dependent 
        on their numerical value.

    Recognizing that a drug product receiving a red designation could 
induce significant impact within a healthcare system; special 
consideration was given to criteria which can trigger a red. In this 
proposal, only the quality score criteria within the category of 
Chemical Analysis is allowed to trigger a red designation. Even if the 
sum of Regulatory Information criteria resulted in a score influence of 
-61 or below, the reported quality score would be a minimum of 40, 
yielding a yellow designation. The logic for this is rooted in the 
assumption that regulatory findings and public reporting can be 
influenced by many factors and do not have a well-established 
correlation to product quality, which is defined by its chemical 
composition. Supporting this is an excerpt from a 2015 White Paper from 
the FDA Office of Pharmaceutical Quality:\22\
---------------------------------------------------------------------------
    \22\ Food and Drug Administration. (2015). ``FDA Pharmaceutical 
Quality Oversight: One Quality Voice.'' (https://www.fda.gov/media/
91721/download).

        FDA has only limited information about the current state of 
        pharmaceutical quality. FDA has no formal means for quality 
        surveillance, except through inspections. . . . Furthermore, 
        inspection findings have not been a reliable predictor of the 
        state of quality.
Proposed Implementation for Health Systems
    The intended use of the proposed quality scores system in an 
established health-
care system would be to inform and enable pharmacy procurement teams so 
that decision trees could be enacted. Decision trees could be 
implemented through healthcare IT systems that standalone or are 
integrated into the health systems' existing vender or purchasing 
system. A proposal of a decision tree utilizing such quality scores in 
order to purchase primarily green, occasionally yellow after manager 
review and completely avoid red is proposed for a health system where a 
robust process exists for managing drug shortages. Such drug shortage 
processes may include identification of substitute products, 
determination of alternative drugs or treatments and other remedies for 
mitigating or minimizing the impact of a drug shortage. In extreme 
cases that are reviewed by management, a poorly scoring medication 
product where there is no alternative could be treated by the health 
system as a drug shortage instead of purchasing a product designated 
red. Depending on the healthcare system, it may require a different 
decision tree and may elect to utilize different criteria, or adopt the 
same criteria with different degrees of influence on the quality score 
values. 
[GRAPHIC] [TIFF OMITTED] T6220.005

        Figure 1. Proposed decision tree implementing red/yellow/green 
        quality score designations. The first column describes the 
        color designation of a drug product that is the default 
        selection for the health system, which then triggers the 
        decision tree.
                                results
    The angiotensin receptor blocker drug, valsartan, has been subject 
to heavy scrutiny over quality due to a multitude of recalls after 
carcinogenic impurities were found.\23\ This drug has been selected 
here for analysis using available data to generate a limited number of 
quality score criteria which give illustrative examples of how such 
quality scores can be derived. Regulatory information was gathered by 
Govzilla and chemical analysis information was acquired from Valisure's 
analytical laboratory that is attached to a licensed pharmacy.
---------------------------------------------------------------------------
    \23\ See Food and Drug Administration, Search List of Recalled 
Angiotensin II Receptor Blockers (ARBs) Including Valsartan, Losartan 
and Irbesartan. (http://bit.ly/3aUIbLF).


----------------------------------------------------------------------------------------------------------------
              Table 4A                                    Regulatory Information (2017-2020)
----------------------------------------------------------------------------------------------------------------
                                                                                        Form 483
                                                    Form    Warning   Form    Warning   % Above   Warning Letter
                                      Inspections    483    Letter     483    Letter     Global   % Above Global
                                                                      Ratio    Ratio     Ratio         Ratio
----------------------------------------------------------------------------------------------------------------
Company A                                      38      20         0   0.526     0.000
----------------------------------------------------------------------------------------------------------------
Company B                                       6       1         0   0.167     0.000
----------------------------------------------------------------------------------------------------------------
Company C                                      36      24         1   0.667     0.028        26%
----------------------------------------------------------------------------------------------------------------
Company D                                      15       9         1   0.600     0.067        13%            181%
----------------------------------------------------------------------------------------------------------------
Company E                                      10       3         0   0.300     0.000
----------------------------------------------------------------------------------------------------------------
Company F                                      53      27         0   0.509     0.000
----------------------------------------------------------------------------------------------------------------
Global 3-year                               6,967   3,691       257   0.530     0.037
----------------------------------------------------------------------------------------------------------------



----------------------------------------------------------------------------------------------------------------
            Table 4B                                             Chemical Analysis
----------------------------------------------------------------------------------------------------------------
                                                  DMF
                                     Batches     >96ng,     DMF     NDMA    Dosage   Dissolution    Ingredients
                                    Analyzed    <1000ng   >1000ng   >96ng
----------------------------------------------------------------------------------------------------------------
Company A                                    6       1          0       1         0           0                0
----------------------------------------------------------------------------------------------------------------
Company B                                    2       2          0       0         0           0                0
----------------------------------------------------------------------------------------------------------------
Company C                                    9       9          0       0         0           0                0
----------------------------------------------------------------------------------------------------------------
Company D                                    7       0          0       0         0           0                0
----------------------------------------------------------------------------------------------------------------
Company E                                    7       0          7       0         0           0                0
----------------------------------------------------------------------------------------------------------------
Company F                                    2       2          0       0         0           0                0
----------------------------------------------------------------------------------------------------------------


        Table 4. Detailed regulatory information (Table 4A) and 
        chemical analysis information (Table 4B) on available 
        manufacturers of valsartan. Although the names have been 
        deidentified, the data describes real manufacturers of 
        valsartan drug products being currently sold in the United 
        States.


----------------------------------------------------------------------------------------------------------------
              Table 5                       Quality Scores Impactful Criteria Findings (Score Influence)
----------------------------------------------------------------------------------------------------------------
                                                          % of
                                                        Batches    % of     % of                         Warning
                                        Quality Score     DMF    Batches  Batches   Form 483  Form 483   Letters
                                                          >96,     DMF      NDMA      >10%      >20%      >1.5
                                                        <1000ng  >1000ng   >96ng
----------------------------------------------------------------------------------------------------------------
Company A                                      70                         17% (-
                                                                             30)
----------------------------------------------------------------------------------------------------------------
Company B                                      70       100% (-
                                                           30)
----------------------------------------------------------------------------------------------------------------
Company C                                      40       100% (-                                 26% (-
                                                           30)                                     30)
----------------------------------------------------------------------------------------------------------------
Company D                                      80                                  13% (-10)             1.8 (-
                                                                                                             10)
----------------------------------------------------------------------------------------------------------------
Company E                                      39                100% (-
                                                                    61)
----------------------------------------------------------------------------------------------------------------
Company F                                      70       100% (-
                                                           30)
----------------------------------------------------------------------------------------------------------------


        Table 5. Data output for criteria triggering an influence on 
        quality scores and the corresponding numerical influence on the 
        scores denoted in parentheses, regarding current, on-market 
        valsartan drug products from specific manufacturers. The final 
        calculated quality scores are displayed and given their 
        corresponding color designation.

    Even with a drug such as valsartan that has had many quality 
issues, some of which appear to persist, the use of the proposed 
quality score system is able to identify a supplier that scores a 
green. Even among potentially mediocre product quality choices, those 
that appear to perform particularly poorly are identified by a red and 
can be reasonably avoided.

    To further evaluate the impact on pricing by using the proposed 
quality score system, the relative costs of the valsartan drug products 
were analyzed across the six companies. Four dosage forms (40mg, 80mg, 
160mg and 320mg) were evaluated using pricing from three different 
distributors and ensuring packaging size was consistent among all 
companies.

[GRAPHIC] [TIFF OMITTED] T6220.006


        Figure 2. Relative pricing of drug products from companies A--F 
        (denoted in parenthesis) plotted against their quality scores 
        and given their respective red/yellow/green designation.

    Although the decision tree in Figure 1 proposes the option of 
paying more for a higher scoring drug product, the pricing comparison 
illustrated above suggests that higher quality drug products do not 
necessarily cost more. Despite continued quality issues with valsartan, 
the least expensive option had the second-highest quality score, the 
highest quality score option was only 2 percent more expensive and the 
lowest scoring option was 67 percent more expensive.
                       discussion and conclusion
    When originally conceived, generic drug products were assumed to be 
equal in quality to each other and to the innovator product so the only 
differentiating feature would be the price paid. This has led to 
automatic generic substitution laws across the country where patients 
receive the generic selected by the pharmacy and this could change 
several times over the patient's course of therapy. The premise that 
every innovator and generic product is of equal quality is demonstrably 
false.\8\

    With the changing market dynamics that drove pharmaceutical 
manufacturing offshore and made it very difficult to warrant acceptable 
quality, a new strategy is needed to ensure patient safety. The use of 
drugs that are improperly dosed as well as products that don't dissolve 
properly can put patients at risk of clinical failure or adverse 
events. The use of products with bacterial contamination, unacceptably 
high amounts of carcinogens or heavy metals may lead to unintended 
health problems as a result.\24\
---------------------------------------------------------------------------
    \24\ Mathes RW et al. (2008). ``Relationship between histamine2-
receptor antagonist medications and risk of invasive breast cancer.'' 
Cancer Epidemiology Biomarkers and Prevention, a publication of the 
American Association for Cancer Research. Vol. 17(1): p. 67-72. 
(https://www.ncbi.nlm.nih.gov/pubmed/18199712#).

    We hope this will be a useful overview and baseline proposal for 
the use of quality scores for drug products. This is critical for 
adding much-needed transparency into the American drug supply chain and 
enabling health system purchasers and payers of medications to avoid 
low-quality drug products. As the data demonstrates with valsartan, 
high quality drug products do not necessarily cost more. Thus, even if 
a health system is unable or uninterested to add any additional 
purchasing cost or add any potential drug shortage burden, it is highly 
likely that the use of the proposed quality score system will provide a 
---------------------------------------------------------------------------
significant benefit in avoiding low-quality drug products.

    Such action taken by established healthcare systems could help 
protect them from recalls and drug shortages while serving as a 
significant market driver to incentivize the manufacturing industry to 
produce quality products. Furthermore, the proposed quality score 
system could provide regulatory agencies with transparent and rational 
metrics with which to reward high-scoring manufacturers (e.g., faster 
ANDA approvals) and/or penalize low-scoring manufacturers (e.g., slower 
and more scrutinized drug approvals).

    Overall, drug quality scores have the potential to improve public 
health; therefore, their continued development and implementation is 
highly encouraged.
                            acknowledgement
    The authors would like to thank Michelle Call and Michael de la 
Torre from Govzilla, Martin Van Trieste from Civica Rx and Amber 
Jessop, Kaury Kucera and David Light from Valisure, for their 
assistance in providing data and expertise for this paper.

                                 ______
                                 
           Questions Submitted for the Record to David Light
               Questions Submitted by Hon. Chuck Grassley
    Question. What is the role of new analytical technology in the 
evaluation of drug quality, and is there anything the FDA should be 
doing to ensure it incorporates the latest scientific best practices?

    Answer. Apart from occasional improvements in efficiency, overall 
analytical technology for drug quality has remained largely unchanged 
over the past 5 decades. For example, analysis of well-studied 
carcinogenic impurities like N-Nitrosodimethylamine (NDMA) has been 
fairly consistent for roughly 50 years. Scientific studies describing 
the analysis of NDMA down to parts per billion and even parts per 
trillion \1\ were published as early as 1970, and Senate hearings \2\ 
were held specifically about NDMA in medications in 1977. Even specific 
drugs like Zantac/ranitidine have been flagged by academics for many 
years for serious quality issues using standard scientific methods. 
Since Zantac/ranitidine's first approval in 1981, a Google Scholar 
search for ``ranitidine NDMA'' reveals over 500 scientific studies that 
reference this problem that took regulators 39 years to address, only 
after Valisure's independent analysis and drive for action brought 
global recalls.
---------------------------------------------------------------------------
    \1\ Sen NP. (1970). ``Gas-liquid chromatographic determination of 
dimethylnitrosamine as dimethylnitramine at picogram levels.'' Journal 
of Chromatography. Vol. 51, pp. 301-304. (https://
www.sciencedirect.com/science/article/abs/pii/S0021967301968682).
    \2\ Senate hearings before the Subcommittee on Monopoly and 
Anticompetitive Activities of the Select Committee on Small Business on 
``Effect of Promotion and Advertising of Over-the-Counter Drugs on 
Competition, Small Business, and the Health and Welfare of the 
Public.'' June 1977. (https://drive.google.com/file/d/
1dTw6mwdMVFmoGAM1tQvHieohLiuzicgn/view).

    The most critical ``new'' element of analysis that is having a 
dramatic impact today is analysis that is independent from the 
traditional pharma/regulatory world. At its essence, this means that 
the testing strives to independently answer the fundamental question of 
``is this a quality medication,'' as opposed to adhering only to a set 
of rules largely dictated by manufacturers that can have many 
limitations or biases. Whether it's using updated international 
standards, following scientific/
academic best practices, or acquiring samples without significant bias, 
all these components summarized by the term ``independent testing'' 
have immense value and have already caught serious drug quality issues 
when they were otherwise missed or ignored. Most clearly illustrating 
this is the fact that every major drug that has had potentially life-
threatening quality problems and recalls in the past 2 years 
(specifically, metformin, Zantac/ranitidine, nizatidine, valsartan, 
losartan and irbesartan) have all been flagged and tested by the FDA in 
their ``Drug Sampling and Monitoring'' program \3\ since 2013 and all 
of these drugs have passed FDA testing. Many of these major drugs 
(metformin, Zantac/ranitidine, nizatidine) had serious issues that were 
first identified at Valisure.
---------------------------------------------------------------------------
    \3\ Food and Drug Administration. ``Drug Quality Sampling and 
Testing Programs.'' February 3, 2020. (https://www.fda.gov/drugs/
science-and-research-drugs/drug-quality-sampling-and-testing-programs).

    In Valisure's opinion, FDA should work more closely with 
independent laboratories and academics to create a robust system of 
independent testing in addition to the prescribed industry and 
regulatory oversight currently in place. Such a collaboration would 
certainly help update FDA's methodologies to help safeguard the 
---------------------------------------------------------------------------
American public and our critical drug supply.

    Question. From Valisure's perspective, what are the biggest gaps in 
the FDA's current regulatory oversight framework, and is there any 
current or proposed legislation to address these gaps?

    Answer. One of the biggest gaps in FDA oversight is the agency's 
inability to conduct mandatory recalls of drugs. At a Duke Margolis 
Center event held in conjunction with the FDA in February 2020, 
representatives from the FDA presented data from a survey of 
physicians.\4\ When asked, ``Which, if any, of the following are 
functions of the FDA in terms of regulating drug quality,'' the top 
answer was ``Remove a drug from market if unexpected risks are 
detected.'' It is likely that the American public would similarly be 
surprised by the fact that the FDA lacks the authority to force the 
removal of dangerous drugs from the market.
---------------------------------------------------------------------------
    \4\ Fisher A. (February 3, 2020). ``Patient and Provider 
Perceptions of Pharmaceutical Quality.'' Food and Drug Administration, 
Duke Margolis Center for Health Policy. Page 64. (https://
healthpolicy.duke.edu/sites/default/files/atoms/files/
pharmaceutical_quality_slides_final.pdf).

    Valisure supports recent legislation introduced by Rep. DeLauro (D-
CT) to provide the FDA with this critical mandatory recall 
authority,\5\ which the agency already possesses over medical devices, 
food, and biological products.
---------------------------------------------------------------------------
    \5\ H.R. 1108, the Recall Unsafe Drugs Act (116th Congress).

    Question. Does Valisure observe more quality issues from overseas 
manufacturers, specifically manufacturers in China and India, than from 
---------------------------------------------------------------------------
domestic manufacturers?

    Answer. As most of the United States' complex drug supply chain has 
moved overseas, quality and safety concerns have become more pressing. 
Roughly 80 percent of the volume of active pharmaceutical ingredients 
(API) for products sold in the U.S. now come from outside the country, 
the majority from China.\6\ This is an important clarification from Dr. 
Throckmorton's oral statement during the hearing that ``the U.S. 
provides about 28 percent, China about 13 percent'' of API given that 
this ``13 percent'' figure references the percentage of registered 
facilities, not the volume produced at those facilities.
---------------------------------------------------------------------------
    \6\ Edney A. ``FDA Misled Senators on China's Role as Vital U.S. 
Drug Supplier.'' Bloomberg News. June 9, 2020. (https://
www.bloomberg.com/news/articles/2020-06-09/fda-misled-senators-on-
china-s-role-as-key-u-s-drug-supplier).

    Although it is apparent we have a significant reliance on overseas 
drug manufacturers, the lack of transparency regarding where all the 
ingredients of a drug originate can make it difficult or almost 
impossible to determine country of origin for a specific drug product. 
The National Drug Code only tracks the final labeler of the drug and 
not the dose manufacturer, the producer of the API, or the producer of 
the fine chemicals that are used to manufacture the API. These labelers 
can also be re-packagers, adding another layer that keeps regulatory 
agencies and consumers from knowing the true provenance of the 
pharmaceuticals coming into the U.S. Furthermore, many manufacturers 
have multiple facilities around the world, and even though a final drug 
product may State that it was manufactured in a specific country, the 
---------------------------------------------------------------------------
reality is that this may not be an accurate representation.

    In summary, due to the immense lack of transparency into origin of 
manufacturing, it is not currently possible for Valisure to determine 
which regions or specific manufacturers have the greatest incidence of 
quality issues. However, we do see widespread drug quality problems 
throughout this complex supply chain and believe more must be done to 
safeguard the hundreds of millions of Americans that rely on 
medications.

    Question. On May 26, 2020, a consortium of leaders from eight 
health care institutions, including the Defense Health Agency, 
published a paper that advocates for an independently generated, 
evidence-based quality score system for drug products that could be 
used by private and public sector entities and regulators. Under this 
concept, what criteria would be used to determine the scores? What role 
does the FDA's proposed ``quality management maturity'' play in these 
scores?

    Answer. The May 2020 paper \7\ makes the argument that the criteria 
for determining drug quality scores should be science- and evidence-
based and should be derived from independent sources and not only from 
manufacturers' reports. Results from independent chemical analysis of 
drug products could be combined with publicly available regulatory data 
and turned into simple red/yellow/green drug quality scores. Ideally, 
these scores would be continually updated with new regulatory and 
chemical analysis data to provide real-time, evidence-based guidance on 
drug product quality.
---------------------------------------------------------------------------
    \7\ Dabestani A et al. (May 26, 2020). ``Evidence-Based Quality 
Scores for Rating Drug Products and Their Utility in Health Systems.'' 
MedRxiv. (https://www.medrxiv.org/content/10.1101/
2020.05.22.20110775v1).

    The FDA's ``quality management maturity'' ratings could 
theoretically be a useful input for drug quality scores, although this 
is difficult to gauge as the information and specific criteria is not 
currently available or finalized. Using only quality management 
maturity to generate drug scores would likely fall short of providing 
the science-based transparency into drug quality and safety that 
healthcare leaders are advocating for. Valisure strongly supports a 
collaborative approach between the FDA and healthcare industry 
stakeholders to finalize details of quality management maturity ratings 
---------------------------------------------------------------------------
and potentially incorporate them into drug quality scores.

                                 ______
                                 
                Questions Submitted by Hon. John Cornyn
                     pharmaceutical product testing
    Question. Valisure conducts batch testing of every product that is 
dispensed. How does this process differ from the testing criteria FDA 
applies when they test pharmaceutical products? Would applying this 
standard to drugs with foreign sourced API prevent lower-quality, 
adulterated, or counterfeit medications from making it to the market?

    Answer. Important background to this question is the fact that the 
FDA very rarely tests pharmaceutical products. Rather, the overwhelming 
majority of drug quality testing is conducted by the pharmaceutical 
manufacturers, who then self-
report this data to the FDA. This presents a potential conflict of 
interest, as well as a significant opportunity for data manipulation 
and fraud, especially from foreign manufacturers where inspection 
processes differs from domestic manufacturers. In fact, of the over 4 
billion prescriptions written in the U.S. annually, typically only a 
few dozen drug products are tested per year by the FDA.\8\
---------------------------------------------------------------------------
    \8\ Food and Drug Administration. ``Drug Quality Sampling and 
Testing Programs.'' February 3, 2020. (https://www.fda.gov/drugs/
science-and-research-drugs/drug-quality-sampling-and-testing-programs).

    Valisure's testing follows a combination of FDA/industry guidance 
and adherence to scientific/academic best practice, which are not 
always perfectly aligned. The differences can be nuanced and complex, 
though essentially Valisure's testing strives to independently answer 
the fundamental question of ``is this a quality medication'' as opposed 
to adhering only to a set of analytical rules largely dictated by 
manufacturers that can have many limitations or biases. There are three 
primary components of Valisure's independent testing that occasionally 
differ from that of the FDA: criteria set by manufacturers, criteria 
---------------------------------------------------------------------------
set by regulators, and sourcing of samples.

    Criteria for what to test for in a specific medication and how to 
test for it are usually determined by the manufacturer of that specific 
drug product. Testing for dissolution, or how a pill dissolves, is one 
example of methodologies registered by manufacturers that do not always 
follow scientific best practice and are not always indicative of 
conditions in a human body. For example, the registered testing 
condition for ibuprofen tablets uses a solution with a pH of 7.2 (water 
is pH of 7). The commonly accepted scientific standard conditions are 
to use ``simulated gastric fluid'' with a pH of 1.2 for 2 hours and 
then ``simulated intestinal fluid'' with a pH of 6.8, thereby 
simulating exposure to the stomach and intestines. Using this 
scientific standard protocol, Valisure identified batches of ibuprofen 
that do not dissolve for over 24 hours; however, when using the 
manufacturer-registered test, they dissolve in under 30 minutes.\9\ 
Valisure uses the scientifically accepted dissolution conditions that 
represent the human body and therefore rejects some medication batches 
that are not able to dissolve in such an environment.
---------------------------------------------------------------------------
    \9\ ``Your Medication May Not Be Dissolving Properly.'' (2018). The 
Valisure Notebook. http://bit.ly/38XVDNm (accessed June 22, 2020).

    For criteria that is set by the FDA and not by drug manufacturers, 
like the limits for certain carcinogens, the agency does not always 
promptly incorporate independent scientific research, techniques, and 
guidance. For example, the carcinogen DMF (N,N-Dimethylformamide), is 
in the same ``group 2A'' carcinogenic risk class as NDMA (N-
Nitrosodimethylamine) according to the World Health Organization (WHO). 
NDMA is the carcinogen responsible for recalls of major drug products 
over the last 2 years including blood pressure drugs valsartan, 
losartan and irbesartan, heartburn drugs ranitidine and nizatidine, and 
the diabetes drug metformin. Valisure filed an FDA Citizen Petition in 
June 2019 on the alarmingly high abundance of DMF in the drug 
valsartan.\10\ The petition underscored that the WHO and International 
Agency for Research on Cancer (IARC) had reclassified DMF as a Group 2A 
carcinogen in 2018, but the FDA's last assessment was from 2017 when 
DMF was not yet considered at high risk of causing cancer in humans. 
Likely because of this outdated understanding, the FDA allows over 
90,000 times more DMF to contaminate a medication than it allows for 
NDMA even though these two probable human carcinogens are now in the 
same, high-risk class. At Valisure, medications with excessively high 
DMF contamination (some have been found with over 1,000 times the 
current NDMA limit) are rejected even if they pass the FDA's current 
limit for DMF.
---------------------------------------------------------------------------
    \10\ Light D, Kucera K. Valisure FDA Citizen Petition on DMF. 
Regulations.gov. June 16, 2019. (https://www.regulations.gov/
docket?D=FDA-2019-P-2869).

    Lastly, the source of what is being tested can have a significant 
impact, even if the criteria are the same at the FDA and Valisure. The 
FDA will often request voluntary samples of a suspect medication direct 
from a manufacturer, which again presents a potential conflict of 
interest. At Valisure, we independently source the medication to 
minimize any potential bias. A critical example of this is the diabetes 
drug metformin where international regulators initiated recalls in 
December 2019 due to the presence of NDMA. On February 3, 2020, the FDA 
posted lab results from its testing of metformin from seven companies 
and 16 batches, finding that all passed the FDA's daily acceptable 
intake limit for NDMA.\11\ However, Valisure independently acquired 38 
batches of metformin from 22 companies through its pharmacy's 
distributors and found failures from 11 companies.\12\ When the FDA 
acquired and tested samples provided by Valisure, the agency requested 
recalls from a number of these companies, including ones the FDA had 
previously passed.\13\
---------------------------------------------------------------------------
    \11\ Food and Drug Administration. Statement. ``FDA posts 
laboratory testing results for NDMA levels in metformin.'' February 3, 
2020. (https://www.fda.gov/drugs/drug-safety-and-availability/fda-
updates-and-press-announcements-ndma-metformin).
    \12\ Light D, Kucera K, Wu Q. Valisure FDA Citizen Petition on 
Metformin. Regulations.gov. March 2, 2020. https://www.regulations.gov/
document?D=FDA-2020-P-0978-0001.
    \13\ Food and Drug Administration. Update. ``FDA names companies 
recalling ER metformin.'' June 11, 2020. (https://www.fda.gov/drugs/
drug-safety-and-availability/fda-updates-and-press-announcements-ndma-
metformin)

    Whether it's using updated international standards, following 
scientific best practices, or acquiring samples without significant 
bias, all these components summarized by the term ``independent 
testing'' have immense value and have already identified serious drug 
quality issues that were otherwise missed. Illustrating this is the 
fact that every major drug that has had potentially life-threatening 
quality issues and recalls in the past 2 years (specifically metformin, 
Zantac/ranitidine, nizatidine, valsartan, losartan and irbesartan) have 
all been flagged and tested by the FDA in their ``Drug Sampling and 
Monitoring'' program since 2013 and all of these drugs have passed FDA 
testing.\14\ These serious problems in metformin, Zantac/ranitidine, 
and nizatidine were first identified by Valisure.
---------------------------------------------------------------------------
    \14\ Food and Drug Administration. ``Drug Quality Sampling and 
Testing Programs.'' February 3, 2020. (https://www.fda.gov/drugs/
science-and-research-drugs/drug-quality-sampling-and-testing-programs).

    Valisure strongly believes that independent batch-testing of all 
products, regardless of country of origin, would help safeguard against 
lower-quality, adulterated, or counterfeit medications from entering 
the U.S. market. Beginning with certain high-risk products, such as 
metformin, would be a good start that will already affect tens of 
millions of Americans, and can eventually be scaled to thousands of 
drug products. Creating a new category of ``certified drugs'' would 
inject much-needed transparency and security into the U.S. drug supply. 
Valisure is proof of concept that this testing can be done at no 
---------------------------------------------------------------------------
additional cost to consumers.

    Regarding foreign-sourced API, it is important to note that when 
Dr. Throckmorton responded to Senator Cornyn's query about the 
percentage of active API for drugs in America sourced from China, his 
response that ``the U.S. provides about 28 percent, China about 13 
percent'' does not paint the full picture. While China has 13 percent 
of the API facilities in the world, those are very large plants and 
supply roughly 60 percent or more of our API total 
volume.\15\, \16\, \17\ The vast majority of the 
volume of our medications rely on foreign manufacturers, primarily 
China.
---------------------------------------------------------------------------
    \15\ Edney A, Berfield S, Yu E. ``Carcinogens Have Infiltrated the 
Generic Drug Supply in the U.S.'' Bloomberg Businessweek. Sept. 12, 
2019. (https://www.bloomberg.com/news/features/2019-09-12/how-
carcinogen-tainted-generic-drug-valsartan-got-past-the-fda).
    \16\ Harper M. ``Sanofi to start pharmaceutical ingredients 
company, which it says may avert future shortages.'' STAT News. Feb. 
24, 2020. (https://www.statnews.com/2020/02/24/sanofi-to-start-
pharmaceutical-ingredients-company-which-it-says-may-avert-future-
shortages/).
    \17\ U.S.-China Economic and Security Review Commission, 2019 
Report to Congress 248 (2019).

                                 ______
                                 
                 Questions Submitted by Hon. Tim Scott
    Question. We must do more to proactively address drug shortages and 
shortage risks, as well as to promote the production of medical 
products in the U.S. With that in mind, I recently released a proposal 
called the MADE in America Act, which would: (a) identify barriers to 
domestic manufacturing and recommendations for removing those barriers; 
(b) enhance efficiency and transparency when it comes to detecting and 
resolving drug shortages and shortage risks; and (c) create targeted 
tax credits for manufacturing critical medical products in Opportunity 
Zones. This proposal would also us to leverage incentives in a way that 
accelerates our economic recovery and bolsters our supply chain 
security at the same time.

    For the two CEOs on Panel II, as we work to identify legislative 
and regulatory solutions, what do you see as some of the principal 
barriers to manufacturing medications domestically while keeping 
costs--and by extension consumer prices--low?

    How does the United States' tax and regulatory environment for drug 
manufacturing and manufacturing more broadly compare with those of some 
of our competitors?

    What types of job opportunities can domestic API, excipient, and 
finished drug form manufacturing and packaging create for lower-income 
and working-class Americans, along with middle-class Americans?

    What do you see as the potential for advanced manufacturing 
technologies to accelerate drug development and bolster drug quality, 
as well as to address shortage risks? What are some of the hurdle's 
manufacturers are experiencing when looking to adopt technologies that 
could expedite production and improve drug quality, and how can 
Congress and the administration act to facilitate this type of 
innovation?

    Answer. Valisure is not a manufacturer of drug products, nor do we 
provide any FDA-mandated Current Good Manufacturing Practice (cGMP) 
testing of drug products for pharmaceutical manufacturers. Valisure's 
core business is to analyze medications that have already been produced 
in order to screen out poor quality batches and manufacturers. By doing 
so, we help ensure that patients, doctors, and health systems can 
benefit from independently certified drugs. Given that the current 
regulatory framework for pharmaceutical manufacturing is largely 
dependent on the self-regulation of the pharmaceutical industry, 
including self-reporting of testing of manufacturers' own products, 
there is tremendous value to independent scientific analysis. This is 
particularly important given Senator Scott's concern about overseas 
manufacturing and the heavy reliance specifically on China, which 
supplies roughly 60 percent of the volume of active pharmaceutical 
ingredients (API) used in drugs sold in the U.S.\18\
---------------------------------------------------------------------------
    \18\ Edney A. ``FDA Misled Senators on China's Role as Vital U.S. 
Drug Supplier.'' Bloomberg News. June 9, 2020. (https://
www.bloomberg.com/news/articles/2020-06-09/fda-misled-senators-on-
china-s-role-as-key-u-s-drug-supplier).

    Valisure is not an expert in the business considerations around 
drug manufacturing in the United States. However, Valisure supports 
incentivizing American pharmaceutical production of finished drugs, 
APIs, and the fine chemicals used to make APIs, especially for drugs 
that are considered essential for national security like antibiotics. 
Importantly, Valisure believes that independent analysis should be a 
part of the standard manufacturing process regardless of where a drug 
is made, and that any new legislation proposed for the production of 
medications in the U.S. should consider incorporating this critical 
---------------------------------------------------------------------------
safeguard.

                                 ______
                                 
               Questions Submitted by Hon. Sherrod Brown
    Question. Recent examples of adulterated products include the 
recalls of multiple drugs containing the API valsartan, and the over 
the counter drug known as ranitidine. Valsartan is found in several 
drugs that are used to treat high cholesterol and heart failure. The 
United States and 22 other countries issued a recall of valsartan after 
it was found to contain a cancer-causing chemical known as N-
nitrosodimethylamine (NDMA). Because the FDA does not engage in the 
regular testing of imported products to check for quality and purity, 
regulators have been unable to ascertain how long this impurity has 
existed. Shortly after the valsartan recall, your company, Valisure, 
notified the FDA that it had detected NDMA in multiple batches of 
ranitidine in October 2019. Regulators are also unaware of how long we 
have been importing adulterated ranitidine.

    Describe the process Valisure went through to notify the FDA of the 
adulterated ranitidine. Do you have recommendations to improve the 
process with which individuals are able to report suspected 
adulterations in products?

    Answer. First, as additional background on valsartan, while the FDA 
very rarely tests drug products (only a few dozen tests are conducted a 
year out of the billions of bottles that are dispensed), valsartan was 
indeed tested by FDA in 2015 due to customer complaints, as was 
similarly contaminated losartan in 2013 and 2017, and irbesartan in 
2017. Industry estimates suggest the contamination issue for valsartan 
began in 2011.\19\ While the FDA reported that it tested multiple lots 
and manufacturers of valsartan and these other drugs, all the tested 
samples passed the FDA's testing standards.
---------------------------------------------------------------------------
    \19\ Edney A, Berfield S, Yu E. ``Carcinogens Have Infiltrated the 
Generic Drug Supply in the U.S.'' Bloomberg Businessweek, Sept. 12, 
2019. (https://www.bloomberg.com/news/features/2019-09-12/how-
carcinogen-tainted-generic-drug-valsartan-got-past-the-fda).

    Regarding ranitidine, Valisure presented extensive data to the FDA 
through an FDA Citizen Petition filed on September 13, 2019 on the 
inherent instability of the drug and its ability to easily form high 
amounts of the carcinogen N-Nitrosodimethylamine (NDMA).\20\ Apart from 
Citizen Petitions, Valisure is not aware of an effective mechanism for 
an independent laboratory like Valisure to raise drug quality or safety 
concerns to the agency.
---------------------------------------------------------------------------
    \20\ Valisure FDA Citizen Petition Requesting Recall of Ranitidine 
and Other Actions. September 9, 2019. Regulations.gov. (https://
www.regulations.gov/docket?D=FDA-2019-P-4281).

    Currently, there are two primary paths for a drug quality complaint 
to be filed. First, non-GMP (Good Manufacturing Practices) entities 
like Valisure can report an ``adverse event'' to manufacturers or the 
FDA, which are typically filed with thousands of individuals' 
complaints and generally receive very limited follow up, if any. 
Second, GMP entities registered with the FDA can make a GMP report of a 
quality violation to the FDA or the responsible manufacturer which 
---------------------------------------------------------------------------
triggers mandated follow ups and corrective actions.

    Because Valisure does not itself manufacture products or conduct 
release testing for pharmaceutical companies, we are not a GMP 
laboratory. As such, following guidance from the FDA, Valisure submits 
dozens of drug quality problem findings directly to pharmaceutical 
companies. We believe these reports are most often ignored or filed 
away in the ``adverse events'' category which requires little to no 
follow-up. This means that many products that fail Valisure's testing 
are likely distributed to American consumers through other pharmacies.

    To improve this process, FDA could issue guidance to industry that 
a report submitted to a pharmaceutical company from a ``qualified 
laboratory'' must go through a more rigorous follow-up process than are 
typically afforded the standard ``adverse event'' complaints. A 
``qualified laboratory'' could be defined as one that has accreditation 
from an internationally recognized organization such as the 
International Organization for Standardization (ISO).

    Question. Please describe the technology Valisure utilizes to test 
products before distribution. You mentioned in your testimony this 
service takes place at no cost to patients, and in your response to 
Chairman Grassley that it results in small additional costs. Please 
clarify what the cost of this service is, who pays for this testing, 
and what the financial impact on the patient is?

