Food and Drug Administration: Improvements Needed in the Foreign Drug
Inspection Program (Letter Report, 03/17/98, GAO/HEHS-98-21).

Pursuant to a congressional request, GAO reviewed the Food and Drug
Administration's (FDA) efforts to correct problems identified in earlier
evaluations of its foreign drug inspection program, focusing on FDA's
efforts to: (1) prepare inspection reports and take enforcement actions
against foreign pharmaceutical manufacturers in a timely manner; (2)
improve the consistency with which FDA evaluates the results of foreign
inspections and conducts reinspections to verify that foreign
pharmaceutical manufacturers have corrected serious deficiencies; (3)
conduct routine inspections of foreign pharmaceutical manufacturers to
monitor their compliance with U.S. quality standards; and (4) improve
the management of data needed for planning inspections, monitoring
inspection results, and taking enforcement actions.

GAO noted that: (1) FDA has taken several actions to address problems
with its foreign inspection program that were identified in two previous
internal evaluations; (2) although FDA has improved the timeliness with
which investigators submit inspection reports, in fiscal year (FY) 1996,
almost 60 percent were still submitted later than called for by agency
standards, including half the reports that identified the most serious
deficiencies in manufacturing quality; (3) during fiscal years 1996 and
1997, headquarters review personnel continued to downgrade the
classifications of inspections recommended by its field investigators
who conducted the inspections; (4) most of the decisions to downgrade
the classifications were based on foreign manufacturers' promises to
implement corrective actions; (5) as a result, FDA conducted fewer
reinspections of these facilities to verify that foreign manufacturers
had corrected serious manufacturing deficiencies; (6) FDA conducts
infrequent routine inspections of foreign manufacturers to ensure that
they continue to comply with U.S. quality standards, although routine
surveillance inspections constitute FDA's most comprehensive program for
monitoring the quality of marketed pharmaceutical products; (7) most
inspections of foreign pharmaceutical manufacturers are performed to
approve the marketing of new products; (8) routine surveillance
inspections of manufacturers producing approved pharmaceutical products
already marketed in the United States accounted for only 20 percent of
FDA's foreign inspections during FY 1995; (9) as a result, routine
inspections of foreign pharmaceutical manufacturers occur with far less
frequency than the 2-year interval required for domestic manufacturers;
(10) FDA has been striving to improve its management of data needed for
planning inspections, monitoring inspection results, and taking
enforcement actions; (11) at present, FDA relies on 15 separate systems
to identify foreign pharmaceutical manufacturers, plan foreign
inspection travel, track inspection results, and monitor enforcement
actions; (12) as a result, essential foreign inspection data are not
readily accessible to the different FDA units that are responsible for
planning, conducting, and reviewing inspections and taking enforcement
actions against foreign manufacturers; and (13) FDA is developing a
comprehensive, agencywide automated system to provide better data for
managing its foreign inspection program.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-98-21
     TITLE:  Food and Drug Administration: Improvements Needed in the 
             Foreign Drug Inspection Program
      DATE:  03/17/98
   SUBJECT:  Pharmaceutical industry
             Inspection
             Safety regulation
             International trade
             Drugs
             Product safety
             Sanctions
             Quality control
             Agency reports
             Management information systems
IDENTIFIER:  FDA Program Oriented Data System
             
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Cover
================================================================ COVER


Report to the Chairman, Subcommittee on Oversight and Investigations,
Committee on Commerce, House of Representatives

March 1998

FOOD AND DRUG ADMINISTRATION -
IMPROVEMENTS NEEDED IN THE FOREIGN
DRUG INSPECTION PROGRAM

GAO/HEHS-98-21

Foreign Inspection Program

(108279)


Abbreviations
=============================================================== ABBREV

  CDER - Center for Drug Evaluation and Research
  FACTS - Field Accomplishments and Compliance Tracking System
  FDA - Food and Drug Administration
  GMP - good manufacturing practice
  NAI - no action indicated
  OAI - official action indicated
  ORA - Office of Regulatory Affairs
  PODS - Program Oriented Data System
  TRIPS - Travel and Inspection Planning System
  VAI - voluntary action indicated

Letter
=============================================================== LETTER


B-275814

March 17, 1998

The Honorable Joe Barton
Chairman, Subcommittee on Oversight and
 Investigations
Committee on Commerce
House of Representatives

Dear Mr.  Chairman: 

In the late 1980s, at least 15 Americans reportedly suffered
epileptic seizures, and 2 died, after taking a drug that allegedly
contained a poor-quality ingredient that had been manufactured in a
foreign country and imported by a U.S.  pharmaceutical company. 
Reports of these tragic incidents and other problems raised concerns
about the Food and Drug Administration's (FDA) ability to ensure the
safety and quality of the increasing volume of foreign-produced drugs
imported daily into the United States. 

According to FDA, as much as 80 percent of the bulk pharmaceutical
chemicals used by U.S.  manufacturers to produce prescription drugs
is imported.  Moreover, the number of finished drug products
manufactured abroad for the U.S.  market is increasing.  FDA inspects
foreign manufacturers to help ensure that pharmaceutical products
entering the United States are safe, pure, and high in quality.\1

However, a 1988 FDA internal review and a 1993 internal discussion
paper identified serious problems with the agency's foreign
inspection program.\2 Specifically, these internal evaluations found
that FDA was not taking prompt action against foreign manufacturers
because inspection reports were not being prepared in a timely
manner.  The 1993 discussion paper also noted that headquarters staff
often disagreed with field investigators about the results of foreign
inspections and whether FDA should reinspect problem manufacturers to
verify that they had corrected serious deficiencies.  Further, the
evaluations found that FDA was not routinely inspecting foreign
manufacturers to ensure that they complied with U.S.  manufacturing
standards.  Finally, the evaluations found that FDA did not have a
comprehensive data management system to monitor foreign
manufacturers.  The evaluations concluded that unless corrected,
problems in FDA's foreign inspection program could lead to the
importation of adulterated and low-quality drugs that could pose
serious health risks to Americans. 

This report responds to your request that we examine FDA's efforts to
correct problems identified in the earlier evaluations.  In
subsequent discussions with your office, we agreed to examine FDA's
efforts to

  -- prepare inspection reports and take enforcement actions against
     foreign pharmaceutical manufacturers in a timely manner,

  -- improve the consistency with which FDA evaluates the results of
     foreign inspections and conducts reinspections to verify that
     foreign pharmaceutical manufacturers have corrected serious
     deficiencies,

  -- conduct routine inspections of foreign pharmaceutical
     manufacturers to monitor their compliance with U.S.  quality
     standards, and

  -- improve the management of data needed for planning inspections,
     monitoring inspection results, and taking enforcement actions. 

To obtain information on FDA's foreign inspection program, we
interviewed FDA officials and examined documents regarding FDA's
requirements for inspecting, reporting, and taking enforcement
actions against foreign pharmaceutical manufacturers.  We also
examined FDA's 1988, 1993, and 1997 internal evaluations of its
foreign inspection program and discussed them with agency
officials.\3

To determine the timeliness of enforcement actions, the consistency
of evaluations of foreign inspection results and enforcement actions,
the frequency of routine inspections, and the management of data, we
analyzed computerized data on the 287 foreign inspection reports FDA
reviewed during fiscal year 1996 and the 257 it reviewed during
fiscal year 1997.  In addition, we reviewed inspection reports for 22
pharmaceutical manufacturers in China and 17 in India that were
inspected between January 1, 1994, and May 15, 1996.  We focused on
China and India because they represent two developing countries that
had large increases in pharmaceutical products exported to the United
States.  We interviewed the investigators who conducted the
inspections and the FDA officials responsible for reviewing these
inspection reports.  We did not independently verify the accuracy of
data provided by FDA.  These are the same data FDA uses to manage the
foreign inspection program.  Except for this, we performed our work
from April 1996 to February 1998 in accordance with generally
accepted government auditing standards. 


--------------------
\1 We use "pharmaceutical products" to refer to pharmaceuticals
imported in finished dosage form as well as bulk drug substances (for
example, active pharmaceutical ingredients or bulk pharmaceutical
chemicals). 

