Drug Safety: Preliminary Findings Suggest Weaknesses in FDA's	 
Program for Inspecting Foreign Drug Manufacturers (01-NOV-07,	 
GAO-08-224T).							 
                                                                 
Many drugs marketed in the United States are manufactured in	 
foreign countries and the value of such products entering the	 
country is increasing. The Food and Drug Administration (FDA) is 
responsible for overseeing the safety and effectiveness of human 
drugs that are marketed in the United States, whether they are	 
manufactured in foreign or domestic establishments. Foreign	 
establishments that market their drugs in the United States must 
register with FDA and FDA inspects foreign establishments to	 
ensure that they meet the same standards that are required of	 
domestic ones. GAO reported 9 years ago that FDA needed to	 
improve its foreign drug inspection program (GAO/HEHS-98-21).	 
Questions remain as to whether FDA has improved its management of
the foreign drug inspection program. This statement discusses	 
preliminary information on (1) the extent to which FDA has	 
accurate data to manage the foreign drug inspection program, (2) 
the frequency of foreign inspections and factors influencing the 
selection of establishments to inspect, and (3) issues unique to 
conducting foreign inspections. To address these issues GAO	 
interviewed FDA officials; reviewed pertinent statutes, 	 
regulations, and guidance; and analyzed information from FDA	 
databases. Because of the preliminary nature of our work, we are 
not making recommendations at this time.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-224T					        
    ACCNO:   A77892						        
  TITLE:     Drug Safety: Preliminary Findings Suggest Weaknesses in  
FDA's Program for Inspecting Foreign Drug Manufacturers 	 
     DATE:   11/01/2007 
  SUBJECT:   Accountability					 
	     Data integrity					 
	     Databases						 
	     Food and drug legislation				 
	     Foreign governments				 
	     Imported drugs					 
	     Importing						 
	     Inspection 					 
	     International relations				 
	     Investigations by federal agencies 		 
	     Pharmaceutical industry				 
	     Prescription drugs 				 
	     Product safety					 
	     Program management 				 
	     Risk assessment					 
	     Program implementation				 

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GAO-08-224T

   

     * [1]Background
     * [2]FDA Lacks Accurate Information to Effectively Manage the For
     * [3]FDA Conducts Relatively Few Foreign Establishment Inspection

          * [4]Relatively Few Foreign Establishments Are Inspected by FDA E
          * [5]The Need to Conduct Preapproval Inspections Associated with
          * [6]FDA's Risk-Based Process Is Used to Select Relatively Few Fo

     * [7]Challenges Unique to Foreign Inspections Influence the Manne
     * [8]Concluding Observations
     * [9]Contacts and Acknowledgments

          * [10]Order by Mail or Phone

     * [11]PDF6-Ordering Information-Young-10-25-07.pdf

          * [12]GAO's Mission
          * [13]Obtaining Copies of GAO Reports and Testimony

               * [14]Order by Mail or Phone

          * [15]To Report Fraud, Waste, and Abuse in Federal Programs
          * [16]Congressional Relations
          * [17]Public Affairs

Testimony

Before the Subcommittee on Oversight and Investigations, Committee on
Energy and Commerce, House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery
Expected at 10:00 a.m. EDT
Thursday, November 1, 2007

DRUG SAFETY

Preliminary Findings Suggest Weaknesses in FDA's Program for Inspecting
Foreign Drug Manufacturers

Statement of Marcia Crosse, Director

Health Care

GAO-08-224T

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today as you examine the Food and Drug
Administration's (FDA) inspections of foreign drug manufacturers whose
products are imported into the United States. In 1998, we reported that
FDA needed to improve its foreign drug inspection program.^1 Among other
things, we noted that FDA had serious problems managing its foreign
inspection data and that it lacked a comprehensive automated system for
tracking this important information. We were also critical of the number
of inspections FDA conducted at foreign manufacturers. At that time, FDA
reported on our growing dependence on imported pharmaceutical products,
noting that as much as 80 percent of the bulk drug substances^2 used by
manufacturers in the United States to produce prescription drugs was
imported and that the number of finished drug products manufactured abroad
for the U.S. market was increasing. Today, we are still dependent on
foreign establishments^3 manufacturing drugs for the U.S. market as the
value of pharmaceutical products coming into the United States from abroad
continues to increase.^4

Given the importance of FDA's foreign drug inspection program, you
expressed concern about FDA's ability to oversee foreign establishments
manufacturing drugs and asked whether FDA has improved its management of
the foreign drug inspection program since our previous report was issued.
My testimony today will summarize preliminary findings from our ongoing
work to update our 1998 report. My remarks will focus on (1) the extent to
which FDA has accurate data to manage its foreign drug inspection program,
(2) the frequency of foreign inspections and factors influencing the
selection of establishments to inspect, and (3) issues unique to
conducting foreign inspections.

^1GAO, Food and Drug Administration: Improvements Needed in the Foreign
Drug Inspection Program, [18]GAO/HEHS-98-21 (Washington, D.C.: Mar. 17,
1998).

^2A bulk drug substance is any substance that is represented for use in a
drug that, when used in the manufacturing, processing, or packaging of a
drug, becomes an active ingredient or a finished drug product. 21 C.F.R. S
207.3(a)(4)(2007).

^3FDA regulations define an establishment as a place of business under one
management at one general physical location. 21 C.F.R. S
207.3(a)(7)(2007). Drug firms may have more than one establishment.

^4According to GAO analysis of International Trade Centre data, the value
of pharmaceutical imports increased 42 percent from 2001 to 2005 adjusted
for pharmaceutical inflation. The International Trade Centre is a joint
agency of the United Nations Conference on Trade and Development and the
World Trade Organization.