    Answer. Valisure has developed proprietary, laser-based analytical 
technology that we use in combination with industry-standard approaches 
to analyze a variety of critical chemical components of medications. 
This includes analyzing for dosage/potency, dissolution (how a pill 
dissolves in a patient's body), identifying inactive ingredients, and 
detecting a range of impurities and carcinogens. Importantly, 
analytical technology specifically for the detection of well-studied 
carcinogenic impurities like NDMA has been largely unchanged over the 
past five decades.

    Regarding costs, Valisure's optimized analytical workflows are 
themselves very cost-effective and the cost is amortized over large 
batches of a medication. This often translates to less than a penny per 
pill of additional quality assurance cost, which Valisure pays for from 
a portion of our retail pharmacy margin. As such, we are able to 
dispense medications at no additional cost to patients and still remain 
profitable.

    If the Valisure model were to be expanded significantly--such as in 
the creation of what we term ``certified drugs'' in which independent 
analysis is performed at the same time as the FDA-required, standard 
analysis--the analysis would add minimal cost, which we believe could 
be borne by manufacturers without impacting patients. Health systems 
and government programs could help facilitate this concept by 
incentivizing or requiring independent analysis as part of their 
sourcing and bidding processes for drugs.

    Question. What steps would you suggest Congress, regulators such as 
the FDA, and other organizations across the drug supply chain take to 
ascertain the extent of the purity problems that are possibly 
afflicting our supply chain, and address these problems?

    Answer. To accurately ascertain the extent of drug quality problems 
in the U.S., Valisure recommends a broad analytical survey conducted by 
independent entities (in other words, entities operating outside the 
regulatory and pharmaceutical GMP system). Currently, the FDA conducts 
very limited surveillance testing (a few dozen products a year) of drug 
products based on perceived risks and customer complaints.\21\ 
Troublingly, this surveillance testing included each major drug that 
has had highly publicized drug recalls due to serious quality problems 
in recent years, including metformin, Zantac/ranitidine, nizatidine, 
valsartan, losartan and irbesartan, and all passed the FDA's testing. 
With this in mind, we believe that a properly funded survey of U.S. 
pharmaceutical products could be very impactful if conducted by 
qualified independent entities.
---------------------------------------------------------------------------
    \21\ Food and Drug Administration. ``Drug Quality Sampling and 
Testing Programs.'' February 3, 2020. (https://www.fda.gov/drugs/
science-and-research-drugs/drug-quality-sampling-and-testing-programs).

    Regular, independent surveillance of drug quality is an approach 
that can be implemented immediately and is already being performed at 
Valisure on a small scale with tremendous impact. Such surveillance 
would likely identify specific quality issues, and the overall data it 
produces on all analyzed drug products could be used as guidance for 
buyers and payers in the form of drug quality scores. In a May 26, 2020 
paper entitled ``Evidence-Based Quality Scores for Rating Drug Products 
and Their Utility in Health Systems,'' a consortium of leaders from 
eight health-care institutions proposed a system of drug quality scores 
to provide transparency into America's drug products.\22\ These scores 
could be used by drug purchasers and payers to avoid low-quality 
products. Further, if used by regulators to incentivize or penalize 
manufacturers, these scores could be a powerful driver to produce high-
quality pharmaceutical products.
---------------------------------------------------------------------------
    \22\ Dabestani A et al. (May 26, 2020). ``Evidence-Based Quality 
Scores for Rating Drug Products and Their Utility in Health Systems.'' 
MedRxiv. (https://www.medrxiv.org/content/10.1101/
2020.05.22.20110775v1).

    A more definitive solution is what Valisure terms ``certified 
drugs'' that are independently chemically analyzed at the batch level 
and certified before being sold to a patient, pharmacy, wholesaler, or 
health care system. This added layer of quality assurance would improve 
public health and likely offer overall cost savings by mitigating drug 
recalls and increased hospitalizations that can arise from low-quality 
drugs. Such a system is very reasonable to quickly implement on a few 
high-volume and high-risk drugs, like metformin, and later scale up to 
many thousands of drug products. As a proof of principal, Valisure 
currently offers over 2,000 certified drug products in its pharmacy at 
---------------------------------------------------------------------------
no additional cost to patients.

    Question. Are there other companies on the market that are able to 
do testing similar to what Valisure offers its customers?

    Answer. There are many contract research laboratories in the U.S. 
that possess similar analytical capabilities as Valisure. However, most 
of these labs are GMP facilities and thus primarily, if not entirely, 
work for pharmaceutical manufacturers and follow very prescriptive 
analytical procedures that, like those performed at the FDA, have 
missed drug quality problems for decades. The largest source of 
independent analytical testing in the U.S. is in academia and 
universities. However, these analyses and research have historically 
been almost entirely ignored by regulators and the pharmaceutical 
industry as evidenced by hundreds of studies published in the past 4 
decades on the carcinogenic and unstable nature of ranitidine. Valisure 
believes there is already very strong evidence and multiple examples 
that underscore the position that impactful improvements to 
safeguarding drug quality in the U.S. need to come from industry-led, 
independent analysis.

                                 ______
                                 
             Prepared Statement of Martin VanTrieste, RPh, 
                    President and CEO, Civica, Inc.
    Chairman Grassley, Ranking Member Wyden, and members of the 
committee, my name is Martin VanTrieste. I am the president and CEO of 
Civica, Inc. I am also a 35-year veteran of the pharmaceutical 
industry.

    It is an honor to appear before you today, and an honor to follow a 
group of dedicated public servants. My dealings with the FDA and BARDA 
over the past few months have reminded me how tirelessly these 
officials work to serve the American people.

    In my testimony today, I will:

        Introduce you to Civica and our non-profit model;
        Discuss several policy options to help the United States 
ensure a robust supply of drugs; and
        Share some background on a recently announced agreement with 
the Federal Government to enhance U.S. manufacturing capacity for 
essential medicines.
                              about civica
    Civica is a non-profit 501(c)(4) social welfare organization 
established by U.S. health systems and philanthropies to reduce chronic 
drug shortages and ensure a safe and stable supply of essential 
medicines to U.S. patients.

    That is our mission: to serve patients by making quality 
medications available and affordable.

    Today, more than 50 health systems have joined Civica (Figure I). 
They represent approximately 1,200 hospitals and over 30 percent of all 
U.S. hospital beds. Civica also supplies the Veteran's Administration, 
the Department of Defense and ``340B'' hospitals, which care for 
vulnerable patients in some of the most underserved areas of the 
country.

[GRAPHIC] [TIFF OMITTED] T6220.015


The Supply Chain
    Civica was primarily created to improve the resiliency of the 
supply of essential medicines used in hospitals daily, often for 
critical care. The drugs we make are not those with the highest return 
on investment. Rather, they are the ones that are identified and 
prioritized by our health systems--by doctors and pharmacists on the 
front lines--as the medications most important for high-quality patient 
care. Civica's members have also identified generic medications that 
are excessively priced, such as daptomycin, where Civica lowered 
significantly the market price.

    Civica is implementing, simultaneously, a three-pronged product 
supply strategy to reduce chronic drug shortages and secure the supply 
of essential generic medicines for patients:

        Working with multiple generic drug manufacturers that have the 
U.S. Food and Drug Administration (FDA) approved manufacturing 
facilities and capacity to produce generic drugs under Civica's 
National Drug Code,\1\ allowing manufacturers to re-enter the market or 
increase existing capacity. Civica is currently working with five 
supplier partners and is in negotiations with several more.
---------------------------------------------------------------------------
    \1\ A unique numerical identifier indicating the labeler 
(manufacturer, repackager, or distributer), strength, and dosage form 
of each drug.
---------------------------------------------------------------------------
        Developing Abbreviated New Drug Applications \2\ (ANDAs) to 
produce Civica medications using contract manufacturers.
---------------------------------------------------------------------------
    \2\ The approval pathway for generic drugs.
---------------------------------------------------------------------------
        Building Civica manufacturing capability using Civica's ANDAs.

    Civica is fully committed to stabilizing the supply of antibiotics, 
anesthetics, cardiac medications, pain management medications, and 
other essential sterile injectable medicines. To date, and in just over 
a year, Civica has launched 24 sterile injectable medications for use 
in hospitals across the country (see Table I). Civica is on track to 
deliver approximately 20 more medications in 2020, building toward 100 
medications (in hundreds of dosage forms) by 2023.

    Many of our drugs are used in the management of patients with 
COVID-19 (see Table I). And during this pandemic, Civica has 
contributed 1.6 million containers of medicine to the Strategic 
National Stockpile.


                   TABLE I. CURRENT CIVICA MEDICATIONS
------------------------------------------------------------------------
                    Source of
       Drug          finished    API     COVID-19        Surge       SNS
                       drug     Source
------------------------------------------------------------------------
Aminocaproic acid   USA        Japan
Calcium chloride    USA        Germany
Ceftriaxone         Portugal   Italy *
Daptomycin          India      Hungary
Dexamethasone       USA        France
Diazepam            Italy      Italy
Fentanyl            USA        USA               Y       5mL - 224%
Glycopyrrolate      USA        Finland           Y
Heparin             USA        USA               Y
Hydralazine         USA        Japan
Ketamine            Portugal   Germany           Y       5mL - 367%    Y
                                                        10mL - 265%
Labetalol           Portugal   Italy             Y                     Y
Lidocaine           Portugal   Spain             Y                     Y
Metoprolol          Portugal   Spain/
                                India
Midazolam           USA        Israel/           Y       5mL - 324%    Y
                                India
Morphine            USA        USA               Y
Naloxone            USA        USA
Neostigmine         USA/India  Austria           Y
Nicardipine         USA        Italy
Ondansetron         USA        Spain/
                                India
Prochlorperazine    USA        Italy
Sodium bicarbonate  USA        USA               Y
Tranexamic acid     USA        Italy
Vancomycin          Denmark/   Denmark           Y                    Y
                     USA        *
------------------------------------------------------------------------
Source of finished drug refers to the country of manufacture of the
  sterile vial or prefilled syringe.
API Source refers to the country of origin of the active pharmaceutical
  ingredient.
COVID-19 identifies those drugs used in the management of patients with
  COVID-19, including management of patients on ventilators and
  treatment of secondary pneumonia.
Surge represents the increase in demand over anticipated volume for
  select drugs during the initial weeks of the COVID-19 pandemic. Note
  that some health systems had no increased demand; others ranged as
  high as 800 percent for select drugs. These data illustrate the
  ability of the ``Civica model'' to cope with a demand surge, but can't
  be used to extrapolate to national increase in demand or predict
  future demand.
SNS indicates that the initial set of identified drugs contributed to
  the Strategic National Stockpile.
 
* China is backup API source.


    The Civica model brings together hospital systems and drug 
manufacturers to work collaboratively, ensuring both stable and fairly 
priced generic drugs for hospitals and predictable volumes for 
manufacturers. Key elements of the model include:

        Hospital systems join Civica, allowing them to purchase drugs 
in predetermined volumes at transparent and stable prices. Member 
health systems prioritize the medications needed to reduce shortages 
for patients and identify the volume requirements for their hospitals.
        Civica conveys this information to its manufacturing team or 
trusted manufacturing partners--those with a history of producing high-
quality products. Manufacturers commit their production capacity based 
on long-term projected volumes of medications identified by the health 
systems.
        As a result, patient care improves as hospitals receive a 
reliable supply of the essential generic medications.

    Because its specific mission is to create a robust, high-quality 
supply of essential medicines, several features of the Civica supply 
chain model may have lessons for the larger U.S. system, including:

        Long-term purchase take-or-pay commitments allow Civica, and 
our suppliers, to invest in quality systems;
        Use of backup suppliers and maintenance of a reserve stock 
averaging at least six months' supply;
        A preference to purchase medicines made in the U.S. where 
possible, followed by other highly regulated markets, followed by India 
and avoiding Chinese ingredients where possible in our drugs due to 
quality concerns; and
        Entrusting those on the front lines--hospital physicians and 
pharmacists--to prioritize the medications Civica makes, based on their 
experiences day-to-day or in times of crisis like the pandemic.

                the importance of a robust supply chain
    The global coronavirus pandemic has highlighted weaknesses in the 
U.S. supply chain for essential medicines and other medical supplies. 
Key products required to manage the epidemic have been unavailable or 
in short supply. Increased demand, both within the United States and 
among our trading partners, are important factors but have largely 
served to exacerbate supply chain shortcomings that are pre-existing 
and longstanding.

    It is important to note that many of the medicines used to manage 
COVID-19, including the sedatives and neuromuscular blocking agents 
essential for patients on ventilators, were already in short supply 
prior to the pandemic. They represent a longstanding weakness in our 
supply chain that is explained, in part, by the relentless pursuit of 
ever-lower costs.

    The desire for low-cost drugs--the race to the bottom in 
manufacturer pricing in order to get market share--is understandable, 
but it creates unintended consequences. Facing low margins and 
uncertain sales, companies are discouraged from investing in quality 
and incentivized to move production out of the U.S. to economies with 
lower labor costs, lower regulatory compliance costs and where they may 
receive direct or indirect support from foreign governments for to 
build new facilities.

    Reliance on a sole source of supply, whether that is a single 
manufacturer or a supply from a single country, increases the risk of 
supply disruption. No purchaser should source essential drugs or other 
products from a single supplier.

    Indeed, Civica's policy is not to supply all of any health system's 
needs for a given drug. If we were the sole supplier, we would be 
increasing rather than reducing vulnerabilities in the supply chain.

    Longer supply chains and just-in-time inventory systems are 
especially vulnerable to disruption, whether due to quality problems 
or, as we've recently witnessed, export restrictions by foreign 
governments who understandably put their domestic needs ahead of those 
of their trading partners.

    No single policy caused the exodus of pharmaceutical companies from 
the U.S., and it will take a multi-faceted approach--and a sustained 
commitment--to further diversify the supply chain and rebuild our 
domestic manufacturing capacity.
                              policy tools
    Nevertheless, the U.S. Government has a range of tools that can 
help rebuild capacity as well as protect against supply interruptions 
and keep the cost of medications in check. These include:

        Creating an essential medicines list to set priorities for 
investments, policy and regulatory reviews;
        Improving transparency in sourcing, pricing and drug quality;
        Utilizing incentives to encourage U.S. investment;
        Committing government programs to prioritize purchase of U.S.-
made goods;
        Enhancing the Strategic National Stockpile;
        Directly supporting U.S. manufacturing; and
        Focusing on advanced manufacturing.
Target Essential Medicines
    Civica selects medicines to manufacture based on the needs of 
patients, as prioritized by those on the front lines of the health care 
system. The U.S. government could benefit from a similar priority list 
to guide policy.

    For these essential drugs, policymakers should incentivize 
contingency planning or redundant production lines for manufacturers to 
use in the event of a shortage, particularly for medicines that already 
have too few manufacturers.

    To encourage investments in critical drugs, policymakers should 
consider waiving FDA user fees for drugs on the drug shortage list and 
when there is minimal competition.

    Congress may also want to reconsider policies that turn generic 
drugs into sole-source products without competition. Specifically, the 
Drug Efficacy Study Implementation (DESI) program provides market 
exclusivity to companies in exchange for filing a New Drug Application 
on very old products. While intended to create an incentive for 
companies to submit efficacy and safety data to the FDA, this can 
result in unintended consequences, including reduced supply chain 
resiliency and dramatic price hikes.\3\
---------------------------------------------------------------------------
    \3\ Civica letter to Congress, February 6, 2020. https://
civicarx.org/letter-closing-loopholes-that-lead-to-unreasonable-price-
increases-for-decades-old-drugs/. Accessed May 24, 2020.
---------------------------------------------------------------------------
Transparency in Sourcing and Quality
    Civica provides not only complete transparency on the source of its 
finished drugs, but also on the source of the active pharmaceutical 
ingredients (APIs) (Table I). But such transparency is not required by 
law. Any purchaser wishing to avoid active ingredients from high-risk 
countries is currently constrained by a lack of information. Congress 
could require country of origin labeling for both finished drug and 
API.

    Similarly, Congress should consider steps to increase publicly 
available manufacturer quality information. It is a well-known quality 
principle that quality cannot be tested or inspected into a product. 
For example, if five tablets are tested from a batch of one million and 
they all pass, then all that is known is that those five tablets 
passed. In contrast, a mature quality system requires protocols, 
standard operating procedures, appropriate oversight and a culture of 
compliance. These are the ingredients of a quality system that are 
essential to producing quality pharmaceuticals. The supply chain itself 
must be considered a part of a quality assessment: A drug that does not 
reach patients cannot be considered high quality, whatever its other 
attributes.

    There are tools that can be used to measure the maturity of a 
pharmaceutical quality system, such as those used for the Malcomb 
Baldrige National Quality Award and Parenteral Drug Association Quality 
System Maturity Model.

    Making robust quality data available to health systems would help 
purchaser to take quality into account when buying medications. 
Congress could consider requiring the FDA to validate its quality 
metrics program \4\ with a limited number of manufacturers within 1 
year.
---------------------------------------------------------------------------
    \4\ Geok Yan Loo, U.S. Food and Drug Administration. https://
static1.squarespace.com/static/58d0113a3e00bef537b02b70/t/
5e726c5316537f1aa5309d79/1584557142149/2P0410_Loo_CDE
RsApproach.pdf. Accessed May 24, 2020.

    Manufacturers could be incentivized to participate. When the 
metrics have been sufficiently validated, manufacturer participation 
---------------------------------------------------------------------------
should be required.

    We also commend Congress and the FDA for recently adding 
requirements for manufacturers to notify the FDA of discontinuance or 
interruption in active pharmaceutical ingredient supply and in the 
event of a demand surge or other factors that could interrupt 
supply.\5\
---------------------------------------------------------------------------
    \5\ Food and Drug Administration Guidance for Industry: Notifying 
FDA of a Permanent Discontinuance or Interruption in Manufacturing 
Under Section 506C of the FD&C Act (March 2020). https://www.fda.gov/
media/136486/download.
---------------------------------------------------------------------------
Tax Incentives
    As a non-profit organization, Civica does not benefit directly from 
tax incentives to encourage U.S. manufacturing, but other manufacturers 
may, including some of our suppliers. For example, one recent proposal 
would allow 100 percent expensing for any new U.S. pharmaceutical 
manufacturing facility placed in service before 2026.\6\
---------------------------------------------------------------------------
    \6\ For example, S. 3537, the ``Protecting Our Pharmaceutical 
Supply Chain from China Act of 2020,'' introduced by Senators Cotton, 
Blackburn, and Cruz.
---------------------------------------------------------------------------
Priority Purchase of U.S.-Made Goods
    One change Congress could make, as proposed in recent 
legislation,\7\ would be to amend the Trade Agreements Act of 1979 to 
clarify that pharmaceutical products would not be considered to have 
originated in a country if the API originated in a different country. 
Updating this definition would reverse a recent court decision, Acetris 
Health, LLC v. United States, that precludes U.S. government purchasers 
from giving preference, under the Buy American Act, to pharmaceutical 
products that originated entirely within the United States or our 
preferred trading partners.
---------------------------------------------------------------------------
    \7\ For example, S. 3538, ``The Strengthening America's Supply 
Chain and National Security Act,'' introduced by Senators Rubio and 
Warren.

    Congress could also consider recognizing the real cost differences 
between U.S. drug production and manufacturing in low-wage countries, 
by increasing the incremental additional cost the government will pay 
in order to purchase U.S.-made goods from the current level of 6 
---------------------------------------------------------------------------
percent.

    Given that it will take time to rebuild U.S. manufacturing, it may 
be inadvisable to set a firm short-term deadline to exclude Chinese 
suppliers completely, but the government should have a goal of having 
at least one U.S. supplier for every U.S. essential drug, with annual 
targets and progress tracking.
Enhanced Strategic National Stockpile
    The U.S. essential medicines list identified above can be used to 
guide an enhanced national stockpile. The Federal Government currently 
maintains an emergency stockpile of drugs and medical equipment in 
warehouses around the country. While some supplies are inexpensive and/
or can effectively be warehoused for long periods, the cost of 
stockpiling more expensive products with limited shelf lives, such as 
drugs, could be reduced with a commercially managed ``flow through'' 
inventory so that drugs are distributed and used prior to expiry, with 
the stockpile being continually replenished with newer product.
Direct Government Support of U.S. Manufacturing
    Recently, the Biomedical Advanced Research and Development 
Authority (BARDA) announced a new partnership that will help build more 
U.S. advanced manufacturing capacity for essential drugs.\8\
---------------------------------------------------------------------------
    \8\ Health and Human Services, May 19, 2020. https://www.hhs.gov/
about/news/2020/05/19/hhs-industry-partners-expand-us-based-
pharmaceutical-manufacturing-covid-19-response.html. Accessed May 24, 
2020.
---------------------------------------------------------------------------
                         the barda partnership
    Under this agreement, BARDA will fund Phlow Corporation, a newly 
formed 
public-benefit pharmaceutical manufacturing company in Richmond, VA, to 
build a new state-of-the art continuous manufacturing facility to 
produce API.

    On the same site, Civica will build a facility capable of producing 
finished sterile injectable medicines for U.S. patients on an ongoing 
basis and to meet the needs of the national stockpile. Civica will use 
API from Phlow and from Ampac Fine Chemicals, an API maker on the same 
site.

    This partnership will create a 100 percent U.S.-owned and -operated 
end-to-end domestic drug manufacturing infrastructure to secure 
essential medicines and prevent shortages of these vital medicines in 
the future.
Advanced manufacturing
    Advanced manufacturing is a term for newer technologies that will 
help improve the speed and flexibility of drug manufacturing. In the 
case of the BARDA agreement, Phlow will commercialize continuous 
manufacturing technology developed at Virginia Commonwealth 
University's College of Engineering. In contrast with traditional batch 
manufacturing, this approach offers several advantages, including:\9\
---------------------------------------------------------------------------
    \9\ Statement of Janet Woodcock, M.D., U.S. Food and Drug 
Administration, October 30, 2019. https://energycommerce.house.gov/
sites/democrats.energycommerce.house.gov/files/documents/Testimony-
Woodcock-API_103019.pdf. Accessed May 20, 2020.

        Precise control of product quality;
        Ability to rapidly respond to changes in demand;
        Lower cost of production; and
        Reduced environmental impact.

    As set forth in recent proposed legislation,\10\ Congress could 
further support the development of advanced manufacturing by supporting 
the creation of Centers of Excellence and providing expedited review if 
a technology is likely to prevent or resolve a drug shortage, 
maintaining an adequate supply of critical medications for national 
emergencies, or promote the adoption of innovative approaches to drug 
product design and manufacturing.
---------------------------------------------------------------------------
    \10\ For example, S. 3532, the ``Securing America's Medicine 
Cabinet Act of 2020,'' introduced by Senators Blackburn and Menendez, 
and S. 3780, the ``Help Onshore Manufacturing Efficiencies for Drugs 
and Devices Act,'' introduced by Senator Peters.

    Thank you again for your attention to this important topic. Civica 
looks forward to working with this committee as it considers how best 
---------------------------------------------------------------------------
to protect the interest of American patients.

                                 ______
                                 
      Questions Submitted for the Record to Martin VanTrieste, RPh
                Questions Submitted by Hon. John Cornyn
    Question. The COVID-19 pandemic has shown us that there are 
vulnerabilities in our supply chain. As demand has surged for 
medications for patients on ventilators, manufacturers have been unable 
to meet the needs. Your testimony outlines policy tools to better 
prepare against supply chain interruptions.

    Can you expand on how we can incentivize production of essential 
medicines?

    Answer. To incentivize production of essential medicines, the 
United States should first identify those drugs in order to guide 
policy and target incentives. Criteria could include: likely need in 
the event of a demand surge due to pandemic or other public health 
emergency; current U.S. sources of finished drug, API and, where 
relevant, key precursors; redundancy and resiliency of supply across 
the entire supply chain, U.S. and OUS, with particular attention to 
single- or geographically-concentrated sourcing. For these essential 
drugs, policymakers should incentivize contingency planning or 
redundant production lines for manufacturers to use in the event of a 
shortage, particularly for medicines that already have too few 
manufacturers. To encourage investments in critical drugs, policymakers 
should consider waiving FDA user fees for drugs on the drug shortage 
list and when there is minimal competition.

    To incentivize U.S. manufacturing, Congress could consider allowing 
100-percent expensing for any new U.S. pharmaceutical manufacturing 
facility placed in service before 2026 and waiving supplemental ANDA 
fees for manufacturers modifying an existing ANDA to create a new U.S. 
source of API or finished drug.

    Congress could also ensure that the purchasing power of the U.S. 
Government is used to support a resilient drug supply chain, including 
sufficient U.S.-based manufacturing. For example, Congress could amend 
the Trade Agreements Act of 1979 to clarify that pharmaceutical 
products would not be considered to have originated in a country if the 
API originated in a different country, reversing Acetris Health, LLC v. 
United States, a recent decision that precludes U.S. Government 
purchasers from giving preference, under the Buy American Act, to 
pharmaceutical products that originated entirely within the United 
States or our preferred trading partners.

    Congress could also increase the ``Buy American'' price 
differential from the current 6 percent to 20 percent to recognize the 
real cost differences between U.S. drug production and manufacturing in 
low-wage countries.

    Congress could also consider requiring the FDA to provide expedited 
review if a technology is likely to prevent or resolve a drug shortage, 
maintain an adequate supply of critical medications for national 
emergencies, and/or promote the adoption of innovative approaches to 
drug product design and manufacturing.

    Question. How can we reform the Drug Efficiency Study 
Implementation to allow for more manufacturers but also maintain 
incentives for manufacturers to go through the approval process for 
those ``grandfathered'' drugs?

    Answer. The Drug Efficacy Study Implementation (DESI) program was 
begun by the U.S. Food and Drug Administration (FDA) in the 1960s after 
the Kefauver-
Harris Amendment, to classify all pre-1962 drugs that were already on 
the market as either effective, ineffective, or needing further study. 
By 1984, final action had been completed on 3,443 products, of which 
2,225 were found to be effective, 1,051 were found not effective, and 
167 were pending.

    In 2006, the FDA introduced the ``Unapproved Drugs Initiative'' 
with the aim of removing unapproved drugs from the market, including 
DESI drugs and new drugs that were marketed without FDA approval. The 
Initiative required NDA (New Drug Application) approval for DESI or 
``grandfathered'' drugs. Once the FDA approves an NDA for a DESI drug, 
the existing unapproved drugs are removed from the market, until the 
pharmaceutical company obtains an ANDA (Abbreviated New Drug 
Application) approval from the FDA.

    There are numerous benefits to NDA approval for DESI or 
``grandfathered'' drugs. NDA approval demonstrates to physicians, 
health-care providers, and patients that a drug is safe and effective. 
The Sponsor of an NDA must demonstrate how the entire end-to-end 
manufacturing process is reliable and reproducible, and consistently 
meets standards of identity, strength, quality and purity. This is 
particularly important for the prevention of drug shortages and ensures 
that patients receive quality products with greater certainty of safety 
and efficacy.

    However, the exclusivity period awarded to the NDA sponsor and 
resulting lack of competition has resulted in substantial price 
increases to consumers, health systems and plans, including Medicare 
and Medicaid, and was associated with more frequent drug shortages. An 
analysis by Gupta et al. found that between 2006 and 2015, 34 
previously unapproved prescription drugs were addressed by the UDI.

        Nearly 90 percent of those with a drug product that received 
        FDA approval were supported by literature reviews or 
        bioequivalence studies, not new clinical trial evidence. Among 
        the 26 drugs with available pricing data, average wholesale 
        price during the 2 years before and after voluntary approval or 
        UDI action increased by a median of 37 percent (interquartile 
        range (IQR) = 23%  204%; P < 0.001). The number of drugs in 
        shortage increased from 17 (50.0%) to 25 (73.5%) during the 2 
        years before and after, respectively (P = 0.046). The median 
        shortage duration in the 2 years before and after voluntary 
        approval or UDI action increased from 31 days (IQR = 0 - 339) 
        to 217 days (IQR = 0 - 406; P = 0.053). (J Manag Care Spec 
        Pharm, 2017, 23(10):1066-1076)

    To reintroduce competition to the market following the end of the 
exclusivity period, generic manufacturers must invest substantial sums 
to bring their products through the ANDA development and approval 
process. While the NDA process benefits patients (as noted above), 
Congress could consider several avenues to promote competition and 
reduce the cost of this program to taxpayers:

        Allow FDA to end the exclusivity period if the NDA holder 
enters into business practices to create an artificial monopoly, like 
exclusive contracts with all viable API manufacturers or a restricted 
distribution channel (unless mandated by FDA) that prevents competitors 
from obtaining reference product.
        Require the NDA holder to provide reference product to 
potential competitors at no charge.
        Waive the ANDA fees for manufacturers of previously unapproved 
drugs seeking to re-enter the market and for new ANDA applicants.
        Require the NDA holder to submit confidential information to 
the government regarding its expenses to obtain an NDA approval, and 
terminate exclusivity if an analysis of Medicare spending data or 
national pricing and utilization patterns indicate that cost to the 
taxpayer has exceeded those expenses by more than a defined factor.
        Directly fund NDA development through an RFP process, allowing 
ANDA approvals to begin without any defined exclusivity period.

                                 ______
                                 
                 Questions Submitted by Hon. Tim Scott
    Question. We must do more to proactively address drug shortages and 
shortage risks, as well as to promote the production of medical 
products in the U.S. With that in mind, I recently released a proposal 
called the MADE in America Act, which would identify barriers to 
domestic manufacturing and recommendations for removing those barriers; 
enhance efficiency and transparency when it comes to detecting and 
resolving drug shortages and shortage risks; and create targeted tax 
credits for manufacturing critical medical products in Opportunity 
Zones. This proposal would also us to leverage incentives in a way that 
accelerates our economic recovery and bolsters our supply chain 
security at the same time.

    As we work to identify legislative and regulatory solutions, what 
do you see as some of the principal barriers to manufacturing 
medications domestically while keeping costs--and by extension consumer 
prices--low?

    Answer. Barriers to U.S. manufacturing include higher labor costs 
and additional regulatory costs, particularly associated with 
environmental and occupational health and safety approvals, in the 
United States compared with lower-cost economies.

    Question. How does the United States' tax and regulatory 
environment for drug manufacturing and manufacturing more broadly 
compare with those of some of our competitors?

    Answer. Civica is committed to manufacturing in the United States 
and, moreover, as a non-profit would not benefit directly from tax 
incentives (though some of our manufacturing partners might). 
Nevertheless, the examples of Ireland, Singapore, and, previously, 
Puerto Rico illustrate the potential of favorable tax treatment to 
attract pharmaceutical manufacturing.

    Question. What types of job opportunities can domestic API, 
excipient, and finished drug form manufacturing and packaging create 
for lower-income and working-class Americans, along with middle-class 
Americans?

    Answer. Pharmaceutical manufacturing creates direct employment for 
hundreds of thousands of Americans. These jobs include roles for 
chemical engineers, materials scientists, biological scientists, 
laboratory technicians, line operators, quality managers, compliance 
personnel, as well as all the associated ancillary management and 
support personnel. For example, the recently announced BARDA 
partnership with Phlow and Civica is expected to create hundreds of new 
jobs. Some of those will be filled by individuals with professional 
qualifications and experience in the industry, but others will be 
filled by training and growth opportunities within the local workforce.

    Question. What do you see as the potential for advanced 
manufacturing technologies to accelerate drug development and bolster 
drug quality, as well as to address shortage risks? What are some of 
the hurdles manufacturers are experiencing when looking to adopt 
technologies that could expedite production and improve drug quality, 
and how can Congress and the administration act to facilitate this type 
of innovation?

    Answer. Compared with traditional batch manufacturing, advanced 
pharmaceutical manufacturing has the potential to reduce production 
costs, improve flexibility and speed of production and reduce waste. As 
a more nimble manufacturing process, continuous manufacturing will help 
mitigate drug shortages caused by lack of access to API. Hurdles to 
advanced manufacturing include the cost of new capital investment and 
the regulatory cost associated with modifying the supply chain for 
currently approved drugs. In the generic market, these costs may be 
prohibitive, and companies are unlikely to invest to change the 
production of existing drugs without substantial support. To facilitate 
this type of innovation, Congress and the administration may wish to 
consider lowering the costs of new investments in U.S.-based advanced 
pharmaceutical manufacturing through tax incentives, direct grants or 
contracts; by waiving the FDA user fees associated with new or 
supplemental drug applications that use advanced manufacturing 
technology, and by supporting innovation and workforce development 
through the establishment of academic centers of excellence, provided 
they are directly and closely associated with commercial manufacturing 
enterprises. Congress and FDA should also evaluate the potential of 
system-based regulatory oversight that enables simpler and faster 
regulatory approval for manufacturing provided appropriate quality 
systems and protocols are in place.

                                 ______
                                 
             Questions Submitted by Hon. Benjamin L. Cardin
    Question. Prescription drug shortages have been a persistent and 
troubling occurrence. Many of the drugs in shortage are generic and 
have been off patent for years, which should lead to a market with 
reasonable prices and reliable manufacturing.

    Instead, patients and providers in Maryland and nationwide struggle 
to afford and obtain many of these critical medications.

    CivicaRx and its member hospitals look to address the issue of drug 
shortages by making their own generic drugs. I am excited that CivicaRx 
is focusing on generic drugs susceptible to shortages, and am curious 
to learn more about your company's drug shortage prevention practices.

    How are the drug shortage prevention practices of CivicaRx 
different from those of other drug companies?

    Answer. Civica differs from other drug companies in several 
important ways. First, Civica is a non-profit, non-stock social welfare 
organization established by U.S. health systems and philanthropies for 
the express purpose of reducing chronic drug shortages and ensuring a 
safe and stable supply of essential medicines to U.S. patients at a 
fair price. The drugs Civica makes are not those with the highest 
return on investment. Rather, they are the ones that are identified and 
prioritized by our health systems--by doctors and pharmacists on the 
front lines--as the medications most important for high-quality patient 
care. Civica's members have also identified generic medications that 
are excessively priced, such as the antibiotic daptomycin, where Civica 
lowered significantly the market price.

    Additionally, Civica's member health systems sign long-term ``take-
or-pay'' purchase agreements that allow Civica, and its suppliers, to 
invest in quality systems. The organization establishes backup 
suppliers for all drugs and maintains a physical reserve stock 
averaging at least 6 months' supply. This contrasts with a more typical 
30-day supply distributed across the entire supply chain. Civica also 
sources medicines made in the U.S. where possible, followed by other 
highly regulated markets, followed by India, and avoiding Chinese 
ingredients where possible in our drugs due to quality concerns.

    Question. Based on your experience, what recommendations for FDA, 
or Congress, would you suggest to better prevent drug and medical 
supply shortages?

    Answer. To better prevent drug shortages, the FDA and/or Congress 
should give consideration to creating an essential medicines list to 
set priorities for investments, policy, and regulatory reviews. An 
essential medicines list can be used to guide policy and target 
incentives. For these drugs, policymakers could incentivize contingency 
planning or redundant production lines for manufacturers to use in the 
event of a shortage, particularly for medicines that already have too 
few manufacturers. To encourage investments in critical drugs, 
policymakers could also consider waiving FDA user fees for drugs on the 
drug shortage list and when there is minimal competition.

    Improved transparency in sourcing and quality can better enable 
purchasers to choose products that are less likely to experience supply 
interruptions. To achieve this, Congress could consider country of 
origin labeling for both finished drug and API. In addition, increasing 
publicly available manufacturer quality information could be supported 
by establishing a timeline for FDA to finalize its quality metrics 
program and requiring manufacturer participation by date certain and/or 
incentives for manufacturers to participate.