\2 Office of Regulatory Affairs, Program Evaluation Branch, "An
Evaluation of FDA's Foreign Inspection Program," Rockville, Md.,
March 1988, and the internal FDA discussion paper entitled
"Recommendations to Strengthen Surveillance and Enforcement
Operations Associated with the Importation of Human Drugs," prepared
by the Regional Director and senior staff, mid-Atlantic Region, 1993. 

\3 Office of the Commissioner, U.S.  Food and Drug Administration,
"Summary Report of the Foreign Inspection Working Group," Rockville,
Md., June 1997. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

FDA has taken several actions to address problems with its foreign
inspection program that were identified in two previous internal
evaluations.  Although FDA has improved the timeliness with which
investigators submit inspection reports, in fiscal year 1996, almost
60 percent were still submitted later than called for by agency
standards, including half the reports that identified the most
serious deficiencies in manufacturing quality.  Moreover, FDA is
still experiencing delays in taking prompt enforcement action against
foreign pharmaceutical manufacturers.  During fiscal year 1996, FDA
took, on average, almost four times longer than its required time to
issue warning letters to foreign pharmaceutical manufacturers with
serious manufacturing deficiencies.  The extent of these delays can
be significant.  For example, in one case FDA allowed a manufacturer
in India to continue exporting its pharmaceutical products to the
United States despite its investigator's finding that the
manufacturer could not adequately test for impurities in its product
and water system.  Nearly 2 years elapsed before FDA determined that
enforcement action had not been taken against this manufacturer. 

During fiscal years 1996 and 1997, headquarters review personnel
continued to downgrade the classifications of inspections recommended
by its field investigators who conducted the inspections.  Most of
the decisions to downgrade the classifications were based on foreign
manufacturers' promises to implement corrective actions.  As a
result, FDA conducted fewer reinspections of these facilities to
verify that foreign manufacturers had corrected serious manufacturing
deficiencies.  In one case, for example, FDA headquarters reviewers
accepted a manufacturer's written explanation of the actions it was
taking to correct deficiencies in its testing procedures, instead of
issuing the manufacturer a warning letter.  As a result, this
facility was not reinspected even though agency documents raised
questions about the manufacturer's trustworthiness.  Our analysis
showed that in fiscal year 1996, half of the inspections in which
field investigators recommended agency enforcement action were
downgraded by headquarters review staff, which meant that FDA
conducted 50 percent fewer reinspections to verify that foreign
manufacturers corrected the deficiencies observed during their
initial inspections.  The frequency of downgrades has increased
significantly in the past year.  In fiscal year 1997, FDA downgraded
about two-thirds of the inspections in which field investigators
recommended agency enforcement action. 

FDA conducts infrequent routine inspections of foreign manufacturers
to ensure that they continue to comply with U.S.  quality standards,
although routine surveillance inspections constitute FDA's most
comprehensive program for monitoring the quality of marketed
pharmaceutical products.  Most inspections of foreign pharmaceutical
manufacturers are performed to approve the marketing of new products. 
Routine surveillance inspections of manufacturers producing approved
pharmaceutical products already marketed in the United States
accounted for only 20 percent of FDA's foreign inspections during
fiscal year 1995.  As a result, routine inspections of foreign
pharmaceutical manufacturers occur with far less frequency than the
2-year interval required for domestic manufacturers.  In China and
India, for example, 4 to 5 years elapsed between FDA inspections of
pharmaceutical manufacturers.  Acknowledging that it needs to conduct
more routine surveillance inspections, FDA has developed a four-tier
strategy aimed at ensuring that high-risk foreign pharmaceutical
products and manufacturers are inspected more frequently.  While this
strategy may improve the frequency of routine inspections for some
facilities, FDA acknowledges that most foreign pharmaceutical
manufacturers may never receive a routine surveillance inspection. 

FDA has been striving to improve its management of data needed for
planning inspections, monitoring inspection results, and taking
enforcement actions.  At present, FDA relies on 15 separate systems
to identify foreign pharmaceutical manufacturers, plan foreign
inspection travel, track inspection results, and monitor enforcement
actions.  As a result, essential foreign inspection data are not
readily accessible to the different FDA units that are responsible
for planning, conducting, and reviewing inspections and taking
enforcement actions against foreign manufacturers.  FDA is developing
a comprehensive, agencywide automated system to provide better data
for managing its foreign inspection program.  The first phase of
FDA's new Field Accomplishments and Compliance Tracking System
(FACTS) is expected to be implemented during fiscal year 1998. 

Our report contains several recommendations to the Commissioner of
FDA to establish procedures to help ensure timely compliance with
U.S.  quality standards by foreign pharmaceutical manufacturers. 


   BACKGROUND
------------------------------------------------------------ Letter :2

FDA is responsible for the safety and quality of domestic and
imported pharmaceutical products under the Federal Food, Drug, and
Cosmetic Act.  Specifically, FDA's Center for Drug Evaluation and
Research (CDER) establishes standards for the safety, effectiveness,
and manufacture of prescription pharmaceutical products and
over-the-counter medications.  CDER reviews the clinical tests and
manufacture of new pharmaceutical products before they can be
approved for the U.S.  market, and it regulates the manufacture of
pharmaceutical products already being sold to ensure that they comply
with federal statutes and regulations, including current "good
manufacturing practice" (GMP).  GMP requirements are federal
standards for ensuring that pharmaceutical products are high in
quality and produced under sanitary conditions.\4 In addition, CDER
enforces the act's prohibitions against the importation of
adulterated, misbranded, and counterfeit pharmaceutical products. 

CDER regulates the manufacture of pharmaceutical products by
requesting that FDA's Office of Regulatory Affairs (ORA) inspect
manufacturers both at home and abroad to ensure that pharmaceuticals
are produced in conformance with GMPs.  ORA manages investigators
located in FDA's 21 district offices.  Approximately 375
investigators and 75 microbiologists and chemists conduct inspections
of foreign pharmaceutical manufacturers.  ORA's investigators inspect
manufacturers that produce pharmaceuticals in finished form as well
as manufacturers that produce the active ingredients used in finished
pharmaceutical products.  Typically, ORA investigators travel abroad
for about 3 weeks at a time during which they inspect approximately
three manufacturers.  Each inspection ranges from 2 to 5 days in
length, depending on the number and types of products inspected.\5 In
fiscal year 1996, FDA reviewed the results of 287 inspections of
foreign pharmaceutical manufacturers conducted by its investigators
in 35 countries (see figure 1).  About 70 percent of these
inspections were performed in manufacturing facilities that produce
the active ingredients used in finished pharmaceutical products. 

   Figure 1:  The 287 FDA
   Inspections of Foreign
   Pharmaceutical Manufacturers in
   35 Countries Reviewed During
   Fiscal Year 1996

   (See figure in printed
   edition.)



   (See figure in printed
   edition.)

CDER requests that ORA's investigators conduct inspections for three
reasons.  First, CDER requests pre-approval inspections to ensure
that before a new drug application is approved, the manufacturer of
the finished pharmaceutical product as well as each manufacturer
supplying a bulk pharmaceutical chemical used in the finished
pharmaceutical product comply with GMPs.  Each step in the
manufacture and processing of a new drug, from the sources of raw
materials to final packaging must be approved by FDA.  Second, CDER
requests postapproval or routine surveillance inspections to
periodically assess the quality of marketed pharmaceutical products. 
During these inspections, investigators verify that manufacturers of
finished pharmaceutical products and bulk pharmaceutical chemicals
comply with GMPs.\6

Third, CDER requests for-cause inspections when it receives
information indicating problems in the manufacture of approved
pharmaceutical products.  In addition, CDER requests for-cause
inspections of manufacturers that were not in compliance with GMPs
during previous inspections.  In for-cause inspections, FDA
investigators determine whether the manufacturer has improved its
production processes to comply with GMPs. 

During an inspection, the ORA investigator examines the
pharmaceutical manufacturer's production processes, product packaging
and labeling processes, product contents, warehouse practices,
quality control, laboratories, recordkeeping systems, and other
manufacturing practices.  The investigator reports observations of
significant objectionable conditions and practices that do not
conform to GMPs on the list-of-observations form, commonly referred
to as FDA form 483.  At the end of the inspection, the investigator
gives a copy of the form 483 to the highest ranking management
official present at the manufacturing facility.  The investigator
also discusses the observations on the form 483 with the firm's
management to ensure that they are aware of any deviations from GMPs
that were observed during the inspection and suggests that the
manufacturer respond to FDA in writing concerning all actions taken
as a result of the observations.  Figure 2 shows FDA's process for
managing foreign pharmaceutical inspections. 