To address these issues, we interviewed officials from FDA's Center for
Drug Evaluation and Research (CDER) and Office of Regulatory Affairs
(ORA), which each have responsibilities for managing the foreign drug
inspection program. We reviewed pertinent statutes and regulations as well
as agency documents that provide guidance on conducting inspections and
provide the basis for FDA's assessment of an establishment's compliance
with current good manufacturing practices (GMP).^5 These documents
included FDA's Compliance Program Guidance Manuals, its Guide to
Inspections of Foreign Pharmaceutical Manufacturers, and its
Investigations Operations Manual 2007. We also obtained information from
FDA databases on establishments whose drugs have been imported into the
United States. Specifically, we obtained data from the Drug Registration
and Listing System (DRLS), the Field Accomplishments and Compliance
Tracking System (FACTS), and the Operational and Administrative System for
Import Support (OASIS). We assessed the reliability of these data by (1)
reviewing existing information about the data and the databases that
produced them, (2) interviewing agency officials knowledgeable about the
data, and (3) performing electronic testing of data elements from FACTS.
We found the data in the FACTS database reliable for our purposes. We also
found that DRLS was reliable, to the extent that it accurately reflects
information provided by foreign establishments that register to market
drugs in the United States. However, we determined that these data do not
necessarily reflect all foreign establishments whose drugs are imported
into the United States. In addition, we found that OASIS is likely to
over-estimate the number of foreign establishments whose drugs have been
imported into the United States, due to uncorrected errors in the data.
Therefore, we present information from both DRLS and OASIS to illustrate
the variability in information that FDA's databases provide to agency
officials on this topic. This represents the best information available
and is what FDA relies on to manage its foreign drug inspection
activities. Our ongoing work is focused on human drugs regulated by CDER
and not on biologics,^6 medical devices, veterinary medicines, or other
items or products for which FDA conducts inspections. We received
technical comments on a draft of this statement from FDA, which we
incorporated as appropriate. Our work is being performed in accordance
with generally accepted government auditing standards.

^5GMPs provide a framework for a manufacturer to follow to produce safe,
pure, and high-quality products. See 21 C.F.R. pts. 210, 211 (2007).

^6Biologics are materials, such as vaccines, derived from living sources
such as humans, animals, and microorganisms. Some biologics are regulated
by CDER and inspections related to those products are included in our
work.

In summary, our preliminary results indicate that more than 9 years after
we issued our last report on this topic, FDA's effectiveness in managing
the foreign drug inspection program continues to be hindered by weaknesses
in its data systems. FDA does not know how many foreign establishments are
subject to inspection. FDA relies on information from several databases
that were not designed for this purpose. One of these databases contains
information on foreign establishments that have registered to market drugs
in the United States, while another contains information on drugs imported
into the United States. One database indicates about 3,000 foreign
establishments could have been subject to inspection in fiscal year 2007,
while another indicates that about 6,800 foreign establishments could have
been subject to inspection in that year. Despite the divergent estimates
of foreign establishments subject to inspection generated by these two
databases, FDA does not verify the data within each database. For example,
the agency does not routinely confirm that a registered establishment
actually manufactures a drug for the U.S. market. However, FDA used these
data to generate a list of 3,249 establishments from which it prioritized
establishments for inspection.

Because FDA is not certain how many foreign establishments are actually
subject to inspection, the percentage of foreign establishments that have
been inspected cannot be calculated with certainty. We found that FDA
inspects relatively few foreign establishments. Using the list of 3,249
establishments from which FDA prioritized establishments for inspection,
we found that the agency may inspect about 7 percent of foreign
establishments in a given year. At this rate, it would take FDA more than
13 years to inspect each foreign establishment on this list once, assuming
that no additional establishments are subject to inspection. FDA cannot
provide the exact number of foreign establishments that have never been
inspected. Most of the foreign inspections are conducted as part of
processing a new drug application (NDA) or an abbreviated new drug
application (ANDA),^7 rather than as GMP surveillance inspections, which
are used to monitor the quality of marketed drugs. Although FDA used a
risk-based process to develop a prioritized list of foreign establishments
for GMP surveillance inspections in fiscal year 2007, few such inspections
are completed in a given year. According to FDA, about 30 such inspections
were completed in fiscal year 2007 and at least 50 are targeted for
inspection in fiscal year 2008. Further, the data on which this risk-based
process depends limits its effectiveness.

^7FDA must approve an NDA in order for a new drug product to be marketed
in the United States; approval for a generic drug is sought through an
ANDA. FDA also reviews scientific and clinical data contained in these
applications, as part of its process in considering them for approval to
be marketed.

Finally, the very nature of the foreign inspection process involves unique
circumstances that are not encountered domestically. For example, FDA does
not have a dedicated staff to conduct foreign inspections and relies on
those inspecting domestic establishments to volunteer. While FDA may
conduct unannounced GMP surveillance inspections of domestic
establishments, it does not arrive unannounced at foreign establishments.
It also lacks the flexibility to easily extend foreign inspections if
problems are encountered, due to the need to adhere to an itinerary that
typically involves multiple inspections in the same country. Finally,
language barriers can make foreign inspections more difficult to conduct
than domestic ones. FDA does not generally provide translators to its
inspection teams. Instead, they may have to rely on an English-speaking
representative of the foreign establishment being inspected, rather than
an independent translator.

Because of the preliminary nature of our work, we are not making
recommendations at this time.

Background

FDA is responsible for overseeing the safety and effectiveness of human
drugs that are marketed in the United States, whether they are
manufactured in foreign or domestic establishments.^8 Foreign
establishments that market their drugs in the United States must register
with FDA. As part of its efforts to ensure the safety and quality of
imported drugs, FDA is responsible for inspecting foreign establishments
whose products are imported into the United States. The purpose of these
inspections is to ensure that foreign establishments meet the same
manufacturing standards for quality, purity, potency, safety, and efficacy
as required of domestic establishments.

Requirements governing foreign and domestic inspections differ.
Specifically, FDA is required to inspect registered domestic
establishments that have been previously approved to market their drugs in
the United States every 2 years,^9 but there is no comparable requirement
for inspecting foreign establishments. FDA does not have authority to
require foreign establishments to allow the agency to inspect their
facilities. However, FDA has the authority to conduct physical inspections
of the imported product or prevent its entry at the border.

^8FDA regulations define manufacturing to include the manufacture,
preparation, propagation, compounding, or processing of a drug. See 21
C.F.R. S 207.3(a)(8) (2007).