    Congress could also consider directing major Federal purchasers to 
establish a goal of having at least one U.S. supplier for every U.S. 
essential drug, with annual targets and progress tracking that take 
into account market share and ability to scale up production on a 
defined timeline.

    Question. In May, the administration announced a 4-year, $354-
million contract with a newly formed company, Phlow, to produce both 
drug ingredients and generic medicines in the U.S. that are in short 
supply and used to treat COVID-19 patients. Phlow has partnered with 
CivicaRx, and plans to make medicines and ingredients at CivicaRx 
plants and will open its own facility in Virginia in 2021.

    Based on recent press articles, Phlow is partnering with CivicaRx 
to ramp up domestic production of certain pharmaceutical ingredients 
and medications. Part of this strategy will include building 
manufacturing facilities.

    How long will this take?

    What drugs is Phlow manufacturing?

    I understand that Phlow is working with CivicaRx's existing 
contractors, but as I understand it none of the existing contractors 
are domestic. Can you elaborate on how you will build up domestic 
production?

    Answer. A typical timeline for establishing a new pharmaceutical 
manufacturing facility, from the beginning of construction to 
commercialization, would be as soon as 36 months. That could be 
considerably shortened by expediting regulatory approvals. The timeline 
for Phlow to produce active pharmaceutical ingredient is shorter. In 
the meantime, Civica and Phlow are contributing to the strategic 
national stockpile through Civica's existing network of contract 
manufacturers, which prioritizes U.S. manufacturing where possible. Of 
the 26 drugs we've contracted to date, we manufacture 17 in the U.S. 
and 8 in Europe. The primary source of the API is in the United States 
or Europe for 21 of 26 products.

    Civica and Phlow will create new U.S. capacity through the 
construction of new API and finished drug manufacturing facilities. In 
addition, the Phlow facility will manufacture key precursor compounds 
used to make APIs. These facilities will make drugs prioritized by the 
U.S. Government.

                                 ______
                                 
               Questions Submitted by Hon. Sherrod Brown
    Question. One of your policy recommendations to rebuild capacity 
and protect against supply chain interruptions is for the U.S. to 
establish an essential medicines list to set priorities for 
investments, policy and regulatory reviews.

    Can you please elaborate on this policy recommendation? Which 
Federal agency would you suggest take the lead on developing this list? 
What considerations should be taken into account in building out this 
list of essential medicines?

    What priorities should follow the development of an essential 
medicines list?

    Answer. In establishing a list of essential medicines, the 
Secretary of Health and Human Services could draw on the expertise of 
multiple agencies. The U.S. Food and Drug Administration (FDA) has 
comprehensive information on approved drugs and their uses and 
countries of origin, as well as ongoing communication with sponsors and 
agency staff actively engaged in addressing drug shortages. The Public 
Health Emergency Medical Countermeasures Enterprise (PHEMCE) 
coordinates Federal efforts to enhance chemical, biological, 
radiological and nuclear threats (CBRN) and emerging infectious 
diseases (EID) preparedness from a medical countermeasure (MCM) 
perspective. The PHEMCE is led by the HHS Office of the Assistant 
Secretary for Preparedness and Response (ASPR) and includes three 
primary HHS internal agency partners: the Centers for Disease Control 
and Prevention (CDC), the FDA and the National Institutes of Health 
(NIH), as well as several interagency partners: the Department of 
Defense (DoD), the U.S. Department of Veterans Affairs (VA), the 
Department of Homeland Security (DHS), and the U.S. Department of 
Agriculture (USDA). The Strategic National Stockpile (SNS) is designed 
to supplement and resupply State and local public health agencies in 
the event of a national emergency anywhere and at any time within the 
United States or its territories. In 2018, oversight of the SNS was 
transferred to HHS/ASPR from HHS/CDC.

    An essential medicines list should include drugs essential for 
routine clinical care. Civica relies on pharmacy and medical trends 
advisory committees from a cross section of U.S. health systems to 
identify the drugs most needed, and most vulnerable, on the front lines 
of care. A similar process may inform establishment of a U.S. list. 
Other factors for consideration should include a recent history of 
shortages, the number of suppliers in the market (including whether 
they, in turn, rely on common upstream suppliers of active 
ingredients), the potential for supply interruptions due to demand 
surges (such as during a pandemic or other public health emergency) and 
the likelihood of supply interruptions, taking into account 
geographical concentration of manufacture and country of origin, 
including the potential that supplies could be interrupted as other 
countries seek to ensure supply for their own populations or limit 
exports for strategic advantage.

                                 ______
                                 
                 Prepared Statement of Hon. Ron Wyden, 
                       a U.S. Senator From Oregon
    This afternoon the Finance Committee is holding its first meeting 
since March, focusing on the FDA's failure to adequately inspect 
foreign drug manufacturers for safety. In my view, the head of the FDA 
ought to face tough questions in any hearing on this topic. But FDA 
Commissioner Hahn is not with the committee today because the Trump 
administration blocked his testimony. They did this to prevent the 
committee from holding the FDA's point person accountable. I'd also 
asked for the committee to invite the journalist Katherine Eban here to 
testify, because she literally wrote the book on this issue. That did 
not happen either. In lieu of that, I'll ask consent to enter into the 
record testimony and articles from Ms. Eban on this subject.

    While the committee meets for this hearing, COVID-19 is ripping 
through nursing homes and killing thousands of Americans every week. 
Unemployment is at near-Depression levels. The kindling laid down over 
centuries of racial injustice was reignited by the murder of George 
Floyd. The President is agitating for more violence and more 
escalation. Our Nation is suffering.

    The injustice driving peaceful protestors to the streets over the 
last few days is woven throughout society. Since the committee is 
dealing with health care in today's hearing, I'm going to start with an 
immediate piece of urgently needed health-care reform. COVID-19 has hit 
the African American community harder than virtually any other group of 
Americans, and the status quo is immoral.

    There is a long and terrible history of our health-care system 
working against black people in this country, from simply not listening 
when they report symptoms right up to performing cruel experiments on 
black human beings. That's part of why COVID-19 is having such an 
outsized impact on the African American community today. There's a risk 
that when a COVID-19 vaccine becomes available, vaccination rates in 
the African American community may be lower than elsewhere--because 
many in that community, for understandable reasons, do not believe that 
American health care is really looking out for them.

    So I want to make something clear: this committee has muscle when 
it comes to health-care policy--$2 trillion in spending and 
jurisdiction over flagship programs like Medicare, Medicaid, the 
Affordable Care Act, and more. Today I'm calling on this committee to 
come together in the weeks and months ahead and use all that power to 
right the wrongs of the past.

    As for the subject of this afternoon's hearing, I want to focus on 
one specific example of the FDA and the President teaming up to put 
Americans in danger. Let's talk about hydroxychloroquine.

    Back in March, with the pandemic exploding nationwide, far-right 
media began talking about using this old malaria drug to treat COVID-
19. The President glommed onto those reports, and without any valid 
evidence, he spent weeks declaring it the ultimate game-changer in the 
fight against the pandemic.

    The FDA, in my view, bowed to the pressure and issued what's called 
an ``emergency use authorization'' for the drug. Doing so threw open 
the door to tens of millions of pills, including some, directly related 
to this hearing, manufactured inside facilities in Pakistan and India 
that have either failed FDA's inspection or never been inspected by the 
FDA at all. Studies have now shown that the drug has no benefit for 
COVID-19 patients. In fact, it is linked to higher rates of COVID-19 
mortality.

    Finally on April 24th, the FDA warned against using the drug in 
COVID-19 treatments, citing ``serious and potentially life-threatening 
heart rhythm problems,'' but the FDA still says it can be imported from 
unapproved manufacturing facilities.

    A recent article in The New England Journal of Medicine said the 
episode posed, quote, ``fundamental threats to the U.S. drug evaluation 
process.'' Mr. Chairman, without objection, I'd like to have that 
article inserted into the hearing record.

    The fact is, lots of Americans take this medication to treat other 
diseases, including lupus and rheumatoid arthritis. It's prescribed by 
their doctors, part of a valid treatment. They're counting on having a 
safe supply of their medication, and Donald Trump took that away from 
them. He repeated a bunch of far-right pundits touting junk science, 
and now the U.S. market is polluted with tens of millions of 
hydroxychloroquine doses that may or may not be safe. It's not clear 
there's a system in place to distinguish them from other stockpiles 
that came from approved sources. So if you're talking about FDA 
failures leading to greater risk for Americans, hydroxychloroquine is 
the case in point.

    There's also the botched rollout of COVID-19 antibody tests. 
There's the emergency use authorization for faulty KN95 masks that pose 
a danger to health-care workers and first responders. There's the fact 
that the number of FDA inspections of foreign drug manufacturing 
facilities was already down under the Trump administration.

    On this committee, there's bipartisan interest in seeing 
improvements at the FDA, and it makes sense to look for ways to build 
up our drug manufacturing capacity in the U.S. However, the Trump 
administration just handed a big contract for COVID-19 drug 
manufacturing to a company with no experience manufacturing drugs and 
no facilities in which to manufacture them.

    That's not a good enough plan to help COVID-19 patients who are 
suffering right now. It also raises serious questions about how this 
administration would handle a COVID-19 vaccine, if and when a vaccine 
becomes available.

    There's a lot to account for on this issue. It's unfortunate that 
the Trump administration is continuing to stonewall our oversight by 
blocking Commissioner Hahn from answering our questions today. Still, I 
thank our witnesses for joining us today, and I look forward to their 
testimony.

                                 ______
                                 
From:  Katherine Eban
      Author, Bottle of Lies: The Inside Story of the Generic Drug Boom
      Vanity Fair Contributor

To:   Senate Committee on Finance
      Attn. Editorial and Document Section
      Rm. SD-219
      Dirksen Senate Office Bldg.
      Washington, DC 20510-6200

Re:    Statement for the Record
       ``COVID-19 and Beyond: Oversight of the FDA's Foreign Drug 
Manufacturing Inspection Process''

Date: June 1, 2020

_______________________________________________________________________

Introduction

I spent a decade investigating the overseas manufacturing plants that 
supply a majority of generic drugs to the U.S. market, and the FDA's 
system for regulating those plants. That effort culminated in the 
publication of my New York Times best-selling book, Bottle of Lies: The 
Inside Story of the Generic Drug Boom (Ecco/Harper Collins, May 2019).

The book takes readers into the overseas manufacturing plants where the 
majority of our low-cost generic medicine is made. It reveals endemic 
fraud and dire conditions in an industry where companies routinely 
falsify data and circumvent principles of safe manufacturing to 
minimize cost and maximize profit. To report the book, I traveled to 
four continents, interviewed hundreds of sources and obtained over 
20,000 pages of confidential FDA documents.

The U.S. drug supply is 90 percent generic, with a majority of those 
drugs coming from overseas, principally India and China. As well, 80 
percent of the active ingredients in all our drugs, whether brand or 
generic, come from overseas, the bulk of those from China and India.

It is crucial to the health and safety of the American public that 
these drug products are effectively regulated. No substandard drug 
product should be permitted to enter the U.S. market. And yet, as my 
book uncovers, low-cost drug plants overseas routinely falsify their 
quality data in order to gain market approval. In a bid to cut costs 
and speed time to market, they use low-quality ingredients and take 
manufacturing shortcuts. The FDA, in numerous instances, has chosen to 
overlook these problems in its drive to approve a greater volume of 
low-cost medicine. The result is that generic drugs with toxic 
impurities, unapproved ingredients, dangerous particulates, or that are 
non-bioequivalent, have reached American patients.

The COVID-19 pandemic--which has increased drug shortages and snarled 
global supply chains--has intensified these problems. It has deepened 
our dependence on overseas drug manufacturers that produce low-quality 
medicine and has diminished the FDA's ability and inclination to police 
those manufacturers.\1\
---------------------------------------------------------------------------
    \1\ Katherine Eban, ``The Coronavirus Pandemic Is Creating a Drug 
Supply Crisis Just When We Most Need Medicine,'' Time Magazine, March 
26, 2020.

After extensive reporting on this topic, it is my conclusion that: the 
FDA is not effectively regulating the overseas manufacturing plants 
that export to the U.S. market. The FDA is granting exceptions to these 
plants and allowing substandard drug products into the U.S. for reasons 
that include: concern over drug shortages; confusion about its own 
authority; reliance on drug companies' promises of reforms. The FDA's 
investigators are spread too thin, with depleted staff in overseas 
offices, anemic recruiting efforts, and a relatively small cadre of 
---------------------------------------------------------------------------
U.S.-based investigators willing to perform inspections overseas.

In conclusion, I believe the FDA must overhaul its foreign inspection 
system, more strictly enforce its own regulations, and create a 
transparent and verifiable system to ensure the integrity of our 
medicine and the safety of the American public.

1. The Widespread Problem of Data Fraud

Extensive data fraud at generic drug companies overseas first came to 
light in 2005, when a brave whistleblower, Dinesh Thakur, alerted the 
FDA to egregious fraud at India's largest drug company, Ranbaxy. In May 
2013, after an 8-year investigation by the FDA, Ranbaxy pled guilty to 
seven felonies connected to its widespread falsification of quality 
data.\2\ But Ranbaxy was hardly an outlier, as Bottle of Lies exposes. 
Dozens of overseas drug manufacturing plants have misrepresented their 
drug-quality data in order to gain market approval.
---------------------------------------------------------------------------
    \2\ Katherine Eban, ``Dirty Medicine.'' Fortune Magazine, May 15, 
2013. Available at: https://fortune.com/2013/05/15/dirty-medicine/.

One FDA investigator Peter Baker, who I feature in my book, inspected 
86 drug plants in India and China from 2012 to 2016, and found evidence 
of serious data-integrity violations in 67 of them. He uncovered this 
fraud and data manipulation by looking inside the computer systems of 
the manufacturing plants he inspected. There, he found widespread 
evidence that plants were engaged in hidden testing to pre-screen their 
drugs. This allowed them to figure out if the drugs would meet 
specifications, and then alter the parameters on the official tests 
which they showed to the FDA.\3\
---------------------------------------------------------------------------
    \3\ Eban, Katherine. ``Americans Need Generic Drugs. But Can They 
Trust Them?'' The New York Times, May 11, 2019.

Additional evidence supports the view that fraud and manipulation of 
quality data is endemic in overseas drug plants. In 2016, an 
investigation by China's own State Food and Drug Administration (SFDA) 
found that 80 percent of clinical trial data submitted by Chinese 
companies to regulators to gain approval for new drugs was 
fabricated.\4\
---------------------------------------------------------------------------
    \4\ Fiona Macdonald, ``80% of Data in Chinese Clinical Trials Have 
Been Fabricated,'' Science Alert, October 1, 2016, https://
www.sciencealert.com/80-of-the-data-in-chinese-clinical-trial-is-
fabricated (accessed September 30, 2018).

The generic drug industry has claimed that fraudulent practices have 
largely been corrected. But in October 2019, for an article in STAT 
News, co-author Sony Salzman and I analyzed the FDA's own records, 
which revealed that violations of data integrity are not only 
persistent and ongoing in overseas drug manufacturing plants, but are 
happening with greater frequency than in U.S. plants.\5\ With the help 
of FDAzilla, a leading data analytics company, we analyzed 5\1/2\ years 
of FDA inspection records, from 2014 to 2019, for four major markets: 
China, India, Europe, and the United States.
---------------------------------------------------------------------------
    \5\ Eban, Katherine, and Sony Salzman. ``In Generic Drug Plants in 
China and India, Data Falsification Is Still a Problem.'' STAT News, 
October 29, 2019. https://www.statnews.com/2019/10/29/data-
falsification-still-problematic-china-india-generic-drug-plants/.

The data showed significantly greater falsification or manipulation of 
manufacturing data in Indian and Chinese drug plants. For example, a 
January 2019 FDA inspection at Indoco Remedies in Goa, India, uncovered 
that the manufacturing plant had faked the data in its batch production 
records to justify the release to market of its diabetes drug 
glimepiride.\6\ By contrast, the raw testing data showed that the drug 
did not meet quality standards and therefore should not have been 
released to patients.
---------------------------------------------------------------------------
    \6\ Food and Drug Administration. Warning Letter, Indoco Remedies 
Ltd., July 16, 2019.

While data integrity violations may sound minor and technical, for 
patients they can mean the difference between a safe, effective generic 
drug that functions just like the brand and a drug that is not 
equivalent to the brand, or that may contain toxic impurities or 
foreign particulate matter. In short, a difference between life and 
death.

2. Essential Difference Between U.S. and Foreign Inspections

In the United States, in order to inspect drug plants, FDA 
investigators simply show up unannounced and stay as long as is needed. 
But for overseas inspections--due to the complex logistics of getting 
visas and ensuring access to the plant--the FDA has chosen to announce 
its inspections in advance, despite there being no requirement to do 
so.

Overseas drug plants typically ``invite'' the FDA to inspect and the 
agency accepts. Plant officials serve as hosts to the visiting FDA 
investigators, who become their guests. It is not unusual for 
manufacturing plants to arrange local travel for FDA investigators. 
This system has allowed manufacturing plants to ``stage'' inspections, 
as one FDA investigator put it, and conceal evidence of data 
fabrication. Some companies have even sent in teams of data fabricators 
in advance of FDA inspections, to alter, shred, or backdate documents 
to create a facade of compliance.

This system of advance notification has also harmed the integrity and 
independence of FDA investigators. It has allowed companies to organize 
shopping trips, golf outings, and tourist excursions for them, leaving 
them ``captive and compromised,'' as a former head of the FDA's India 
office, Altaf Lal, described it.

In January 2014, with the FDA's permission, Lal launched what came to 
be known as the India pilot program.\7\ He eliminated the months-long 
advance notice and company-arranged travel plans. Instead, the FDA gave 
only short notice--or no notice--of investigators' arrival for all 
inspections in India.
---------------------------------------------------------------------------
    \7\ Eban, Katherine. ``Bottle X: Exposing Impurities in the Generic 
Drug Business.'' Newsweek, July 2, 2019.

The FDA's new inspection program exposed widespread malfeasance that 
had previously been hidden. By showing up unannounced, the 
investigators uncovered an entire machinery that had existed for years: 
one dedicated not to producing perfect drugs, but to producing perfect 
results. The investigators found a bird infestation at one sterile 
manufacturing site. At another, they found a facility's paperwork for 
its sterility testing in perfect order, ensuring that the plant's air, 
water and surfaces were free of microbial contamination. Yet the 
samples didn't exist. They were testing nothing. The entire laboratory 
---------------------------------------------------------------------------
was a fake.

Under the India pilot program, the rate of inspections resulting in the 
FDA's most serious finding, Official Action Indicated, increased by 
almost 60 percent. The program succeeded in exposing endemic fraud and 
dire conditions in India's drug manufacturing plants. But in July 2015, 
the FDA abruptly ended the pilot program without explanation, and 
resumed pre-announced inspections. This raises the crucial question of 
how the FDA deals with the problems that it finds.

3. How the FDA Responds to Findings

It is striking that the FDA has all too frequently chosen to downgrade 
the findings of its own investigators.

In May 2017, in Linhai, China, an FDA investigator inspected Zhejiang 
Huahai Pharmaceuticals, the world's largest manufacturer of the active 
ingredient for valsartan, a generic version of the blood pressure drug 
Diovan. He found evidence at the plant that the company was failing to 
investigate potential impurities in its own drugs, which showed up as 
aberrant peaks in its test results. The investigator recommended the 
inspection be categorized as Official Action Indicated, which would 
have forced the manufacturing plant to urgently make changes or face 
further sanctions.

But in a September 7, 2017 memo, the agency downgraded the recommended 
classification to Voluntary Action Indicated, which allowed the company 
to make non-
urgent corrections. The memo \8\ concluded:
---------------------------------------------------------------------------
    \8\ Tamara Felton Clark, Branch Chief, Global Compliance Branch 4, 
``Reclassification of Surveillance Inspection: VAI as Inspection 
Classification,'' CMS File--Work Activity 161861, Zheijiang Huahai 
Pharmaceutical.

        The firm's response is mostly adequate including as it 
        concerned the observation pertaining to their investigation of 
        aberrant peaks on HPLC chromatograms. The firm provided data 
        and information to demonstrate the peaks did not impact product 
        and timeframes for improving their method and revising their 
---------------------------------------------------------------------------
        investigation procedure.

In fact, the peaks were a clue to a compromised product. Less than a 
year later, the company wound up in the middle of a worldwide quality 
scandal. In July 2018, European regulators announced a harrowing 
discovery: the active ingredient made by Zhejiang Huahai contained a 
cancer-causing toxin known as NDMA.

The FDA's decision to overrule its own investigator and downgrade the 
Zhejiang Huahai inspection was not unique. According to the FDA's own 
data, which I obtained, from 2013 to 2018, out of 864 inspections in 
China of drug manufacturing plants that FDA investigators recommended 
as Official Action Indicated, FDA officials downgraded 78 of those. Of 
1,514 inspections in India in the same time period, FDA officials 
downgraded 109. By contrast, in the same time period, out of 11,642 
inspections that FDA investigators conducted in the U.S. and 
recommended as Official Action Indicated, only one inspection was 
downgraded.

These downgrades reflect the FDA's willingness to give foreign plants 
the opportunity to continue operations without sanctions.

4. COVID-19 Compromises

The coronavirus pandemic has intensified our dependence on potentially 
dangerous sources of foreign drugs, and the FDA's willingness to grant 
exceptions to source those drugs.

Most glaringly, in its efforts to source hydroxychloroquine, a 
treatment of unproven utility for COVID-19, in late March the FDA 
lifted restrictions on the Indian drug company Ipca Laboratories, which 
had previously been caught manipulating and deleting quality data, so 
that the U.S. could import the company's hydroxychloroquine sulphate 
and chloroquine phosphate active ingredients and hydroxychloroquine 
sulphate tablets.\9\
---------------------------------------------------------------------------
    \9\ Altstedter, Ari, and Anna Edney. ``Censured Indian Plant Gets 
USFDA Nod to Supply Trump-Touted Drug.'' Bloomberg, March 23, 2020. 
https://www.bloomberg.com/news/articles/2020-03-23/fda-lifts-import-
curbs-on-maker-of-unproven-virus-drug-in-india.

Even more concerning was the emergency use authorization the FDA issued 
on March 28th, which for the first time allowed the U.S. to import a 
version of chloroquine phosphate called Resochin, donated by Bayer AG, 
that had been made in plants in India and Pakistan that had never been 
registered with, or inspected by, the FDA.\10\
---------------------------------------------------------------------------
    \10\ Eban, Katherine. ``Exclusive: FDA May Have Dropped Standards 
Too Far in Hunt for Chloroquine to Fight Coronavirus--Sources.'' 
Reuters, April 16, 2020. https://www.reuters.com/article/us-health-
coronavirus-bayer-chloroquine/exclusive-bayers-chloroquine-donation-to-
u-s-raises-concern-about-fda-standards-in-pandemic-idUSKBN21Y2LO.

At the same time, the FDA has been forced to suspend foreign 
inspections, and is relying on information provided by drug companies, 
a number of which have previously been caught supplying falsified 
data.\11\
---------------------------------------------------------------------------
    \11\ FDA Statement, ``Coronavirus Disease 2019 (COVID-19) Update: 
Foreign Inspections.'' https://bit.ly/3gL6O19, March 10, 2020.

As well, plants that are facing regulatory restrictions, based on 
previous inspection findings of Official Action Indicated, are 
increasingly getting accelerated approvals to market their drugs, based 
on the Agency's regulatory discretion. The committee should request 
that data.

5. Suggested Reforms to Safeguard the U.S. Drug Supply

  The FDA needs to overhaul its foreign drug inspection program

The FDA's overseas offices are poorly staffed, and its cadre of U.S.-
based investigators willing to perform inspections overseas is 
relatively small and demoralized. The FDA needs a specialized and 
highly trained workforce that can make a years-long commitment to serve 
overseas and become a ``go to'' group for emergency assignments. This 
would remedy the problem behind the FDA's anemic recruitment to foreign 
posts: a lack of clear career progression and promotion opportunities.

  Unannounced inspections should be the norm

The FDA's current regimen of pre-announced overseas inspections is 
counter-productive and ineffective, and allows companies to stage-
manage inspections. Short notice, or no notice inspections, should be 
the norm.

  Downgrades should be rare

Too often, FDA officials at the agency's headquarters in Maryland 
overrule the judgment of investigators in the field, and downgrade 
recommended findings.

In the course of my reporting, an FDA spokesperson justified these 
downgrades as follows:

        The FDA can and does change assessments of a plant's 
        compliance. After the initial data gathered by the investigator 
        is reviewed by both the Office of Regulatory Affairs and the 
        Center for Drug Evaluation, additional information can be taken 
        into account. Oftentimes, a firm is not able to provide 
        paperwork at the time of an inspection but can produce 
        documents later on that provide more insight into the matter. 
        Assessments can also change based on how willing a firm is to 
        cooperate and fix issues that are found.

This system allows manufacturing plants to fabricate documents and 
generate excuses for submission to the FDA.

  Drugs should be systematically tested

The FDA has largely used an honor system to verify the quality of drugs 
made overseas: it reviews data provided by the companies and conducts 
pre-announced inspections. Actual testing of drugs is rare.

The FDA should either institute a system of testing, or commission 
outside labs to do this testing, to serve as independent corroboration 
of quality.

  Country-of-origin labeling on drugs and drug ingredients

Consumers want to know where their drugs are made. There is no reason 
to conceal that information. The food we eat and the clothes we wear 
come with country-of-origin labeling. Yet when it comes to our 
prescription drugs, that information is deemed proprietary. It 
shouldn't be. Required country-of-origin labeling would likely 
underscore our dependence on foreign drug sources and accelerate the 
current push to return drug manufacturing to the United States.

  Notify doctors of medication manufacturer switches

Doctors are struggling to stabilize patients who are often being 
switched, month to month, between different manufacturers' versions of 
their monthly prescriptions. Those versions can vary widely in quality, 
absorption, and bio-availability. Doctors, particularly those that 
prescribe drugs where dosing is critical, should have the option to be 
notified about any medication switches that result in a change of 
manufacturers.

                                 ______
                                 

                       From Time, March 26, 2020

       The Coronavirus Pandemic Is Creating a Drug Supply Crisis 
                    Just When We Most Need Medicine

                           By Katherine Eban

As the world scrambles for a magic pharmaceutical bullet to stop the 
coronavirus, drugs perceived as cures--despite reed-thin evidence--have 
vanished from pharmacy shelves. Just last Friday, after President Trump 
touted the still unproven remedy of a malaria drug, hydroxychloroquine, 
the Food and Drug Administration lifted a restriction it had imposed on 
a Indian drug manufacturer with a record of manipulating its quality 
data, to allow it to make the active ingredient now suddenly in hot 
demand. With the United States long dependent on foreign drug 
manufacturers for low-cost medicine and key drug ingredients, it is 
little wonder that we have arrived at this frightening moment, with the 
FDA allowing companies that it didn't even trust enough last month to 
make any drug for the American public, to now churn out unproven drug 
ingredients for a largely untested off-label use.

Coronavirus has now done what years of U.S. Government Accountability 
Office (GAO) reports and congressional hearings could not achieve. It 
has laid bare the full perils of our dependence on an overseas drug 
supply. Not only has this pandemic intensified already serious drug 
shortages. But question marks loom over the safety of the drugs we are 
able to procure. Experts have long warned this day would come.

Last July, a Pentagon official testified before the U.S.-China Economic 
and Security Review Commission that U.S. dependence on Chinese-made 
prescription-drug ingredients constituted a national security threat. 
This was an understatement, even then. Over eighty percent of the 
manufacturing plants that make active ingredients for all U.S. drugs 
are located overseas, concentrated particularly in China. Furthermore, 
a majority of our finished generic drugs, which constitute ninety 
percent of the U.S. drug market, are made overseas, with a full forty 
percent coming from India, which in turn is also dependent on China for 
active drug ingredients.

Fast forward to the coronavirus pandemic, and that national security 
threat has turned into a full-blown national security disaster, with 
dangerous dominoes falling in the American drug supply, pointing to 
deeper trouble ahead.

India recently announced that it would curb the export of 26 drugs and 
drug ingredients, as it consolidates pharmaceutical supplies to treat 
its own population. The FDA announced, in light of travel bans, that it 
would halt all inspections at overseas drug plants. And the Chinese 
government recently threatened to impose restrictions on pharmaceutical 
exports to the U.S.

Even before the onset of coronavirus, serious questions loomed about 
the integrity of much of our low-cost foreign-made medicine. The FDA's 
foreign drug inspection program has been frighteningly threadbare for 
years: woefully understaffed and poorly organized, with long-standing 
vacancies, as a December report by the GAO confirmed. But it also 
operates on an honor system, where the FDA gives foreign plants months 
of advance notice, does not systematically test drugs and instead, 
relies on reviewing company data.

This has allowed overseas plants to refine elaborate techniques for 
duping the FDA, a dangerous cat-and-mouse game that I first exposed in 
my book Bottle of Lies: The Inside Story of the Generic Drug Boom.

The overseas plants use hidden laboratories, secret testing machines, 
altered test results--and even clandestine drug samples taken from 
brand-name drug competitors--all to create pristine quality data to 
gain approvals from regulators and pass inspections. The result is that 
much of the quality data emanating from certain overseas plants is not 
``worth the paper it's written on,'' as one FDA investigator told me. 
Ipca Laboratories, the Indian drug company that just got the FDA's 
permission to make hydroxychloroquine, was found by FDA investigators 
to be manipulating and deleting quality data.

When the FDA announced it would suspend all foreign inspections, the 
FDA offered this to reassure the public: it would be ``requesting 
records'' from plants ``in advance of or in lieu of'' on-site drug 
inspections. In other words, the issue is not just the 
hydroxychloroquine made by one dubious company. Neither the FDA nor 
American consumers will have any idea whether the majority of our drugs 
on the market will be safe or work as intended, and will be relying 
entirely on information provided by drug companies, a number of which 
have previously been caught supplying falsified data.

Facing looming drug shortages, the U.S. finds itself at the mercy of 
China, which has threatened to cut active drug ingredients. India, 
which has already put an export hold on 26 vital drugs and drug 
ingredients. And Italy, another vital supplier of active drug 
ingredients, is under siege with almost 69,000 COVID-19 cases, and 
close to 7,000 deaths.

The generic drug market, responsible for ninety percent of the drugs 
Americans consume, operates on a ``30/30/30 supply chain,'' said Martin 
VanTrieste, president of Civica Rx, a nonprofit drug maker aiming to 
ramp up U.S. manufacturing of generic drugs in short supply. At any 
given time, Trieste explained, there's a 30-day supply of active drug 
ingredients, a 30-day supply of drugs moving through the wholesale 
market and a 30-day supply of drugs on pharmacy shelves. That gives the 
U.S. government about ``30 [days]'' to avert major drug shortages. ``My 
biggest fear is the shipping lanes close off,'' said Trieste, though it 
hasn't happened yet. ``That would be setting off a disaster.''

Within the last few weeks, lawmakers have introduced legislation that 
would incentivize innovation and advanced pharmaceutical manufacturing 
in the U.S., and require drug makers to more clearly disclose the 
origin of ingredients and the amount of stock on hand. The White House 
is pushing ``Buy American'' policies that would require the Federal 
government to prioritize the purchase of U.S.-made drugs and medical 
supplies.

But the flurry of proposals cannot make up for years of a broken drug 
supply, in which so many drug manufacturers looked for the cheapest way 
to make lifesaving drugs as far from vigilant regulators as possible. 
Facing a far-flung drug supply, the FDA failed to implement real 
verification systems--such as unannounced inspections and systematic 
drug testing--to safeguard the quality of foreign-made drugs. It was 
under this porous review system that millions of Americans wound up 
getting blood pressure medicine that contained a dangerous carcinogen.

If and when the COVID-19 pandemic subsides, our drug supply will 
require major reforms. The FDA must make unannounced inspections the 
norm for every plant it inspects, anywhere in the world. It must 
implement a system for routine testing of drugs. The big pharmacy 
chains, such as CVS and Walgreens, should also test the drugs they 
dispense.

And consumers should get country-of-origin labeling that discloses 
where their drugs and drug ingredients are actually made. That kind of 
information--available on our cereal boxes and clothing--is somehow 
deemed proprietary when it comes to lifesaving medications. These 
disclosures would probably shock most patients--and would go a long way 
to helping restore America's lost medicine manufacturing base.

In all likelihood, says VanTrieste, bringing drug manufacturing home 
will require an ``all-out Manhattan project [style] initiative to get 
infrastructure back to the U.S. market.'' After all, it was just such a 
U.S. government effort--in the midst of World War II--that led to one 
of the great breakthroughs in modern science, the commercial 
development of penicillin.

                                 ______
                                 

                      From Rueters, April 16, 2020

     Exclusive: FDA May Have Dropped Standards Too Far in Hunt for 
               Chloroquine to Fight Coronavirus--Sources

                           By Katherine Eban

On March 21, two days after President Donald Trump first touted 
chloroquine drugs as a ``gamechanger'' in the fight against COVID-19, 
administration officials privately described what they felt was a 
``win'' in the president's efforts to build an emergency stockpile of 
the drugs: a hefty donation of pills from Bayer AG.

In an exchange of enthusiastic emails among federal health officials 
reviewed by Reuters, Keagan Lenihan, chief of staff of the U.S. Food 
and Drug Administration (FDA), cautioned that ``3-4 days'' of testing 
would be needed.

``Potentially serious issues with product so let's be careful when we 
take that win,'' she wrote.

Bayer has since donated three million tablets of the drug, called 
Resochin, to the U.S. national stockpile for treatment of COVID-19, the 
disease caused by the coronavirus. After a brief period of testing, its 
use in the United States was approved on an emergency basis.

But three U.S. government sources familiar with the matter told Reuters 
that there is reason to be concerned about the quality of Resochin and 
its makers, located in India and Pakistan.

Although some rules can be waived in an emergency, the FDA dropped its 
quality-control standards too far as it scoured the world for scarce 
supplies of chloroquine drugs, according to the sources, who spoke on 
condition of anonymity.

The plants that make Resochin ingredients and finished doses in India 
and Pakistan have never been registered with, or inspected by, the FDA, 
according to the three government sources, as well as FDA documents 
compiled in the private online database FDAzilla.com. Some chloroquine 
drugs were already approved by the FDA before the pandemic as 
antimalarial medications, a process that required plant inspections. 
Resochin was not approved.

Pakistani regulators, who inspected Bayer's Resochin plant in Karachi 
in 2015, found a ``gross failure'' in manufacturing processes there, 
according to documents from the Drugs Regulatory Authority of Pakistan, 
reviewed by Reuters. And though the FDA has never screened the Indore, 
India plant that supplies ingredients for Resochin, the U.S. agency has 
inspected other Indian plants run by the same Indian supplier and found 
serious deficiencies, including falsification of records, inspection 
documents spanning 2014 through 2019 show.

Responding to questions from Reuters about Resochin, FDA spokesman 
Michael Felberbaum said that the agency ``sampled and tested the 
donated drugs to evaluate acceptability for importation'' and they met 
appropriate standards.

Asked about Lenihan's March 21 email, the FDA spokesman said the agency 
``does not comment on alleged, leaked emails.''