   Figure 2:  How FDA Manages
   Foreign Pharmaceutical
   Inspections

   (See figure in printed
   edition.)

After returning to the district office, the investigator prepares an
establishment inspection report that describes the manufacturing
operations observed during the inspection and any conditions that may
violate federal statutes and regulations.  The investigator also
recommends whether the manufacturer is acceptable to supply
pharmaceutical products to the United States.  The investigator's
district office formally endorses the recommendation after reviewing
the inspection report to determine if it supports the proposed
recommendation.  The district office forwards its endorsement along
with the investigator's establishment inspection report and the form
483 to CDER.  The foreign inspection team within CDER's Office of
Compliance reviews the documentation and the manufacturer's written
response to FDA about any corrective actions taken.  CDER then
decides whether the manufacturer complies with GMPs. 

Inspections of pharmaceutical manufacturers are classified in one of
three categories.  As table 1 shows, during fiscal year 1996, 238
inspections (or 83 percent) revealed deviations from GMPs.  Of these,
CDER determined that 46 inspections revealed deviations from GMPs
that ranked in the most serious (or "official action indicated")
category. 



                                         Table 1
                         
                          Distribution of Inspection Results of
                           Foreign and Domestic Pharmaceutical
                             Manufacturers, Fiscal Year 1996

                                                        Foreign             Domestic
                                                   ------------------  ------------------
Classification  Explanation                          Number   Percent    Number   Percent
--------------  ---------------------------------  --------  --------  --------  --------
Official        OAI classifications are                  46       16%       182       21%
 action          considered the most serious and
 indicated       indicate deviations from GMPs
 (OAI)           that require some FDA
                 intervention to ensure that
                 corrections are made. OAI
                 classifications require FDA to
                 issue either a warning letter or
                 an untitled letter, the
                 manufacturer to correct problems
                 and respond in writing to FDA
                 about the corrections made, and
                 FDA to reinspect the
                 manufacturer to verify that it
                 has improved its production
                 processes to comply with GMPs.
Voluntary       VAI classifications are                 192        67       328        38
 action          considered less serious than OAI
 indicated       classifications and indicate
 (VAI)           deviations from GMPs that are
                 amenable to corrective action by
                 the manufacturer with no
                 compromise to public safety. VAI
                 classifications require the
                 manufacturer to agree to
                 voluntarily correct problems and
                 FDA to verify that the
                 manufacturer corrected all less-
                 serious GMP deviations during
                 the next routine surveillance
                 inspection.
No action       NAI classifications indicate             49        17       342        40
 indicated       insignificant or no deviations
 (NAI)           from GMPs.
=========================================================================================
Total                                                   287      100%       852     99%\a
-----------------------------------------------------------------------------------------
\a FDA could not provide the inspection classification for 16
domestic inspections. 

When CDER classifies a foreign pharmaceutical inspection as "official
action indicated" (OAI), it sends the manufacturer an enforcement
letter.  CDER issues two types of enforcement letters:  untitled
letters and warning letters.  CDER issues an untitled letter to a
foreign manufacturer when the inspection was conducted as part of its
review of a new drug application and the manufacturer has not
previously been inspected and accepted to supply approved
pharmaceutical products to the United States.  The untitled letter
notifies the manufacturer that its manufacturing process does not
comply with federal statutes and regulations and that failure to take
corrective action may result in the disapproval of any new drug
application on which the manufacturer is listed. 

CDER issues a warning letter to a foreign manufacturer when a
subsequent inspection of its facility is classified as OAI.  Warning
letters are issued to manufacturers that are already supplying
approved pharmaceutical products to the United States.  Warning
letters indicate that serious manufacturing deficiencies can and are
affecting commercially marketed products.  The warning letter
notifies the manufacturer of its violation of federal statutes and
regulations and that failure to take corrective action may result in
further FDA enforcement action.  CDER issued 17 untitled letters and
19 warning letters to foreign pharmaceutical manufacturers in fiscal
year 1996. 

If CDER classifies an inspection as OAI and believes the
manufacturer's product is adulterated because it was not produced in
compliance with GMPs, CDER can instruct the district offices to
cooperate with the U.S.  Customs Service in detaining the
manufacturer's product when it is offered for entry into the United
States.  In such a situation, the warning letter may also threaten to
detain the manufacturer's products at U.S.  entry points or notify
the manufacturer that detention will occur.  Customs, which controls
the points where foreign shipments enter the United States, ensures
that adulterated pharmaceutical products are either exported from the
United States or destroyed.  In fiscal year 1996, CDER determined
that the pharmaceutical products made by two foreign manufacturers
should be detained. 


--------------------
\4 The current good manufacturing practice regulations (21 C.F.R. 
parts 210 and 211) provide a framework for manufacturers to follow to
ensure that they produce safe, pure, and high-quality pharmaceutical
products.  While FDA has an essential role in ensuring safe, pure,
and high-quality pharmaceutical products, the individual
manufacturers are ultimately responsible for the safety and quality
of their products. 

\5 FDA contends that foreign inspections now range from 2 to 7 days
and may be performed by a single investigator or an inspection team. 

\6 FDA's surveillance of foreign pharmaceutical products also
includes routine sampling of imports at the port of entry to the
United States.  In addition, FDA's postapproval surveillance system
for human pharmaceutical products consists of inspections of
manufacturing establishments, which we discuss in this report. 


   TIMELINESS OF INSPECTION
   REPORTS HAS IMPROVED, BUT
   DELAYS IN TAKING PROMPT
   ENFORCEMENT ACTIONS CONTINUE
------------------------------------------------------------ Letter :3

FDA's 1988 internal evaluation found that delays in the submission of
final inspection reports by investigators made it difficult for FDA
to take prompt enforcement action against foreign manufacturers that
did not comply with federal regulations that ensure the safety,
purity, and quality of pharmaceutical products.  Since then, FDA has
taken several actions that have reduced the average time required by
investigators to submit foreign inspection reports to headquarters. 
Despite this improvement, only about a quarter of the warning letters
FDA issued in fiscal year 1996 to foreign pharmaceutical
manufacturers found to have serious deficiencies met FDA's timeliness
standards.  The lack of prompt enforcement action may impair FDA's
ability to prevent foreign manufacturers from exporting contaminated
or adulterated pharmaceutical products to the United States. 


      FDA HAS ACTED TO IMPROVE THE
      TIMELINESS OF ENFORCEMENT
      ACTIONS
---------------------------------------------------------- Letter :3.1

FDA's 1988 internal evaluation of its foreign inspection program
reported that the average length of time required from the completion
of an inspection to CDER's receipt of a final report was slightly
more than 3 months.  Delays in submitting inspection reports may
hinder CDER's ability to initiate timely enforcement actions to
prevent contaminated or adulterated products from entering the United
States.  To reduce these delays, the evaluation recommended that FDA
explore new ways of processing inspection reports. 

To strengthen its enforcement strategy, FDA revised its timeliness
standards for new drug applications in October 1991 by requiring
investigators and districts to submit all inspection reports
classified as OAI or "voluntary action indicated" (VAI) to CDER
within 30 work days of completing inspections.\7 FDA also revised its
enforcement policy to require CDER to review OAI inspection reports
containing recommendations for warning letters and issue the letters
within 15 work days. 

According to FDA officials, additional changes were made to help
investigators submit more timely inspection reports on foreign
manufacturers.  In the early 1990s, FDA reduced the length of foreign
inspection trips from about 6 to 3 weeks as well as the number of
inspections an investigator conducted during the trip.  The agency
also revised inspection requirements for international travel to
build time into foreign inspections for investigators to prepare
their reports and provided investigators with notebook computers so
that they could begin preparing their reports overseas. 


--------------------
\7 The same timeliness standards were extended to approved drug
products in September 1994. 