Within FDA, CDER sets standards for and evaluates the safety and
effectiveness of prescription drugs and over-the-counter drugs. Among
other things, CDER requests that ORA inspect both foreign and domestic
establishments to ensure that drugs are produced in conformance with
federal statutes and regulations, including current GMPs. CDER requests
that ORA conduct inspections of establishments that produce finished drug
products. CDER also requests inspections of those that produce bulk drug
substances, including the active pharmaceutical ingredients (API)^10 used
in finished drug products. These inspections are performed by
investigators and laboratory analysts.^11 ORA conducts two primary types
of inspections^12:

           o Preapproval inspections of domestic and foreign establishments
           are conducted before FDA will approve a new drug to be marketed in
           the United States. These inspections occur following FDA's receipt
           of an NDA or ANDA and focus on the manufacture of a specific drug
           product. Preapproval inspections are designed to verify the
           accuracy and authenticity of the data contained in these
           applications and ensures that the manufacturer of the finished
           drug product, as well as each manufacturer supplying a bulk drug
           substance used in the finished product, manufactures, processes,
           and packs the drug adequately to preserve its identity, strength,
           quality, and purity.
			  
^921 U.S.C. S 360(h).

^10An API is any component that is intended to provide pharmacological
activity or other direct effect in the diagnosis, cure, mitigation,
treatment, or prevention of disease. According to FDA officials, the
agency typically only inspects establishments manufacturing inactive
ingredients on a for-cause basis. FDA defines inactive ingredients as any
component of a drug product other than the API, such as materials that
improve the appearance, stability, and palatability of the product.

^11ORA investigators lead inspections. They are responsible for performing
or overseeing all aspects of an inspection. ORA laboratory analysts are
chemists or microbiologists and have expertise in laboratory testing.

^12FDA may also conduct other postapproval inspections, such as to address
adverse events associated with a particular drug. In addition, FDA
conducts for-cause inspections when it receives information indicating
problems in the manufacture of approved drug products, as well as when it
follows up on manufacturers that were not in compliance with GMPs during
previous inspections.

           o Postapproval GMP surveillance inspections are conducted to
           ensure compliance with applicable laws and regulations pertaining
           to the manufacturing processes used by domestic and foreign
           establishments in the manufacture of finished drug products
           marketed in the United States and bulk drug substances used in the
           manufacture of those products. These inspections focus on a
           manufacturer's systemwide controls for ensuring that drug products
           are high in quality. Systems examined during these inspections
           include those related to quality control, production, and
           packaging and labeling. These systems may be involved in the
           manufacture of multiple drug products.

           FDA allocates funds to ORA to carry out preapproval and
           postapproval inspections of foreign and domestic establishments.
           ORA develops an annual work plan and a budget that estimates human
           resources available to conduct activities related to foreign
           inspections. ORA also develops estimates for inspections of
           domestic establishments. Typically, ORA investigators and
           laboratory analysts travel abroad for about 3 weeks at a time,
           during which they inspect approximately three establishments. Each
           establishment inspection typically lasts a week, with 1 day of
           each week set aside for documenting the inspection or for
           extending the inspection, if necessary.

           CDER uses a risk-based process to select some domestic and foreign
           establishments for postapproval GMP surveillance inspections.
           According to an FDA report,^13 the agency developed the process
           after recognizing that it did not have the resources to meet the
           requirement for inspecting domestic establishments every 2
           years.^14 The process uses a risk model to identify those
           establishments that, based on characteristics of the establishment
           and of the product being manufactured, have the greatest public
           health risk potential should they experience a manufacturing
           defect. (See table 1 for a description of the risk-based site
           selection model used by FDA in fiscal year 2007.) For example, FDA
           considers the risk to public health from poor quality
           over-the-counter drugs to be lower than for prescription drugs,
           and consequently establishments manufacturing only
           over-the-counter drugs receive a lower score on this factor than
           other manufacturers. Through this process, CDER annually prepares
           a prioritized list of domestic establishments and a separate,
           prioritized list of foreign establishments. CDER began applying
           this risk-based process to domestic establishments in fiscal year
           2006 and expanded it to foreign establishments in fiscal year
           2007.

^13Department of Health and Human Services, U.S. Food and Drug
Administration, "Risk-Based Method for Prioritizing CGMP Inspections of
Pharmaceutical Manufacturing Sites--A Pilot Risk Ranking Model,"
(September 2004),
http://www.fda.gov/cder/gmp/gmp2004/risk_based_method.htm (accessed Oct.
21, 2007).

^14Previously, FDA used other less formal risk-based systems to prioritize
its inspections. For example, we noted in our 1998 report that FDA had
used a risk-based site selection system, in which it classified
establishments according to risk tiers. See [19]GAO/HEHS-98-21 .

           Table 1: Summary of Factors in FDA's Risk-Based Site-Selection
           Model in Fiscal Year 2007
			  
Category of                                                                
factor      Description                 Example(s)                         
Product     Factors pertaining to the   FDA considers establishments       
               intrinsic properties of     manufacturing prescription drugs,  
               drug products such that     as opposed to only                 
               quality deficiencies could  over-the-counter drugs, to be      
               potentially and adversely   higher risk                        
               affect public health                                           
Process     Factors pertaining to       FDA considers establishments       
               aspects of drug             manufacturing small-volume drugs   
               manufacturing operations    administered intravenously to be   
               that may predict potential  higher risk than those             
               difficulties with process   manufacturing prompt release       
               control or vulnerability to tablets, because of the greater    
               various forms of            risk of contamination associated   
               contamination               with the manufacture of            
                                           small-volume intravenous products  
Facility    Factors relating to         FDA considers establishments that  
               characteristics of a        have not had a recent GMP          
               manufacturing site believed inspection to be higher risk than  
               to be predictive of         those that have received a recent  
               potential quality risks     GMP inspection                     

           Source: GAO analysis of FDA's risk model.

           FDA relies on multiple databases to manage the foreign drug
           inspection program. FDA assigns unique numeric identifiers to
           establishments, known as the FDA establishment identifier (FEI)
           number. An FEI number could be assigned at the time of
           registration, importation, or inspection.

           o DRLS contains information on foreign and domestic drug
           establishments that have registered with FDA. Establishments that
           market their drugs in the United States must register with FDA.
           These establishments provide information, such as company name and
           address and the drug products they manufacture for commercial
           distribution in the United States, on paper forms that are entered
           into DRLS by FDA.
           o OASIS contains information on drugs and other FDA-regulated
           products imported into the United States, including information on
           the establishment that manufactured the drug. The information in
           OASIS is automatically generated from data managed by U.S. Customs
           and Border Protection, which are originally entered by customs
           brokers based on the information available from the importer.^15
           Each establishment is assigned a manufacturer identification
           number that is generated from key information entered about an
           establishment's name, address, and location.

           o FACTS contains information on FDA's inspections of domestic and
           foreign drug establishments. FDA investigators and laboratory
           analysts enter information into FACTS, following completion of an
           inspection.