In a statement to Reuters, Bayer said that the FDA had tested Resochin 
``and found it to be of appropriate quality for release to the 
(stockpile) for emergency use. We are proud to make this donation to 
the U.S. government in the fight against COVID-19.''

Resochin is part of a class of medications containing one of two active 
ingredients--chloroquine or hydroxychloroquine--that the Trump 
administration has praised as a potentially lifesaving treatment. But 
the effectiveness of chloroquine drugs against coronavirus has not been 
proven. Though in use for years in the United States as a treatment for 
malaria and autoimmune conditions such as lupus, the medicines can have 
serious side effects, including heart arrhythmias.

The three U.S. sources who spoke with Reuters, as well as an 
independent expert, said spot-testing is not always sufficient to 
ensure a drug's safety and effectiveness, and plant inspections 
normally done by the FDA are crucial to ensuring overall quality.

``If you're talking about millions of doses, you can't test every 
product,'' said Stephen Payne, who for years chaired a practice group 
specializing in the FDA and health care at a global law firm. ``You 
have no idea what you don't know.''

A PHOTO OPPORTUNITY

Trump first endorsed chloroquine drugs to treat COVID-19 from the White 
House podium on March 19, citing ``very, very encouraging early 
results'' and downplaying any risks. ``If things don't go as planned, 
it's not going to kill anyone,'' he said.

The statements came as the administration was being hammered for its 
slow response to the growing coronavirus crisis, which to date has 
infected more than 637,000 people in the United States, killing almost 
31,000. His comments set high public expectations for the drugs, which 
are now being snapped up all over the globe.

In emails two days later, federal health officials greeted the Bayer 
donation of chloroquine phosphate, or Resochin, with eagerness.

Cicely Waters, director of external affairs for the U.S. Department of 
Health and Human Services (HHS), saw a media opportunity. A shipment of 
two million tablets was due to arrive at John F. Kennedy International 
Airport in New York City.

``I would like to get photos of the product coming off of the FedEx 
plane so we can be prepared to support the story with visuals if this 
turns out the way we hope,'' wrote Waters.

Lenihan of the FDA told the group of health officials that ``if it is 
the product we think it is and it is not toxic we will release it to 
ASPR''--the Assistant Secretary for Preparedness and Response, a 
division within HHS.

Reached by email, Lenihan referred Reuters back to the FDA press 
office. Waters did not respond to an email seeking comment.

One of the participants in the March 21 email discussion appeared to 
raise the issue of which agency should get credit for the deal. Joseph 
Hamel, ASPR's manager of strategic innovation and emerging technology, 
asked in an email to the group: ``How do you want to handle? FDA win? 
ASPR win? Happy either way, please let us know.''

Hamel did not return an email seeking comment.

Asked about the email exchanges, an HHS spokesman echoed the FDA's 
statement, saying the agency would not comment on ``alleged, leaked 
emails.''

``GROSS FAILURE''

The pills and ingredients welcomed by the administration had origins 
that should have raised red flags and prompted greater scrutiny, said 
the three sources who spoke to Reuters.

In 2015, Bayer's plant in Pakistan, Bayer Pakistan Private Ltd, was 
cited by that country's regulators for making Resochin that was lower 
in potency than labeled, according to inspection documents reviewed by 
Reuters.

A whistleblower complaint led to the discovery of more than 21 million 
Resochin tablets that were too weak, more than 12% under the specified 
weight of 400 milligrams, according to the Pakistani regulatory 
records.

Officials blamed the problem on a ``gross failure'' of manufacturing 
operations, citing improperly calibrated machines, poorly trained 
workers and insufficient staffing. Weak medications can fail to treat 
the illness for which they're prescribed and harm patients.

The investigation was ultimately resolved with Bayer's agreement to 
destroy the 21 million doses.

Regarding the 2015 incident, the company told Reuters: ``All batches 
produced with lower content due to an error in production were never 
released, the corresponding batches destroyed.''

According to FDA records reviewed by Reuters, the active ingredients 
for the drug are made at a plant in Indore, India, run by Ipca 
Laboratories Ltd, an Indian drug manufacturer and ingredient supplier 
that exports its products globally.

In 2016, the FDA issued a warning letter to Ipca regarding three of its 
plants in India that make chloroquine ingredients and finished pills 
for companies other than Bayer. The plants did not include the one 
making the active ingredient for Bayer's Resochin. Nonetheless, the 
U.S. government sources said, Ipca's troubled history calls into 
question its general practices.

The FDA found the company was deleting, manipulating, and fabricating 
laboratory data, according to the agency's records. The company vowed 
at the time to ``resolve these issues at the earliest.''

In 2017, the agency restricted drugs and ingredients from those three 
plants from entering the U.S. market, a regulatory sanction called an 
import alert. Then in August 2019, the FDA accused one of the Ipca 
plants of a ``cascade of failure'' for not properly maintaining its 
quality data, agency records show.

Ipca did not respond to questions from Reuters about its track record 
with the FDA.

On March 20, a day after Trump praised the antimalarial drug from the 
podium, the FDA lifted its import alert for Ipca's chloroquine 
ingredients and completed tablets from the three restricted plants, 
according to a March 21 statement filed by Ipca with the Indian stock 
exchange.

The company pledged in the statement to adhere to stringent 
manufacturing standards, ``and thus help mankind in the best possible 
way in these testing times.''

                                 ______
                                 

                    From Vanity Fair, April 24, 2020

  ``Really Want to Flood NY and NJ'': Internal Documents Reveal Team 
                    Trump's Chloroquine Master Plan

                           By Katherine Eban

        Forget testing, ventilators, and PPE. Donald Trump's big plan 
        to beat COVID-19 involved distributing millions of doses of an 
        unproven drug. Behind the scenes, senior administration 
        officials pushed hard to bend the rules and back up his boasts.

On the afternoon of Saturday, April 4, President Trump stood at the 
White House podium and escalated his marketing blitz on behalf of 
hydroxychloroquine, hyping the old malaria drug's alleged promise in 
treating COVID-19, as well as his administration's success in acquiring 
huge amounts of it.

``We have millions and millions of doses of it--29 million to be 
exact,'' he said, as the official tally of COVID-19 cases in the U.S. 
topped 260,000 and governors across the country pleaded for federal 
support to acquire tests, ventilators, and protective gear for health 
care workers. ``We're just hearing really positive stories, and we're 
continuing to collect the data.'' That evening, according to emails 
obtained by Vanity Fair, Trump's political appointees would ramp up the 
pressure on career health officials to make good on the President's 
extravagant promises, despite clear warnings from federal clinicians 
about the risks and unproven benefits of chloroquine-based treatments 
for COVID-19.

Vanity Fair has assembled this account based on documents and 
interviews provided by multiple federal officials with knowledge of 
internal Trump administration proceedings.

The President had been touting hydroxychloroquine for weeks, sparking 
worldwide shortages of the drug and prompting negotiations with Indian 
prime minister Narendra Modi to lift export restrictions on its active 
ingredients. But on March 24, the federal government's top interagency 
working group of clinicians and scientists privately threw cold water 
on his claims, according to a federal official with knowledge of the 
working group's deliberations. In an internal consensus statement, a 
medical countermeasures group within Health and Human Services 
recommended that chloroquine-based COVID-19 treatments should be 
studied only in controlled, hospital-based clinical trials, as their 
safety and efficacy was ``not supported by data from reliable clinical 
trials or from non-human primates'' and carried ``potential risks.'' 
The medicines-which are used to treat malaria as well as autoimmune 
conditions such as lupus-can have serious side effects, including heart 
arrhythmias.

And yet, just hours after that April 4 press conference, White House 
officials pushed ahead with a massive behind-the-scenes pressure 
campaign on the government's top health officials to deliver huge 
amounts of chloroquine drugs to just about anyone who wanted them, 
according to documents reviewed by Vanity Fair. That night, Brett 
Giroir, the assistant secretary for health in the Department of Health 
and Human Services, sent an email with the subject line 
``Hydroxychloroquine'' to a group including FEMA administrator Pete 
Gaynor, HHS assistant secretary for preparedness and response Robert 
Kadlec, and Navy Rear Admiral John Polowczyk, who leads a supply-chain 
task force at FEMA.

The email read:

_______________________________________________________________________

WH call. Really want to flood NY and NJ with treatment courses. 
Hospitals have it. Sick out patients don't. And can't get. So go 
through distribution channels as we discussed. If we have 29 million 
perhaps send a few million ASAP? WH wants follow up in AM. We can get a 
lot more of this. Right Bob? Millions per week?

_______________________________________________________________________

The emails indicate that the administration's top health officials were 
closely involved in a frenzied effort to make unproven chloroquine 
treatments widely available, even though the FDA's new emergency rule 
limited distribution of the drug as a COVID-19 treatment to 
hospitalized patients. One hour after the first email, Gaynor replied 
to Kadlec, Giroir, and Polowczyk, seeming to suggest that FDA 
commissioner Stephen Hahn was on board with expanding COVID-19 
patients' access to the drug: ``Hahn asked to distribute to hospitals 
and the drug stores.''

In a second email that appears to have been sent the same night, Gaynor 
indicated that he was working closely with Rear Admiral Polowczyk: ``Me 
and Adm P are on it. More to follow in the am.''

A FEMA spokesperson did not answer questions about the involvement of 
Pete Gaynor or other officials in the chloroquine plan but said, ``FEMA 
does not maintain stocks of medicine.'' In response to a request for 
comment, an FDA spokesman responded: ``Given increased demand, Dr. Hahn 
considered whether the donated drugs could be distributed in the 
commercial market to ensure a stable supply for malaria, lupus, and 
rheumatoid arthritis patients.''

An HHS spokesperson said that, while clinical trials of the drugs 
proceed, some of the government's hydroxychloroquine ``was provided to 
wholesale distributors to further supply hospitals as well as retail 
pharmacies that were experiencing product shortages for people who use 
the drug for the maintenance of chronic conditions such as rheumatoid 
arthritis and lupus.'' The spokesperson added that the hospitals and 
pharmacies that receive donated medications are not permitted to 
``charge for the drug itself.''

The White House did not respond to a request for comment.

The intra-White House battle over the use of chloroquine drugs for 
treating COVID-19 broke into the open in dramatic fashion on April 21, 
when the administration's top coronavirus vaccine developer, Rick 
Bright, was pushed out of his position as the head of the Biomedical 
Advanced Research and Development Authority (BARDA), a small agency 
within HHS that partners with private scientific ventures to create 
vaccines, drugs, and diagnostics. The next day Bright issued a 
statement, first reported by The New York Times, stating that he was 
fired for resisting efforts ``to fund potentially dangerous drugs 
promoted by those with political connections.''

``Specifically, and contrary to misguided directives,'' he said, ``I 
limited the broad use of chloroquine and hydroxychloroquine, promoted 
by the administration as a panacea, but which clearly lack scientific 
merit.'' On April 23, attorneys for Bright said they would file a 
formal whistleblower complaint on his behalf.

Even before Trump began making public statements from the podium, his 
political appointees had begun rallying around the idea of amassing 
chloroquine drugs to treat COVID-19, despite the paucity of evidence 
for their benefits. On March 18, according to records obtained by 
Vanity Fair, the German drug manufacturer Bayer first petitioned the 
FDA to let it donate millions of doses of a chloroquine drug called 
Resochin. Normally such a move would be prohibited since the FDA had 
never inspected the plant in Karachi, Pakistan, where Resochin is made. 
But the FDA set aside its usual safeguards and approved the donation, 
after sampling and testing the drugs to make sure they met U.S. 
standards. On March 19, Bayer issued a press release to announce that 
it was ``working with appropriate agencies on an Emergency Use 
Authorization for the drug's use in the U.S.''

The next day Trump first spoke of hydroxychloroquine from the White 
House podium, citing its ``very, very encouraging early results. And 
we're going to be able to make that drug available almost 
immediately.'' Because the drug had ``been around for a long time,'' he 
added, ``if things don't go as planned, it's not going to kill 
anybody.'' Trump said he had spoken the night before with New York 
governor Andrew Cuomo about the drug's promise, and ``he wants to be 
first on line.''

Inside the administration, as the White House cobbled together a plan 
to make chloroquine drugs widely available to the American public, 
Trump's political appointees began exerting tremendous and unwelcome 
pressure upon career health officials. As part of the plan, Oracle, the 
technology company co-founded by billionaire Trump fundraiser Larry 
Ellison, designed and built an app to collect data from physicians and 
patients tracking the response to various experimental treatments for 
COVID-19. (A source familiar with Oracle's app called it ``an 
information collector; it does not recommend therapies or treatment 
plans.'')

Under the plan, which set off alarm bells within the health agencies, 
chloroquine drugs would be available to patients through pharmacies, 
not just to hospitalized patients. ``There wasn't a plan for physician 
oversight or monitoring,'' one federal official told Vanity Fair. 
``That's what concerned clinicians the most. Career FDA, NIH, CDC, and 
BARDA [personnel] were all very concerned about lack of physician 
oversight or adverse event monitoring with the expanded-access 
program.''

On the evening of March 23, the FDA's chief counsel, Stacy Amin, 
emailed lawyers and other officials within HHS, the National Institutes 
of Health, and the FDA, urging action. The proposal that she relayed, 
as she spelled it out, was to have BARDA sponsor what is called an 
investigational new drug study. An IND permits a new drug in 
preclinical development to be shipped across state lines to be studied. 
In this case the IND would have covered an old drug with a potential 
new use. Amin, who served as a special assistant to President Trump 
before assuming her current role at the FDA in September 2018, wrote, 
``The President is announcing this tonight and I believe the WH would 
like it set up by tomorrow with data to flow into the Oracle 
platform.'' She then asked, ``What needs to be done and what 
requirements do we think can be waived or use enforcement discretion?''

According to the FDA's spokesman, ``The FDA, including Ms. Amin, has 
discussed and explored various ways to collect this data but ultimately 
did not support doing it through an IND, has not waived any regulatory 
requirements, and never sought any unapproved use of the drugs that 
wouldn't be under doctor supervision in connection with this or other 
related efforts.''

The order to implement such a complex and unorthodox plan on a 
timetable driven by the President's press announcements stunned 
numerous BARDA employees. Within hours, one official wrote to a 
colleague, ``We have been hit by a bus. Now we hit back.'' He said he 
would try to amend the proposal and find a ``workable'' solution.

Days of debate ensued as employees within the agency pushed back.

By late March, health officials across multiple agencies had settled on 
an alternate plan, which they viewed as safer for patients. On March 
28, the FDA issued an emergency use authorization (EUA) to allow 
chloroquine drugs from the Strategic National Stockpile to be 
administered to hospitalized COVID-19 patients who could not access 
clinical trials. The stockpile is a cache of equipment and supplies 
managed by HHS that can be accessed in the event of medical 
emergencies.

In the statement related to his firing, Rick Bright seemed to refer to 
that authorization when he wrote, ``I rightly resisted efforts to 
provide an unproven drug on demand to the American public. I insisted 
that these drugs be provided only to hospitalized patients with 
confirmed COVID-19 while under the supervision of a physician.''

But top officials were not satisfied with the more restrictive approach 
and kept pushing for more widespread distribution of the drug. In an 
email that appears to have been addressed to Gaynor at some point after 
the emergency use authorization was issued, Brett Giroir argued 
strongly against limiting the drugs to hospitals. ``NOPE. Needs to go 
to pharmacies as well,'' he wrote. ``The EUA matters not. The drug is 
approved [and] therefore can be prescribed as per doctor's orders. That 
is a FINAL ANSWER.''

Giroir's rationale for ignoring FDA limitations appeared to hinge on a 
technicality: Because chloroquine is FDA-approved for conditions 
including malaria and lupus, doctors could technically prescribe it for 
any ``off-label'' treatments they saw fit. He added, presumably in 
reference to shortages prompted by Trump's P.R. campaign, ``And 
pharmacies need it for ON LABEL use as well.''

According to Dr. Adarsh Bhimraj, head of the neurologic infectious 
diseases section of the Cleveland Clinic, the impulse to rush untested 
medicines to patients is understandable but unwise. ``These people are 
sick. We want to do something,'' he said, drawing on his own experience 
treating patients with COVID-19. Nevertheless, he added, ``It's 
important as clinicians that we step back, reflect, and pause. Let's 
look at the evidence before we prescribe any medications.''

Dr. Bhimraj chaired the panel for the Infectious Diseases Society of 
America that recently issued treatment guidelines stating COVID-19 
patients should only get treated with chloroquine drugs in hospital-
based clinical trials. Based on the human data so far, he said, ``We 
don't know if the benefits outweigh the harm,'' and only ``double-
blinded, placebo-controlled studies'' can answer that question.

As HHS prepared to announce donations of chloroquine to the Strategic 
National Stockpile, and chalk up a ``win'' for the White House, safety 
concerns dogged the plan.

The FDA's chief of staff, Keagan Lenihan, emailed a group of federal 
officials including Amin to warn that after the chloroquine pills 
donated by Bayer arrived at John F. Kennedy International Airport in 
New York, they would need to be quarantined and tested. ``If it is the 
product we think it is and it is not toxic we will release it'' to the 
office that oversees the national stockpile, Lenihan wrote. 
``Apparently, where Bayer is getting this product from is a 
manufacturing facility they use for Africa.'' In fact, the facility in 
question is used to supply the Pakistan market, and has been inspected 
by Pakistani regulators, not the FDA. Lenihan continued, ``Potentially 
serious issues with product so let's be careful when we take that 
win.'' Bayer has previously pointed out that the FDA tested Resochin 
``and found it to be of appropriate quality for release to the 
(stockpile) for emergency use.''

As health officials navigated a minefield of long-standing regulations 
that were impeding the White House campaign, the message from the 
presidential podium was exultant: Trump had zeroed in on a potential 
cure and had slashed red tape to speed it to patients in need. On April 
4, the President declared that the tech giant Oracle had donated a 
``very sophisticated'' web portal to gather real-time data on how 
patients were responding to the new treatments.

Since then, a steady drumbeat of small-scale studies and medical 
recommendations has cast increasing doubt on the treatment that Trump 
once hailed as a ``game-changer.'' On April 21, a study of 368 COVID-19 
patients at veterans hospitals showed that about 28% of those treated 
with hydroxychloroquine died, compared with 11% of those who didn't 
receive the medication.

On the same day the National Institutes of Health issued detailed 
treatment guidelines, stating, ``There are insufficient clinical data 
to recommend either for or against using chloroquine or 
hydroxychloroquine for the treatment of COVID-19.'' The agency advised 
clinicians using the drugs to closely monitor patients for adverse 
effects, particularly cardiac risks.

Whether owing to the accumulation of evidence against 
hydroxycholoroquine's efficacy, the resistance of career health 
officials, or something else entirely, the Trump administration appears 
to have dropped its crusade on behalf of the purported miracle cure-at 
least for now. It's been over a week since the president last used a 
daily coronavirus briefing to promote the drug. This week, the U.S. 
death count from COVID-19 is expected to pass 50,000.

                                 ______
                                 

                     From Vanity Fair, May 5, 2020

  ``Political Connections and Cronyism'': In Blistering Whistleblower 
      Complaint, Rick Bright Blasts Team Trump's Pandemic Response

                           By Katherine Eban

        Two weeks after being pushed out of his post, the former head 
        of a $1.5-billion federal health agency formally accuses top 
        officials of pressuring him to approve unproven chloroquine 
        drugs and award pricey contracts to friends of the 
        administration.

He was pressured to invest in drugs and vaccines that lacked scientific 
merit, because the people selling them had friends in the Trump 
administration, up to and including the President's son-in-law, Jared 
Kushner. He was forced to transfer funds to acquire drugs for the 
Strategic National Stockpile, America's most important reserve of 
lifesaving medications, based not on health needs but on ``political 
connections and cronyism.'' He was instructed to use his department's 
budget to purchase flu medications of questionable efficacy. And when 
the COVID-19 crisis erupted, he was pressured to approve a plan that 
would ``flood'' cities with unproven and untested doses of chloroquine 
drugs, from uninspected manufacturing plants in Asia. When his efforts 
to work through the system failed, he decided he had a ``moral 
obligation to the American public'' to ring the alarm about the plan, 
``which he believed constituted a substantial and specific danger to 
public health and safety.'' In retaliation, he was ``smeared,'' with 
officials unfairly accusing him of dropping the ball on vaccine 
development and PPE preparation.

These are just some of the allegations contained in a blistering, 63-
page complaint that Dr. Rick Bright, former head of the Biomedical 
Advanced Research and Development Authority (BARDA), filed today with 
the U.S. Office of Special Counsel. According to his lawyers, Bright 
will testify before Congress next week.

Vanity Fair has submitted requests for comment to the White House and 
the Food and Drug Administration, and will update this article with any 
responses. In a statement, Department of Health and Human Services 
spokesperson Caitlin Oakley said: ``Dr. Bright was transferred to NIH 
to work on diagnostics testing--critical to combatting COVID-19--where 
he has been entrusted to spend upwards of $1 billion to advance that 
effort. We are deeply disappointed that he has not shown up to work on 
behalf of the American people and lead on this critical endeavor.''

Bright has become the first high-level federal whistleblower to 
publicly allege that the Trump administration has responded to the 
COVID-19 crisis by unduly pressuring health officials, and putting 
politics and profit ahead of science. Bright, the government's top 
coronavirus vaccine developer, had spent a decade at BARDA, a small but 
powerful agency within the Department of Health and Human Services 
(HHS), whose mandate is to partner with private companies to help 
accelerate the development of vaccines, drugs, and diagnostics. 
According to Bright's complaint, BARDA manages almost $50 billion worth 
of contracts and acquisitions, on an annual budget of just over $1.5 
billion. He was named director in 2016.

On April 22, after HHS reassigned him to a smaller role at the National 
Institutes of Health, Bright alleged in a fiery statement that he had 
been sidelined because he ``resisted efforts to fund potentially 
dangerous drugs promoted by those with political connections.'' One of 
the drugs Bright identified in his statement was the malaria medication 
hydroxychloroquine, which President Trump had promoted extensively as a 
``game changer.'' Bright said he had ``rightly resisted efforts to 
provide an unproven drug on demand to the American public.''

His original statement prompted an immediate call for investigations. 
Rep. Frank Pallone Jr. (D-N.J.), chairman of the House Energy and 
Commerce Committee, asked the HHS inspector general to probe Bright's 
departure, and Rep. Anna G. Eshoo (D-CA.) announced that her 
subcommittee on health would hold congressional hearings.

Today's complaint goes much further, enumerating a series of instances 
in which politics encroached on science. According to the complaint, 
Bright's superiors at the Department of Health and Human Services began 
pressuring him to ``ignore expert recommendations and instead to award 
lucrative contracts based on political connections and cronyism,'' 
starting around the spring of 2017. Bright says he ``repeatedly 
clashed'' with his boss, Dr. Robert Kadlec, the assistant secretary for 
preparedness and response, over the ``outsized role'' played by 
Kadlec's friend John Clerici, a pharmaceutical consultant. That year 
Clerici tried to get Bright to renew a contract with one of his 
clients, Aeolus Pharmaceuticals, that was set to expire. ``In 
attempting to justify the extension of this failed contract,'' Bright 
says in his complaint, ``Mr. Clerici emphasized that Aeolus's Chief 
Executive Officer was a `wildcard' and a friend of Jared Kushner, 
President Trump's son-in-law and a Senior Advisor to the President.''

In a statement to The New York Times, Clerici said, ``I unequivocally 
deny all of the allegations lodged by Dr. Bright and his lawyers.''

Tensions escalated over the course of the next year, the complaint 
alleges, as Bright objected repeatedly to Kadlec's efforts to award 
multimillion-dollar contracts to Clerici clients. Last fall Bright 
``rejected pressure by Dr. Kadlec to invest millions of dollars in 
EIDD-2801, a drug developed at Emory University by a longtime friend of 
Dr. Kadlec. EIDD-2081 was presented as a `miracle cure' for influenza, 
Ebola, and nearly every other virus, even though the developer had not 
yet conducted clinical trials and no data had been compiled to 
demonstrate either the efficacy or safety of the drug in humans.'' That 
incident, the complaint says, further strained Bright's relationship 
with Kadlec, setting the scene for their eventual rupture over COVID-
19. ``The fact that Dr. Kadlec and his staff repeatedly made decisions 
to benefit those like Mr. Clerici and his clients, but which were not 
in the best interest of the health or safety of Americans, continued to 
be of tremendous concern to Dr. Bright,'' the complaint states.

The COVID-19 crisis only magnified the brewing conflict between 
scientific safeguards and political expediency. In a January 23 
meeting, Bright demanded urgent access to funding, personnel, and 
clinical specimens necessary to develop lifesaving medicines for use in 
a possible pandemic. He was met with reassurances from HHS brass that 
the virus's spread was under control, according to the complaint. Also 
in January, Mike Bowen, the co-owner of a leading mask manufacturer 
named Prestige Ameritech, offered to scale up production of N95 masks. 
``U.S. mask supply is at imminent risk,'' Bowen told Bright, according 
to the complaint. Bowen reached out again and again in the coming days, 
but Bright was unable to get Kadlec and HHS to take the threat 
seriously, the complaint states, leading Bowen to write to Bright, 
saying, ``Rick, I think we're in deep shit.''

Bright's allegations, and his refusal to accept his demotion quietly, 
come as the Trump administration continues to muzzle scientists and 
remove government watchdogs. On Friday, House Democrats said that the 
White House had blocked the government's top infectious disease expert, 
Dr. Anthony Fauci, from testifying at an upcoming appropriations panel 
hearing. That same day Trump nominated a new Health and Human Services 
inspector general, effectively replacing the acting official who had 
issued a report in early April confirming that hospitals around the 
country were experiencing widespread shortages of critical medical 
supplies and protective equipment. The administration had denied that 
such shortages existed.

The crisis at BARDA came to a boiling point after top agency health 
officials found themselves under immense pressure to fulfill a vision 
that Trump had outlined from the White House podium: to build a 
stockpile of repurposed malaria drugs, hydroxychloroquine and 
chloroquine, that he claimed had ``very, very encouraging early 
results.''

There was scant evidence of the drug's utility--and plenty of questions 
about its safety as a treatment for COVID-19. Chloroquine drugs, which 
are used to treat malaria as well as autoimmune conditions such as 
lupus, can have serious side effects, including heart arrhythmias. One 
infectious disease doctor described hydroxychloroquine as a ``zombie 
drug,'' advanced as a possible treatment for acute respiratory distress 
in various outbreaks, including the H5N1 and H7N9 strains of avian flu, 
with disappointing results. ``It's back every seven years.''

It is unclear what, exactly, drew Trump administration officials to 
double down on hydroxychloroquine as a potential game-changing cure. On 
March 13, a Google Doc on the use of chloroquine drugs, which had been 
cobbled together by a cryptocurrency investor and a New York City 
lawyer, drew the attention of billionaire inventor Elon Musk, who 
tweeted about it on March 16.

By March 17, according to documents obtained by Vanity Fair, officials 
within HHS were already working to corral donations of the drug, though 
they seemed to know it was unlikely to amount to a miracle cure. ``Not 
a blockbuster drug for this fight, but a good drug'' is how Joe Hamel, 
the manager of strategic innovation and emerging technology at the 
Assistant Secretary of Preparedness and Response (ASPR), a division 
within HHS, described chloroquine treatments in an email to colleagues.

The next day a health scientist at BARDA noted to colleagues that the 
guidance from two HHS working groups was to ``wait for clinical data on 
the numerous clinical trials that are ongoing before making 
recommendations on the use of chloroquine for COVID-19. Currently, 
there is no data available to support that chloroquine provides 
clinical benefit in the treatment or prevention of COVID-19.''

But Trump did not wait. On March 19, he first touted the drug at a 
White House press conference, setting off a crisis that ricocheted from 
the Food and Drug Administration (FDA) to HHS to BARDA, as staff looked 
to circumvent safeguards and load up the Strategic National Stockpile 
with millions of doses, procured from far-flung manufacturing plants 
around the globe. (The Strategic National Stockpile is a cache of 
equipment and supplies managed by HHS that can be accessed in the event 
of medical emergencies.)

This left Dr. Bright, and other top administration health officials, 
scrambling for answers to urgent questions about the quality, safety, 
and efficacy of the drugs. The debate played out inside contentious 
White House coronavirus task force meetings and a flurry of emails, as 
documents obtained by Vanity Fair reveal.

According to Dr. H. Clifford Lane, deputy director for clinical 
research and special projects at the NIH's National Institute of 
Allergy and Infectious Diseases (NIAID), the administration proposed 
that the NIH launch a massive study involving as many as tens of 
thousands of patients. It was an idea that the NIAID flatly rejected. 
``We were very keen to do some studies, to figure out what effect the 
drug does have,'' Lane says, ``but in the traditional way we do it''--
meaning via smaller-scale studies on hospitalized patients who could be 
closely monitored and evaluated.

Nonetheless, on or around March 23, administration officials devised a 
plan for Bright's agency, BARDA, to sponsor a new experimental drug 
study, under which the chloroquine drugs could be widely disseminated.

The scheme set off a furious round of debate within HHS, as BARDA 
officials pushed back, concerned that broad use of the drug could pose 
a clinical danger to the American public.

By late March, health officials across multiple agencies had settled on 
an alternate plan, which they viewed as safer for patients. On March 
28, the FDA issued an emergency use authorization (EUA) to allow 
chloroquine drugs from the Strategic National Stockpile to be 
administered to hospitalized COVID-19 patients who could not access 
clinical trials. As Bright said in a statement on his firing, ``I 
insisted that these drugs be provided only to hospitalized patients 
with confirmed COVID-19 while under the supervision of a physician.''

But top officials appear to have ignored the restriction that Bright 
fought to insert into the FDA's emergency rule. As Trump continued to 
expound on the benefits of hydroxychloroquine from the podium, they 
worked behind the scenes to move thousands of doses from the stockpile 
into the nation's retail pharmacies, where patients could access the 
drug with a simple doctor's prescription. In part, this was intended to 
assist non-COVID-19 patients struggling with shortages prompted by the 
president's promotion of the drug, but there was also discussion of 
``off-label'' prescriptions for treatment of the novel coronavirus.

On April 5, Navy Rear Admiral John Polowczyk, who leads a supply-chain 
task force at FEMA, spelled out the distribution plan in an email to 
top administration colleagues: ``Distro to Hospitals and retail 
pharmacies and geography: NYC area--100k to hospitals, 150k to retail 
Detroit--50k to hospitals, 100k to retail Chicago--50k to hospitals, 
NO--20k hospitals--50k retail Total hospitals--220k hospitals, 400k 
retail. Total 620k first shipments.''

This resulted in a query from an official within ASPR's Strategic 
National Stockpile division: ``All, just wanted to assure everyone is 
aware that the EUA,'' the FDA's emergency rule, ``for 
hydroxychloroquine and chloroquine appears to limit use to the 
treatment of hospitalized patients.'' A FEMA spokesperson referred 
questions about the distribution plan described by Polowczyk to HHS and 
the FDA.

But with Trump cheerleading wide use of the drug, his top appointees 
appeared uninterested in the more restrictive fine print. Only after a 
study of veterans with COVID-19 found that patients treated with 
chloroquine died at twice the rate of those who didn't get the drug did 
Trump scale back his cheerleading. By then Rick Bright had fought all 
he could within the system to limit the drug's use. Within a week of 
the study's publication, Bright had been pushed out of BARDA and 
decided to blow the whistle.

                                 ______
                                 

                     From Vanity Fair, May 14, 2020

``He Was Fired for Being Right'': Rick Bright Warns Congress ``Time Is 
                  Running Out'' to Contain Coronavirus

                           By Katherine Eban

        As Trump rage-tweeted and representatives bickered amid bottles 
        of hand sanitizer, the ousted head of BARDA described trying to 
        mount an effective federal response to COVID-19--and paying a 
        heavy price.

The United States could be facing ``the darkest winter in modern 
history,'' according to testimony this morning by Dr. Rick A. Bright, 
the federal government's top vaccine developer turned whistleblower. 
Speaking in steady, measured tones at a widely anticipated hearing 
before the House Energy and Commerce Committee's Subcommittee on 
Health, Bright warned that, without a ``standard, centralized, 
coordinated plan to take our nation through this response'' to the 
COVID-19 crisis, the federal government risked a resurgence of the 
virus that could ``be devastating.''

``The window is closing to address this pandemic,'' Bright testified. 
``Time is running out because the virus is still spreading 
everywhere.''

The hearing marked the first time that a top government scientist has 
testified candidly, and in unstinting detail, about the shortcomings of 
a federal response that, as Bright described it, has been dominated by 
politics, cronyism, and falsehoods, rather than science.

Members of Congress, wearing latex gloves and masks and seated amid 
containers of Clorox wipes and hand sanitizers, sparred over the claims 
made by Dr. Bright, who remained calm throughout the more-than-three-
hour hearing. Wearing a gray suit and crisp red tie, he testified that 
the administration needed to ``be truthful with the American people'' 
about the ``real risk and dire consequence of this virus.''

Asked by Rep. Anna Eshoo (D-CA), the committee chairwoman, to say 
whether the Trump administration's response to the pandemic had been a 
success or a failure, Bright paused, then said, ``I believe we could 
have done better. . . . There are critical steps we did not take in 
time.'' However, there was no mistaking his view of the 
administration's failures. As he testified later in the hearing, ``We 
don't have a single point of leadership right now . . . and we don't 
have a master plan for this response.''

His stark testimony came in a week when Dr. Anthony Fauci, alongside 
other top health officials, testified before a Senate panel and warned 
that reopening the economy too soon could lead to a resurgence ``that 
you may not be able to control.''

On Tuesday the U.S. Office of Special Counsel stated in a letter to 
Bright's lawyers that it had found a ``substantial likelihood of 
wrongdoing'' by the Department of Health and Human Services in removing 
Bright as head of the Biomedical Advanced Research and Development 
Authority, a small but powerful agency within HHS, whose mandate is to 
partner with private companies to help accelerate the development of 
vaccines, drugs, and diagnostics. BARDA manages almost $50 billion 
worth of contracts and acquisitions, on an annual budget of just over 
$1.5 billion. Bright was named director in 2016.

The OSC has given the HHS secretary, Alex Azar, 60 days to conduct an 
investigation into Bright's removal and report his findings. On April 
22, after HHS reassigned him to a smaller role at the National 
Institutes of Health, Bright alleged in a fiery statement that he had 
been sidelined because he ``resisted efforts to fund potentially 
dangerous drugs promoted by those with political connections.'' Chief 
among those drugs was the malaria medication hydroxychloroquine, which 
President Trump had promoted extensively as a ``game changer.''

On May 5, Rick Bright filed a 63-page whistleblower complaint with the 
OSC. That unleashed a furious public relations battle within Health and 
Human Services to contain the fallout from his allegations, and to 
paint Bright as a mediocre leader of BARDA who served as an obstacle to 
innovation, rather than as a steward of it.

In a three-page statement issued this morning, HHS said it ``strongly 
disagrees'' with Dr. Bright's allegations, and accused him of working 
with ``partisan attorneys who are politicizing the response to COVID-
19. His whistleblower complaint is filled with one-sided arguments and 
misinformation.'' The statement also accused him of continuing to draw 
a government salary and failing to take up the new position offered to 
him. ``Rick Bright has chosen to stay home,'' the statement said.