      INSPECTION REPORTS ARE MORE
      TIMELY, BUT MANY MISS FDA'S
      REPORTING DEADLINE
---------------------------------------------------------- Letter :3.2

Although FDA has reduced the average time it takes to submit reports
after inspections are completed from slightly more than 3 months to
2, over half of the reports in fiscal year 1996 did not meet FDA's
timeliness standard.  Our analysis of 287 foreign inspection reports
CDER reviewed during fiscal year 1996 showed that about 42 percent
(102) of the inspections that identified GMP deficiencies (either OAI
or VAI) were submitted on time or within 30 work days of completing
inspections.  However, 58 percent (141) of the inspection reports
were not timely (see table 2).\8



                          Table 2
          
            Work Days Between the Completion of
           Foreign Inspections and Submission of
          Inspection Reports to CDER, Fiscal Year
                            1996

                   Inspection classifications
                recommended by investigators and
                           districts
                --------------------------------
Submitted to      Official   Voluntary
CDER (in work       action      action
days)            indicated   indicated     Total   Percent
--------------  ----------  ----------  --------  --------
30 days or              41          61       102       42%
 less
31-60 days              37          79       116        48
61-90 days               4          14        18         7
91-120 days              0           3         3         1
121 days or              0           4         4         2
 more
==========================================================
Total                   82         161       243     100%\
----------------------------------------------------------
About half of the inspections with the most serious deficiencies
(classified as OAI or requiring official action) were submitted on
time and half were not.  Most of the OAI inspection reports that were
submitted to CDER after the 30-day deadline were submitted within 60
work days.  CDER received about one-third of the inspection reports
with less serious deficiencies (classified as VAI, allowing foreign
manufacturers to voluntarily make corrections) on time; two-thirds
were late. 

FDA reported more recently that its analysis of fiscal year 1997 data
showed a modest improvement in the submission times for OAI and VAI
inspection reports.  FDA reported that in its analysis of 230 foreign
inspection reports reviewed during fiscal year 1997, about 47 percent
(75) of the inspections that identified GMP deficiencies (either OAI
or VAI) were submitted on time.  However, 53 percent (85) of the
inspection reports were not timely. 

Our review of inspection reports for China and India showed that
regardless of the seriousness of the GMP deficiencies found, CDER did
not receive the majority of the inspection reports within the 30-work
day requirement.  Specifically, 22 of the 36 OAI and VAI inspection
reports (61 percent) we reviewed for China and India were not
submitted on time.\9

Although there was no one reason for the late submissions, CDER
officials told us that an investigator may return to the United
States 3 weeks after conducting his first inspection, making it
impossible for him or her to submit an inspection report within 30
work days.  Some investigators told us that the paperwork, which
includes preparing numerous documents and exhibits to support the
deficiencies observed, is time-consuming.  In addition, after
returning to their district offices, some investigators stated that
they are often confronted with competing demands on their time, such
as responding to problems with domestic pharmaceutical manufacturers. 


--------------------
\8 Investigators classified an additional 44 inspections as not
requiring any action by FDA or foreign manufacturers because
insignificant or no deviations from U.S.  GMPs had been observed. 

\9 Three of the inspection reports we reviewed did not identify any
deviations from U.S.  GMPs. 


      FDA ENFORCEMENT ACTIONS
      STILL TAKE TOO LONG
---------------------------------------------------------- Letter :3.3

Although FDA established a 15-work-day standard for issuing warning
letters, about one out of four warning letters issued by CDER during
fiscal year 1996 was issued on time.  The extent of these delays can
be significant.  For example, CDER took 4 months (80 work days) to
issue a warning letter to one Chinese manufacturer inspected in
September 1994.  In the inspection report, received by CDER 2 months
after the inspection, the investigator noted 20 significant
deviations from U.S.  GMPs and wrote that the manufacturer was
incapable of producing the injectable pharmaceutical product for
which it was seeking approval.  The investigator wrote that
"Virtually all of the processing equipment for the first phases of
processing is filthy, in [an] extreme state of disrepair, and was
removed during this inspection." Despite the severity of the
inspection findings, it was not until March 1995 that CDER sent a
warning letter to the manufacturer. 

As shown in table 3, it took more than 15 work days to issue 23 of
the 30 warning letters sent to foreign pharmaceutical manufacturers. 
After receiving the inspection reports from investigators, it took
CDER between 21 and 148 work days to issue the 23 late warning
letters, with an average of 57 work days.  According to a CDER
official, CDER experienced staffing shortages during the period we
examined that delayed the review of incoming foreign inspection
reports. 



                          Table 3
          
            Work Days Between CDER's Receipt of
             Inspection Reports and Issuance of
             Warning Letters, Fiscal Year 1996

                                   Number of
                                     warning
                                     letters
Issued by CDER (in work days)         issued       Percent
------------------------------  ------------  ------------
15 days or less                            7           23%
16-30 days                                 6            20
31-45 days                                 5            17
46-60 days                                 2             7
61-75 days                                 3            10
76-90 days                                 3            10
91-105 days                                2             7
106 or more days                           2             7
==========================================================
Total                                     30        101%\a
----------------------------------------------------------
\a Total does not add to 100 because of rounding. 

More recently, FDA reported that its analysis of fiscal year 1997
data showed a substantial improvement in the time CDER spent in
processing warning letters.  FDA reported that 30 percent or 3, of
the 10 warning letters issued to foreign pharmaceutical manufacturers
during fiscal year 1997 were sent within 15 work days.  On average,
FDA issued the 10 warning letters in about 24 work days.  However,
compared with the number of warning letters issued during fiscal year
1996, FDA issued two-thirds fewer warning letters during fiscal year
1997. 

Our analysis of inspections conducted in China and India between
January 1, 1994, and May 15, 1996, showed that CDER did not issue any
of the six warning letters within the agency's 15-work-day standard. 
The number of work days from CDER's receipt of inspection reports to
the issuance of these warning letters ranged from 24 to 86 days, with
an average of 40 days. 

In one case, a February 1994 inspection of a plant in India making an
antibacterial agent identified serious problems, including failure to
ensure that the proper manufacturing process was followed and
inadequate testing of impurities in the product and water used by the
plant.  The investigator also found that two deficiencies identified
during a 1985 FDA inspection had not been fully corrected to meet
U.S.  quality standards.\10 Given the significance of the
deficiencies found during the 1994 inspection, the investigator and
his district office recommended that CDER (1) not approve the new
drug application, (2) advise FDA district offices to deny entry into
the United States of any pharmaceutical products from this
manufacturer, and (3) pursue additional enforcement actions against
pharmaceutical products from the manufacturer that were already
distributed in the United States.  Notwithstanding the seriousness of
the problems or the recommended enforcement action, it took 2 years
for CDER officials to determine that they had not taken any
enforcement action against this foreign manufacturer. 

While CDER officials agreed with the district recommendation and
planned to issue a warning letter, the letter was never sent to this
foreign pharmaceutical manufacturer because CDER lost track of it
during staffing changes.  In March 1996, CDER officials determined
that they had allowed this foreign manufacturer to continue shipping
already approved bulk pharmaceutical products to the United States,
even though the inspection had identified manufacturing problems such
as unacceptable impurity testing procedures, no periodic review of
the production process, and the failure to investigate product yields
that were lower than the specified amount.\11

In another case, it took CDER about 3 months to issue a warning
letter to a foreign pharmaceutical manufacturer operating with 17
serious GMP deficiencies.  FDA inspected this foreign manufacturer in
April 1995, after receiving several new drug applications listing the
manufacturer as a supplier of bulk pharmaceutical chemicals for use
in U.S.  finished drug products.  The investigator found that the
manufacturer did not have an appropriate impurity testing system and
identified questionable results from impurity testing.  The
investigator believed that these questionable results represented a
deliberate attempt to conceal instances in which the pharmaceutical
products contained higher levels of impurities than permitted by U.S. 
standards.  As a result, the investigator and his district office
recommended that CDER not approve the new drug applications and that
it issue a warning letter to the manufacturer. 

Notwithstanding the serious nature of the investigator's findings, it
took ORA about 2 months to submit the inspection report to CDER and
another month for CDER to review the report.  On August 1, 1995,
slightly more than 3 months after the inspection, CDER issued a
warning letter stating that it would not approve any applications
listing this foreign pharmaceutical manufacturer as a supplier. 
During the time it took CDER to act on the serious deficiencies and
possible fraud identified by the investigator, a U.S.  finished-drug
manufacturer discovered that several containers labeled as a bulk
pharmaceutical chemical product from the same foreign manufacturer
contained an herbicide rather than a bulk chemical. 