           According to DRLS, in fiscal year 2007, China and India had more
           establishments registered to manufacture drugs for the U.S. market
           than any other country.^16 Other countries that had a large number
           of establishments registered to manufacture drugs for the U.S.
           market in this year were Canada, France, Germany, Italy, Japan,
           and the United Kingdom. (See fig. 1.) These countries are also
           listed in OASIS as having the largest number of manufacturers
           importing drugs into the United States.
			  
^15Customs brokers are private individuals, partnerships, associations, or
corporations licensed, regulated, and empowered by U.S. Customs and Border
Protection to assist in meeting federal requirements governing imports and
exports.

^16These counts include foreign establishments that manufactured human
drugs, biologics, and veterinary drugs; FDA was unable to provide the
number of registered establishments specifically manufacturing human
drugs.

Figure 1: Foreign Establishments Registered to Manufacture Drugs for the
U.S. Market, by Country, Fiscal Year 2007

Note: These counts include foreign establishments that manufactured human
drugs, biologics, and veterinary drugs; FDA was unable to provide the
number of registered establishments specifically manufacturing human
drugs.

FDA Lacks Accurate Information to Effectively Manage the Foreign Drug Inspection
Program

FDA does not know how many foreign establishments are subject to
inspection; including the number of establishments that are registered and
whose products are currently imported into the United States and
establishments that are not required to register but whose products are
ultimately used in drugs that are marketed here. Instead of maintaining a
list of such establishments, FDA relies on information from several
databases that were not designed for this purpose.

DRLS, established in 1991, is intended to list the establishments
registered that manufacture drugs for the U.S. market. However,
requirements for the registration of foreign establishments were not
implemented until 2002.^17 FDA expected that requiring foreign
establishments to register would provide it with a comprehensive list of
such establishments. In fiscal year 2007, approximately 3,000 foreign
establishments were registered with FDA that manufactured human drugs,
biologics, or veterinary drugs; FDA was unable to determine from this
database the number of registered establishments specifically
manufacturing human drugs.

DRLS provides FDA with some information about establishments subject to
inspection, but contains inaccuracies and does not provide a complete
count. FDA officials told us that the count of registered foreign
establishments in DRLS does not reflect the actual number whose products
are being imported into the United States for several reasons. First,
foreign establishments may register with FDA, whether or not they actually
manufacture drugs for the U.S. market. FDA officials told us that this is
made more likely by the fact that FDA does not charge foreign
establishments a fee to register. FDA officials pointed out that some
foreign establishments register because, in foreign markets, registration
may erroneously convey an "approval" or endorsement by FDA. Second,
foreign establishments may not renew their registration information,
although they are required by FDA to do so annually. Agency officials told
us that if foreign establishments stop manufacturing drugs for the U.S.
market or go out of business they may not report the change to FDA, even
though it is required. FDA officials told us that the agency does not
routinely verify the information provided by the establishment to ensure
that it is accurate or confirm that the establishment actually
manufactures drugs for the U.S. market.^18 FDA does not know how many
foreign establishments are erroneously registered. Third, foreign
establishments that manufacture APIs are not required to register if their
products are not directly imported into the United States.^19

^17See Pub. L. No. 105-115, SS 417, 501, 111 Stat. 2296, 2379-80. FDA
issued implementing regulations in 2001, which were effective February 11,
2002. 66 Fed. Reg. 59138 (Nov. 27, 2001).

OASIS also provides FDA with some information about establishments subject
to inspection, but this database contains inaccurate data on the count of
foreign establishments manufacturing drugs imported into the United
States. According to OASIS, 6,760 foreign establishments manufactured
drugs that were imported into the United States in fiscal year 2007.
However, FDA officials told us that errors in data entry result in
inaccurate counts of establishments whose drugs are imported into the
United States. FDA officials told us that if information about an
establishment--such as its name--was entered by customs brokers
incorrectly, a new manufacturer identification number, and thus a new FEI
number, could be assigned to an establishment that already has an FEI
number. For example, a customs broker may enter an establishment's name
slightly differently from the way it is displayed in OASIS, such as using
"Inc." instead of "Incorporated," which would lead to the creation of a
second FEI number for the establishment. Therefore, a single establishment
may be counted more than once in OASIS, which would result in an
artificially high count of foreign establishments importing drugs into the
United States. FDA officials acknowledge this problem but were unable to
provide us with an estimate of the extent of that error. In addition, the
agency does not have a process for systematically identifying and
correcting these errors. To mitigate this problem, the officials told us
that FDA has provided regional training to brokers as a way to improve
accuracy. FDA officials also told us that the agency is pursuing a new
government-wide initiative that would address this problem by providing a
unique identifier for each foreign establishment involved in the import
supply chain.

FDA's data suggest that between 3,000 and 6,760 establishments could be
subject to FDA inspection. However, FDA officials told us that the two
databases--DRLS and OASIS--cannot be electronically integrated or interact
with one another, so any comparisons are done manually for each individual
establishment. Because comparisons of the data and error identification
are done manually, the databases are not conducive to routine data
analysis. FDA officials told us that they have not generated an accurate
count of the establishments whose drugs are imported into the United
States.

^18If the agency learns of an error, it would ask the establishment to
submit corrected information.

^19For example, an establishment in China may export an API to Germany.
The German establishment may use the API in its production of a drug that
is imported into the United States. Although the German establishment
would be required to notify FDA of its arrangement with the Chinese
establishment, and the Chinese establishment would be subject to
inspection by FDA, the Chinese establishment is not required to register.