In a statement, Dr. Bright's lawyers countered HHS' claims, saying that 
Dr. Bright ``never refused'' to report to his new post at the National 
Institutes of Health and planned to do so next week, unless HHS 
secretary Alex Azar ``grants a stay of his reassignment,'' as requested 
by the Office of Special Counsel. They also added, ``Rather than 
investigating Dr. Bright's serious allegations of wrongdoing . . . HHS 
leadership has decided to lodge baseless allegations against him in an 
effort to distract attention'' from essential issues that should be 
addressed to save lives.

This morning, in anticipation of today's hearing, President Trump 
tweeted, ``I don't know the so-called Whistleblower Rick Bright, never 
met him or even heard of him, but to me he is a disgruntled employee, 
not liked or respected by people I spoke to and who, with his attitude, 
should no longer be working for our government!''

In her opening statement, Rep. Eshoo said that Bright had filed ``one 
of the most specific and troubling whistleblower complaints I have ever 
seen,'' and stated, ``He was fired for being right.''

Rep. Michael Burgess (R-TX) accused Rep. Eshoo of trampling on minority 
rights and of ``procedural fouls'' in setting up the hearing.

Over the course of three hours, Bright testified that his urgent 
warnings to top Health and Human Services officials from January 
through March about a critical shortage of needed supplies--from 
syringes and swabs to personal protective equipment for health care 
workers--led to his being cut out of key, high-level meetings. ``I was 
told that my urgings were causing a commotion, and I was removed from 
those meetings,'' he said.

But he said it was his opposition to a Trump administration plan to 
promote broad access to an unproven and potentially dangerous drug, 
chloroquine, for use in treating COVID-19, that led to his removal from 
his post at BARDA.

The battle over hydroxychloroquine within the administration began in 
mid-March, as President Trump hailed the malaria drug as a ``game 
changer'' for COVID-19, a claim that sparked worldwide shortages of the 
drug and a frantic effort inside the administration to build a 
stockpile of the medicine and find a way to disseminate it widely.

Regulations and long-relied-upon safeguards stood in the way, as career 
health officials at HHS and the FDA faced tremendous pressure to help 
implement the Trump administration's plan. Top officials clashed over a 
push for the FDA to approve a donation from Bayer of 3 million pills of 
a chloroquine drug, Resochin, which had been made in manufacturing 
plants in India and Pakistan that had never been inspected by the FDA.

At BARDA, Bright was asked to sponsor an investigational new drug 
study, as a legal and organizational mechanism to disseminate the 
drugs. Bright pushed back, saying that he opposed a plan that would 
allow Americans wide access to the drugs without close supervision from 
their doctors.

As he testified at today's hearing, it was a lack of limited clinical 
data as well as concerns about the drug's known cardiac risks that made 
him push for ``carefully controlled clinical studies under the close 
watchful eye of a physician.''

Bright went on to say that he was removed, in part, in retaliation for 
pushing back against making chloroquine drugs more widely available to 
Americans, even those who might not actually be infected, outside of 
more closely supervised hospital settings.

Bright testified that he had been briefly reassured when the FDA passed 
an emergency rule that required chloroquine drugs in the stockpile to 
be used only for hospitalized patients. But he said his ``concerns were 
escalated'' once he learned that HHS leadership continued to push to 
make the drugs available outside of that rule.

Expressing those concerns, he testified, was ``the straw that broke the 
camel's back.''

Asked by Rep. John Sarbanes (D-MD) about what needed to be done to 
improve the government's response, Bright said, ``We need to unleash 
the voices of the scientists in our public health systems in the United 
States so they can be heard.''

                                 ______
                                 

                     From Vanity Fair, May 27, 2020

  ``I'll Send You the Contact'': Documents Expose FDA Commissioner's 
Personal Interventions on Behalf of Trump's Favorite Chloroquine Doctor

                           By Katherine Eban

        Looking past concerns about the drug's safety, not to mention 
        his own agency's recommendations, Stephen Hahn took time during 
        the COVID-19 crisis to lend a helping hand to Dr. Vladimir 
        Zelenko, a hero among fringe Trumpworld figures.

It was Sunday, April 5, and Dr. Stephen Hahn, the commissioner of the 
U.S. Food and Drug Administration, faced a world of problems. Less than 
two months after the first American death from COVID-19, the U.S. 
health care system was under siege, with more than 300,000 confirmed 
cases of the new disease-the most of any nation in the world-and almost 
10,000 deaths. Hahn was under fire over faulty test kits the FDA had 
approved, and angry members of Congress were demanding that his agency 
prevent the hoarding of an old malaria drug called hydroxychloroquine, 
which President Trump was hyping without evidence as a miracle cure.

Nevertheless, Dr. Hahn found time that afternoon to carry out an 
unusual mission. He contacted an obscure family practitioner in Monroe, 
New York, with whom he had never before been in touch, to ask if the 
doctor had ``time for a quick call.'' Once on the phone with Dr. 
Vladimir Zelenko, Hahn posed a question: How could he--the commissioner 
of a federal health agency with a $5.7-billion annual budget and the 
responsibility to safeguard the nation's drugs, medical devices, and 
food supply--be of help?

Zelenko was a 46-year-old ``simple country doctor,'' as he described 
himself to The New York Times, who claimed to have witnessed positive 
results after prescribing a cocktail of drugs including 
hydroxychloroquine to patients in the Orthodox Jewish community of 
Kiryas Joel, New York. His message aligned perfectly with the 
pronouncements Trump had been making from the White House podium: that 
hydroxychloroquine, when used early and liberally, was a game-changing 
treatment for COVID-19. That, in turn, had earned Zelenko a growing 
platform on right-wing media.

Two days after that first phone call, in a series of text messages 
obtained by Vanity Fair, Zelenko returned to Hahn for help setting up a 
clinical trial of some 750 outpatients at St. Francis Hospital in 
Roslyn, New York. ``The Catholic Health System (St. Francis Hospital)/
Dr. Zelenko COVID-19 trial is ready to go,'' Zelenko wrote to Hahn, 
copying one of the hospital's doctors involved in the trial. ``We need 
ASAP 1. Hydroxychloroquine 200mg. 10,000 pills 2. Azithromycin 500mg 
5,000 pills 3. Zinc sulfate 220 mg 5,000 pills. This treatment will be 
deployed in outpatient primary care.''

Hahn responded, ``Not sure what the ask of FDA is.'' To which Zelenko 
replied, ``We need the medication to run the study.'' Hahn then asked, 
``Do you have IRB approval?'' This referred to an institutional review 
board that hospitals use to oversee clinical trials and research. The 
doctor answered, ``Hopefully this week.''

``Congratulations,'' Hahn offered. ``Really well done.'' He then 
advised the doctor to reach out to the Federal Emergency Management 
Agency (FEMA) to obtain hydroxychloroquine from the Strategic National 
Stockpile, a federal cache of emergency equipment and supplies managed 
by the Department of Health and Human Services (HHS). When the doctor 
expressed uncertainty over how to do that, Hahn offered, ``I'll send 
you the contact.''

Federal agency chiefs normally focus on high-level problems and 
solutions, delegating any ground-level efforts through the chain of 
command. Assisting with a lone clinical trial hardly seemed worthy of 
the commissioner's time. More troubling, perhaps, was the question of 
why Hahn-whose agency two weeks earlier had established restrictions on 
the use of certain chloroquine drugs in the national stockpile to 
hospitalized patients, as a way to avert potential risk to patients-
appeared to be bending over backward to assist a doctor who, in line 
with President Trump, was advocating unfettered use of the drug.

Hahn, 60, a radiation oncologist who previously served as chief medical 
executive of the University of Texas MD Anderson Cancer Center, has 
repeatedly insisted that he has felt no political pressure while 
carrying out his agency's pandemic response. ``I can assure you 100% 
that the President has never pressured me to make a decision regarding 
any regulatory aspect of the FDA's work,'' he recently told The 
Washington Post.

But Hahn's previously unreported intervention on behalf of Zelenko--who 
was both promoting a COVID-19 treatment that the government's top 
medical experts had warned against and seeking drugs that the FDA's own 
rules restricted--calls his claims of independence into doubt. ``I am 
pretty appreciative to Stephen Hahn,'' Zelenko told Vanity Fair in an 
interview. ``I think he helped in this process.''

The FDA declined Vanity Fair's request to interview Dr. Hahn. FDA 
spokesman Michael Felberbaum instead provided a statement: ``Throughout 
the pandemic, the FDA has heard from people across all levels of 
government, academia, industry, and the public interested in providing 
or seeking assistance or information from the agency. In that vein, Dr. 
Hahn and others at the FDA have connected with a variety of entities on 
ways to combat COVID-19 and put them in touch with the appropriate 
people for follow-up, including agency staff who assess the science and 
the data regarding potential prevention and treatment options.''

But experienced observers of the FDA find Hahn's conduct troubling. 
``The primary import of his action is to add the agency's scientific 
weight to these unproven claims put forth by Trump and Zelenko,'' said 
Dr. Peter Lurie, president of the Center for Science in the Public 
Interest and a former associate FDA commissioner. ``It feels like so 
much about Trump and this epidemic. You say one thing and you encourage 
something else. `We're providing it under restricted conditions, but--
wink-wink--you have little to fear in providing it in situations beyond 
that.' ''

In the weeks following their first phone call, as Hahn continued to 
assist Zelenko, the commissioner found himself a party to Zelenko's 
growing political entanglements. By April 26, Hahn had been copied on 
an email alongside Trump chief of staff Mark Meadows and former New 
York City mayor turned Trump lawyer Rudy Giuliani. The email was sent 
to Zelenko by Jerome Corsi, a right-wing conspiracy theorist who had 
been investigated as part of the Mueller probe. In it, Corsi--who is 
involved in a for-profit telemedicine platform where doctors prescribe 
hydroxychloroquine--expressed his anxieties about the ``heavy legal 
scrutiny'' facing the drug.

A growing body of clinical studies indicates that hydroxychloroquine is 
ineffective in treating COVID-19 and may actually increase mortality. 
The World Health Organization, the National Institutes of Health, the 
FDA, and the pharmaceutical company Sanofi, which sells 
hydroxychloroquine under the brand name Plaquenil, have all issued 
guidelines cautioning against the kind of early, prophylactic use of 
the drug that Trump has hyped and Zelenko advocates. On Friday a 
retrospective study of 96,000 COVID-19 patients on six continents, 
published in the medical journal The Lancet, found that hospitalized 
patients treated with hydroxychloroquine and an antibiotic--part of the 
drug combination Zelenko has plugged--were 45% likelier to die.

Zelenko claims that clinical trials of hydroxychloroquine with poor 
outcomes are part of a political conspiracy from a ``corrupted'' 
medical establishment, and are ``clearly designed to fail and to 
substantiate a false narrative.'' Last week Trump claimed, honestly or 
not, that he himself had been taking hydroxychloroquine.

President Trump began touting hydroxychloroquine from the White House 
podium on March 19, claiming there were ``very, very encouraging early 
results.'' Dr. Hahn, who was also present, offered a more measured 
assessment, stating that ``a large, pragmatic clinical trial'' could 
help answer the question of the drug's effectiveness.

His caution reflected the doubts of top federal clinicians and 
scientists. In early March, the director of the influenza and emerging 
infectious diseases division within HHS's Biomedical Advanced Research 
and Development Authority (BARDA) wrote to a colleague that the drug 
had ``not panned out to clinical benefit,'' according to an internal 
email obtained by Vanity Fair. Others flagged the drug's well-
established risk of cardiac arrhythmias.

Nonetheless, the White House was moving ahead with a plan to promote 
the drug and launch a vast clinical trial. On March 19, Trump alluded 
to that plan when he declared that the government would be ``quickly 
studying this drug . . . as it's given out to large groups of people, 
perhaps in New York and other places.''

Two days after that press conference, Dr. Zelenko uploaded a video to 
YouTube in which he addressed the president directly. Zelenko claimed 
that he had used hydroxychloroquine early on hundreds of patients, not 
a single one of whom had been hospitalized. He even advocated treating 
patients with his regimen of hydroxychloroquine, zinc, and azithromycin 
before confirming a diagnosis, as he believed clinical intuition was 
more important than a positive test. In the video, he told Trump, ``I 
am suggesting that you please advise the country that they should be 
taking this medication in an outpatient setting.'' He added, ``I 
personally love you.''

The day after Zelenko uploaded the video, Trump's chief of staff, Mark 
Meadows, contacted him to ask for his patient data. Meadows did not 
respond to an email seeking comment.

Two days later, on March 24, the federal government's top interagency 
medical countermeasures group recommended that chloroquine-based COVID-
19 treatments should be studied only in controlled, hospital-based 
clinical trials, as their safety and efficacy were ``not supported by 
data from reliable clinical trials'' and carried ``potential risks.'' 
On March 28, the FDA issued its EUA allowing chloroquine drugs from the 
Strategic National Stockpile to be administered only to hospitalized 
COVID-19 patients who could not access clinical trials.

Remarkably, the recommendation did nothing to curb the Trump 
administration's ambition to ``flood New York and New Jersey'' with 
treatment courses obtainable even at drugstores, as spelled out in a 
series of internal emails first obtained by Vanity Fair. Inside the 
federal government, career officials had been pushing back for weeks 
against a White House plan they considered dangerous, but by the 
evening of Saturday, April 4, it was clear that Hahn had fallen in line 
with the administration. ``Hahn asked to distribute to hospitals and 
the drug stores,'' FEMA administrator Peter Gaynor wrote to colleagues 
in an internal email.

It was the following day when Hahn first reached out to Zelenko.

Hahn's services on behalf of Zelenko included a personal introduction 
to the director of the National Library of Medicine, a division of the 
National Institutes of Health that oversees clinicaltrials.gov, the 
website where any legitimate clinical trial must be listed in order to 
publish study results in a peer-reviewed journal. In a statement, a 
spokesperson for the National Library of Medicine said that Zelenko had 
contacted the director, Patricia Flatley Brennan, and ``shared lessons 
learned from treating patients that he thought would be valuable to 
others. Dr. Brennan suggested that he write up a case report for 
publication.''

As Zelenko worked with St. Francis Hospital to hammer out the details 
of a clinical trial that would test his preferred cocktail of 
hydroxychloroquine, zinc, and one of two antibiotics--azithromycin or 
doxycycline--on COVID-19 outpatients, Hahn intervened. He shared the 
contact information for a FEMA official with hospital investigators, so 
St. Francis could obtain hydroxychloroquine directly from the Strategic 
National Stockpile.

``Stephen Hahn helped us get medication,'' Zelenko said. ``We were 
having trouble-he advised us who to talk to in FEMA.''

One current HHS official said of Hahn's intervention to help a single 
hospital get stockpiled drugs, ``That is way outside what one would 
consider normal for a commissioner to do. . . . I have never heard of 
anyone at FDA doing anything like that.''

Dr. Avni Thakore, a cardiologist at St. Francis Hospital and the 
study's principal investigator, told Vanity Fair that the study of 
hydroxychloroquine in COVID-19 patients seemed like a natural fit for 
the hospital, which has a national reputation in cardiac care. ``It is 
a safety protocol,'' she said of the study, which plans to remotely 
monitor the heart rhythms of trial enrollees by providing them with 
mobile electrocardiogram devices. She also emphasized that the trial 
was inspired not only by Zelenko's clinical observations, but also by 
other sources: ``early results from some small studies, and 
observational reports, doctors sharing their observations, all of that 
combined.''

As Zelenko's celebrity grew, he became a fixture on podcasts hosted by 
Jerome Corsi and, through him, Rudy Giuliani. Before long, Corsi 
himself would contact Hahn.

Corsi, who obtained a Ph.D. in political science from Harvard in 1972, 
is the best-selling author of books questioning John Kerry's war record 
and Barack Obama's citizenship. He briefly served as the Washington, 
D.C., bureau chief of Infowars, the conspiracy website run by Sandy 
Hook truther Alex Jones, though he later sued Jones for defamation. He 
became a target of the Mueller investigation as a result of his 
contacts with Roger Stone and his alleged foreknowledge of WikiLeaks 
document dumps. The Mueller team eventually declined to press charges, 
and Corsi sued Stone for defamation.

In late April, Corsi was planning a promotional campaign for a 
telemedicine platform on his website, corsination.com, that enabled 
doctors to conduct video consultations with patients and directly 
prescribe them hydroxychloroquine and other drugs. According to Corsi's 
marketing materials, Dr. Zelenko would serve as the program's medical 
director.

But on April 20, Corsi accidentally emailed those marketing plans not 
to Zelenko but to Aaron Zelinsky, a U.S. prosecutor who'd worked on the 
Mueller investigation--a mishap first reported by The Washington Post. 
Zelinsky, now spearheading a COVID-19 fraud-fighting task force out of 
the Maryland U.S. Attorney's Office, scrutinized the materials and 
zeroed in on Corsi's claim that ``Zelenko has an FDA approved 
randomized test of HCQ under-way.'' No such trial was listed on 
clinicaltrials.gov, raising the prospect of fraud.

Zelenko said he had mistakenly made the claim to a group of physicians 
in the telemedicine program, having confused approval from the 
hospital's institutional review board with FDA approval. ``I kind of 
misspoke,'' he told Vanity Fair. He also said he had agreed to serve as 
an unpaid medical adviser, not a paid director, for Corsi's 
telemedicine program.

When Zelinsky inquired about the erroneous claim, Corsi and Zelenko 
panicked. Zelenko appealed for help to a doctor at St. Francis Hospital 
who was one of the study's principal investigators. The doctor wrote a 
``To Whom It May Concern'' letter on April 22, stating: ``Dr. Zelenko 
not only embraced the idea of a controlled trial, but has been 
instrumental in helping us develop the trial to the point where, in 
less than two weeks, we are ready to initiate it.''

On Sunday, April 26, Corsi expressed his concerns in an email to 
Zelenko that Vanity Fair obtained. Corsi cc'd the message to a large 
and unlikely group: Dr. Hahn; Mark Meadows (via his personal email); 
Giuliani; a volunteer paramedic director in Orange County; a rabbi; the 
lawyers for Corsi and Zelenko; and two of the doctors involved in the 
fledgling St. Francis clinical trial. (Reached by Vanity Fair, Corsi 
declined to comment on his decision to copy Hahn and the others on the 
email.)

Corsi noted in the email that the ``HCQ issue is under heavy legal 
scrutiny.'' Taking Zelenko to task for making inflated scientific 
claims about his protocol, Corsi wrote, ``I am concerned that you have 
to speak very precisely.'' He went on to stress how scrupulous he had 
been about following the letter of the law in setting up the TeleMD 
program: ``under advice by legal counsel, emphasizing that we are 
marketing a teleconference with an MD who can legally write 
prescriptions for HCQ.''

The email had the quality of skywriting, as if it were intended to 
telegraph to the email recipients, and to any federal prosecutor, 
Corsi's commitment to scientific legitimacy. It is not clear what 
impact the email had. But one recipient of the email described it as a 
``CYA'' effort.

The doctors at St. Francis Hospital, who were copied on the email, 
submitted their clinical trial design to clinicaltrials.gov that same 
day, though it is unclear whether they did so before or after receiving 
Corsi's email. Within six days the trial was posted on the website, 
complete with what appeared to be an imprimatur of legitimacy, a 
National Clinical Trial number.

In an interview, Corsi was keen to assert his view that the posting of 
the clinical trial ``makes legitimate what Dr. Zelenko was saying . . . 
on a government website, a government-recognized clinical trial.''

                                 ______
                                 

        From The New England Journal of Medicine, June 11, 2020

              Drug Evaluation During the COVID-19 Pandemic

            By Benjamin N. Rome, M.D., and Jerry Avorn, M.D.

The search for a treatment for COVID-19 is testing our country's 
ability to quickly develop, test, and deploy medications, presenting 
both opportunities and challenges to our drug-assessment apparatus. 
Several aspects of the U.S. response raise serious concerns, 
highlighting how the processes for evaluating and approving drugs can 
go awry during a public health crisis.

The global pandemic has put pressure on clinicians and the Food and 
Drug Administration (FDA) to act swiftly to make medications available 
to patients. When very limited observational and anecdotal evidence 
raised the possibility that the antimalarial drugs chloroquine and 
hydroxychloroquine may have activity against SARS-CoV-2, President 
Donald Trump quickly began celebrating the promise of their widespread 
use, stating on national television that he had a ``hunch'' that such 
therapy was effective and that the drugs could be a ``game changer'' in 
addressing the pandemic. More recently, he openly encouraged patients 
to take the drugs and suggested he might do so himself, despite having 
tested negative for the virus.

After Trump's initial assertions, the FDA--still facing criticism that 
its delays in approving testing kits for the virus hindered prevention 
efforts--issued an Emergency Use Authorization (EUA) on March 28 that 
allowed for use of the drugs to treat patients with COVID-19. Although 
the EUA's scope was limited to permitting distribution of chloroquine 
and hydroxychloroquine from a federal stockpile, its issuance was 
widely yet incorrectly reported by Trump and others as meaning that the 
FDA had approved the drugs for this indication. The Centers for Disease 
Control and Prevention (CDC) went so far as to publish doses of 
chloroquine and hydroxychloroquine for use in patients with COVID-19, 
though it later removed them from its website. Meanwhile, serious 
concerns have been raised about the adequacy of the available studies 
of these drugs.\1\
---------------------------------------------------------------------------
    \1\ Kim AHJ, Sparks JA, Liew JW, et al. ``A rush to judgment? Rapid 
reporting and dissemination of results and its consequences regarding 
the use of hydroxychloroquine for COVID-19.'' Ann Intern Med 2020 March 
30 (Epub ahead of print).

These developments represent fundamental threats to the U.S. drug-
evaluation process. Advocating that the FDA should quickly approve 
drugs without randomized trial data runs counter to the idea of 
evidence-based medicine and risks further undermining the public's 
understanding of and faith in the drug-review process, which requires 
``substantial evidence'' of safety and efficacy based on adequate and 
well-controlled trials before a drug can be marketed. Though this 
unprecedented emergency provides a compelling reason for the FDA to act 
as efficiently as possible, the agency and the medical community can 
still maintain the highest scientific standards while acting 
---------------------------------------------------------------------------
expeditiously.

The new EUA represents only the second time the FDA has ever used 
emergency authority to permit use of a medication for an unapproved 
indication. During the 2009-2010 ``swine flu'' outbreak, the agency 
allowed use of peramivir--an investigational intravenous neuraminidase 
inhibitor--in severely ill hospitalized patients with H1N1 influenza. 
Under that EUA, peramivir was administered to some 1,200 to 1,500 
patients, with no rigorous tracking of which patients received it or 
collection of outcome data.\2\ Ultimately, a randomized, controlled 
trial failed to show any benefit of peramivir as compared with placebo 
in severely ill hospitalized patients with influenza; the drug was 
approved in 2014 with an indication only for uncomplicated influenza 
and not for use in severely ill hospitalized patients.
---------------------------------------------------------------------------
    \2\ Pavia AT. ``Editorial commentary: what did we learn from the 
emergency use authorization of peramivir in 2009?'' Clin Infect Dis 
2012;55:16-18.

Hydroxychloroquine is already marketed for other conditions, so 
physicians were allowed to prescribe it off-label to patients with 
COVID-19 even before the EUA or CDC dose recommendations were issued. 
In addition, for investigational drugs that are not yet marketed, 
providers can request ``expanded access'' for severely ill patients who 
lack alternative treatment options and are not eligible for clinical 
trials--permission the FDA nearly always grants. This option has 
already been used for remdesivir, an investigational antiviral drug 
whose manufacturer has provided it to more than a thousand patients 
---------------------------------------------------------------------------
with COVID-19 outside clinical trials.

Even before the pandemic, many conservative and libertarian politicians 
and advocacy groups supported expanding patients' ``right to try'' 
unapproved experimental drugs. This position has intensified a commonly 
held but spurious belief that slow processes and overly onerous 
requirements by the FDA prevent patients from accessing many clinically 
useful drugs. In fact, the FDA presides over one of the fastest drug 
approval processes in the world, with a majority of drugs gaining 
approval in the United States before they are approved in Europe or 
Canada.\3\ The FDA approves the overwhelming majority of drug 
applications it receives, and over the past several decades it has been 
approving more drugs on the basis of limited evidence, such as fewer 
clinical trials per drug, trials with suboptimal design, and trials 
using surrogate measures--which may or may not predict actual clinical 
benefit--as end points.\4\
---------------------------------------------------------------------------
    \3\ Downing NS, Aminawung JA, Shah ND, Braunstein JB, Krumholz HM, 
Ross JS. ``Regulatory review of novel therapeutics--comparison of three 
regulatory agencies.'' N Engl J Med 2012;366:2284-2293.
    \4\ Darrow JJ, Avorn J, Kesselheim AS. ``FDA approval and 
regulation of pharmaceuticals, 1983-2018.'' JAMA 2020;323:164-176.

Widening access to experimental therapies that have not been fully 
evaluated is likely to have several unintended consequences. First, 
benefits to patients are unknown and may be negligible (as in the case 
of peramivir), in which case expanded access undermines physicians' 
attempts to practice evidence-based medicine. Second, medications such 
as hydroxychloroquine have well-documented risks; subjecting patients 
to these risks would be unjustifiable in the absence of meaningful 
clinical benefit. Third, distributing unproven drugs under expanded 
access or EUAs may detract from the resources needed to carry out 
clinical trials, including the patient base and necessary funds. Since 
key outcome data are often not collected outside a trial, this 
redirection of resources will hamper our ability to quickly determine 
---------------------------------------------------------------------------
whether these drugs are truly safe and effective.

Finally, with drugs that are already marketed for other conditions, 
widespread off-label use can limit access for patients who need them 
for their established use. After Trump promoted hydroxychloroquine, 
prescribing of the drug increased rapidly, leading to substantial 
shortages affecting patients taking it for rheumatoid arthritis or 
lupus--indications for which it has been proven effective.

During a pandemic that is causing morbidity and mortality to grow 
exponentially, there is an understandable temptation to make unproven 
therapies widely available and not wait for rigorous clinical trial 
data. However, well-conducted randomized, controlled trials in these 
acutely ill patients can actually be carried out quite rapidly. 
Thousands of new patients with COVID-19 present for care each day, and 
many can be (and are) quickly enrolled in pragmatic clinical trials. 
The most relevant clinical outcomes for evaluating these drugs--
including death, hospitalization, number of days spent in intensive 
care, and need for a ventilator--are readily assessed and available 
within days or weeks.

At least 25 drugs are under investigation for use in COVID-19, with 10 
in active clinical trials. The first published major randomized, 
controlled trial of an antiviral drug combination (lopinavir-ritonavir) 
began enrolling patients in China just a week after the virus had been 
identified.\5\ Contrary to expectations, its results were negative, 
providing important clinical guidance.
---------------------------------------------------------------------------
    \5\ Cao B, Wang Y, Wen D, et al. ``A trial of lopinavir-ritonavir 
in adults hospitalized with severe COVID-19.'' N Engl J Med 
2020;382:1787-1799.

If data emerge showing that any regimen is truly effective in treating 
COVID-19, the FDA should be able to review those data and provide an 
approval decision within days or weeks. The agency has already 
established a Coronavirus Treatment Acceleration Program to assist 
manufacturers in navigating administrative requirements and to expedite 
---------------------------------------------------------------------------
the review process.

Adequate clinical trials will soon confirm or refute the usefulness of 
several candidate drugs in treating COVID-19. But the weeks leading up 
to provision of that evidence reveal a great deal about threats to our 
approach to evaluating medications. Issues such as inadequate trial 
design, overreaching public declarations, and widespread use of 
unproven treatments will continue to present themselves during this 
pandemic and beyond.

Rigorous premarketing evaluation of drugs' safety and effectiveness in 
randomized, controlled trials remains our primary tool for protecting 
the public from drugs that are ineffective, unsafe, or both. It is a 
false dichotomy to suggest that we must choose between rapid deployment 
of treatments and adequate scientific scrutiny. For the COVID-19 
pandemic and other pressing medical challenges, the health of 
individual patients and the public at large will be best served by 
remaining true to our time-tested approach to clinical trial evidence 
and drug evaluation, rather than cutting corners and resorting to 
appealing yet risky quick fixes. The pandemic will inevitably leave 
considerable morbidity, mortality, and loss in its wake. Damage to the 
country's medication-assessment process--and the public's respect for 
it--should not be part of its legacy.

                                 ______
                                 

                             Communications

                              ----------                              


                  Association for Accessible Medicines

                   601 New Jersey Ave., NW, Suite 850

                          Washington, DC 20001

                              202-249-7100

                        [email protected]

                      https://accessiblemeds.org/

The Association for Accessible Medicines (AAM) is pleased to submit the 
following statement for the record for the Senate Finance Committee's 
hearing on ``COVID-19 and Beyond: Oversight of the FDA's Foreign 
Manufacturing Inspection Process.'' As the nation's leading trade 
association for the developers, manufacturers and distributors of FDA-
approved generic and biosimilar prescription medicines, AAM and our 
members are committed to the secure and consistent supply of critical 
medicines to improve the health of America's patients and as a critical 
tool in the effort to lower prescription drug costs.

Introduction

As the Finance Committee examines the pharmaceutical supply chain, we 
wish to stress three points:

      The generic drug industry currently manufactures approximately 
70 billion doses in the U.S.;
      AAM and its members strongly support the Generic Drug User Fee 
Amendments (GDUFA) program enacted in 2012 and reauthorized in 2017, 
which has provided the resources for FDA to dramatically increase its 
capacity to inspect facilities, both domestic and foreign, that support 
an application; and
      Building on today's U.S.-based production and FDA's oversight, 
AAM and its members have released the ``Blueprint to Enhance the 
Security of the U.S. Pharmaceutical Supply Chain'' to provide Congress 
and the Administration with recommendations on how to further 
strengthen the pharmaceutical supply chain and enhance the U.S. 
manufacturing of essential medicines.

The COVID-19 pandemic reminds us of the incredible value offered by the 
generic and biosimilar industry, the benefits of a resilient and 
redundant global supply chain, and industry's daily commitment to 
manufacturing safe, effective and high-quality medicines.

AAM's members have experienced substantially increased demand for 
certain medicines that has far exceeded historical trends,\1\ navigated 
export restrictions on active pharmaceutical ingredients (API) and 
finished dose (FD) generic medicines,\2\ re-
routed the delivery of medicine as air travel was significantly 
curtailed around the globe,\3\ and absorbed much of the increased costs 
charged for the transportation of medical products to ensure that 
America's patients are able to access critically needed medicines 
during the coronavirus pandemic.\4\ In response, AAM's member companies 
have stepped up to meet these challenges.\5\
---------------------------------------------------------------------------
    \1\ Ellen Gabler and Michael Keller, ``Prescriptions Surged as 
Trump Praised Drugs in Coronavirus Fight,'' New York Times, April 25, 
2020, updated May 19, 2020.
    \2\ Rajesh Roy, ``India Again Allows Export of Antimalarial Drug 
Touted for Coronavirus,'' Wall Street Journal, April 7, 2020.
    \3\ Ian Duncan, ``Drug Industry Warns That Cuts to Passenger 
Airline Service Have Put Medical Supplies at Risk,'' Washington Post, 
May 2, 2020.
    \4\ AAM Survey of Biosimilar and Generic Drug Manufacturers, 
``Pharmaceutical Shipping Costs Spike in Response to Global COVID-19 
Pandemic,'' April 30, 2020.
    \5\ AAM, ``Generics and Biosimilars Industry Supply Chain and 
Response to COVID-19,'' April 10, 2020.

Implementation of the CARES Act Will Enhance FDA's Regulation of the 
---------------------------------------------------------------------------
Global Supply Chain

We understand why the Finance Committee would raise questions about 
recent reports that may paint a distorted picture of a global supply 
chain that is overly reliant on China and other countries for API. Our 
statement clarifies and provides more accurate analysis of where API 
and finished dosage form (FDF) facilities are located, according to 
testimony provided by FDA to Congress last year. Moreover, Congress 
took important action as part of the Coronavirus Aid, Relief, and 
Economic Security (CARES) Act (H.R. 748) enacted in March. The CARES 
Act includes several important steps intended to help strengthen the 
pharmaceutical supply chain. Specifically, the CARES Act:

      Increases the transparency of the pharmaceutical supply chain by 
providing FDA with additional information on potential disruptions in 
the supply chain, on manufacturers' contingency plans to ensure 
continued supply and on the volume of medicines manufactured (Section 
3112);
      Stresses the importance of air transportation in maintaining 
well-functioning pharmaceutical supply chains (Section 4005);
      Evaluates U.S. dependence on overseas manufacturing with a 
forthcoming report from the National Academies (Section 3101); and
      Strengthens the national stockpile to ensure access to drugs, 
vaccines and other biological productions (Section 3102).

We believe these provisions will help answer some of the questions 
raised once implemented and will serve to further inform policymakers 
about the economic realities of the generic and biosimilar markets. In 
this statement, we provide additional information on the role of 
generics and biosimilars in improving patient health, how more 
affordable treatments enhance patient access, details FDA's oversight 
role and inspections process, and outline our industry's robust 
commitment to quality.

Generics and Biosimilars Are Integral to Patient Health

Generic medicines play an integral role in health care and enhance 
patient access to life-saving treatments. The expiration or 
invalidation of patents and the resulting introduction of multiple 
generic and biosimilar manufacturers competing against each other on 
price result in significant savings for patients and the health care 
system. Over the last 10 years, manufacturers of generic medicines have 
delivered savings of nearly $2 trillion--including $293 billion in 
2018--to patients and the health care system.\6\
---------------------------------------------------------------------------
    \6\ AAM, ``The Case for Competition: 2019 Generic Drug and 
Biosimilars Access and Savings in the U.S. Report,'' September 2019.

Biosimilar medicines represent another critical step forward in 
reducing high drug prices. Biosimilars are safe, effective and more 
affordable versions of costly brand biologics. By the year 2025, over 
70 percent of drug approvals are expected to be biological products.\7\ 
Experts estimate that FDA-approved biosimilars could save more than $54 
billion over the next 10 years.\8\ In doing so, biosimilars will mean 
greater access to lifesaving cures for an estimated 1.2 million 
patients.\9\
---------------------------------------------------------------------------
    \7\ U.S. Pharmacist, ``Biosimilars: Current Approvals and Pipeline 
Agents,'' October 2016.
    \8\ RAND, ``Biosimilars Cost Savings in the United States,'' 
October 2017.
    \9\ The Biosimilars Council, ``Biosimilars in the United States: 
Providing More Patients Greater Access to Lifesaving Medicines,'' 
August 2017.

The introduction of generic and biosimilar competition significantly 
reduces the price of medicine, and patients benefit from greater, more 
affordable access to FDA-approved drugs. Experience shows prescription 
drug prices decline by more than half the first-year generics enter the 
market.\10\ Early experience with the nascent biosimilars market in the 
U.S. shows that these more affordable alternatives are also providing 
value and savings to patients, on average priced 40 percent lower than 
their branded biologic counterparts.\11\
---------------------------------------------------------------------------
    \10\ IMS Institute for Healthcare Informatics, ``Price Declines 
After Branded Medicines Lose Exclusivity in the U.S.,'' January 2016.
    \11\ AAM analysis of IQVIA WAC Data, December 2018.