--------------------
\10 During a 1994 inspection, FDA found that the manufacturer had not
packaged stability samples of its product in simulated market
containers as agreed and had implemented laboratory procedures for
impurity testing that did not meet U.S.  GMPs. 

\11 According to FDA, a reinspection of this manufacturer found that
it had implemented promised corrections and was in compliance with
U.S.  GMPs. 


   FDA VERIFIES CORRECTIVE ACTIONS
   IN ONLY ABOUT HALF THE CASES IN
   WHICH SERIOUS DEFICIENCIES ARE
   IDENTIFIED
------------------------------------------------------------ Letter :4

Members of the Congress and industry representatives have been
concerned about the consistency of FDA inspections and subsequent
enforcement actions taken against domestic and foreign pharmaceutical
manufacturers.  In FDA's 1993 internal evaluation, these concerns
were attributed to differences in how field investigators and
headquarters staff evaluated foreign inspection results and
determined the appropriate follow-up activity.  Moreover, the
internal evaluation acknowledged that there was a perception that FDA
relied on foreign facilities to correct manufacturing deficiencies
because there were insufficient resources to conduct follow-up
inspections to confirm that corrective actions had been implemented. 

Our analysis of the foreign inspection reports reviewed during fiscal
year 1996 showed that in about half the instances in which field
staff concluded that the severity of inspection findings warranted a
reinspection, headquarters disagreed.  For domestic manufacturers
with a history of serious GMP manufacturing problems, FDA typically
conducts a reinspection to verify that promised corrective actions
have been implemented.  However, current FDA policy does not address
the need for verifying the corrective actions of foreign
pharmaceutical manufacturers in instances in which FDA headquarters
downgrades the severity of inspection findings.  As a result of
downgrading, FDA conducted far fewer reinspections of foreign
manufacturers than was recommended by its investigators.  Without
reinspections, FDA cannot adequately verify that foreign
manufacturers have corrected serious deficiencies that could affect
the safety, purity, and quality of their pharmaceutical products. 


      FDA'S 1993 INTERNAL REVIEW
      IDENTIFIED DIFFERENCES IN
      THE EVALUATION OF INSPECTION
      FINDINGS THAT AFFECTED THE
      FREQUENCY OF REINSPECTIONS
---------------------------------------------------------- Letter :4.1

In the 1993 internal discussion paper, FDA managers found that agency
headquarters' personnel downgraded the severity of the manufacturing
deficiencies identified in foreign inspections and the need for
reinspecting violative foreign manufacturers.  However, they stated
that FDA did not downgrade the severity of inspection findings for
domestic manufacturers that had similar deficiencies.  According to
the review, this was caused by different FDA units being responsible
for reviewing and evaluating inspection results and planning
reinspections of foreign and domestic pharmaceutical manufacturers to
verify corrective actions.  The discussion paper identified several
instances in which approval of new drug applications was withheld,
based on significant GMP deficiencies discovered during domestic
inspections, whereas similar deficiencies found at foreign
manufacturing facilities resulted in the approval of applications. 

In the discussion paper, FDA managers stated that differences between
the evaluations of foreign and domestic inspection results existed
for two reasons.  First, unlike for domestic inspections, decisions
regarding the severity of the manufacturing deficiencies identified
during foreign inspections are made by CDER staff rather than by the
field investigators who actually conducted the inspections and their
district office managers who endorse their recommendations.  Second,
they indicated that a perception existed that FDA has too few
resources to conduct a reinspection of a foreign manufacturer to
verify that corrections have been made.  According to the review,
this leads CDER staff to "trust" a foreign manufacturer to correct
serious manufacturing deficiencies.  The review described several
instances in which significant GMP deficiencies at foreign facilities
received little or no enforcement action, while similar deficiencies
at domestic facilities resulted in product recalls or application
denials. 

To correct this problem, the discussion paper recommended that
district offices, where the investigators are located, rather than
CDER be responsible for evaluating the results of foreign inspections
and determining the appropriate enforcement action, including the
need for reinspecting the manufacturer.  FDA officials disagreed with
the assertion that its inspection and enforcement programs were
applied disparately to domestic and foreign pharmaceutical
manufacturers.  Further, they argued that district offices already
had this responsibility. 


      CDER OFTEN DOWNGRADES
      INVESTIGATORS' RECOMMENDED
      CLASSIFICATIONS OF
      INSPECTION FINDINGS
---------------------------------------------------------- Letter :4.2

Our analysis of FDA computer data of foreign inspection reports
reviewed during fiscal year 1996 showed that CDER and field
investigators often disagree on the classification of inspection
findings and the severity of the enforcement action that should be
taken against foreign pharmaceutical manufacturers when GMP
deficiencies are found.  For 82 of the 287 foreign inspections
reviewed during this period, field investigators concluded that the
severity of the GMP deficiencies they observed warranted that CDER
initiate official action against the manufacturers.  The
investigators' district offices also endorsed their classifications
of these inspections and their recommendations for enforcement action
before these were forwarded along with the inspection reports and the
form 483s to CDER.  However, CDER officials downgraded the inspection
classifications and recommendations for enforcement action in 41 of
these inspections, based on foreign manufacturers' promises to
implement corrective actions.  CDER officials decided that rather
than OAI, 40 of these inspections should be classified as VAI and 1
should be classified as "no action indicated" (NAI).  Conversely,
CDER officials upgraded the field investigators' classifications and
recommendations for enforcement action in 11 foreign inspections and
classified them OAI rather than VAI. 

In instances in which inspections found serious GMP deficiencies but
CDER downgraded the inspection classifications, FDA's procedures
allow foreign manufacturers to continue exporting pharmaceutical
products to the United States without reinspections to evaluate
whether they comply with U.S.  quality standards.  The classification
of an inspection determines to a large degree whether a reinspection
is conducted.  The OAI classification is the most serious and
requires FDA to reinspect the manufacturer to verify that it has
improved its production processes to comply with GMPs.  When CDER
does not accept the investigators' recommendations and classifies
inspections as VAI rather than OAI, foreign manufacturers are allowed
to voluntarily correct their deficiencies and respond in writing to
FDA about the corrections made.\12 FDA officials have acknowledged
that they sometimes base their downgrades of inspection
classifications and approvals of new drug applications on foreign
manufacturers' promises to implement corrective actions.  They
contend that during the next inspection, whenever it may be, FDA
confirms that the corrections were made. 

Our analysis of FDA computer data of foreign inspection reports
reviewed during fiscal year 1997 showed that CDER and field
investigators continue to disagree on the classification of
inspection findings and the severity of the enforcement action that
should be taken against foreign pharmaceutical manufacturers when GMP
deficiencies are found.  For 49 of the 230 foreign inspections
reviewed during this period, field investigators concluded that the
severity of the GMP deficiencies they observed warranted that CDER
initiate official action against the manufacturers.  However, CDER
officials downgraded the inspection classifications and
recommendations for enforcement action in 32 of these inspections. 
CDER officials decided that rather than classify these inspections
OAI, 32 of the 49 inspections (65 percent) should be classified VAI. 
CDER officials also upgraded the field investigators' classifications
and recommendations for enforcement action for two foreign
inspections and classified them OAI rather than VAI. 

FDA officials believe that in some instances the agency can
adequately verify that foreign manufacturers have corrected serious
deficiencies without reinspecting them.  They said that foreign
pharmaceutical manufacturers nearly always respond in writing
concerning corrective actions taken as a result of the observations
listed on the FDA form 483.  They said that these responses typically
include copies of the manufacturer's documentation of the corrective
actions taken, such as photographs, laboratory test results, and
corrected manufacturing procedures.  Consequently, FDA officials said
they can evaluate a manufacturer's corrective actions to ensure the
safety, purity, and quality of its pharmaceutical products without
conducting a reinspection based on the deficiencies found, the
documentation provided, and the manufacturer's history of
implementing corrective action.  While we recognize that there may be
instances in which documentation could suffice to verify the
correction of manufacturing deficiencies, inspections of facilities
in China and India that we reviewed give instances in which such
documentation may not have been sufficient. 