Because FDA does not have a list of all foreign establishments subject to
inspection, in fiscal year 2007 it created a list of such establishments
for the purpose of applying its risk-based process.^20 In preparing this
list, FDA draws on information from DRLS. It also obtains information from
previous inspections to help it identify establishments that are subject
to inspections but are not required to register--such as the manufacturer
of an API whose product is not directly imported into the United States.
For fiscal year 2007, this list consisted of 3,249 foreign establishments.
However, as a result of the inaccuracies in DRLS, FDA recognizes that this
list does not provide an accurate count of establishments subject to
inspection.

^20In addition to establishments identified for the purposes of conducting
its risk-based analysis, FDA also identifies establishments subject to
inspection that are named in NDAs or ANDAs using its Establishment
Evaluation System database. This database identifies the multiple
establishments involved in drug manufacturing, including the
establishments manufacturing a finished product for import into the United
States and the establishments manufacturing any APIs for that finished
product.

FDA Conducts Relatively Few Foreign Establishment Inspections and Relies on the
NDA and ANDA Review Process as the Primary Selection Factor

FDA conducts relatively few inspections of foreign drug establishments.
However, because FDA is not certain how many foreign establishments are
actually subject to inspection, the percentage of foreign establishments
that have been inspected cannot be calculated with certainty. Most foreign
establishments are selected for inspection as part of the agency's review
process associated with an NDA or ANDA. Therefore, the vast majority of
foreign inspections include a preapproval inspection. In addition,
although FDA has implemented a risk-based process in selecting foreign
establishments for GMP surveillance inspections, relatively few such
inspections are conducted. FDA tries to make efficient use of its
resources by selecting establishments for these inspections that allow it
to coordinate travel with preapproval inspections.

Relatively Few Foreign Establishments Are Inspected by FDA Each Year

In each year we examined, FDA inspected a small portion of foreign
establishments through either preapproval or GMP surveillance inspections.
However, its lack of a list of foreign establishments subject to
inspection makes it difficult to determine an exact percentage. Based on
our review of data on inspections, FDA conducted an average of 241 foreign
establishment inspections per year from fiscal year 2002 through fiscal
year 2007.^21 Comparing this average number of inspections with FDA's
count of 3,249 foreign establishments it used to plan its fiscal year 2007
prioritized GMP surveillance inspections suggests that the agency inspects
about 7 percent of foreign establishments in a given year. At this rate it
would take FDA more than 13 years to inspect this group of establishments
once, assuming that no additional establishments are subject to
inspection.

FDA's data indicate that some foreign drug manufacturers have not received
an inspection, but the exact number of establishments not inspected was
unclear. Of the list of 3,249 foreign establishments, there were 2,133
foreign establishments for which the agency could not identify a previous
inspection. Agency officials told us that this count included registered
establishments whose drugs are being imported into the United States that
have never been inspected but also included other types of establishments,
such as those whose products were never imported into the United States or
those who have stopped importing drugs into the United States without
notifying FDA. FDA was unable to provide us with counts of how many
establishments fall into each of these subcategories. Of the remaining
1,116 establishments on FDA's list, 242 had received at least one
inspection, but had not received a GMP surveillance inspection since
fiscal year 2000,^22 and the remaining 874 establishments had received at
least one GMP inspection since fiscal year 2000. Of these 874
establishments, 326 had last been inspected in fiscal years 2005 or 2006,
292 were last inspected in fiscal years 2003 or 2004, and the remaining
256 received their last inspection from fiscal year 2000 through fiscal
year 2002.

^21Inspection data for fiscal year 2007 may not be complete because FDA
provided GAO with these data as of September 26, 2007, prior to the end of
the fiscal year. Our analysis includes all foreign and domestic
inspections that were identified in FDA's data as being either related to
the drug application approval process or GMP. It does not include a small
number of other inspections, such as those related to problems identified
by consumers or health care professionals.

FDA has increased the number of foreign establishments it inspects, most
of which are concentrated in a small number of countries. From fiscal year
2002 through fiscal year 2007, the number of foreign establishment
inspections FDA conducted annually varied from year to year, but increased
overall from 222 in fiscal year 2002 to 295 in fiscal year 2007. During
this period, FDA inspected establishments in a total of 51 countries. More
than three quarters of the 1,445 foreign inspections the agency conducted
during this period were of establishments in ten countries, as shown in
table 2. The country with the most inspections during this period was
India, which had 200 inspections. Inspections of establishments located in
India increased from 11 in fiscal year 2002 to 65 in fiscal year 2007.

^22According to FDA officials, some of these establishments may have
received an inspection for another type of product, such as a veterinary
drug.

Table 2: Number of FDA Inspections of Foreign Establishments Involved in
the Manufacture of Drugs for the U.S. Market, by Country for the 10 Most
Frequently Inspected Countries, Fiscal Year 2002 through Fiscal Year 2007

                            Number of inspections                                
                                                                       Number of 
  Country     FY2002 FY2003 FY2004 FY2005 FY2006 FY2007^a Total establishments^b 
  India           11     19     38     33     34       65   200              410 
  Germany         24     15     35     25     19       22   140              199 
  Italy           17     30     26     21     18       19   131              150 
  Canada          29     12     17     23     23       19   123              288 
  United          19     22     15     18     15       13   102              169 
  Kingdom                                                                        
  France          14     15     13     12     16       24    94              162 
  China           11      9     17     21     17       13    88              714 
  Japan           11     13     14     21     13       15    87              196 
  Switzerland     12     12     11     17      9       14    75               83 
  Ireland         11      5     11     14      3       11    55               61 
  All other       63     38     63     61     45       80   350              817 
  countries                                                                      
  Total          222    190    260    266    212      295 1,445            3,249 

Source: GAO analysis of FDA data.

^aInspection data for fiscal year 2007 may not be complete because FDA
provided GAO with these data as of September 26, 2007, prior to the end of
the fiscal year.

^bThis count represents the number of establishments FDA used to plan its
fiscal year 2007 prioritized surveillance inspections.