However, one must also consider the underlying economic realities of 
the generic and biosimilar markets. Prices for generic drugs are 
plummeting--falling for 40 of the last 45 months--and creating a market 
in which many drugs are simply and increasingly not economical to 
produce.\12\ The biosimilars market is still developing with 17 of the 
26 FDA-approved biosimilars launched with only a handful regularly 
prescribed.\13\ Biosimilar manufacturers are increasingly looking to 
provide Europe's patients with access first, rather than the U.S., due 
to the barriers to competition and a policy environment that 
inadequately supports their uptake and use domestically.\14\
---------------------------------------------------------------------------
    \12\ Morgan Stanley, April 2020.
    \13\ Biosimilars Council, ``FDA Biosimilars Approvals,'' April 
2020.
    \14\ Biosimilars Council, ``Failure to Launch: Barriers to 
Biosimilar Market Adoption,'' September 2019.

Setting the Record Straight on the Global Production of Medicines and 
---------------------------------------------------------------------------
the FDA's Gold Standard of Safety

In testimony before the House Energy and Commerce's Subcommittee on 
Oversight and Investigations on December 10, 2019, Dr. Janet Woodcock, 
Director, Center for Drug Evaluation and Research at FDA, provided a 
detailed breakdown of where API and FDF of prescription drugs--
inclusive of brand-name and generic medicines--are located.\15\ The 
U.S. is home to 47 percent of FDF facilities and 28 percent of API 
facilities as of August 2019, according to the FDA.\16\
---------------------------------------------------------------------------
    \15\ Janet Woodcock, M.D., Director of CDER, FDA, testimony, 
Subcommittee on Oversight and Investigations of the Committee on Energy 
and Commerce, hearing on ``Securing the U.S. Drug Supply Chain: 
Oversight of FDA's Foreign Inspection Program,'' December 10, 2019.
    \16\ Ibid.

As depicted in Figures 1 and 2 from FDA's testimony, and included 
below, the number of FDF and API facilities regulated by FDA is as 
follows:
FDF Facilities, By Geographic Region
      U.S.--47 percent
      Europe--18 percent
      India--11 percent
      China--7 percent
      Rest of World--13 percent
API Facilities, By Geographic Region
      U.S.--28 percent
      Europe--26 percent
      India--18 percent
      China--13 percent
      Rest of World--13 percent

    [GRAPHIC] [TIFF OMITTED] T6220.016
    

Globalization of the supply chain--a market reality for brand-name drug 
companies and generic and biosimilar manufacturers--is often mentioned 
as a matter of concern, but the record should in fact bolster 
confidence in the system. The U.S. has one of the safest drug supply 
chains in the world.

FDA's Oversight of the Pharmaceutical Supply Chain

FDA ensures all pharmaceuticals meet the same high-quality standards 
regardless of where brand-name drugs, biologics, generics and 
biosimilars are manufactured. All pharmaceuticals, whether generic or 
brand, must be manufactured in accordance with rigorous regulatory 
standards that require high levels of diligence and accompanying 
documentation.\17\ FDA and other governmental requirements cover each 
of the following areas:
---------------------------------------------------------------------------
    \17\ 21 Code of Federal Regulations Parts 210, 211, 600-680; 
Inspection of Biological Drug Products, FDA Compliance Program Guidance 
Manual, Chapter--45 Biological Drug Products, Section 7345.848.

      Acquisition of raw materials and drug packaging components, 
including auditing the manufacturers and suppliers of critical 
ingredients;\18\
---------------------------------------------------------------------------
    \18\ 21 CFR Sec. 211.182.
---------------------------------------------------------------------------
      Testing of active ingredients using qualified equipment and 
validated methods;\19\
---------------------------------------------------------------------------
    \19\ 21 CFR Sec. 211.84.
---------------------------------------------------------------------------
      Constructing and maintaining manufacturing equipment and 
facilities that have been constructed and maintained to provide 
sanitary conditions and to protect against contamination;\20\
---------------------------------------------------------------------------
    \20\ 21 CFR Sec. 211.42, Sec. 211.56 (facilities), Sec. 211.65, 
Sec. 211.67 (equipment).
---------------------------------------------------------------------------
      Appropriate and documented training of manufacturing 
personnel;\21\
---------------------------------------------------------------------------
    \21\ 21 CFR Sec. 211.25.
---------------------------------------------------------------------------
      Validation of manufacturing processes to ensure that they 
consistently produce safe, effective and uniform medicine;\22\
---------------------------------------------------------------------------
    \22\ 21 CFR Sec. 211.100.
---------------------------------------------------------------------------
      Thorough contemporaneous documentation of each manufacturing 
step, with oversight by an employee other than the operator for 
critical manufacturing steps;\23\
---------------------------------------------------------------------------
    \23\ Ibid., 21 CFR Sec. 211.101(c), Sec. 211.180(a), Sec. 211.186, 
Sec. 211.188(b).
---------------------------------------------------------------------------
      Taking samples of prescription drugs during the manufacturing 
process at predetermined intervals, and testing the samples for potency 
and, where appropriate, sterility;\24\
---------------------------------------------------------------------------
    \24\ 21 CFR Sec. 211.110.
---------------------------------------------------------------------------
      Maintaining rigid controls over labels placed on drug 
containers, to ensure the correct labels are placed on every 
package;\25\
---------------------------------------------------------------------------
    \25\ 21 CFR Sec. 211.122, Sec. 211.125, Sec. 211.130, Sec. 211.134.
---------------------------------------------------------------------------
      Thorough testing of prescription drugs before packaging to 
ensure that they are free of microbial contamination or other defects, 
and that they meet tight specifications for uniformity, potency and 
lack of impurities;\26\
---------------------------------------------------------------------------
    \26\ 21 CFR Sec. 211.113, Sec. 211.165, Sec. 211.194.
---------------------------------------------------------------------------
      Retention of samples of all manufactured batches of prescription 
drugs;\27\
---------------------------------------------------------------------------
    \27\ 21 CFR Sec. 211.170(b).
---------------------------------------------------------------------------
      Routine stability testing to ensure that prescription drugs, 
including biologics, will remain safe and effective for the duration of 
their shelf lives;\28\
---------------------------------------------------------------------------
    \28\ 21 CFR Sec. 211.165.
---------------------------------------------------------------------------
      Release of each batch of prescription drugs for distribution 
only upon review of all batch records and testing data by a quality 
unity that is independent of manufacturing personnel;\29\
---------------------------------------------------------------------------
    \29\ 21 CFR Sec. 211.22, Sec. 211.142, Sec. 211.167, Sec. 211.192.
---------------------------------------------------------------------------
      Continuous oversight by management and regular audits by an 
independent quality unit of the manufacturer or outside 
consultants;\30\
---------------------------------------------------------------------------
    \30\ 21 CFR Sec. 211.180(e), (f).
---------------------------------------------------------------------------
      Rigorous documentation of every step in the storage and 
distribution of manufactured prescription drugs;\31\ and
---------------------------------------------------------------------------
    \31\ 21 CFR Sec. 211.150(b), Sec. 211.196; Drug Supply Chain 
Security Act, Title II of the Drug Quality and Security Act of 2013.
---------------------------------------------------------------------------
      Prompt reporting to FDA and thorough investigation of any 
complaints about distributed medicines, or any reports that the 
prescription drugs may have failed to remain safe and effective.\32\
---------------------------------------------------------------------------
    \32\ 21 CFR Sec. 211.198.

When FDA finds any deviation from the strict standards of production, 
FDA can take swift action. Potential actions include: mass recall of 
products; issuing public Warning Letters; imposing import alerts and 
barring the admission into the U.S. of violative API or FDF; seizing 
violative medicines; seeking court orders suspending distribution of 
drug products until FDA approves resumption of operations; and pursuing 
criminal prosecution of individuals and companies when necessary.\33\ 
FDA does not hesitate to exercise these powers, taking action not only 
when prescription drugs are determined to be defective, but when FDA 
believes that the system of manufacturing is inadequate to guarantee 
that all prescription drugs are safe and effective.
---------------------------------------------------------------------------
    \33\ FDA Public Databases on Drug Recalls, Warning Letters, and 
Import Alerts; Ned Sharpless, M.D., ``Expanding Criminal Enforcement 
Operations Globally to Protect Public Health,'' FDA, October 2019.

GDUFA, originally enacted in 2012 and then reauthorized in 2017, 
included a $4 billion commitment from the generic drug industry.\34\ 
One primary reason the generic drug industry supported the user fee 
program for generic drugs was the imbalance between the frequency of 
inspections for domestic manufacturers and foreign manufacturers, 
especially those located in China and India. Statistics at the time 
showed that large generic manufacturers located in the U.S. could 
expect to be inspected by FDA once every two to three years. In 
contrast, major suppliers of prescription drugs based in China and 
India were inspected, on average, less than once every 10 years.
---------------------------------------------------------------------------
    \34\ FDA, Five-Year Financial Plan for the Generic Drug User Fee 
Amendments, 2018.

GDUFA has significantly increased and continues to augment the funding 
of FDA's generic drug review and inspection programs. GDUFA 
substantially increased FDA's review capacity and the frequency of 
inspections. FDA hired nearly 1,200 employees to strengthen oversight 
under GDUFA implementation and 338 additional employees were added as a 
result of GDUFA II.\35\
---------------------------------------------------------------------------
    \35\ Kathleen Uhl, Director of Office for Generic Drugs, 
Presentation: Director's Update, February 2016.

Indeed, GDUFA fees and the foreign drug manufacturer inspections by FDA 
that the fees enable have dramatically changed where FDA has focused 
its inspection and enforcement efforts. Until 2012, the majority of FDA 
Warning Letters relating to manufacturing violations issued to 
mainstream drug manufacturers were based on inspections at facilities 
located in the U.S. In 2011, for instance, 45 percent of FDA Warning 
Letters for drug manufacturing violations were based on inspections of 
facilities outside of the U.S. More recent data, for 2016, shows 98 
percent of FDA Warning Letters were issued to facilities located 
outside of the U.S.\36\ The increase in enforcement actions against 
drug manufacturing facilities located outside of the U.S. is directly 
attributable to an increase in the number of FDA inspections. However, 
it is important to remember that most manufacturers that are inspected 
are found to be fully compliant with the regulations.\37\
---------------------------------------------------------------------------
    \36\ Independent review of FDA's public database of Warning 
Letters.
    \37\ FDA, ``Facts About the Current Good Manufacturing Practices 
(CGMPs),'' June 2018.

FDA utilizes a risk-based inspection strategy, established under Title 
VII of the Food and Drug Administration Safety and Innovation Act 
(FDASIA), to maintain a robust inspections footprint around the world. 
FDA has established offices in China and India and uses GDUFA funding 
to support those offices. FDA's global inspection efforts are 
prioritized and focused on facilities in a way to prevent, uncover and 
combat data integrity issues and manufacturing problems. Using a risk-
based site selection surveillance inspection model, FDA prioritizes 
domestic and foreign inspections based on multiple factors carefully 
---------------------------------------------------------------------------
selected to appropriately target the agency's resources.

In fiscal year 2017, FDA conducted 935 inspections of generic drug 
manufacturing facilities in the U.S. and around the world.\38\ This 
includes 547 international inspections and 388 domestic inspections. 
Moreover, the level of inspections increased between fiscal year 2013 
and fiscal year 2017 (five years) from a total of 721 inspections. As 
former FDA Commissioner Scott Gottlieb, M.D., noted at the time, ``We 
expect these trends to continue due to resources from GDUFA II.''\39\
---------------------------------------------------------------------------
    \38\ FDA, FY2017 Performance Report to Congress for GDUFA, May 
2018.
    \39\ Scott Gottlieb, tweet on FY 2013-17 Inspectional Data, January 
2019.

AAM and its members remain committed to ensuring FDA continues to have 
the resources to perform thorough inspections of facilities that 
manufacture all medicines approved in the U.S. We are pleased that the 
number of FDA's foreign inspections continue to rise, in no small part 
based on funding provided by AAM's member companies through GDUFA and 
the Biosimilars User Fee Act (BsUFA).

AAM's Blueprint to Strengthen the U.S. Pharmaceutical Supply Chain

As part of the industry's ongoing commitment to patient access, AAM 
released a six-element framework that lays out concrete actions to 
ensure that U.S. patients and the U.S. health care system have access 
to a secure and consistent supply of critical medicines.\40\ AAM's 
``Blueprint for Enhancing the Security of the U.S. Pharmaceutical 
Supply Chain'' builds upon the existing generic drug supply chain in 
the U.S., which produces approximately 70 billion doses annually and 
provides more than 36,000 jobs in nearly 150 manufacturing facilities 
across the country. AAM and its members seek to provide solutions that 
will enable expanded investment in the manufacturing of medicines 
domestically.\41\ Creating the conditions that support and encourage 
this investment are critical to ensuring the most critical medicines--
those most essential to our country's health and security--are 
manufactured in the U.S. In order to establish this environment, AAM's 
Blueprint recommends the following:
---------------------------------------------------------------------------
    \40\ AAM, ``A Blueprint for Enhancing the Security of the U.S. 
Pharmaceutical Supply Chain,'' April 30, 2020.
    \41\ Based on a 2016 survey of AAM's member companies.

      Identify the list of medicines most critical for U.S.-based 
manufacturing;
      Provide new grant and tax incentives to secure the U.S. supply 
chain;
      Supply the Strategic National Stockpile, the U.S. Department of 
Veterans Affairs, and other agencies with essential medicines on a 
long-term basis;
      Reduce regulatory inefficiencies to streamline the federal 
approval for U.S.-based facilities to manufacture medicines; and,
      Promote a global, cooperative approach to diversifying the 
supply chain.

The Blueprint includes actionable short-term steps to expedite more 
U.S.-based production of essential medicines, while putting in place a 
series of incentives to enhance the security of the U.S. pharmaceutical 
supply chain. Given modern manufacturing facilities can take 5-7 years 
and cost up to $1 billion to build, a long-term, consistent commitment 
from the federal government is critical to building an expanded generic 
manufacturing base in the U.S.

Importantly, the Blueprint offers a targeted approach to addressing 
potential vulnerabilities in the U.S. pharmaceutical supply chain, 
while building on the existing capacity in the U.S. and what is widely 
recognized as one of the safest drug supply chains in the world. 
Through its rigorous approval process, manufacturing regulations and 
continuous inspections of manufacturing facilities, FDA ensures that 
``medicines at all levels of the supply chain, from active 
pharmaceutical ingredients (API) to the finished product sold to 
consumers at the pharmacy counter are safe, effective and high 
quality.''\42\ This is why every administration of both parties and, 
including the current Secretary of Health and Human Services Alex Azar, 
are publicly on record assuring America's patients that FDA would not 
approve generics if they were not safe and effective treatments.\43\
---------------------------------------------------------------------------
    \42\ Statement from FDA Commissioner Scott Gottlieb, M.D., and 
Director of FDA's CDER Janet Woodcock, M.D., ``FDA's continuing efforts 
to maintain its strong oversight of generic drug quality issues 
domestically and abroad,'' February 2019.
    \43\ Alaric DeArment, ``FDA commissioner praises generic industry's 
efforts on quality, shortages, follow-on biologics in GPhA speech,'' 
Drug Store News, February 2013.
---------------------------------------------------------------------------

Our Industry's Commitment to Quality and Patient Safety

Patient safety is the number one priority for AAM and its member 
companies. AAM's members adhere to a code of business ethics and the 
``Safety of Medicines'' is its first principle.\44\ Every AAM member 
company pledges to ``conform to high standards of quality, safety and 
efficacy as determined by regulatory authorities in each economy in 
which they operate.''\45\ This commitment to quality, safety and 
efficacy applies regardless of where medicines are manufactured.
---------------------------------------------------------------------------
    \44\ AAM, Code of Business Ethics, March 2018.
    \45\ Ibid.

Patients should know and be confident in the quality of the generic 
medicines prescribed and consumed. Generics and biosimilars are just as 
safe and effective as their brand-name drug counterparts. Independent 
research consistently demonstrates the clinical equivalence of generic 
medicines compared to the brand-name drug.\46\
---------------------------------------------------------------------------
    \46\ FDA, Generic Drugs: Questions and Answers, June 2018.

Patients can trust the safety and effectiveness of generic medicines. 
And it is important that patients take their medicines as prescribed by 
---------------------------------------------------------------------------
their physicians. As Secretary Azar has previously stated:

        Every single drug I take is a generic. They are exact copies. 
        They wouldn't get approved by the FDA if they weren't.\47\
---------------------------------------------------------------------------
    \47\ Secretary Azar, interview on Fox and Friends, October 2019.

While it is not always possible to combat all of the misinformation 
that exists, we encourage lawmakers to avoid, to the extent possible, 
repeating and sometimes promoting inaccurate information on quality 
that can potentially result in placing patients in harm's way by way of 
promoting non-compliance of their prescribed medication regimen. As FDA 
has emphasized, not taking one's medicine as prescribed by a doctor or 
as instructed by a pharmacist, due to unsubstantiated claims on 
quality, could have the undesired effect of exacerbating a patient's 
---------------------------------------------------------------------------
illness or disease, and lead to worse health outcomes.

Moreover, and as described previously, FDA provides regulatory 
oversight of the manufacturing of generic and biosimilar medicines. 
Manufacturing facilities located overseas, as well as in the U.S., are 
routinely inspected by FDA to ensure the medicines are of the highest 
quality for patients. A standardized, transparent and dynamic system is 
in place and is working for doctors, pharmacists and patients.
            Quality Is Standard
Exacting standards ensure the reliability of the medicines we take. 
These standards make it possible for us to trust that a pill dispensed 
from a pharmacy in Oregon in the spring will match, in every way that 
matters, a pill picked up at a drug store counter the following winter 
in Miami.

Dr. Jeremy Greene, professor of medicine and the history of medicine at 
Johns Hopkins University and author of ``Generic: The Unbranding of 
Modern Medicine,'' explained in a recent interview with United States 
Pharmacopeia (USP):

        There's a mutual interest among manufacturers, whether they are 
        brands or generics, for establishing and disseminating a public 
        standard that helps us determine if a drug is what it says it 
        is.\48\
---------------------------------------------------------------------------
    \48\ Jeremy Greene, ``Similarity and difference in the world of 
drugs,'' USP, accessed October 2019.

The various stakeholders--health care professionals, industry, and 
government--that keep our drug supply safe agree upon the standards, 
and USP publishes the standards and the methods that manufacturers and 
regulators can employ to demonstrate that medicines are what they 
should be. These standards apply to a drug's molecular structure, and 
to the amount of active and inactive ingredients it contains to ensure 
---------------------------------------------------------------------------
a drug's efficacy and safety.

USP strives for comprehensive standards, which is no small task. 
According to its latest annual report, more than 3,700 reference 
standards and more than 6,700 documentary standards have been 
issued.\49\ USP's collaborative work with FDA to set drug quality 
standards for nearly 80 years has made drugs marketed in the U.S. the 
gold standard worldwide for safety and quality.
---------------------------------------------------------------------------
    \49\ USP Annual Report, ``USP by the numbers: Fiscal year 2019,'' 
accessed October 2019.
---------------------------------------------------------------------------
            Transparency Enhances Quality
All of the links along the supply chain have an obligation to be open 
and transparent about issues related to safety and quality. This is how 
the system secures the accountability necessary to earn and retain the 
trust of the medical profession and, ultimately, the patients.

FDA has a robust around-the-clock program for inspecting pharmaceutical 
manufacturing facilities worldwide. The Office of Regulatory Affairs 
(ORA) conducts assessments, inspections, research and surveillance of 
pharmaceutical manufacturing facilities. AAM's member company 
manufacturing facilities, all over the world, must be ready for FDA 
inspection whenever they are operating, 365 days a year. Our member 
companies have established interlocking processes and procedures to 
ensure the quality and integrity of the medicines manufactured in these 
facilities.

Generic manufacturers not only readily comply with inspections audits; 
they also fund this oversight through GDUFA, which supports FDA 
staffing and best practices in protecting public health and 
accelerating innovation. These fees total nearly $500 million 
annually.\50\ Foreign as well as domestic companies identify and 
register all facilities involved in the manufacturing of generics and 
their active ingredients. BsUFA operates on similar principles.
---------------------------------------------------------------------------
    \50\ FDA, ``GDUFA II Fee Structure Summary,'' accessed October 
2019.

Reports from the public, health care professionals and the industry of 
potentially defective drug products help FDA identify sites for 
inspection or investigation. Most companies that are inspected are 
found to be fully compliant with the regulations.\51\ In addition, 
Post-marketing Surveillance Programs are in place to identify adverse 
reactions that did not appear during the drug approval process.
---------------------------------------------------------------------------
    \51\ FDA, ``Facts About the Current Good Manufacturing Practices 
(CGMPs),'' June 2018.

Critics may point to product recalls to draw attention to issues in the 
supply chain, but we believe the rarity of these events demonstrates 
the system's effectiveness. Indeed, recalls are occasionally required 
not when a flaw or defect is identified in a medicine, but rather when 
FDA believes that there is inadequate assurance of adequate quality 
systems at a plant because manufacturing does not strictly comply with 
the rigorous regulatory requirements. We would also note that while 90 
percent of prescriptions filled in the U.S. are generic medicines, 
generic drugs account for only 56 percent of any prescription drug 
recalls.\52\ Brand products on the other hand account for only 10 
percent of prescriptions filled, but 44 percent of the total 
recalls.\53\
---------------------------------------------------------------------------
    \52\ FDA database, ``Recalls, Market Withdrawals, and Safety 
Alerts,'' 2011-18.
    \53\ Ibid.

When an issue is discovered, the proper mechanisms are activated, and 
industry works with FDA to appropriately address it. In the unlikely 
event that flawed medication does reach a patient, we should take 
comfort that all medicines can be traced to the manufacturer. The 
manufacturer of the product immediately notifies stakeholders in the 
supply chain, and then pharmacists or physicians reach out to notify 
patients and to determine alternative prescription options. Obviously, 
these recalls are widely publicized; transparency contributes to 
quality.
            The Global Supply Chain Is Dynamic
FDA and the industry are constantly adapting to manufacturing 
innovations. Current Good Manufacturing Practice (cGMP) regulations 
address methods, facilities and controls used in manufacturing, 
processing and packaging. The globalization of the supply chain, which 
is a fact of life for brand, generic and biosimilar drugs, is often 
mentioned as a matter of concern, but in fact, the record bolsters 
confidence in the system. While it is true that so-called fake drugs 
circulate in developing nations through mail-order and online 
pharmacies, U.S. regulations, guidance and legislation are in place to 
minimize the possibility that they could reach America's patients.\54\ 
Further, the only additional method of preventing counterfeit or 
unapproved medications from reaching the U.S. market would be to 
rigorously examine and test all incoming parcels and packages that 
could contain medications--a measure that AAM would support. Only a 
tiny fraction of incoming parcels and packages are currently examined.
---------------------------------------------------------------------------
    \54\ Fight the Fakes, ``US FDA Gives Tips on Spotting Fake 
Medicines,'' June 2014.

These factors ensure patients can take their medications with 
confidence. Dr. Michael Kopcha, Director of the Office of 
Pharmaceutical Quality (OPQ) in FDA's Center for Drug Evaluation and 
---------------------------------------------------------------------------
Research (CDER), may have put it best when he said:

        The quality of our drug supply is better than ever before. 
        There is no difference in the quality of drugs based only on 
        where they are made.\55\
---------------------------------------------------------------------------
    \55\ Michael Kopcha, ``CDER Conversation: Assuring Drug Quality 
Around the Globe,'' FDA, May 2019.
---------------------------------------------------------------------------

Conclusion

Patients can and should trust in the safety and effectiveness of 
generic and biosimilar medicines. FDA ensures all pharmaceuticals meet 
the same high-quality standards regardless of where medicines are 
manufactured. Globalization of the supply chain--a market reality for 
brand-name drug companies and generic and biosimilar manufacturers--is 
often mentioned as a matter of concern, but the record should in fact 
bolster confidence in the system. The U.S. has one of the safest drug 
supply chains in the world. And this is the result of the daily 
commitment to quality from AAM's member companies and FDA oversight. 
With that said, there are steps that the federal government can take to 
enhance the U.S.-based production of critical medicines and we look 
forward to working with the Finance Committee and its members to 
advance the recommendations outlined in the ``Blueprint for Enhancing 
the Security of the U.S. Pharmaceutical Supply Chain.''

                                 ______
                                 

             A Blueprint for Enhancing the Security of the

                    U.S. Pharmaceutical Supply Chain

INTRODUCTION

A closely connected, diverse, high-quality and resilient pharmaceutical 
supply chain based in the United States and in U.S. allied countries 
(such as Canada, Europe, India, Israel, Japan, Jordan and Mexico) is 
the best means to ensure that U.S. patients and the U.S. health care 
system have access to a secure and consistent supply of critical 
pharmaceuticals. The United States already plays an important role in 
this supply chain, with generic companies providing more than 36,000 
jobs at nearly 150 facilities, and manufacturing more than 70 billion 
doses of prescription medicines annually.\1\
---------------------------------------------------------------------------
    \1\ Based on a 2016 survey of Association for Accessible Medicines' 
member companies.

With strategic support from the U.S. government, the economic footprint 
of the generic drug industry in the U.S. can expand even more, leading 
to increased national security, a stronger, more redundant supply chain 
for key pharmaceuticals or their components and an expanded employment 
---------------------------------------------------------------------------
base.

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


A.  IDENTIFYING THE LIST OF MEDICINES MOST CRITICAL FOR U.S. 
MANUFACTURING

      List of Essential Medicines. Within 180 days of enactment, the 
Secretary of HHS shall establish a list of essential medicines for the 
United States. Essential medicines are defined as the active 
pharmaceutical ingredient (API) and finished dosage form (FD). The list 
of essential medicines shall include medicines deemed most critical to 
the U.S. health care system, vital during a secretary-designated public 
health emergency, and/or those that, if shortages occurred, could 
impact U.S. national security. In developing the list, the secretary 
shall consult with the U.S. Food and Drug Administration (FDA), Centers 
for Disease Control and Prevention (CDC), National Institutes of Health 
(NIH) and other public health agencies, as well as the Secretary of 
Defense and Secretary of State. The list shall be subject to a 60-day 
public comment period.

      Assessment of Supply Chain. Within one year of enactment, the 
Secretary of HHS shall prepare an assessment of the global supply 
chain's ability to source and manufacture the medicines on the list of 
essential medicines.\2\ The assessment shall identify the location and 
number of facilities involved in the production of FD and API. The 
secretary shall consider several factors in preparing the assessment, 
including but not limited to the number of manufacturers of each FD and 
API; the number of manufacturers with approved Abbreviated New Drug 
Applications (ANDA); the market shares for manufacturers of each FD and 
API; the volume of FD and API manufactured at each facility; the extent 
of supply redundancy for each FD and API; and the geographic location 
of FD and API facilities. Information provided to HHS as part of the 
assessment shall be confidential and not subject to public disclosure 
due to its proprietary nature and potential to impact the market. The 
Secretary of HHS shall prepare and submit a report providing 
recommendations to Congress on how to strengthen the supply chain to 
ensure sustainable U.S. patient access to all essential medicines.
---------------------------------------------------------------------------
    \2\ The Coronavirus Aid, Relief, and Economic Security (CARES) Act 
(H.R. 748) included several important steps intended to help strengthen 
the pharmaceutical supply chain. The CARES Act increases the 
transparency of the pharmaceutical supply chain by providing FDA with 
additional information on potential disruptions in the supply chain, on 
manufacturers' contingency plans to ensure continued supply and on the 
volume of medicines manufactured (Section 3112); stresses the 
importance of air transportation in maintaining well-functioning 
pharmaceutical supply chains (Section 4005); evaluates U.S. dependence 
on overseas manufacturing with a forthcoming report from the National 
Academies (Section 3101); and strengthens the national stockpile to 
ensure access to drugs, vaccines and other biological products (Section 
3102). The policies outlined in this paper build on and enhance these 
provisions.

      Designation of ``High Priority'' Essential Medicines. From the 
list of essential medicines, and informed by the assessment of the 
supply chain, the Secretary of HHS shall publish a list of ``high 
priority'' essential medicines for the purpose of ensuring U.S. 
production and supply of those medicines. The secretary shall update 
the list annually and may designate additional medicines--including 
those not previously deemed essential--as ``high priority'' during a 
secretary-designated public health emergency. The list, and any 
---------------------------------------------------------------------------
updates, shall be subject to a 30-day public comment period.

B.  INCENTIVES TO SECURE THE U.S. PHARMACEUTICAL SUPPLY CHAIN

Within six months of the completion of the list of ``high priority'' 
medicines, HHS, acting through the Office of the Assistant Secretary 
for Preparedness and Response (ASPR), will seek new and specific 
proposals from pharmaceutical manufacturers to determine how individual 
companies can help secure the U.S. harmaceutical manufacturing base for 
priority medicines. Proposals would include the list of specific FDs 
and APIs the company proposes manufacturing in the United States, and 
the specific type of incentives necessary to make the facilities 
economically viable. HHS would be authorized to make:

      Long-Term Price and Volume Guaranteed Contracts. Guaranteed 
volume and price agreements are essential to ensuring the viability of 
U.S.-based generic manufacturing for ``high priority'' medicines and to 
inoculate those investments against low-priced imports of the same 
medicine. When engaging with the industry, however, HHS must encourage 
multiple suppliers in the market and ensure, whenever possible, that no 
one company supplies the entire market (this protects against supply 
disruptions). The price and volume agreements would provide purchase 
guarantees that could be spread across the Strategic National Stockpile 
(SNS) and all federal agencies that procure medicines through the 
Federal Supply Schedule. For the SNS, HHS may take possession of such 
purchases or may pay manufacturers an inventory management fee to 
produce and maintain the specified quantity on behalf of the SNS. 
Specific volume and price levels would be negotiated on a company-by-
company basis.

      Grants. HHS shall provide grants to support construction, 
alteration or renovation of facilities for the U.S.-based manufacture 
of medicines included on the high priority medicines list. Grants shall 
also be provided to pharmaceutical manufacturers to relocate production 
facilities from outside of the United States back to the United States 
to cover expenses in moving production and include funds to offset the 
cost of building new factories and research centers. Such grants shall 
be available only to manufacturers with an approved ANDA or authorized 
generic or to external/contract manufacturers of approved ANDAs or 
authorized generics. To support a diverse and reliable supply, such 
grants shall be available to multiple manufacturers of the same 
medicine. Grants will be administered by HHS/Biomedical Advanced 
Research and Development Authority (BARDA).

C.  OTHER NECESSARY ELEMENTS TO SUPPORT AN EXPANDED U.S. PHARMACEUTICAL 
ECONOMIC FOOTPRINT

Certain additional measures will be necessary to support the economic 
viability of a U.S.-based pharmaceutical investment. The following 
elements will not be negotiated at an individual company level, like 
those listed above, but will instead be adopted for the entirety of the 
U.S. generics or biosimilars pharmaceutical manufacturing base:

      Tax Incentives. New tax incentives must be passed that promote 
U.S. pharmaceutical companies relocating foreign manufacturing back to 
the United States, build new greenfield sites, refurbish already 
existing manufacturing facilities and/or repurpose existing production 
lines to focus on pharmaceuticals that appear on HHS's list of ``high 
priority'' medicines.

        }  Manufacturers of medicines designated as ``high priority'' 
medicines shall be eligible for a tax deduction during whichever of the 
two periods is longer: throughout the period the medicine is deemed 
``high priority'' or during the initial period that company has agreed 
with HHS to supply from its expanded investment. Specific tax 
incentives that will facilitate the onshoring of U.S. pharmaceutical 
manufacturing include:

        }  A dollar-for-dollar credit against federal taxes to 
pharmaceutical manufacturers for 50% of wages, investments and 
purchases made for manufacturing medications on the priority medicines 
list in the United States.

        }  A tax reduction modeled after the Section 199 Domestic 
Production Activities Deduction, which provided a tax deduction of as 
much as 9% of the company's income attributable to U.S. manufacturing 
operations.

        }  Increase the R&D credit rate to 20% for the alternative 
simplified credit.

        }  Provide full expensing for the construction of new factories 
built to move production from overseas to the United States.

      Regulatory Efficiencies. To expedite the approval of a facility 
and all the products to be produced in it the FDA will streamline its 
regulatory review and approval processes, removing duplicated actions 
and reducing the time for approvals across the board. The agency will 
expand cooperation with the manufacturer, working collaboratively to 
evaluate and approve the facility and the tech transfer processes 
concurrently, as opposed to waiting until after the facility is built 
and the equipment is installed/validated.

To accomplish these goals, the FDA will create an internal, intra-
agency working group focused on helping to expedite reviews and 
approvals to onshore pharmaceutical manufacturing. This working group 
will consist of resources from the Office of Regulatory Affairs; the 
Office of Pharmaceutical Quality; the Office of Compliance; reviewers 
from both chemistry and microbiology disciplines; and the Office of 
Generic Drugs. This working group will focus on reviewing for approval 
the transfer of production back into either U.S.-approved facilities or 
newly constructed facilities at new or existing sites, including those 
utilizing advanced manufacturing technology. This working group will 
grant meetings with the company to discuss the overall transfer plans. 
For example:

    }  Inspector(s) and Office of Pharmaceutical Quality staff will 
make site visit(s) during the construction or validation phase.

    }  The mechanism will be similar to a pre-ANDA meeting--that is, a 
developmental phase inspection and then a pre-submission inspection.

    }  Microbiology reviewer(s) will conduct site visits.

    }  Decouple submission and inspection. Inspections will be 
completed within 30 days of request for inspection, regardless of 
submission.

D.  INCREASING U.S. PHARMACEUTICAL SUPPLY CHAIN SECURITY THROUGH GLOBAL 
COORDINATION

      The International Pharmaceutical Supply Chain Agreement. To 
promote the benefits of a globally diverse supply chain, the United 
States Trade Representative (USTR), working with HHS, should negotiate 
a plurilateral agreement with U.S. allies to promote a cooperative 
approach to securing the U.S. supply chain, ensuring diversity of 
supply and responding to global health care challenges and natural 
disasters, without resorting to export controls or other trade 
barriers. In addition, coordinating the expansion of pharmaceutical 
manufacturing with U.S. allies will allow for economies of scale and a 
coordinated approach to global pandemics. Possible signatories would 
include U.S. allies such as Canada, Europe, India, Israel, Japan, 
Jordan and Mexico.

Definitions

      ``Generic drug'' means ``any drug that is marketed under an 
abbreviated new drug application (ANDA) as well an `authorized generic 
drug.' ''

      ``Manufacture'' has the meaning set forth in the Buy American 
Act, 41 U.S.C. Sec. Sec. 8301 8305: ``completion of an article in the 
form required for use by the government in the United States. For drugs 
this means readied for use as a medicine for human consumption.''

                                 ______
                                 
             Statement Submitted by Peter Kolchinsky, Ph.D.

       Safe and inexpensive generic drugs must be made in America

Reliable, high-quality generic drugs are the great value proposition of 
continued biomedical innovation. They are the ultimate price control on 
branded drugs and a unique phenomenon in all of healthcare, where 
nothing else goes generic--not hospitals, not services, not surgery.

Drugs are a manufactured good. The high prices of branded drugs that 
are necessary to incentivize investment in risky research projects are 
like a finite set of mortgage payments. Once a mortgage is paid off, 
America takes ownership of an inexpensive public good. Through their 
taxes and insurance premiums, our parents paid for branded drugs and 
passed them on to us as inexpensive generics, as they might a home. 
Over 90% of all prescriptions in America are for generic drugs \1\ and 
each new drug we invent to improve our standards of care is built on a 
foundation bought and paid for by past generations.
---------------------------------------------------------------------------
    \1\ https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/
medicine-use-and-spending-in-the-us---a-review-of-2018-outlook-to-
2023.pdf?_=1591031020789.