A pre-approval inspection of a bulk drug manufacturer in India found
several deficiencies in the procedures used to test impurity levels
in the product being manufactured.  Although ORA personnel
recommended withholding approval of the new drug application until
corrective actions had been implemented, CDER changed the final
inspection classification based on its review of the manufacturer's
written explanation of the actions it was taking to correct the
deficiencies identified during the inspection.  CDER did not request
a reinspection to verify that the corrective actions had been taken,
even though FDA documents raised questions about the trustworthiness
of the manufacturer.  According to these documents, FDA had been
notified several years earlier that this manufacturer had informed
the U.S.  Department of Commerce that it was no longer making a
particular pharmaceutical product, despite evidence that the
manufacturer was still shipping the product to the United States. 

In another case, FDA conducted a for-cause inspection of a bulk
pharmaceutical manufacturer in India to investigate reports that the
manufacturer was using chloroform in its manufacturing process (a
substance that had been found at higher than acceptable levels in the
bulk pharmaceutical chemical).  While the investigators found that
the manufacturer was no longer using chloroform, they identified
other deficiencies in how the company was measuring the impurities
present in other bulk drug products that an FDA chemist characterized
as "incompetence bordering on fraud." The investigators recommended
from these deficiencies that the manufacturer be considered an
unacceptable source of bulk pharmaceutical chemicals.  CDER disagreed
with this recommendation after reviewing the manufacturer's response
to the investigators' findings and accepted the manufacturer as a
supplier of bulk pharmaceutical chemicals without verifying that it
had corrected deficiencies in its impurity testing procedures.\13


--------------------
\12 FDA's field offices are responsible for determining the severity
of inspection findings and enforcing facility compliance for U.S. 
pharmaceutical manufacturers.  As a result, even in instances where
CDER does not approve the enforcement actions recommended by the
district offices, CDER does not downgrade the field offices'
classifications of domestic inspections when violations are
identified.  Consequently, unlike foreign manufacturers, U.S. 
pharmaceutical manufacturers are subject to reinspections to verify
that promised corrective actions have been implemented and
manufacturing operations meet GMP requirements. 

\13 Again, according to FDA, more recent reinspections of these
manufacturers found that they had implemented promised corrections
and were in compliance with U.S.  GMPs. 


   FDA CONDUCTS INFREQUENT ROUTINE
   INSPECTIONS OF FOREIGN
   PHARMACEUTICAL MANUFACTURERS
------------------------------------------------------------ Letter :5

FDA's 1988 and 1993 internal evaluations found that while FDA
routinely conducted surveillance inspections of domestic
pharmaceutical manufacturers, foreign manufacturers were typically
inspected only when they were listed in new drug applications.  The
evaluations concluded that this practice, which FDA said was because
of limited resources, was unreasonable and unfair to domestic
manufacturers.  In addition, FDA's 1993 evaluation concluded that in
the absence of reinspections, FDA could not adequately verify that
foreign manufacturers corrected deviations from GMPs that had been
observed during prior FDA inspections.  Both evaluations recommended
that FDA increase the frequency of its inspections of foreign
manufacturers that supply approved pharmaceutical products to the
United States. 

FDA has authority to inspect foreign pharmaceutical manufacturers
exporting their products to the United States under the Food, Drug,
and Cosmetic Act.  The purpose of the foreign inspection program is
to ensure that internationally manufactured pharmaceutical products
meet the same GMP standards for quality, safety, and efficacy that
are required of domestic manufacturers.  However, FDA is not required
to inspect foreign pharmaceutical manufacturing facilities every 2
years as it is required by statute to do for domestic pharmaceutical
manufacturers that must be registered with the agency.  Enforcing GMP
compliance through routine surveillance inspections is FDA's most
comprehensive program for monitoring the quality of marketed
pharmaceutical products.  FDA also uses routine surveillance
inspections to verify that manufacturers have corrected all
less-serious GMP deficiencies that were observed in prior FDA
inspections.  Each year, FDA classifies about 65 percent of its
foreign pharmaceutical inspections as VAI, which means that
deviations from GMPs were found but they were not serious enough to
warrant FDA intervention to ensure that corrections were made.  In
such instances, manufacturers agree to voluntarily correct any
manufacturing procedures that do not comply with U.S.  GMPs. 

FDA's foreign inspection program has been predominantly a
pre-approval inspection program--that is, most inspections of foreign
manufacturers occur only when they are listed in new drug
applications, with no routine follow-up thereafter.  We found that
the majority of FDA's foreign inspections of pharmaceutical
manufacturers were conducted to ensure that before a new drug
application was approved, each manufacturer listed as a supplier of a
bulk pharmaceutical chemical used in the manufacture of the finished
pharmaceutical product had been inspected within the previous 2 years
and found to comply with GMPs.  During fiscal year 1995, about 80
percent of FDA's foreign inspections were of pharmaceutical
manufacturers listed in new drug applications.  The remaining 20
percent consisted of routine surveillance inspections of accepted
foreign pharmaceutical manufacturers.  Consequently, FDA had few
opportunities to verify that foreign pharmaceutical manufacturers had
implemented prescribed corrective actions in response to prior
inspections where less-serious GMP deviations were observed and were
producing pharmaceutical products in compliance with GMPs. 

FDA officials could not tell us how often accepted foreign
manufacturers are inspected.  FDA has inspected about 1,100
pharmaceutical manufacturers since the foreign inspection program
began in 1955.  For each fiscal year from 1990 through 1996, FDA
conducted about 100 routine surveillance inspections of accepted
foreign pharmaceutical manufacturers annually.  At this rate,
assuming that resources for the program remain constant, FDA will
inspect each accepted foreign pharmaceutical manufacturer only once
every 11 years, provided it is not listed on a new drug application. 

Of the 39 inspections we reviewed for pharmaceutical manufacturers in
China and India from January 1, 1994, through May 15, 1996, 11 (28
percent) were routine inspections of manufacturers producing approved
pharmaceutical products rather than inspections conducted as part of
FDA's review of new drug applications.  On average, we found that
approximately 4 to 5 years elapsed between routine inspections of
manufacturers in China and India producing approved pharmaceutical
products for the U.S.  market, more than twice FDA's 2-year
inspection requirement for domestic pharmaceutical manufacturers. 


      FDA PLANS TO CONDUCT MORE
      ROUTINE INSPECTIONS OF
      FOREIGN PHARMACEUTICAL
      MANUFACTURERS
---------------------------------------------------------- Letter :5.1

In June 1997, FDA's foreign inspection working group proposed a
strategy for scheduling more routine surveillance inspections of
accepted foreign pharmaceutical manufacturers.  Led by the Deputy
Commissioner of Operations, the group was asked to review the program
and identify areas for improvement.  The working group found that
serious deviations from GMPs were identified more often in foreign
pre-approval inspections (42 percent), compared with 18 percent at
U.S.  manufacturers.  They concluded that by relying primarily on
pre-approval inspections, FDA did not provide the necessary assurance
that imported pharmaceutical products were manufactured in compliance
with GMPs.  The foreign inspection working group proposed that FDA's
foreign inspection program include more routine surveillance
inspections and fewer pre-approval inspections.  To accomplish this,
they suggested that FDA conduct fewer pre-approval inspections of
accepted foreign manufacturers.  Instead, they recommended that FDA
use information from routine surveillance inspections in approving
new drug applications in which accepted foreign manufacturers are
listed. 

Recognizing that FDA does not have sufficient resources for frequent
inspections of all foreign manufacturers of pharmaceutical products
imported into the United States, the working group proposed using
risk-based criteria to prioritize the foreign manufacturers that FDA
inspects.  FDA's four-tier surveillance inspection strategy would
vary the frequency of routine surveillance inspections depending on
the public health risk associated with an accepted foreign
manufacturer of an approved pharmaceutical product.  Foreign
pharmaceutical manufacturers whose prior inspections found serious
deviations from GMPs would be placed in tier 1 and inspected
annually.  Routine surveillance inspections of all other foreign
pharmaceutical manufacturers would vary from 3 to 6 years.  Foreign
manufacturers of pharmaceutical products that pose higher public
health risks, such as sterile pharmaceutical products, would be
placed in tier 2 and inspected every 3 years.  Foreign manufacturers
producing 10 or more pharmaceutical products for the U.S.  market and
those producing nonsterile bulk ingredients used in sterile finished
pharmaceutical products would be placed in tier 3 and inspected every
5 years.  All other foreign pharmaceutical manufacturers would be
placed in tier 4 and inspected every 6 years (see table 4).  The
working group estimated that when the strategy is fully implemented,
60 percent of FDA's foreign inspections will be routine surveillance
inspections.  The remaining 40 percent will be inspections of foreign
pharmaceutical manufacturers listed in new drug applications. 