The Need to Conduct Preapproval Inspections Associated with NDAs and ANDAs
Drives FDA's Selection of Foreign Establishments

While enforcing GMP compliance through surveillance inspections is FDA's
most comprehensive program for monitoring the quality of marketed drugs,
FDA's inspections of most foreign establishments occur as part of the
agency's review of an NDA or ANDA. Agency officials said that FDA may need
to inspect establishments involved in the manufacture of the drug
referenced in an NDA or ANDA in order to meet specific goals for the
timely review of these applications. As we reported in 1998 and we still
found in 2007, most inspections of foreign manufacturers occur only when
they are listed in an NDA or ANDA. For fiscal years 2002 through 2007, 88
percent of FDA's inspections of foreign establishments were conducted as
part of the preapproval process. When FDA receives an NDA or ANDA, CDER
officials review the inspection history of each establishment listed on
the application. According to FDA officials, if an establishment listed on
the NDA or ANDA has received a satisfactory GMP inspection in the previous
2 years and the agency has no new concerns, FDA will consider this
inspection sufficient and will not perform a preapproval inspection of
this establishment.^23

FDA often includes a GMP inspection when it visits an establishment for a
preapproval inspection. As presented in figure 2, from fiscal year 2002
through fiscal year 2007, the majority of FDA's foreign inspections
combined a preapproval inspection with a GMP inspection. According to FDA
officials, because foreign establishments are inspected infrequently, it
is expedient for investigators and laboratory analysts to conduct
preapproval inspections and GMP inspections during the same visit to a
foreign establishment. During one establishment visit, FDA investigators
can conduct inspections related to multiple compliance programs.^24
Because a GMP surveillance inspection examines the major manufacturing
systems at an establishment, the results of such an inspection can be
generalized to all products manufactured at a particular establishment.
FDA can thus use the results of the combined inspection to make decisions
in the future if that establishment is listed again in another NDA or
ANDA.

^23According to FDA officials, the agency typically only inspects
establishments manufacturing inactive ingredients on a for-cause basis.
FDA defines inactive ingredients as any component of a drug product other
than the API, such as materials that improve the appearance, stability,
and palatability of the product.

^24Compliance programs outline procedures for conducting different types
of inspections, including preapproval inspections for drugs that are the
subject of an NDA or ANDA, drug manufacturing inspections, and drug
repacker and relabeler inspections.

Figure 2: FDA Foreign Establishment Inspections by Type of Inspection,
Fiscal Year 2002 through Fiscal Year 2007

Note: Inspection data for fiscal year 2007 may not be complete because FDA
provided GAO with these data as of September 26, 2007, prior to the end of
the fiscal year.

FDA conducts fewer GMP surveillance inspections of foreign establishments
than it does of domestic ones. Of the 1,445 foreign establishment
inspections conducted from fiscal year 2002 through fiscal year 2007,
1,177 inspections included a GMP component, of which 998 were conducted in
conjunction with a preapproval inspection. In contrast, FDA conducted
9,694 domestic establishment inspections that included a GMP component, of
which 7,742 were not conducted in conjunction with a preapproval
inspection. Figure 3 shows a comparison of foreign and domestic
inspections, by type of inspection.

Figure 3: Number of FDA Foreign and Domestic Establishment Inspections, by
Type of Inspection, Fiscal Year 2002 through Fiscal Year 2007

Note: Inspection data for fiscal year 2007 may not be complete because FDA
provided GAO with these data as of September 26, 2007, prior to the end of
the fiscal year.

FDA's funding for its domestic and foreign inspection programs is
consistent with this approach. From fiscal year 2002 through fiscal year
2007, FDA dedicated more funding to domestic establishment inspections
than foreign establishment inspections. The agency dedicated more funding
to conduct foreign preapproval inspections than foreign GMP surveillance
inspections, as shown in table 3.

Table 3: FDA Funding for Foreign and Domestic Inspections Related to Human
Drugs, Fiscal Year 2002 through Fiscal Year 2007

Activity (dollars in                                                       
thousands)                     FY2002 FY2003 FY2004 FY2005 FY2006 FY2007^a 
Foreign                                                                    
Preapproval inspections        $8,274 $8,515 $8,406 $8,604 $7,544   $7,558 
Postapproval inspections        5,256  5,177  5,150  5,224  5,261    5,191 
Domestic                                                                   
Preapproval inspections        21,846 23,008 23,965 25,213 21,775   23,532 
Postapproval inspections       23,102 28,601 27,989 28,270 27,607   28,452 

Source: GAO analysis of FDA data.

aFiscal year 2007 funding is estimated.

FDA's Risk-Based Process Is Used to Select Relatively Few Foreign Establishments
for GMP Surveillance Inspections

Relatively few foreign establishments identified through CDER's risk-based
site selection process are selected for GMP surveillance inspections. In
fiscal year 2007, after using this process to rank the 3,249
establishments by their potential risk level, CDER forwarded to ORA a list
of 104 foreign establishments that it considered to be a high priority for
inspection. Of these, CDER requested that ORA complete GMP surveillance
inspections of 25 establishments and FDA officials estimated that about 30
such inspections were actually completed in fiscal year 2007. In fiscal
year 2008, CDER submitted a list of 110 foreign establishments to ORA,
with a negotiated target of at least 50 inspections.

The application of the risk-based site selection process does not ensure
that the foreign establishments posing the greatest potential risk are
selected for GMP surveillance inspections. First, FDA officials
acknowledge that they do not have an accurate list of foreign
establishments manufacturing drugs for the U.S. market to use in the
application of the risk-based process. Second, the usefulness of the
risk-based process is weakened by the incomplete and possibly inaccurate
information on those foreign establishments that FDA has not inspected
recently, as well as those that have never been the subject of a GMP
surveillance inspection. As a consequence, FDA lacks sufficient data to
make an accurate assessment of the potential risk of such establishments.
FDA recognized the effect of such data limitations on the domestic
application of the risk-based process and undertook a data quality
improvement initiative in fiscal year 2005, but it has yet to make a
comparable effort to improve its data on foreign establishments.

To help account for the differences in information available to FDA
between foreign establishments that have and have not been inspected, the
agency categorizes establishments into one of three groups for the
purposes of examining risk scores: (1) those that have received a GMP
surveillance inspection since fiscal year 2000; (2) those that have not
received a GMP surveillance inspection since fiscal year 2000, but have
received another type of inspection in that time (for example, a
preapproval inspection or a veterinary drugs inspection); and (3) those
that may never have received an inspection.^25 These groups were created
to account for limitations in the data and are not designed to indicate
relative risk among groups. FDA officials told us that risk scores can be
more readily compared within a group, than among groups. In 2007, FDA
selected 33 establishments from the first group, 31 from the second group,
and 40 from the third group to create the list of 104 establishments it
submitted to ORA.