Consider how easy it is to save money on medicines thanks to generics. 
If your cholesterol is high, your doctor might prescribe Lipitor, using 
the brand name of Pfizer's long-generic drug out of habit instead of 
the generic name ``atorvastatin.'' No worries. Your local pharmacy is 
permitted by law to fill your prescription using pills made by any FDA-
approved manufacturer of atorvastatin. Your pharmacy does the shopping 
around for you, playing dozens of manufacturers off one another to get 
the lowest price. You do not have to worry about which company makes 
your atorvastatin because it is now a commodity; everyone has to make 
it to standards of bioequivalence defined by the FDA. You probably care 
more about the manufacturer of your toilet paper than you care about 
who makes your atorvastatin, presumably because you trust the FDA.

False Economy

But here is the dilemma: It is hard to manufacture drugs reliably, 
consistently, and to the highest standard. A company has to care about 
getting the conditions just right and run quality tests at every stage 
to make sure that the intermediates and final product are exactly as 
they should be. And while the company that sells a new, branded drug 
for a high price has a strong profit motive to keep quality high, 
especially because it has to prove to physicians that this new medicine 
can be trusted, the same cannot necessarily be said for generic drug 
companies.

Generic drugs do not always work as well as they should, and 
globalization has greatly exacerbated this problem. Generic drugs have 
not earned and do not deserve our blind trust. As transplant surgeons, 
cardiologists, infectious disease specialists, and psychiatrists have 
increasingly recognized, a generic version of an essential medicine 
manufactured by one company can be more or less potent than the 
original version or a generic manufactured by a different company. A 
generic might not have the stated amount of an active ingredient. It 
may contain deadly impurities. In some cases a generic might release a 
day's worth of drug into the bloodstream all at once; in other cases it 
might release a drug too slowly. That could mean an infection otherwise 
easily controlled might instead turn deadly. Blood pressure or high 
cholesterol could remain unchecked. Or in the case of an organ 
transplant, a patient taking a generic version of an immunosuppressant 
might lose their precious new organ to rejection. Not all generics are 
substandard; some are manufactured correctly and behave the same as 
branded equivalents. But a growing number of Americans are hesitant to 
take that risk, and rightly so. Some physicians will only prescribe the 
branded version of a drug, which often spurs a protracted fight with 
insurance plans that, like the FDA, consider generics interchangeable 
with branded drugs and only want to pay for low-cost generics.

One key reason why generics are unreliable is because they are 
increasingly manufactured overseas, where labor costs and regulatory 
bars are low. This shift has put factories that manufacture generic 
drugs practically beyond FDA oversight, which has long been crucial to 
holding companies accountable for quality standards. In a competitive 
market that takes quality for granted and prioritizes lower costs, it 
only takes one bad apple out of a dozen manufacturers to drive all the 
honest players out of business. As detailed in Katherine Eban's eye-
opening book, Bottle of Lies, the FDA cannot frequently or adequately 
inspect the Indian and Chinese manufacturing plants that produce so 
much of our generic drug supply. Instead of making high-quality 
medicines, many of these companies circumvent quality regulations 
through an escalating game of cat-and-mouse with the FDA. Quality 
testing might be done on samples of Pfizer's own Lipitor, with the 
resulting data passed off as evidence that these factories' 
atorvastatin generics work just as well. When companies are run by 
people without integrity and regulators cannot hold them accountable, 
the dark side of human nature can flourish. In this case, cutting costs 
comes at the expense of Americans' health, health worldwide, and the 
value proposition of biomedical innovation.

I am not suggesting that generic drugs made in America are inherently 
safer because Americans are more ethical. But what I find somewhat 
reassuring is that drugs made in America are made on the FDA's home 
turf where the leading drug regulator in the world can do a more 
effective job of monitoring quality. In the US, where it can conduct 
surprise inspections, the FDA issues plenty of warning letters: more 
than 50 in the last 12 months related to Drug Quality Assurance.\2\ But 
the violations overseas are extreme and all the worse considering that 
the FDA typically gives several weeks' notice to companies that its 
inspectors are coming; time used to clean up their operations, or, in 
some cases, cook their books and coach employees to lie.
---------------------------------------------------------------------------
    \2\ https://www.fda.gov/drugs/enforcement-activities-fda/warning-
letters-and-notice-violation-letters-pharmaceutical-companies.

An American consumer can hold a local pizza shop accountable for having 
a dirty bathroom or rancid cheese by writing a bad review and eating 
elsewhere. But Americans have no such power to demand American-made 
---------------------------------------------------------------------------
drugs manufactured under FDA supervision. Just try it.

Look in your medicine cabinet to see which companies make the generic 
drugs you find there. Odds are good that they are based in India. Now 
google that company's name together with the term ``483'' and odds are 
good you will see that all of these companies committed drug quality 
violations in the last 12 months. You might ask your doctor or 
pharmacist to fill your next prescription only with generics made in 
America. But neither will know how to do that. Your pharmacist is 
driven by competitive forces to purchase drugs at the lowest possible 
cost, which increasingly means from overseas manufacturers. If she even 
has any control over where her pharmacy purchases its atorvastatin, she 
would be hard-pressed to order from a more expensive US-based 
manufacturer if her competitors are ordering cheaper 
Indian-made drugs. Other than writing a prescription for the branded 
version together with the phrase ``Dispense as Written'' (to ensure 
that the pharmacist does not instead dispense a generic), there is 
nothing your doctor can do. But before you think that prescribing only 
branded drugs is the solution, consider the fact that this will make 
most drugs unaffordable. Insurance plans balk at paying brand prices 
for drugs that have gone generic unless a physician personally fights 
for an exception, which few have the time to do. The system is 
fundamentally based on the idea that, for a given drug, all generic 
versions available in the US are equally safe and effective as one 
another and the brand. The consumer has no choice!

COVID and Contracting: An Opportunity

Policymakers are considering repatriating America's drug supply chain 
to avoid future shortages in the context of temporary disruptions 
caused by COVID-19. But they should think bigger. We should repatriate 
the American drug supply to restore and preserve the integrity of all 
generic drugs in America.

That might seem like overkill. Better quality testing of final 
products, as the pharmacy Valisure has started doing, might suffice in 
some cases. The trouble is that the kinds of analytical assays done in 
a lab can only detect some of the defects in a poorly made generic. A 
drug can be made so that it meets all the lab test specifications, for 
example, containing the right amount of the active drug and dissolving 
at the right rate in a beaker, and yet it could still be made in such a 
way that it acts differently in the human body. That is why the FDA 
requires that generics companies prove their final products behave very 
similarly to branded originals in human bioequivalence studies. Once 
they do, then the process that makes that product must be locked down 
and the company must document that it remains religiously adherent to 
that process. The presumption is that, as long as they do, then the 
final product can be trusted to continue to act as documented in 
humans. But if generics manufacturers never even made their generic to 
appropriate specs, lied about their human bioequivalence data, or did 
not continue to adhere to a process that might have been the right 
process initially, then it is not a given that subsequent lab tests 
will detect the failure of their final products to function in patients 
as intended. Those drugs might still cause dose dumping or not release 
enough drug at the right point in the gut, resulting in potentially 
important differences in therapeutic outcome. The bottom line is that 
generic manufacturing must be done to careful specifications, and 
Americans need both the quality of the final products and the processes 
by which they continue to be made to be carefully monitored by a 
regulator, which in the current framework is the FDA. That can only be 
done truly reliably in the US (though close, trusting cooperation with 
certain countries that have similar concerns about low-quality generics 
is conceivable).

Repatriating the entire competitive generic drug market as it exists 
today would be counterproductive. We can rebuild the market smarter and 
more cost-effectively by using long-term procurement contracts: the 
model we already trust to ensure that America has pandemic flu vaccines 
and drugs for smallpox. This idea is already gaining traction. Just 
recently, the federal government awarded a four-year $354 million 
contract to Phlow,\3\ a Virginia-based generic drug manufacturer, to 
produce certain essential generic medicines. That is the right idea. 
Now we need to scale that approach many times over with several other 
companies.
---------------------------------------------------------------------------
    \3\ https://www.prnewswire.com/news-releases/phlow-corporation-
awarded-354-million-hhsas
prbarda-contract-to-manufacture-essential-medicines-in-shortage-
301061648.html?tc=eml_clear
time.

This type of long-term contracting can achieve better quality and might 
also result in even lower prices than we have today. No doubt 
competition achieves the lowest profit margins possible under free 
market principles. But the fixed costs stack up. Even with low profit 
margins, the total costs of maintaining all those competitors can be 
high. Instead of trying to get twenty different generics manufacturers 
to all produce atorvastatin and compete on price, America can negotiate 
long-term contracts with a smaller number of companies, allowing them 
to enjoy greater economies of scale and greater profits while America 
---------------------------------------------------------------------------
pays less overall. Let's call this ``Contractual Genericization.''

Say 20 companies end up making generic atorvastatin in the US, 
competing on price such that no one company makes very much in profit. 
But each of those companies has to cover its fixed costs without 
enjoying economies of scale, and the FDA has that many facilities to 
inspect to ensure high quality. Instead of 20 companies each having to 
cover $5M of fixed cost to make a drug ($100M total), we might have two 
companies serve the US market that each only need to cover $20M of 
fixed costs ($40M total) due to economies of scale (though each company 
would still manufacture the drug at two or more locations to mitigate 
against shortages)--two management teams instead of twenty; fewer, 
larger factories, instead of many smaller ones. Because of the $60M 
difference, America could pay those two companies more generously under 
contract, allowing them to make more profit on an absolute basis, and 
America would still save money compared to the free-market competitive 
system. Their greater profitability would give them a strong incentive 
not to screw up, since failure could mean transfer of the contract 
(essentially management of high-quality manufacturing facilities) to 
another company.

Still, there is no doubt that the underlying costs of making drugs in 
America are higher than doing so elsewhere. Even under long-term 
procurement contracts, American-made generic drugs might not be less 
expensive than the ones we get now. But when the drugs we get now are 
not actually reliable, then whatever low price we pay for them is too 
high. Better to pay what we must for generic drugs that actually work 
as intended than pay less for inferior and dangerous products.

The real benefit to Americans of onshoring generic drug manufacturing 
through contracting would be that we could rely on much tighter quality 
controls. Not only would generic drugs be American-made, creating 
American jobs by companies paying taxes in America, but they would be 
high-quality American made. And with proper funding and incentives, 
innovation and automation of manufacturing--so-called advanced 
manufacturing techniques--can help reduce the costs of producing 
America's drug supply on American soil.

Repatriating generic drug manufacturing does not require that every 
atom of every drug be made in America. American manufacturers could 
still purchase commodity chemicals from overseas, provided that they 
were able to pivot to other sources in case of disruptions and could 
guarantee quality control of those chemicals before they go into final 
products. The final steps of packaging exactly the right chemicals in 
the right combinations at the right pressures in the right formulations 
with the right coatings has to happen on US soil, where FDA oversight 
is rigorous.

We can't do this all at once. We need to start by repatriating our drug 
supply from countries like India and China that have poor track records 
of adhering to Current Good Manufacturing Practices (cGMP) per FDA 
requirements. We can leave countries like Ireland (where many drug 
companies manufacture products for lucrative tax breaks) for last and 
decide at that time whether it is prudent to cut ourselves off entirely 
from foreign production.

It is also important that high-quality generics are available globally. 
As it is, many countries do not trust generic drugs, and rightfully so 
if one considers that overseas manufacturers have a history of sending 
the best of t heir tainted goods to the US and selling the worst to 
Africa, South America, and their own countries. If the US led the way 
in making high-quality generic drugs, we could end up exporting them to 
other countries. At the very least, out of pure self-interest if not 
compassion, America should ensure that everyone in the world gets the 
proper doses of all antibiotics, since underdosing leads to 
antimicrobial resistance that could land on our shores.

Generic Drug Contract With America

The framework I am proposing, the Generic Drug Contract with America, 
would accomplish at least three important goals:

    (1)  Restore the quality of the American generic drug supply by 
repatriating most or all generic drug manufacturing to the US where the 
FDA can keep a close eye on the process.

    (2)  Protect the American drug supply from disruptions like we have 
seen due to COVID-19.

    (3)  Create tens or even hundreds of thousands of high-quality 
American jobs where they are most needed by tying government contracts 
for American-made generics to requirements (with federal subsidies) 
that these companies build their factories in regions and communities 
that have been hollowed out by globalization.

This model can also help solve another growing problem that Congress 
has not even begun to contemplate. Some drugs cannot go generic under 
our existing legal, ethical, and regulatory frameworks. Increasingly, 
the technologies we are using to treat diseases are complex and some 
are near-impossible to copy. If we cannot trust generic manufactures to 
make atorvastatin reliably, they may never be able to make some of the 
antibody-drug conjugates and gene therapies that have recently come to 
market and are on the rise.

The cost of branded drugs that will go generic are worthy, finite 
mortgage payments that America makes towards a medicine that it will 
eventually own as a public good (i.e., generic). But the costs of 
ungenericizable drugs are rent from day one. Companies that sell 
ungenericizable drugs need never worry about a patent cliff. They need 
never hustle to invent a new drug to replace lost revenues when older 
ones face competition. They can just keep making the same thing 
indefinitely. And while even branded drugs often compete with other 
branded drugs (for example, there are several statins, several SGLT2 
diabetes drugs, and several insulin analogs), having two or three 
competitors in a class makes for an oligopoly, which still can tacitly 
collude to extract rents. But there are many cases where only one drug 
in a class is particularly well suited to some patients and therefore 
represents a true monopoly. Reliable generics are the true disruptors 
of oligopolies and monopolies, but that path is not available to 
certain types of drugs.

The order established by the Hatch-Waxman Act in 1984, which introduced 
the idea of modern generics that are interchangeable amongst themselves 
and with the original branded version, did not contemplate biologics or 
how such drugs could ever go generic. Recombinant insulins launched in 
the early 1980s, and other biologics only really started coming to 
market in the 1990s. Yet not until the ACA passed in 2009 with a 
component called the Biologics Price Competition and Innovation Act 
(BPCIA) did we get a pathway for biosimilars. Biosimilars are as close 
to generics for biologics as we can get and yet far from close enough.

The trouble is that the BPCIA was always on weaker ground than Hatch-
Waxman in terms of driving cost savings because it is harder to 
establish interchangeability for a biologic than for a small molecule 
drug (though that is arguably not as easy as we once thought either). 
Without interchangeability at the pharmacy level, an insurer cannot 
just have a pharmacist switch all patients over from a branded biologic 
to its biosimilar and save a plan money. That is because insurers (and 
even their employer clients) are addicted to the rebates they have 
negotiated on branded biologics, which they risk losing by covering 
cheaper biosimilars of a given drug without the assurance of 
successfully saving money by having patients actually switch to those 
biosimilars.\4\
---------------------------------------------------------------------------
    \4\ If a payer spends $200M/year on a branded drug but gets a 40% 
rebate ($80M) in exchange for exclusive formulary status, that payer 
spends a net $120M on the branded drug. If a biosimilar comes along at 
a 65% discount, then converting all patients to it would result the 
drug costing the payer $70M a year, $50M less than they are spending 
now. That is attractive. But if only 10% of patients switch to the 
biosimilar, then the payer spends $7M on the biosimilar and $180M on 
the branded drug (since the rebate would be gone), resulting in greater 
cost. That is how a rebate without interchangeability protects a 
brand's monopoly from biosimilars.

If trying to create a US-based competitive market for generic 
atorvastatin seems hard and expensive, then doing it for insulins and 
antibodies will be impossible. For example, Abbvie's Humira, an 
autoimmune disease antibody, is the most lucrative drug in history. 
It's been on the market for 18 years, much longer than the 10-15 years 
typical of more easily genericized small molecule drugs. It does not 
make sense to wait until five or ten other US companies figure out how 
to make Humira before America considers its $15B/year mortgage on that 
---------------------------------------------------------------------------
drug paid off.

The most reliable manufacturer of any biologic is the company that has 
been making it for years as a branded drug. The same contracting 
mechanism that we use to contract with a few companies to make the US 
generic drug supply can also be used to contract with biopharmaceutical 
companies to continue to make their biologics at a contracted price 
once their patents expire--one that is low, but remains profitable. 
Yes, that is a price control. But it is a fix for the market's failure 
to achieve the same end through competition.

The Generic Drug Contract with America would achieve a key fourth goal:

    (4)  Ensure that even conventionally ungenericizable drugs become 
inexpensive after their patents expire, bringing modern drugs in line 
with the intent of the groundbreaking Hatch-Waxman Act of 1984 that 
established generic drugs as we know them.

Just as Hatch-Waxman allowed for exclusivity extensions to incentivize 
certain kinds of development of branded drugs, such as demonstrating 
how they should be used in children (i.e., 6-month pediatric 
extension), similarly this Contractual Genericization would allow for 
exclusivity extensions to incentivize companies to continue to upgrade 
their branded drugs.

The Great American Drug Deal

The biotechnology industry I know thrives on solving healthcare 
problems. Its efforts to stop COVID are on full display, ingenuity 
flowing like water through the cracks of a rock, searching out its 
weaknesses. This same ingenuity is also targeted at thousands of more 
familiar healthcare problems. Hepatitis C infection can now be readily 
cured with a short course of pills. The lives of many cystic fibrosis 
patients have been transformed over the past five years with oral 
medications. At the pace we are developing new treatments, there is a 
good chance that a mother giving birth to a girl today will never have 
to worry about her daughter dying prematurely of breast cancer.

This scientific hustle exists on a foundation of public funding for 
basic science and some public support for drug development. But it is 
largely fueled by private capital: the cumulative savings of the world, 
from billionaires to schoolteachers' pension funds, searching for an 
attractive return. And it is America's willingness to pay high prices 
for new drugs during their patented period of market exclusivity that 
is the draw for all this private capital. The fact that other countries 
pay less than we do for branded drugs is a function of their 
willingness to deny breakthrough medicines to their citizens and 
America's resolve to back innovation even if it has to do so on its 
own. But America relies on drugs going generic to ensure that our 
country gets value for its investment. And the fact that branded drug 
revenues are finite keeps scientists and investors constantly working 
to develop the next breakthrough. Thanks to the mortgage model brought 
about by the Hatch-Waxman Act, the biotechnology industry evolved into 
a community of builders that charge finite mortgages. If generic drug 
quality remains unreliable and newer drugs remain difficult or 
impossible to genericize, the biotechnology industry risks regressing 
into rent extracting landlords.

For a free market to work, it cannot allow monopolies to extract high 
rents indefinitely. America created the FTC to regulate companies that 
grew into natural monopolies, in some cases breaking them up. America 
also passed laws that regulated natural monopolies, such as PURPA in 
1978, to make sure Americans are not price gouged by electric 
companies.

As the medical historian Jeremy Greene points out in Generic, his 
excellent overview of how America's generic drug model was negotiated 
into existence, while other countries tried to control the price of 
branded drugs, America kept its drug costs in check by requiring 
branded drugs to go generic. That has been our model and it has worked 
to control costs and to incentivize innovation. Without genericization, 
America would be spending hundreds of billions of dollars more per year 
on branded drugs. Because of generics, America spends about $271B on 
branded drugs and only $73B on generics.\5\ As long as we ensure that 
all drugs go generic, through competition or contract, then if we are 
still spending $271B on branded drugs in 2035, it is because all 
currently expensive drugs have become inexpensive generics and the 
biotechnology industry has invented an entirely new set of branded 
drugs. All of these brands will necessarily have to be better than the 
generic drug foundation on which they stand. We are builders and what 
we are building will ensure that our children and grandchildren live 
healthier lives than we do.
---------------------------------------------------------------------------
    \5\ https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/
medicine-use-and-spending-in-the-us---a-review-of-2018-outlook-to-
2023.pdf?_=1591031020789.

We need a Generic Drug Contract with America to ensure the quality of 
our generic drugs, to ensure that all drugs go generic and offer 
America value for its investment, to protect the incentives that drive 
further biomedical innovation from being throttled by the alternate and 
far worse measure of price controls on branded drugs, to ensure 
America's drug supply against global disruption, and to revitalize 
---------------------------------------------------------------------------
America's heartland with good jobs.

Of course, it is impossible to talk about drugs without also addressing 
affordability. As we call for quality generics, we must also call on 
our society to make appropriately prescribed branded drugs affordable 
to patients via proper insurance, which means not allowing out-of-
pocket costs to exceed what patients can afford. Consider why an 
insurance plan demands that a physician get prior authorization before 
prescribing a drug and then, upon deciding the drug is appropriate for 
the patient and granting the authorization, still requires a high out-
of-pocket cost. Is that insurer nudging that patient to disregard her 
physician's recommendation? That is not insurance and therein lies 
America's problem with affordability: it lacks a proper healthcare 
insurance system. The entire drug industry operates on profit margins 
in the low teens, which means that a price cut across the board of just 
20% would wipe out profits and company valuations (and with them the 
value of executive stock-based compensation), and yet does absolutely 
nothing to make a $10,000 drug affordable to a patient that struggles 
with a $6,000 deductible (which means that even if a drug costs $8,000, 
the patient would still have to cover the entire deductible).

So the Generic Drug Contract with America is really part of the greater 
Biotech Social Contract, which requires insurance reform to lower out-
of-pocket costs for all Americans and extend insurance to everyone. 
Amid the COVID crisis, the federal government has already seen the 
wisdom in covering COVID-related costs for the uninsured, a logical 
public health measure. Hopefully those temporary patches on the gap-
ridden system of American healthcare coverage will be made permanent 
and expanded to other diseases, because cancer, diabetes, and many 
other disorders are no less a personal crisis for each patient who 
suffers from them and their families. Indeed, there are reform bills in 
Congress that propose caps on out-of-pocket costs and pair those limits 
with reforms targeting drug manufacturers. This Generic Drug Contract 
with America embraces the genericization of drugs, ensuring that they 
are efficiently manufactured at high quality in the US, as the reform 
necessary for the biopharmaceutical industry to hold up its end of the 
bargain.

There will be those who oppose the Generic Drug Contract with America. 
They may have good reasons. However, we should dispatch the ones that 
are clearly untrue. This is not an assault on free trade; this is a 
necessary response to unreliable trade. This would not be an 
unprecedented incursion of government price regulations into 
pharmaceuticals; the government already contracts with individual 
companies to make the entire US supply of particular drugs where there 
could not be a reliable and cost-effective ``free market,'' such as 
pandemic vaccines and other biodefense countermeasures. California is 
already exploring the possibility of making all of its own generics. 
The federal government has contracted with Phlow to make many generic 
drugs that normally would be sourced from overseas.

I am proposing that we think bigger and, over the course of this next 
decade, make bold strides to repatriate most if not all of our generic 
drug supply under contracts. We must ensure that we always can look 
forward to paying off the mortgage of a drug to take possession of an 
inexpensive, reliable, public good while innovators move on to the next 
set of upgrades of our medical armamentarium. And someday those too 
will go generic.

                                 ______
                                 
                      Natural Products Association

                       440 1st St., NW, Suite 520

                          Washington, DC 20001

                             (202) 223-0101

                           Fax (202) 223-0250

        Statement of Daniel Fabricant, Ph.D., CEO and President

Introduction

The Natural Products Association (NPA) was founded in 1936 to ensure 
that Americans have access to safe and affordable natural products, and 
also to promote and protect the interests of retailers and suppliers of 
natural nutritional foods and natural products. We are the oldest and 
largest trade association in our industry. While the industry has 
existed for many years, it has only recently--since the late 1980s--
transformed into a major engine of economic growth, customer 
satisfaction, and job creation throughout the United States.

When the Dietary Supplement Health and Education Act of 1994 (DSHEA) 
was passed there were an estimated 4,000 dietary supplement products on 
the market. Twenty-five years later, there are between 50,000 and 
80,000 products on the market. This is in large part because more and 
more consumers are turning to these products to maintain their health 
and wellness. But the recent outbreak of COVID-19 also reaffirms the 
importance of consistency from the Food and Drug Administration when 
regulating imported finished products.

The Federal Food, Drug, and Cosmetic Act (the FD&C Act) requires that 
manufacturers and distributors who wish to market dietary supplements 
that contain ``new dietary ingredients'' notify the FDA about these 
ingredients. The notification must include information that is the 
basis on which the manufacturer or distributor has concluded that a 
dietary supplement containing a new dietary ingredient will reasonably 
be expected to be safe under the conditions of use recommended or 
suggested.

Issue

China is the single largest global supplier of cost-effective raw 
materials for the nutritional supplement industry, responsible for 60% 
of the ingredients supplied for finished product manufacturing in the 
nutritional supplement. Furthermore, in the last several years, 
thousands of dietary supplements have flooded the American market while 
the number of New Dietary Ingredients (NDI) submitted to the FDA to 
establish the safety of new dietary ingredients in supplements has 
dropped.

The FDA recently received a budget increase of $3 million to modernize 
its regulatory process for dietary supplements. Despite recent budget 
increases, FDA has failed to take significant action to protect 
consumers from adulterated products and from the proliferation of CBD 
products, which still remain illegal in the U.S. NPA has repeatedly 
requested action from the FDA on CBD, including establishing a safe 
level of daily consumption.

By neglecting its enforcement obligations on NDIs and CBD products, the 
FDA has allowed unsafe and untested dietary supplement products into 
the country, and potentially unsafe products on store shelves. 
Adulterated ingredients that have not completed the NDI notification 
process are entering our country at an alarming rate. This puts 
American consumers at risk and compliant U.S. supplement makers at a 
terrible disadvantage.

According to industry estimates, about 90% of dietary supplement 
products on the market are not required to file an NDI because they 
have been generally recognized as safe. Meaning, they contain dietary 
ingredients which have been present in the food supply and are 
generally recognized as safe. However, that means approximately 4,600 
products on the market have not received FDA scrutiny. Furthermore, the 
Agency has only received 1,100 NDINs, highlighting concerns that these 
products contain counterfeit ingredients.

When a dietary ingredient is introduced into the food supply for the 
first time, manufacturers are required to notify the FDA of their 
intent to market an NDI-
containing supplement at least 75 days before the supplement is 
marketed in the United States. The NDI notification must thoroughly 
identify the ingredient, how it is used in the supplement, and present 
evidence the manufacturer relied upon to determine the ingredient is 
reasonably safe. This provides the FDA with significant oversight on 
the dietary supplement manufacturers' safety assessment of the NDI-
containing dietary supplement.

The Food Safety and Modernization Act (FSMA) directed the Agency to 
issue guidance pertaining to new dietary ingredients. Specifically, 
Congress directed the Agency to clarify ``when a dietary supplement 
ingredient is a new dietary ingredient, the manufacturer or distributor 
of a dietary ingredient or dietary supplement should provide the 
Secretary with information as described in section 413(a)(2) of the 
Federal Food, Drug, and Cosmetic Act, the evidence needed to document 
the safety of new dietary ingredients and appropriate methods for 
establishing the identity of a new dietary ingredient.''

When an American firm's NDI is acknowledged, its valuable intellectual 
property is supposed to be protected. However, the Director of FDA's 
Office of Dietary Supplement Programs admitted that this is not always 
the case, stating that ``it is not all uncommon for stakeholders to say 
that FDA needs to do a better job of enforcing NDIN. There is a degree 
of sympathy to that view, but we don't know what we don't know.''

Unfortunately, the practice of adulterated products NDIs is all too 
common, and it harms legitimate manufacturers. Imported dietary 
supplements are considered adulterated when they purport to contain 
ingredients that have not gone through the NDIN process or are 
misrepresenting the ingredients that the dietary supplements actually 
contain. In 2008, Mitsubishi Gas and Chemical Inc. (MGC) received a 
successful 2008 NDIN submitted to CFSAN. In 2010, a piggybacked 
ingredient began to appear on the market before engaging in the FDA's 
NDIN compliance process for safety concerns. Testing of the product 
revealed differences between MGC's product and the non-compliant 
products, including product impurities. When the piggybacked product 
finally filed NDIs, the FDA questioned the safety of these products, 
including that the notifier failed to address organ damage after 
consumption in an experimental animal model. Yet, this product remains 
on the market. Members of the Natural Products Association, including, 
Natural Alternatives International, Lonza, and others all face similar 
scenarios.

Proposed Solution

NPA proposes a two-pronged public-private partnership approach to 
ensure the safety of the global dietary supplement supply chain:

Import Alerts: The Agency has not published an import alert for dietary 
supplements in several years. The agency last used this authority in 
2014 in response to safety concerns related to the importation of 
Kratom. Creating an import alert for new dietary ingredients that have 
failed to comply with the NDIN regulations would provide the Agency 
with the ability to police the market in a way that is resource 
efficient and consistent with the goals of protecting the public's 
health, and provide the intellectual property protection the industry 
desperately needs. This process would restore integrity to the NDIN 
process, protect intellectual property, and provide the necessary 
safety net our consumers rely on. Since the FDA is prioritizing 
resources and only performing ``for-cause inspections'' during the 
COVID-19 crisis, issuing an import alert for products that are 
adulterated would require no addition al resources and would be an 
effective measure that would provide important information to the 
Agency to facilitate their enforcement of current dietary supplement 
regulations. Placing responsibility back on the importer to ensure that 
products being imported to the United States are in compliance with the 
FDA's laws and regulations is more than an appropriate step providing a 
necessary safety net for American consumers.

Stronger Self-Regulatory Collaboration: The second recommendation is to 
expand the number of companies who agree to meet industry specific 
quality assurance standards in NPA's Supplement Safety and Compliance 
Initiative (SSCI) SCI is an industry-driven initiative led by the 
nation's leading retailers to provide a harmonized benchmark to 
recognize various safety standards throughout the entire dietary 
supplement supply chain. SSCI is a bold step forward in providing 
quality assurance from harvest to retailer shelf. Dietary supplements 
must meet or exceed the SSCI benchmark to be accepted in major 
retailers, all with the goal of providing quality products and 
increasing consumer confidence.

                                 ______
                                 
           Ohio State University, Fisher College of Business
                                            John V. Gray, Professor
                                  Department of Management Sciences
                                                    612 Fisher Hall
                                                   2100 Neil Avenue
                                                 Columbus, OH 43210
                               614-247-8021 Phone; 614-292-1272 Fax
                                       [email protected] (preferred)

U.S. Senate
Committee on Finance
Dirksen Senate Office Bldg.
Washington, DC 20510-6200

Committee:

It is time to stop implicitly incentivizing the foreign production of 
drugs. Producing in low-cost countries is cheaper due to lower 
regulatory costs, not just due to lower input costs. There are ways to 
lower the incentive to offshore pharmaceutical production:

      Currently, foreign inspections are typically pre-announced; 
domestic ones are not. Foreign inspections should routinely be 
unannounced. They must be as stringent as domestic ones.
      Non-domestic producers should be forced to fund the additional 
costs of running a stringent inspection regime if they want to sell 
their drugs in the USA. This fee can be location specific. It can 
partially depend on whether the FDA can rely on a local agency to help 
regulate production in the chosen production location; it could be 
waived where regulations and inspection regimes are deemed already 
comparable (e.g., possibly the MHRA \1\ in the U.K.). Blocked visas and 
similar bureaucratic obstructions should be met with the right to 
refuse import of drugs until inspections are completed.
---------------------------------------------------------------------------
    \1\ https://www.gov.uk/government/organisations/medicines-and-
healthcare-products-regulato
ry-agency.

It is time to make it easier for consumers, doctors, and pharmacists to 
know not only where their drugs are produced. but to be able to 
evaluate their quality risk more easily. Unlike many products, it is 
difficult for consumers, doctors, and pharmacists to detect quality 
deviations in the drugs they take, prescribe, or administer. In the 
generics space, which is the vast majority of the market, purchasing 
and consumption decisions are generally made entirely based on cost.\2\ 
If quality performance were more transparent, producers of generic 
drugs can compete on quality, not just cost.
---------------------------------------------------------------------------
    \2\ https://pubmed.ncbi.nlm.nih.gov/23337525/.

      Currently, the industry considers the production site of a given 
drug to be a trade secret. This needs to change. Consumers, doctors, 
and pharmacists should know exactly where their drugs were made. 
Specifically, regulations should force transparent ``Made In'' labeling 
for drugs, as follows (this can be a website link, QR code, or similar 
if room on packaging and/or updating packaging is too onerous):
          Packaged by: (list plant and address)
          Finished drug product made by: (list plant and 
address)
          Active Pharmaceutical Ingredient (API) made in: 
(list plant and address)
          Excipients made in: (list countries)
       This, combined with already-available inspection and warning 
letter information, could make it possible for a consumer, doctor, or 
pharmacist to get an indication of the quality risk of a drug with 
reasonable effort. Today, it is extremely difficult to do so, as drugs 
cannot be linked to their manufacturing plants.
      Beyond providing production location--an important first step--
more can be done to make the quality risk of drugs visible. The FDA has 
been working on risk models \3\ for some time, creating risk scores for 
plants. Similar risk scores can be created at the drug level. Scores 
recently have been created for valsartan \4\; it's quite possible other 
drug-level models exist. Once these risk scores are determined to be 
reasonably predictive of drug problems in the field (the definition of 
``reasonably'' can be made public; i.e., what is the predictive 
accuracy for what dependent variable?), these risk scores should also 
be made available.
---------------------------------------------------------------------------
    \3\ https://www.fda.gov/media/116004/download.
    \4\ https://www.medrxiv.org/content/10.1101/2020.05.22.20110775v1.
---------------------------------------------------------------------------
      Even better, third-party testing of scientifically valid random 
samples should be performed and made public, at least to healthcare 
professionals. Valisure \5\ has created a market for itself as ``the 
pharmacy that checks.'' But, why should pharmacies have to test drugs 
to ensure their safety? CVS and Walgreens do not do this, meaning that 
the majority of consumers get drugs that rely on testing by the firms 
selling the drugs. I make two points about the testing of drugs for 
quality:
---------------------------------------------------------------------------
    \5\ https://www.valisure.com/.
---------------------------------------------------------------------------
          Unlike many consumer products, consumers/patients 
generally cannot know if there is a problem with their drug by looking 
at it. Further, even after taking the drug, it is hard to pinpoint that 
any side effects are the result of drug quality. This lack of quality 
visibility makes testing more critical in the drug industry than in 
many other industries. It also increases the risk that manufacturers, 
facing cost and delivery pressures, allow drugs to be shipped that did 
not meet all process and/or product specifications.
          Relatedly, testing the quality of drugs is not as 
easy as testing many consumer products. Take, for example, electronics. 
Electronics production lines often have functionality testing built in, 
as the last step of the process, meaning that 100% of the product are 
tested for all--or at least most--potential defects. 100% of drugs 
cannot be tested, as the tests are destructive. Further, 100% of 
possible defects cannot be tested. For example, unforeseen 
contaminants, for which tests are not conducted, could enter the drug 
supply. Or, processing steps could not be followed in a way that 
affects stability (i.e., the efficacy and safety of the drug over 
time); such process deviations may not be evident from tests conducted 
shortly after production. Further, testing is typically at the batch 
level. As more production moves to continuous manufacturing, isolating 
the drugs affected by a test becomes more difficult.
      Transparency in drug manufacturing location and quality will 
make it more profitable to operate with high quality, and less 
profitable to operate with low quality. The market, with knowledge of 
quality, will be willing to pay more for high-quality drugs and less, 
or possibly nothing, for low-quality drugs. This will naturally lead to 
higher levels of quality being built into the manufacturers' processes, 
through market mechanisms.