                          Table 4
          
          FDA's Four-Tier Strategy for Scheduling
            Surveillance Inspections of Accepted
            Foreign Pharmaceutical Manufacturers

                                   Number of  Frequency of
Tier  Type of manufacturer           firms\a  inspection
----  ----------------------  --------------  ------------
1     Foreign pharmaceutical              35  Every year
      manufacturers whose
      prior inspections were
      classified OAI

2     Foreign manufacturers              154  Every 3
      producing sterile                       years
      bulk, finished, and
      aerosol pharmaceutical
      products

3     Foreign manufacturers              484  Every 5
      producing 10 or more                    years
      nonsterile bulk or
      finished
      pharmaceutical
      products; also,
      foreign manufacturers
      supplying 10 or more
      U.S. pharmaceutical
      manufacturers and
      foreign manufacturers
      producing nonsterile
      bulk ingredients used
      in sterile finished
      pharmaceuticals

4     Foreign manufacturers              427  Every 6
      producing fewer than                    years
      10 nonsterile bulk or
      finished
      pharmaceutical
      products
----------------------------------------------------------
\a Represents the 1,100 pharmaceutical manufacturers FDA has
inspected since the foreign inspection program began in 1955. 

FDA began implementing its four-tier surveillance inspection strategy
in fiscal year 1997 by including routine surveillance inspections
within its pre-approval inspections.  FDA reported that 151 of the
230 foreign pharmaceutical inspections conducted during fiscal year
1997 (66 percent) were classified pre-approval and routine
surveillance inspections.  In addition, FDA planned to conduct
routine surveillance inspections of about 150 accepted foreign
pharmaceutical manufacturers placed in tiers 1 and 2.  This group
includes manufacturers that produce sterile pharmaceutical products
and manufacturers that had prior inspections that revealed serious
deviations from GMPs.  FDA reported, however, that it conducted only
60 inspections of these manufacturers.  As a result, although FDA
conducted more routine surveillance inspections, most foreign
pharmaceutical inspections still are limited predominantly to
manufacturers listed in new drug applications rather than those
considered high risk. 

In developing its new four-tier surveillance inspection strategy,
however, FDA did not include all foreign pharmaceutical manufacturers
that it should consider for a routine surveillance inspection. 
According to FDA data, about 3,200 foreign manufacturers have
submitted information to FDA listing the pharmaceutical products that
they intend to export to the United States.  However, FDA prioritized
for routine surveillance inspections only the 1,100 foreign
pharmaceutical manufacturers that it had previously inspected. 
Consequently, FDA's scheduling strategy does not account for almost
two-thirds of the foreign manufacturers that may be exporting
pharmaceutical products to the United States.  Moreover, according to
the FDA official in charge of developing the surveillance inspection
strategy, FDA may never inspect the majority of foreign manufacturers
placed in tiers 3 and 4.  However, while FDA has recognized that it
does not have sufficient resources to routinely inspect all foreign
manufacturers of pharmaceutical products imported into the United
States, its strategy does not ensure that every foreign manufacturer
exporting pharmaceutical products to the United States complies with
U.S.  quality standards. 


   SERIOUS PROBLEMS PERSIST IN
   MANAGING FOREIGN INSPECTION
   DATA
------------------------------------------------------------ Letter :6

Although both FDA's 1988 and 1993 internal evaluations identified
serious problems in its foreign inspection data systems, the agency
still lacks a comprehensive, automated system for managing its
foreign inspection program.  Instead, the information FDA needs to
identify the foreign pharmaceutical manufacturers it is responsible
for inspecting, manage its foreign inspection workload, and monitor
inspection results and enforcement actions is contained in 15
different computer systems, very few of which are integrated.  As a
result, essential foreign inspection information is not readily
accessible to the different FDA units that are responsible for
planning, conducting, and reviewing inspections and taking
enforcement actions against foreign manufacturers.  While FDA's
working group recently proposed several actions that FDA officials
hope will correct these data system problems, they have not been
implemented. 


      LACK OF COMPREHENSIVE
      AUTOMATED INFORMATION SYSTEM
      INHIBITS EFFECTIVE
      MANAGEMENT OF FOREIGN
      INSPECTION DATA
---------------------------------------------------------- Letter :6.1

FDA's 1988 internal evaluation found that its automated field
management information system did not contain complete information
for 37 percent of the foreign inspections that FDA conducted during
fiscal years 1982 through 1987.  Specifically, the Program Oriented
Data System (PODS) did not contain the results of 673 of the 1,813
foreign inspections that FDA investigators had conducted during this
period.  Moreover, the system did not contain any data for 251 of
these inspections (14 percent).  The evaluation attributed the
missing inspection results to PODS not being updated after CDER's
review and classification of the inspection reports.  The evaluation
recommended that FDA revise its procedures for entering foreign
inspection data in PODS. 

FDA's 1993 internal evaluation found that essential data on foreign
pharmaceutical manufacturers were not readily accessible to agency
personnel.  The evaluation indicated that comprehensive data for a
foreign pharmaceutical manufacturer should include (1) its inspection
history, (2) the results of its last FDA inspection, (3) the
identification of responsible company personnel, (4) its U.S.  agent
or representative, (5) the products that it supplied to the United
States, and (6) the domestic manufacturers and distributors that it
supplied.  The evaluation found that comprehensive foreign inspection
information could be obtained only by searching multiple computerized
databases and FDA headquarters' files.  For example, the evaluation
noted several instances in which ORA investigators conducting
domestic inspections suspected that U.S.  manufacturers had received
adulterated bulk pharmaceutical chemicals from foreign manufacturers. 
However, the investigators' efforts to substantiate these
suppositions were hampered because they could not readily gain access
to comprehensive data for foreign pharmaceutical manufacturers.  The
evaluation recommended that FDA use its field management information
system to provide agencywide access to complete data for all foreign
manufacturers shipping pharmaceutical products to the United States. 

In 1994, FDA began using a new information system to support the
foreign inspection program.  The Travel and Inspection Planning
System (TRIPS) was specifically developed to assist FDA's foreign
inspection planning staff in managing foreign inspection assignments
and the program's budget.  TRIPS is also used to monitor whether the
inspection report has been completed as well as the results of the
inspection.  However, TRIPS is accessible to only ORA headquarters
staff.  As a result, foreign inspection data are not readily
accessible to the different FDA units responsible for conducting
foreign inspections and reviewing inspection results.  FDA plans to
make data from TRIPS more broadly available within the agency when it
upgrades its field management information system in fiscal year 1998. 

TRIPS and PODS have not significantly improved the quality of FDA's
foreign inspection data.  Our analysis of data recorded in TRIPS and
PODS disclosed that these systems did not contain the results of 111
of the 759 inspections (15 percent) FDA conducted of foreign
pharmaceutical manufacturers between January 1, 1994, and May 15,
1996.  For 68 of the 111 inspections, the database did not identify
the foreign manufacturer that was inspected.  TRIPS and PODS also did
not include the correct inspection results for 10 of the 39
pharmaceutical manufacturers FDA inspected in China and India during
this period.  Specifically, the inspection results were missing for
two of these manufacturers and were incorrect for eight others.  The
database errors in recording the results of inspections conducted in
China and India occurred because the systems were not updated after
CDER staff reviewed and classified the inspection reports.  Without
complete and accurate data, FDA cannot ensure that all "high-risk"
foreign pharmaceutical manufacturers are targeted for more frequent
routine surveillance inspections. 

We also found that essential foreign inspection data are not readily
accessible to the different FDA units responsible for planning and
conducting domestic and foreign inspections, and conducting import
operations.  The information that FDA needs for identifying foreign
pharmaceutical manufacturers, verifying their compliance with federal
laws and regulations, and screening foreign-produced pharmaceutical
products for importation is dispersed among 15 automated databases,
most of which do not interface. 