FDA officials indicated that they do not know if the establishments on the
prioritized list forwarded to ORA differ significantly from each other in
risk level. Consequently, they do not necessarily select the highest
ranked establishments and therefore consider the locations of other
planned inspections in making a final determination of foreign
establishments from the prioritized list for GMP surveillance inspections.
According to FDA officials, this gives them needed flexibility to make
selections that will make efficient use of available resources. For
example, if ORA is sending an investigator and laboratory analyst to a
particular region in China for a preapproval inspection and an
establishment in the same region appears on the prioritized list for GMP
surveillance inspections, ORA might add this establishment to the
inspection itinerary.

^25This third group may include registered establishments whose drugs are
imported into the United States. However, some establishments in this
group may have received an inspection under a different FEI number, be
shippers rather than manufacturers, only manufacture products other than
human drugs, or never have or no longer have their drugs imported. FDA was
unable to provide counts of how many establishments fall into each of
these subcategories.

Challenges Unique to Foreign Inspections Influence the Manner in Which FDA
Conducts Such Inspections

Inspections of foreign drug establishments pose unique challenges to
FDA--in both human resources and logistics. For example, unlike domestic
inspections, FDA does not have a dedicated staff devoted to conducting
foreign inspections and relies on volunteers. In addition, unlike domestic
GMP surveillance inspections, foreign establishment GMP surveillance
inspections are announced in advance and inspections cannot be easily
extended due to travel itineraries that involve more than one
establishment. Other factors, such as language barriers, can also add
complexity to the challenge of completing foreign establishment
inspections.

According to FDA officials, the agency does not have a dedicated staff to
conduct foreign inspections. They explained that the same investigators
and laboratory analysts are responsible for conducting both foreign and
domestic inspections. These staff members must meet certain criteria in
terms of their experience and training to conduct inspections of foreign
establishments. For example, they are required to take certain training
courses and have at least 3 years of experience conducting domestic
inspections before they can be considered to conduct a foreign inspection.
FDA reported that it currently has approximately 335 employees who are
qualified to conduct foreign inspections of drug manufacturers.
Approximately 250 of these employees are investigators and 85 are
laboratory analysts. These counts do not represent the number of
individuals that actually conduct foreign inspections in a given year. Not
all investigators and laboratory analysts who are qualified to conduct a
foreign inspection do so in a given year, while others may perform
multiple inspections during the same period. Using data from FACTS, we
found that the total number of employees conducting pre-approval and GMP
surveillance inspections of drug manufacturing establishments, either
foreign or domestic, decreased from 587 in fiscal year 2002 to 446 in
fiscal year 2007, as shown in table 4. However, of these, the number of
employees who conducted foreign inspections of drug manufacturers
increased from 100 to 141 during that same period. While an investigator
and analyst team may participate in foreign inspections, FDA officials
stated that in certain circumstances, such as inspections that do not
involve the review of laboratory facilities, only an investigator is sent.

Table 4: Number of FDA Employees Conducting Inspections, Fiscal Year 2002
through Fiscal Year 2007

Location of inspection         FY2002 FY2003 FY2004 FY2005 FY2006 FY2007^a 
Employees who conducted           100     94    117    114    102      141 
foreign inspections                                                        
Employees who conducted           587    595    539    512    478      446 
foreign or domestic                                                        
inspections                                                                

Source: GAO analysis of FDA data.

^aInspection data for fiscal year 2007 may not be complete because FDA
provided GAO with these data as of September 26, 2007, prior to the end of
the fiscal year.

FDA relies on investigators and laboratory analysts to volunteer to
conduct foreign inspections. FDA officials told us that it is difficult to
recruit investigators and laboratory analysts to voluntarily travel to
certain countries. However, officials noted that the agency provides
various incentives to recruit employees for foreign inspection
assignments. For example, employees receive a $300 bonus for each three
week trip completed. FDA indicated that if the agency could not find an
individual to volunteer for a foreign inspection trip, it would mandate
the travel. However, FDA does not typically send investigators and
laboratory analysts to countries for which the U.S. Department of State
has issued a travel warning nor would it mandate travel to such a
country.^26 We found that 49 foreign establishments registered as
manufacturers of drugs for the U.S. market were located in 10 countries
that had travel warnings posted as of October 2007.^27 However, FDA
officials told us that in the past they have conducted inspections in
countries with travel warnings. They also provided us with one example in
which an establishment in a country with a travel warning hired security
through the U.S. Department of State to protect the inspection team.

FDA also faces several logistical challenges in conducting inspections of
foreign drug manufacturing establishments. FDA guidance states that
inspections at foreign facilities are to be approached in the same manner
as domestic inspections. However, the guidance notes that one main
difference posing a significant challenge to the inspection team abroad is
the logistics borne by the program itself. For example, FDA is unable to
conduct unannounced inspections of foreign drug manufacturers, as it
sometimes does with domestic manufacturers. FDA policy states that the
agency, with few exceptions, initiates inspections of establishments
without prior notification to the specific establishment or its management
so that the inspection team can observe the establishment under conditions
that represent normal day-to-day activities.^28 However, prior
notification is routinely provided to foreign establishments. FDA
recognizes that the time and expense associated with foreign travel
requires them to ensure that the foreign establishment's managers are
available and that the production line being inspected is operational
during the inspection. In addition, FDA does not have explicit authority
to inspect establishments in foreign countries, and it therefore may have
to obtain permission from the government and company prior to the
inspection. FDA officials explained that, in some cases, investigators and
laboratory analysts may need to obtain a visa or letters of invitation to
enter the country in which the establishment is located. In addition, FDA
does not have the same flexibility to extend the length of foreign
inspection trips if problems are encountered as it does with domestic
inspections because of the need to maintain the inspection schedule, which
FDA officials told us typically involves inspections of multiple
establishments in the same country.

^26Travel warnings are issued when the U.S. Department of State recommends
that Americans avoid travel to a certain country.

^27These ten countries are Colombia, the Democratic Republic of the Congo,
Haiti, Indonesia, Israel, Kenya, Nigeria, Pakistan, the Philippines, and
Saudi Arabia.