It is also time to treat drug availability as a national security 
issue. Regulators should not be caught between a rock and a hard place 
in deciding whether to shut down the production of potentially low-
quality drugs at a plant and risk a shortage, or whether to allow 
potentially compromised product into the market to ensure drug 
availability. Government planning should include:

      Identifying drugs whose shortage could pose a national security 
threat.
          Consider Active Pharmaceutical Ingredients (APIs) 
and even excipients in this analysis (i.e., the upstream components 
needed to produce these drugs).
      For these drugs, ensure domestic capability exists to produce 
them; or to ramp up production in the time before shortage (again, 
including APIs and excipients). Or, increase the availability of these 
drugs after a supply loss using the stockpile \6\ (the stockpile needs 
to be cycled through regularly to avoid expiration). The investment in 
capacity to produce/ramp-up vs. investment in the stockpile is a 
tradeoff that will depend, among other things, on: the shelflife/
stability of the drug (and the cost to store), the cost of production 
capacity, and the time to ramp up new capacity. It needs to be a drug-
by-drug analysis.
---------------------------------------------------------------------------
    \6\ https://www.phe.gov/about/sns/Pages/default.aspx.

These regulatory fixes should lead to improvement in both the quality 
---------------------------------------------------------------------------
and availability of drugs.

Sincerely,

John V. Gray

                                 ______
                                 
                       TruTag Technologies, Inc.

                     2200 Powell Street, Suite 1035

                      Emeryville, California 94608

The FDA witnesses in the Senate's COVID-19 and Beyond: Oversight of the 
FDA's Foreign Drug Manufacturing Inspection Process hearing provided 
expert testimony on the nuances of regulating medication during the 
COVID-19 pandemic. The global nature of America's pharmaceutical supply 
chain inherently complicates FDA efforts to safeguard the American 
consumer. As a member of the FDA's Emerging Technology Program, TruTag 
stands ready to assist the FDA and the American public in ensuring that 
both regulators and consumers have the ability to verify that their 
medication is manufactured in certified facilities, regardless of 
packaging.

The stresses on the medical supply chain presented by the COVID-19 
pandemic require novel solutions to ensure that criminal entities 
cannot take advantage of American consumers. Two key points mentioned 
by the FDA witnesses in the June 2nd Senate hearing are the importance 
of developing new enforcement and regulatory tools and an emphasis on 
increasing transparency and accountability in the pharmaceutical supply 
chain. TruTag Technologies' proprietary silica microtagging is 
perfectly suited for supporting both of these critical tasks. By 
encoding existing silica coatings with precise spectral signatures, 
TruTag Technologies has been able to create a tracking solution which 
seamlessly meshes with pharmaceutical manufacturing without increasing 
the cost to consumers. Not only can regulators leverage TruTag 
Technologies' innovation to verify pharmaceutical origin, facilitating 
regulatory agility in the event of new public health crises, 
counterfeiting, or diversion; TruTag Technologies' mobile app enables 
the American consumer to directly confirm the identity and composition 
of their medication, regardless of packaging or labeling. Additionally, 
because TruTags are integrated into the pill coatings themselves, 
TruTags are impossible to counterfeit, unlike existing serialization 
and QR code techniques.

We at TruTag Technologies applaud the FDA's efforts to catalyze new 
technological development to ensure that the United States has access 
to an extensive supply of verified, safe pharmaceuticals; we urge our 
legislators to support the FDA in this vital role.

                                 ______
                                 
                           U.S. Pharmacopeia
It is incontrovertible that the COVID-19 pandemic has exposed 
vulnerabilities in the medicine supply chain. As outlined in our 
comments below, USP believes that now is the time to put in place 
policies and investments to build a more resilient supply chain to help 
ensure patient trust in the consistent supply of safe, quality 
medicines and medical products.

We greatly appreciate the Committee's effort to ensure that the 
medicines Americans rely on meet the quality expectations reflected in 
federal law. The United States drug supply is among the safest in the 
world. However, given the complexity of the global supply chain for 
medicine and the vulnerabilities exposed during this pandemic, we 
believe that it is imperative to take specific steps to strengthen it. 
Within this context, we are pleased to submit the following statement 
for the record on the hearing ``COVID-19 and Beyond: Oversight of the 
FDA's Foreign Manufacturing Inspection Process.''

 Increase transparency in the global supply chain for medicines

Over the last decade, drug manufacturing in the United States has 
become increasingly dependent on foreign sources for both finished drug 
products and active pharmaceutical ingredients (API). It is estimated 
that 70% of API manufacturers for products intended for the U.S. market 
are located outside of the United States, mostly in China and India. In 
this respect, the supply chain is not ``global'' but is 
``concentrated,'' which creates considerable risk when acute 
disruptions occur and raises concerns about America's ability to ensure 
the availability of essential medicines. This was evident earlier this 
year when cities in China shut down and the production of some 
medicines was halted. India also restricted the export of certain 
medicines. Disruptions such as geopolitical crises, natural disasters, 
and pandemics like COVID-19 can cause major interruptions in the supply 
of quality medicines and have a global impact.

USP believes that more transparency is needed in order to more 
accurately pinpoint where medicines and their ingredients are produced. 
For example, while API manufacturers are currently required to register 
with FDA, they do not have to report the quantity of API they produce. 
By requiring API manufacturers to report quantities, FDA would have a 
clearer picture of how much API is produced and by which manufacturers. 
Furthermore, while there has been a greater focus on API, there are 
other, inactive ingredients, also known as excipients, that comprise a 
finished drug product. Additional transparency over the source and 
quantity of these ingredients is needed.\1\ Drug labeling requirements 
are also essential in tracking the supply chain of medicines.
---------------------------------------------------------------------------
    \1\ USP's policy paper on building a more resilient supply chain 
includes additional recommendations for addressing vulnerabilities in 
the global supply chain (see Attachment 1).
---------------------------------------------------------------------------

 Invest in advanced manufacturing technologies for domestic production 
                    of the most critical medicines and API

Among the key elements necessary to build a more resilient supply chain 
is the development and adoption of advanced drug manufacturing 
technologies such as continuous manufacturing. Continuous manufacturing 
is an approach that automates and integrates medicine production from 
start to finish. This reduces the capital investment, physical 
footprint, and environmental impact compared to traditional batch 
manufacturing. Continuous manufacturing, if broadly adopted, will 
greatly increase efficiency to produce critical drugs and API, while 
also ensuring adherence to appropriate quality standards throughout the 
process. This technology has been deployed for the manufacture of 
several innovator drug products, but it has yet to be adopted on a 
wider scale for the most essential (and generally generic) medicines 
that are often needed in a crisis situation.

USP has been working to address barriers to adoption of continuous 
manufacturing by providing testing and analytical research needed to 
ensure quality in this process. Further, USP is taking steps to develop 
training for the workforce needed to broadly operationalize this 
technology. Specifically, we are engaging with academic research 
centers, manufacturers, and regulators to identify and articulate 
appropriate standards and practices that will make advanced 
manufacturing, including continuous manufacturing, more accessible and 
feasible for industry uptake.

We are pleased that there is bipartisan support in Congress for 
legislation (H.R. 4866, S. 3432) that would help promote development of 
continuous manufacturing through designation of National Centers of 
Excellence in Continuous Pharmaceutical Manufacturing. As proposed, 
only qualifying institutions of higher learning would be eligible for 
designation as a Center of Excellence. We believe that other non-profit 
organizations, such as USP, could play an important role in this space 
and urge that the definition of eligible institutions be expanded to 
include qualifying non-profit organizations. USP supports this 
legislation and believes that we can play a robust role in helping to 
accelerate adoption of continuous manufacturing.

Additionally, as Congress considers further action to combat COVID-19 
and strengthen the pharmaceutical supply chain, USP urges that 
additional resources be made available to federal agencies to support 
advanced manufacturing, and that incentives, including market-based 
initiatives, are provided to better enable manufacturers to invest in 
these new technologies.

 Invest in a comprehensive Strategic National Stockpile (SNS)

The pandemic has exposed areas for improvement in the breadth of the 
nation's stockpile of medicines and medical equipment as well as 
important ancillary products. As the United States re-evaluates the SNS 
and bolsters its ability to prepare for, and respond to a pandemic, USP 
believes that ensuring the quality of medicines in the SNS, preparing 
for the need to test the quality of medicines purchased to respond to a 
pandemic, and enhancing medicine manufacturing capacity should be 
priorities.

In response to a request for information from the Department of Health 
and Human Services, we proposed that USP reference standards be part of 
a managed initiative that makes these standards \2\ readily available 
to help ensure the quality of drugs and other medical products included 
in the SNS (see Attachment 2). Enabling readily available access to USP 
reference standards would:
---------------------------------------------------------------------------
    \2\ USP public quality standards include two components that work 
together: documentary standards and reference standards. Documentary 
standards include monographs, which are 
substance-specific or product-specific and articulate the quality 
expectations for a medicine, including its identity, strength, and 
purity. Documentary standards, both in monographs and in general 
chapters, also describe the tests to validate that a medicine and its 
ingredients meet these criteria and provide tests to predict and 
demonstrate how the medicine will be released as it enters the human 
body. These standards are included in the United States Pharmacopeia-
National Formulary (USP-NF) online platform. A USP physical standard, 
also known as a reference standard, is a highly characterized specimen 
of a drug substance or ingredient that facilitates testing to the 
specifications outlined in the USP-NF. Reference standards are used in 
conjunction with documentary standards to verify that a medicine and 
its ingredients adhere to quality requirements. They are rigorously 
tested and evaluated by multiple independent commercial, regulatory, 
and academic laboratories to confirm accuracy and reproducibility.

    1.  Allow government agencies to evaluate the quality of medicines 
purchased to respond to public health emergencies, regardless of the 
manufacturer or manufacturing process;
    2.  Help the government evaluate and ensure the continued quality 
of medicines in the SNS; and
    3.  Help industry and government-funded programs expand 
manufacturing capacity of medicines associated with public health 
emergencies, such as the COVID-19 pandemic.

 Utilize public standards to identify impurities in drug products

The significant safety concerns associated with unsafe levels of 
certain impurities in drug products were recently underscored when 
nitrosamine impurities were found in some widely used medicines, 
leading to major product recalls.

Insights gained from the toxicological science and sources of 
impurities, such as nitrosamines, can be applied to develop risk-based 
approaches to address impurities of potential concern. USP is working 
to support manufacturers and regulators with tools and solutions for 
testing, assessing risk, and understanding potential sources of these 
impurities. For example, we are developing a documentary standard, in 
the form of a general chapter,\3\ that provides broadly applicable 
risk-based approaches and validated tests for manufacturers, with 
accompanying physical reference standards that can be used to verify 
that a medicine and its ingredients pass tests to ensure adherence to 
quality requirements. These will be available later this summer. We are 
confident that these tools (which are validated at USP laboratories), 
will be useful resources to improve product quality. In the longer 
term, USP is working on risk-based predictive tools for handling 
impurities so that problems can be detected earlier, in the hopes of 
preventing large-scale drug recalls.
---------------------------------------------------------------------------
    \3\ USP general chapters are documentary standards that provide 
broadly applicable information to industry on accepted processes, 
tests, and methods to support product development and manufacturing for 
innovative, generic, and biosimilar medicines.

When testing for impurities in general, it is essential to use a method 
demonstrated to be suitable for its intended purpose. Use of 
inappropriate tests and methods can increase the risk of generating 
misleading results, potentially leading to poorer quality of medicines 
and/or requiring industry and regulators to perform potentially 
unnecessary follow-up. This can impact the supply chain and has the 
potential to undermine patient and practitioner confidence in essential 
---------------------------------------------------------------------------
medicines.

Advances in chemistry make it possible to synthesize drug components 
using different methods, which can lead to the development of 
impurities that were not present in previous manufacturing processes. 
Impurities included in a USP monograph represent those expected to be 
present in a product when manufactured under the conditions approved by 
FDA in a specific drug application. Post-approval changes in synthesis 
and manufacturing processes can introduce new impurities that monograph 
tests are not designed to detect. Manufacturers are required to share 
such process changes and information about new impurities with FDA.

Greater transparency and increased information sharing through the 
creation of a shared systematic mechanism between industry, FDA, and 
USP regarding impurities in drugs (including their presence, acceptable 
limits, and control) can help ensure that standards are updated to 
include the most current and relevant quality and safety information 
for all manufacturers. Furthermore, faster detection of impurities can 
occur if manufacturers and regulators can publicly share information on 
new impurities, as appropriate.

Conclusion

We thank the Committee for holding this hearing and drawing attention 
to these important patient safety and medicine quality concerns as we 
continue to address the impact of COVID-19. USP looks forward to 
providing information and expertise and is committed to continue 
working with Congress, FDA, and stakeholders to advance our shared goal 
of helping to ensure the supply of quality medicines for patients.

About USP

USP is an independent, scientific, non-profit organization dedicated to 
improving health through the development of public quality standards 
for medicines, foods, and dietary supplements. Having created quality 
standards for medicines in and outside of the United States for 200 
years, USP has a unique lens into the global medicine supply chain. 
Today, we provide thousands of manufacturers around the world with 
critical standards for ensuring the safety and quality of their 
medicines, including API.

Our mission is to improve global health through public standards and 
related programs that help ensure the quality, safety, and benefit of 
medicines and foods. USP standards are developed by Expert Committees 
and Panels comprised of more than 800 independent, scientific experts 
who collaborate in a transparent process. USP is governed by more than 
460 organizations from the scientific, healthcare practitioner, 
consumer, and industry communities, including dozens of government 
agencies, who together comprise the USP Convention.\4\ Our staff are 
based in the United States and around the world in locations where 
America's medicines and their ingredients are manufactured, including 
India and China. USP staff work with regulators, industry, health care 
practitioners, and other stakeholders to help ensure that our standards 
are utilized effectively to safeguard patients.
---------------------------------------------------------------------------
    \4\ USP's other governing bodies include its Board of Trustees, 
Council of Experts, and Expert Committees.

In addition to being legally recognized in the United States, USP 
standards are recognized in the laws of 40 other countries and are 
utilized in more than 150 countries. While there are many components to 
the regulatory framework to safeguard medicine quality, publicly 
---------------------------------------------------------------------------
available quality standards and adherence to them remain foundational.

                                 ______
                                 

Attachment 1

                   USP Global Public Policy Position

         Key Elements to Building a More Resilient Supply Chain

Issue

Today, patients in the United States and around the world depend on 
medicines--and the ingredients used to make those medicines--sourced 
from and manufactured around the globe. This global supply chain for 
medicines, while providing some inherent risk mitigation, has numerous 
vulnerabilities that can be challenged by acute disruptions. When such 
a disruption occurs, concerns arise regarding the quality and safety--
as well as shortages--of medicines, particularly those used for 
critical treatments. Unfortunately, the COVID-19 pandemic brought these 
impacts into sharp focus.

           11 Key Elements for a More Resilient Supply Chain

USP supports a comprehensive public policy framework to build a more 
resilient supply chain, including advancing the use of pharmacopeial 
standards across the supply chain, to help ensure the supply of quality 
medicines. We propose the following key elements be integrated into 
policy frameworks to build more resilience into the medicines supply 
chain.

Foster more, not less, supply chain diversity

1.  Increase geographic diversity for ingredients and manufacturing--
Policymakers should incentivize geographic diversity among the sources 
of medicine ingredients and drug manufacturing to reduce the risk of 
shortages from acute disruptions that occur in one geographical 
location (e.g., earthquake, hurricane, political disruption) or that 
move from one part of the world to others (e.g., pandemic).

2.  Establish baseline of local production capacity--Governments and 
manufacturers should facilitate the development of local production 
capabilities to secure a supply of essential quality-assured medicines 
and vaccines for their population when acute disruptions arise.

Invest in more manufacturing capacity for critical medicines

3.  Facilitate an adequate supply of therapeutics and vaccines--
Governments should help ensure an appropriate supply of the medicines 
and vaccines needed to address the most urgent public health concerns 
by leveraging capital investments to facilitate additional 
manufacturing capacity, implementing policy reforms to encourage 
greater competition, and ensuring access to quality and affordable 
medicines.

4.  Invest in advanced technologies--Governments should incentivize 
advanced technologies (e.g., continuous pharmaceutical manufacturing) 
through direct investments and other measures to enable more efficient 
and nimble production of essential medicines and vaccines and to buffer 
against disruptions in supply during a global crisis.

Enable more transparency and data sharing

5.  Increase transparency across the supply chain--To enable 
appropriate actions--in and across countries--to address and avoid 
potential supply chain concerns, governments should expand public 
reporting requirements to healthcare providers and industry for 
indicators on existing or potential drug shortages. Drug manufacturers 
and ingredient suppliers should be required to monitor and report to 
governments on their capacity and the quality of ingredients they 
source.

6.  Enhance global cooperation--Pharmacopeias and regulators around the 
world should increase information-sharing and consider recognition and 
reliance agreements. This will help to efficiently mobilize resources 
during public health emergencies such as pandemics, coordinate access 
to essential medicines and vaccines, and disincentivize a market for 
substandard and falsified medicines.

Conduct crisis contingency planning and action

7.  Require contingency planning--Policymakers should encourage and 
incentivize medicine manufacturers to develop backup plans, including 
for production lines and quality control. Manufacturers of critical 
medicines also should have other redundancies in place in the event of 
an acute disruption, to ensure continued access to quality medicines.

8.  Build and maintain critical medical product stockpiles--Governments 
should build and maintain stockpiles of critical medicines and medical 
products to be prepared to meet the needs of patients and healthcare 
providers if product shortages result from a crisis. The composition of 
products in national stockpiles should be continually reviewed and 
modified to address the most likely shortages of the most critical 
products. Medical supplies to protect the safety of frontline 
healthcare workers should be a priority.

9.  Plan for distribution resilience--Governments should issue 
enforceable guidance to ensure the free flow of ingredients and 
materials (including quality standards and physical reference 
standards) to enable medicine manufacturing to continue during a 
crisis. In addition, governments should develop contingency plans to 
ensure that distribution logistics are in place to transport critical 
medical products to providers.

Strengthen regulatory systems and quality assurance

10.  Strengthen regulatory oversight--Governments should invest in 
stronger regulatory systems that can efficiently review applications 
for therapeutics and vaccines, and enforce existing regulations that 
protect patient safety, including adherence to quality standards. 
Reliance mechanisms or regional regulatory systems can operate as 
networks to share information on quality, efficacy, and safety, thereby 
reinforcing regulatory oversight.

11.  Bolster quality assurance systems and adherence to public quality 
standards--Regulators should strengthen quality assurance systems 
through investments in workforce training and national drug quality 
control laboratories and should stress adherence to science-based 
public quality standards, which are essential to maintaining the trust 
of healthcare professionals and patients in medicine quality. Moreover, 
countries around the world should ensure compliance to international 
standards, including good manufacturing practices and science-based 
public quality standards, so that medicines and ingredients from more 
locations can be trusted in the global supply chain.

Discussion

Over the last decade or so, global medicines supply chains have moved 
from being vertically integrated, where a drug manufacturer owns or 
controls most aspects of production (including suppliers), to 
horizontal, where many functions in the supply chain (such as the 
production of both active pharmaceutical ingredients (APIs) and 
inactive ingredients) are increasingly outsourced to many companies 
around the world. In many cases, these companies are concentrated in 
certain geographical areas.

The COVID-19 pandemic has exposed vulnerabilities in the current way 
the medicines supply chain works, including geographically concentrated 
sourcing and manufacturing, uneven regulatory environments, and 
regulatory enforcement or inspection capacity constraints. Many 
countries may soon, if they have not already, face disruptions such as 
medicine shortages, concerns over substandard or falsified medicines, 
and price volatility. Having policies in place to build a more 
resilient supply chain can help ensure the continued availability of 
safe, quality medicines for patients around the globe-even in times of 
a pandemic crisis. While the current COVID-19 crisis points to the 
supply chain impact of a pandemic, other acute supply chain disruptors 
include weather events such as hurricanes and earthquakes, as well as 
product recalls.

The globalization of supply chains has led to geographic concentration 
of manufacturers of both ingredients and finished medicines in certain 
locations where labor and raw material costs may be lower, 
environmental regulations more permissive, and infrastructure 
subsidized by the public sector. While this concentration has likely 
led to lower costs for many medicines and their ingredients, it poses a 
risk to the reliability of supply in crisis situations and raises 
quality and safety concerns.

During a pandemic, sourcing from only a few countries can have 
unintended consequences. For example, countries that make medicines and 
APIs may withhold essential public health resources--including 
therapeutics intended for COVID-19--as well as other therapies needed 
to address national health priorities. For instance, India briefly 
withheld exports on selected medicines, including some antibiotics and 
painkillers, and has restricted the export of antimalarials now being 
considered as potential (though still unproven) treatment options for 
COVID-19.\1\, \2\ Countries may also compete with each other 
to procure medications. Diversifying sources of both pharmaceutical 
ingredients and finished medicines can help reduce the risk of 
concentration in only one place, and appropriate incentives to 
facilitate this diversification should be considered.
---------------------------------------------------------------------------
    \1\ Government of India Ministry of Commerce and Industry. 
Department of Commerce. Directorate General of Foreign Trade. Amendment 
in Export Policy of APIs and formulations made from these APIs. New 
Delhi. March 3, 2020. https://dgft.gov.in/sites/default/files/Noti%2050
_pdf.
    \2\ Government of India Ministry of Commerce and Industry. 
Department of Commerce. Directorate General of Foreign Trade. New 
Delhi. Amendment in Export Policy of Hydroxychloroquine. https://
dgft.gov.in/sites/default/files/notification%2054_0.pdf.

Increased line-of-sight across all parts of the supply chain can also 
help make the supply chain stronger. Regulators, along with pharmacies, 
hospitals, and providers, need to know more about where medicines and 
ingredients are manufactured and how they have passed through the 
supply chain. This information can inform risk mitigation decisions and 
help governments and providers plan for the supply of quality medicines 
needed to treat patients. This is essential to building and maintaining 
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the public's trust.

Today, regulators have limited and inconsistent information on the 
sources of the ingredients in medicines or the volume of medicines 
produced from manufacturing facilities around the world. Information-
sharing between regulators and industry is also needed to see clearly 
across the supply chain. New reporting requirements for finished drug 
products and ingredient makers can increase transparency and should be 
balanced with appropriate protections for trade secrets and 
confidential commercial information. Further, if manufacturers can use 
new technologies (e.g., AI) to strengthen their ability to monitor 
their suppliers, and thereby understand the global presence of both 
their suppliers and their subcontractors, they may be able to mitigate 
problems more immediately as they arise.

A requirement for drug and API manufacturers to develop contingency 
plans in the event of a disruption in production would help to ensure a 
continued supply of quality medicines. Such measures should include 
establishing alternative sources of API and other ingredients, shifting 
production lines, and implementing quality control. These contingencies 
should also apply to ensuring the availability of medical products such 
as personal protective equipment, bags for intravenous fluids, 
syringes, and other supplies needed to provide care that would be 
impacted by supply chain disruptors.

Strong regulatory oversight is needed to withstand disruptions in the 
supply chain. Strengthened oversight by regulatory authorities includes 
deployment of tools such as supplier verification and audits to ensure 
the quality of ingredients, along with track-and-trace mechanisms to 
determine drug and ingredient current and past locations. Risk-based 
analysis can help countries understand the most critical--or 
vulnerable--points in the supply chain. In the absence of tracking and 
tracing of products, especially as the supply chain diversifies, 
quality testing can serve as a last line of defense. During times of 
crisis, aggressive enforcement action by regulatory bodies against 
substandard and falsified products, unverified or false claims of 
treatments or cures, and price gouging, is needed to prevent further 
harm.

Advanced manufacturing technologies, such as continuous manufacturing, 
provide more streamlined, consistent, and efficient production of 
medicines than traditional approaches. Efforts to operationalize this 
technology, including incentives to allow for its rapid deployment, 
should be pursued. Given the current global pandemic, countries should 
incentivize and accelerate longer-term efforts to help expand the 
continuous manufacturing infrastructure in both the United States and 
in other countries for generic and branded medicine production.

Enhanced global cooperation can help countries secure critical 
medicines, especially in light of challenges caused by border closures 
as a result of COVID-19. Regulatory authorities that share information 
have expedited the approval of essential vaccines and medicines, 
prevented the distribution of substandard and falsified medicines, and 
quickly mobilized resources during drug shortages and public health 
emergencies. A recognition or reliance arrangement, whereby one agency 
recognizes or relies on another's work as equivalent to its own, allows 
medicine regulators to make use of shared information while being able 
to make their own decisions. Examples of information that regulators 
can share with each other include clinical assessments, manufacturing 
site inspections, and post-market safety data.

Maintaining the quality of medicines during a global crisis is 
paramount to ensuring they work in the way they are intended. In 
responding to disruptions, countries may purchase medicines from 
untested suppliers, which in turn could create a market for substandard 
or falsified medicines.\3\ Low- and middle-income countries are 
especially vulnerable, as their already under-resourced regulatory 
systems would come under additional stress. Consumers may also buy 
medicines from the Internet, where oversight is weaker and bad actors 
proliferate. In addition, the urgency to develop new therapeutics and 
vaccines cannot be separated from the need to assure quality. Ensuring 
pharmacopeial standards are met across the supply chain can help 
regulators and industry ensure continued access to quality medicines.
---------------------------------------------------------------------------
    \3\ Pisai, Elizabeth. ``The COVID pandemic increases the chance 
that your other medicines won't work.'' Medium. March 29, 2020. https:/
/medium.com/@elizabethpisani/the-cov1d-pandemic-increases-the-chance-
that-your-other-medicines-wont-work-66b7e272bb20.

Encouraging greater competition, especially for products with either a 
single source or few manufacturers, would help lead to increased access 
to critical medicines. Once a vaccine for COVID-19 is discovered and 
approved for use, local capacity to manufacture may become a priority 
---------------------------------------------------------------------------
to ensure widespread, equitable, and rapid distribution.

It also is important that governments plan for resilience in 
distribution. Regulators should issue standing guidance that clarifies 
the ingredients, materials, and standards that must remain available in 
global commerce for the manufacture of critical medicines. Moreover, 
contingencies for the transport of medicines and medical supplies is 
essential to account for the potential malfunction of traditional 
transportation modalities in a crisis situation. In addition to 
contingency planning for medicines, it is equally essential for 
personal protective equipment to protect the safety of frontline 
healthcare workers. Distributors, including wholesalers, must follow 
good distribution practices to assure medicine and ingredient quality 
through procurement, purchasing, transport, distribution, repackaging, 
relabeling, storage, and documentation. Logistics and transport 
considerations are critical to ensuring essential medicines can make it 
to patients.

Finally, to be prepared to meet the needs of patients and healthcare 
providers if product shortages result from a crisis, governments should 
build and maintain stockpiles of critical medicines and medical 
products with unexpired inventory. The composition of products in 
national stockpiles should be continually reviewed and modified to 
address potential shortages of the most critical medical products.

Call to Action

USP encourages investment and policy reform toward building a more 
resilient global supply chain. The current vulnerabilities in the 
supply chain are the result of a number of factors, so solutions to 
address these vulnerabilities must account for these variations. The 
key elements outlined above require action by all those in the supply 
chain, including manufacturers, distributors, policymakers and 
regulators, and public health experts.

About USP

Founded in 1820, USP is an independent, nonprofit, science based 
organization that safeguards the public's health globally by developing 
quality standards for medicines, dietary supplements, food ingredients, 
and healthcare quality. USP standards describe specifications and tests 
for identity, strength, quality, and purity. USP standards are 
enforceable by the U.S. Food and Drug Administration (FDA) for 
medicines and their ingredients imported into or marketed in the United 
States and have been used in more than 140 countries. Such standards 
also assist industry in the development, manufacturing, and testing of 
medicines. USP standards are developed by independent experts through a 
transparent scientific process, with input from stakeholders and 
federal agencies such as FDA and the Centers for Disease Control and 
Prevention.

USP's Promoting the Quality of Medicines Plus (PQM+) program improves 
access to quality-assured priority medicines and addresses the 
proliferation of poor-quality medical products in low- and middle-
income countries. PQM+ strengthens medical product quality assurance 
systems in low- and middle-income countries through cross-sectoral and 
systems strengthening approaches and the application of international 
quality assurance standards across the pharmaceutical system.

USP is implementing a comprehensive program to support the public 
health response to the COVID-19 pandemic. Our immediate work is focused 
on facilitating the supply of quality medicines across the global 
supply chain--especially for those medicines that treat symptoms 
associated with the virus--by working closely with regulators, 
manufacturers, and other stakeholders around the world. We are also 
engaging in middle- and long-term activities to assess vulnerabilities 
in the global supply chain for medicines, advocate for greater 
transparency and more diversity in the sources of medicines and their 
ingredients, and ultimately help build a more resilient supply chain.

                                 ______
                                 

Atttachment 2

June 3, 2020

U.S. Department of Health and Human Services (HHS)
Office of the Assistant Secretary for Preparedness and Response (ASPR)
Division of the Strategic National Stockpile (DSNS)

Re: RFI # 75A50120NEXTGENSNS

Dear Sir/Madam,

The United States Pharmacopeia (USP) appreciates the opportunity to 
provide comments in response to the request for information (RFI) from 
HHS/ASPR/DSNS on the Strategic National Stockpile (SNS). USP is an 
independent, scientific, nonprofit public health organization founded 
in 1820 that works to improve health through the development of public 
standard s and related programs that help ensure the quality, safety, 
and benefit of medicines and foods.

USP's public standards define quality expectations for medicines and 
are developed by Expert Committees and Panels, which are comprised of 
over 1,000 independent, scientific experts and include the 
participation of over 100 government liaisons from the Food and Drug 
Administration (FDA). The United States Pharmacopeia-
National Formulary (USP-NF) includes over 5,000 documentary quality 
standard s for drug substances and drug products.\1\ Material reference 
standards are used in conjunction with these documentary standards to 
verify that a medicine and its ingredients can pass tests to ensure 
adherence to quality requirements. USP standards are legally recognized 
in the United States and are used in more than 150 countries.
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    \1\ USP standards are developed through an open, transparent, 
expert-based process, offering the ability to respond to public health 
emergencies, adapt to new industry practices, and support evolving 
science and technology.
---------------------------------------------------------------------------

 Response to Section 1/Question 1--``Do you agree with the stated 
                    objectives of the SNS? Have we missed anything 
                    major in articulating our vision?''

USP supports the objectives of the SNS and the expansion of public-
private partnerships. USP believes that a contempora1y SNS will need to 
include an appropriate volume of the most critical medicines, 
manufactured and maintained to quality expectations. To ensure the 
quality of these medicines, as well as any that are manufactured and 
purchased by the U.S. government during a crisis, the SNS should also 
include the USP material reference standards required to test these 
medicines.

As explained in more detail below, enabling readily available access to 
USP reference standards would: (1) help industry and government-funded 
programs expand manufacturing capacity of medicines associated with 
pandemics, such as COVID-19; (2) allow government agencies to evaluate 
the quality of medicines purchased to respond to a pandemic, regardless 
of the manufacturer or manufacturing process; and (3) help the 
government evaluate and ensure the continued quality of medicines in 
the SNS.

 Response to Section 1/Question 3--``How can your organization 
                    contribute to achieving the vision for the SNS?''

USP stands ready to help ensure that the medicines in the SNS are 
quality assured. Specifically, we propose that USP reference standards 
be part of a managed initiative that makes reference standards for 
stockpiled medicines available to test medicines in the SNS for their 
quality.\2\ Readily available standards will enable regulators to 
evaluate and ensure the quality of medicines in the SNS. Moreover, a 
managed SNS invento1yof reference standards would support industry and 
government-funded programs to expand the manufacturing capacity for 
quality medicines during a crisis. It is essential for public health 
and patient safety that the quality of drugs in the SNS is ensured, and 
reference standards are necessary to do this.
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    \2\ USP also recommends including in the SNS items such as 
chromatography equipment and substances (e.g., reagents) for use in 
conducting tests and analyses with reference standards.

As stated above, USP public quality standards include two components 
that work together: documenta1y standards and reference standards. 
Documentary standards are substance-specific or product-specific that 
articulate the quality expectations for a medicine, including its 
identity, strength, and purity. Documentary standards also describe the 
tests to validate that a medicine and its ingredients meet these 
criteria. These are included in the USP-NF online platform in the form 
of monographs. A USP physical standard, also known as a reference 
standard, is a highly characterized specimen of a drug substance or 
ingredient that facilitates testing to the specifications outlined in 
the USP-NF. Reference standards are used in conjunction with 
documentary standards to verify that a medicine and its ingredients 
adhere to quality requirements.\3\ They are rigorously tested and 
evaluated by multiple independent commercial, regulatory, and academic 
laboratories to confirm accuracy and reproducibility.
---------------------------------------------------------------------------
    \3\ Additional information on the use of reference standards can be 
found in guidances from the Food and Drug Administration (FDA) and 
International Conference on Harmonisation of Technical Requirements for 
Registration of Pharmaceuticals for Human Use (ICH). See ``Analytical 
Procedures and Methods Validation for Drugs and Biologics,'' at https:/
/www.fda.gov/files/drugs/published/Analytical-Procedures-and-Methods-
Validation-for-Drugs-and-Biologics.pdf; ``Q6B Specifications: Test 
Procedures and Acceptance Criteria for Biotechnological/Biological 
Products,'' at https://www.fda.gov/media/71510/download; and ``Q7 Good 
Manufacturing Practice Guidance for Active Pharmaceutical 
Ingredients,'' at https://www.fda.gov/media/71518/download.

In addition to being required for quality testing, reference standards 
and access thereto in a time of crisis facilitate the expeditious 
production of quality medicines for the SNS. USP reference standards 
support manufacturer's ability to test its products during the drug 
manufacturing process. Ready access to standards--both documentary and 
reference--is especially needed, and in greater quantities, when drug 
---------------------------------------------------------------------------
manufacturing is increased to meet a surge in demand.

In response to increased demand for pa1iicular drug products related to 
the current pandemic, USP has taken steps to ensure continued 
operations of essential services, including the production of reference 
standards, to minimize disruptions and support the medicines supply 
chain. Looking ahead, however, it is difficult to predict all rapid 
increases in demand. Setting aside specific reference standards 
maintained at USP facilities in Ma1yland to support the SNS will help 
secure capacity and support production of critical medicines, 
particularly in a time of crisis. USP can work with HHS/ASPR/DSNS to 
determine which reference standards, and the volume of each standard, 
are needed for the current and evolving stockpile.

                                 * * *

Thank you again for the oppo1iunity to comment on this RFI. USP stands 
ready to work with HHS/ASPR/DSNS to help support manufacturer capacity 
to produce drugs that meet quality standards. For more information, 
please contact Carrie Harney, Senior Director, Government Affairs, 
Policy and Advocacy, at [email protected] or (202) 239-4136.

Sincerely yours,

Anthony Lakavage, J.D.
Senior Vice President, Global External Affairs
Secretary, USP Convention and Board of Trustees
[email protected]
(301) 816-8334

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