FDA officials also told us that language barriers can make foreign
inspections more difficult to conduct than domestic inspections. The
agency does not generally provide translators in foreign countries, nor
does it require that foreign establishments provide independent
interpreters. Instead, they may have to rely on an English-speaking
representative of the foreign establishment being inspected, who may not
be a translator by training, rather than rely on an independent
translator.

Concluding Observations

Millions of Americans depend on the safety and effectiveness of the drugs
they take. More than nine years ago we reported that FDA needed to make
improvements in its foreign drug inspection program. Yet, our preliminary
work indicates that fundamental flaws that we identified in the management
of this program in 1998, continue to persist. FDA still does not have a
reliable list of foreign establishments that are subject to inspection. As
more imported drugs enter the United States, it becomes increasingly
important that foreign establishments receive appropriate scrutiny. We
understand that FDA currently cannot inspect all foreign establishments
every few years. We also recognize that FDA has taken steps to improve its
management of the foreign drug inspection program by enhancing the
risk-based process it uses to select establishments for GMP surveillance
inspections. In addition, FDA is pursuing an initiative that is intended
to improve its identification of foreign drug establishments. However,
until FDA responds to systemic weaknesses in the management of this
important program, it cannot provide the needed assurance that the drug
supply reaching our citizens is appropriately scrutinized, and safe.

^28ORA Field Management Directive No. 112A, Prior Notification to FDA
Regulated Industries of Impending Inspections, August 1996. However, for
both domestic and foreign preapproval inspections, FDA provides prior
notification to the establishment.

Mr. Chairman, this completes my prepared statement, I would be happy to
respond to any questions you or the other Members of the subcommittee may
have at this time.

Contacts and Acknowledgments

For further information about this testimony, please contact Marcia Crosse
at (202) 512-7114 or [email protected]. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this testimony. Geraldine Redican-Bigott, Assistant Director; Katherine
Clark; Robert Copeland; William Hadley; Cathleen Hamann; Julian Klazkin;
Romonda McKinney; Lisa Motley; and Suzanne Worth made key contributions to
this testimony.

(290674)

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Highlights of [27]GAO-08-224T , a testimony before the Subcommittee on
Oversight and Investigations, Committee on Energy and Commerce, House of
Representatives

November 1, 2007

DRUG SAFETY

Preliminary Findings Suggest Weaknesses in FDA's Program for Inspecting
Foreign Drug Manufacturers

Many drugs marketed in the United States are manufactured in foreign
countries and the value of such products entering the country is
increasing. The Food and Drug Administration (FDA) is responsible for
overseeing the safety and effectiveness of human drugs that are marketed
in the United States, whether they are manufactured in foreign or domestic
establishments. Foreign establishments that market their drugs in the
United States must register with FDA and FDA inspects foreign
establishments to ensure that they meet the same standards that are
required of domestic ones. GAO reported 9 years ago that FDA needed to
improve its foreign drug inspection program (GAO/HEHS-98-21). Questions
remain as to whether FDA has improved its management of the foreign drug
inspection program.

This statement discusses preliminary information on (1) the extent to
which FDA has accurate data to manage the foreign drug inspection program,
(2) the frequency of foreign inspections and factors influencing the
selection of establishments to inspect, and (3) issues unique to
conducting foreign inspections. To address these issues GAO interviewed
FDA officials; reviewed pertinent statutes, regulations, and guidance; and
analyzed information from FDA databases. Because of the preliminary nature
of our work, we are not making recommendations at this time.

FDA's effectiveness in managing the foreign drug inspection program
continues to be hindered by weaknesses in its databases. FDA does not know
how many foreign establishments are subject to inspection. Instead, FDA
relies on databases that were not designed for this purpose. Further,
these databases contain inaccuracies that FDA cannot easily reconcile. One
database indicates there were about 3,000 foreign establishments
registered to market drugs in the United States in fiscal year 2007, while
another indicates that about 6,800 foreign establishments actually
imported drugs in that year. FDA recognizes these flaws. Further, because
the databases cannot exchange information, any comparisons of the data are
performed manually, on a case-by-case basis. FDA officials told GAO that
they have not generated an accurate count of foreign establishments whose
drugs are imported into the United States.

FDA inspects relatively few foreign establishments. Data from FDA suggest
that the agency may inspect about 7 percent of foreign establishments in a
given year. At this rate, it would take FDA more than 13 years to inspect
each foreign establishment once, assuming that no additional
establishments require inspection. However, FDA cannot provide an exact
number of foreign establishments that have never been inspected. Most of
the foreign inspections performed are conducted as part of a review
associated with processing an application to market a new drug, rather
than inspections for monitoring the quality of marketed drugs. Although
FDA uses a risk-based process to develop a prioritized list of foreign
establishments for inspections to monitor the quality of marketed drugs,
few are completed in a given year. This prioritized list was used to
select foreign establishments for inspection in fiscal year 2007.
According to FDA, about 30 such inspections were completed in that year
and at least 50 are targeted for inspection in fiscal year 2008.

The foreign inspection process involves unique circumstances that are not
encountered domestically. For example, FDA relies on staff that inspect
domestic establishments to volunteer for foreign inspections. Unlike
domestic inspections to monitor the quality of a marketed drug, FDA does
not arrive unannounced at a foreign establishment. It also lacks the
flexibility to easily extend foreign inspections if problems are
encountered, due to the need to adhere to an itinerary that typically
involves multiple inspections in the same country. Finally, language
barriers can make foreign inspections more difficult than domestic ones.
FDA does not generally provide translators to its inspection teams.
Instead, they may have to rely on an English-speaking representative of
the foreign establishment being inspected, rather than an independent
translator.

References

Visible links
  18. http://www.gao.gov/cgi-bin/getrpt?GAO/HEHS-98-21
  19. http://www.gao.gov/cgi-bin/getrpt?GAO/HEHS-98-21
  20. http://www.gao.gov/
  21. http://www.gao.gov/
  22. http://www.gao.gov/fraudnet/fraudnet.htm
  23. mailto:[email protected]
  24. mailto:[email protected]
  25. mailto:[email protected]
  26. http://www.gao.gov/cgi-bin/getrpt?GAO-08-224T
  27. http://www.gao.gov/cgi-bin/getrpt?GAO-08-224T
*** End of document. ***