FDA's multiple and unlinked databases inhibit the effective
management of the foreign inspection program by impeding the flow of
foreign inspection data to agency personnel for use in screening
foreign pharmaceutical products offered for entry into the United
States.  For example, table 5 illustrates how the lack of linkage
between 8 of FDA's 15 databases not being linked impedes the flow of
essential foreign inspection data.  The first four databases
described in the table are used by FDA's district offices to support
import operations.  The four other databases described in the table
are used by FDA headquarters staff for monitoring foreign
pharmaceutical manufacturers' compliance with federal statutes and
regulations.  However, because these systems do not interface,
comprehensive data about foreign manufacturers are not readily
available to FDA district personnel screening imported pharmaceutical
products.  Consequently, much of the same data must be retrieved from
one automated system to be manually entered into others.  Moreover,
staff must search multiple data systems to obtain a comprehensive
profile of a foreign pharmaceutical manufacturer.  FDA also cannot
easily match foreign manufacturers that have listed with the agency
with their compliance status and the pharmaceutical products that are
imported into the United States. 



                                         Table 5
                         
                         Limitations of Selected FDA Information
                               Systems for Managing Foreign
                                Manufacturers and Imported
                                 Pharmaceutical Products

                                                                             Link to
System         Description                   Limitation                      FACTS\a
-------------  ----------------------------  ------------------------------  ------------
Compliance     Provides the compliance       Does not interface with OASIS   Replace
Status         status (acceptable or         to automatically assist import
Information    unacceptable) of foreign      officers in evaluating the
System         drug manufacturers based on   compliance status of foreign
(COMSTAT)      the results of GMP            manufacturers offering
               inspections. These data are   pharmaceutical products for
               shared with other federal     import into the United States.
               and state agencies and
               foreign countries to ensure
               that pharmaceutical products
               purchased or cleared for
               import meet applicable
               quality standards.

Electronic     Automates screening and       FDA cannot automatically        Integrate
Entry          identification of imported    screen and identify imported
Processing     products and facilitates      pharmaceutical products
System         sampling and testing of       because many pharmaceutical
(EEPS)/        foreign-produced              products are identified by a
Operational    pharmaceutical products by    miscellaneous code in EEPS/
and            interfacing with the U.S.     OASIS. Also, EEPS/OASIS does
Administrativ  Customs Service automated     not include the unique
e System for   data system to retrieve       identification number FDA
Import         information.                  assigns to each foreign
Support                                      pharmaceutical manufacturer;
(OASIS)                                      consequently, there is no
                                             direct cross-reference between
                                             identifiers in EEPS/OASIS and
                                             any center systems.

Import         Provides information about    IDS does not include the        IDS will be
Detention      the detention of imported     unique identification number    replaced by
System (IDS)   products, permitting FDA to   FDA assigns to each foreign     OASIS.
               identify significant problem  pharmaceutical manufacturer;
               areas requiring FDA action.   consequently, FDA cannot
                                             easily identify foreign
                                             manufacturers and their
                                             pharmaceutical products.

Program        Supports the management of    Does not interface with         Replace
Oriented Data  the domestic pharmaceutical   OCFITS; accordingly,
System (PODS)  inspection program and        compliance status must be
               contains limited information  entered into both systems.
               on foreign inspections, such  Sometimes contains incorrect
               as the resources expended by  inspection classification
               FDA's district offices to     because final data are
               conduct foreign inspections.  forwarded from CDER for input.

Drug           Provides information on       Does not interface with         Interface
Registration   foreign pharmaceutical        COMSTAT to ensure that foreign
and Listing    manufacturers based on the    manufacturers listing their
System (DRLS)  statutory requirement that    pharmaceutical products with
               they list the drug products   FDA have been inspected and
               they ship to the United       comply with GMPs. Because the
               States.                       system does not include the
                                             identification number FDA
                                             assigns to each manufacturer,
                                             FDA cannot easily match
                                             foreign manufacturers that
                                             have listed their
                                             pharmaceutical products with
                                             their compliance status. Does
                                             not interface with OASIS to
                                             assist import officers by
                                             automatically comparing
                                             foreign manufacturers and
                                             pharmaceutical products listed
                                             to products offered for
                                             importation.

Establishment  Tracks requests for and       EES-entered information is not  Interface
Evaluation     monitors the status of GMP    captured by COMSTAT.
System (EES)   inspections of
               pharmaceutical manufacturers
               named in new, abbreviated,
               and supplemental drug
               applications. Supports
               CDER's pre-approval
               inspection process by
               permitting electronic
               communication with field
               offices.

Office of      Tracks the results of CDER's  Does not interface with         None
Compliance     Office of Compliance reviews  COMSTAT, PODS, or TRIPS;
Foreign        of foreign inspection         consequently, some of the same
Inspection     reports and recommendations   information must be entered
Tracking       for FDA enforcement action.   into all four systems.
System
(OCFITS)

Travel and     Provides data on inspections  Does not interface with         Replace
Inspection     of foreign pharmaceutical     COMSTAT, OCFITS, or PODS,       foreign
Planning       inspections, including the    thereby requiring much of the   firms/
System         manufacturer, the drug        same data to be entered into    inspection
(TRIPS)        products covered, time        each system.                    functions
               expended, and inspection
               results. Facilitates the
               scheduling of foreign travel
               and managing the foreign
               inspection travel budget.
-----------------------------------------------------------------------------------------
\a FACTS will completely or partially replace many functions now
provided by FDA's field information system and other independent
systems used by ORA headquarters and personnel in the field.  Also,
FACTS will support automated interfaces with several existing FDA
systems.  Some of these systems will receive information from FACTS,
others will pass information to FACTS, and a few will do both.  OASIS
will be integrated with FACTS.  Although OASIS and FACTS will be
separate applications, they will share parts of the same database to
manage information about manufacturers of FDA-regulated products and
authorize user access to the system. 

FDA's foreign inspection working group concluded in June 1997 that
the agency continues to be plagued by having too many databases that
do not automatically interface.  FDA is relying on a new automated
field management information system to provide agencywide
accessibility to comprehensive foreign inspection data.  The Field
Accomplishments and Compliance Tracking System is expected to replace
approximately 22 computerized databases and support automated
interfaces with several existing databases.  The first installment of
FACTS, which is to include an inventory of foreign and domestic
pharmaceutical manufacturers, is scheduled to go on line during
fiscal year 1998.  FDA also plans to develop additional FACTS
components to assist the agency in managing its foreign inspection
workload and compliance activities.  These components will be
included in the second installment of FACTS, which is scheduled for
fiscal year 1999. 


      INCOMPLETE LIST OF FOREIGN
      MANUFACTURERS SHIPPING DRUGS
      TO THE UNITED STATES HINDERS
      INSPECTION PLANNING
---------------------------------------------------------- Letter :6.2

FDA's 1988 internal evaluation found that the agency did not maintain
an inventory of all foreign pharmaceutical manufacturers that were
subject to FDA regulation.  At that time, the only computerized file
of foreign manufacturers shipping pharmaceutical products to the
United States was maintained on a personal computer that could be
accessed only from within one FDA unit.  The file listed the foreign
pharmaceutical manufacturers that FDA had inspected and the results
of the last inspection.  The internal evaluation concluded that this
file was inadequate because it did not contain an inspection history
for each foreign pharmaceutical manufacturer that had advised FDA
that it intended to ship pharmaceutical products to the United
States.  As a result, FDA could not ensure that it was aware of, and
therefore inspecting, all foreign pharmaceutical manufacturers that
were under its jurisdiction. 

FDA's 1988 evaluation recommended that the agency develop a
comprehensive inventory of all foreign manufacturers shipping
pharmaceutical products to the United States that could be used to
improve long-range inspection planning and scheduling.  To use
resources better and increase knowledge agencywide, the evaluation
also recommended that this inventory be available on FDA's automated
field information system. 

FDA's 1993 internal evaluation found the same problem.  According to
the evaluation, the lack of an inventory of the foreign manufacturers
that were shipping pharmaceutical products to the United States made
it virtually impossible for FDA to inspect foreign manufacturers as
frequently as domestic pharmaceutical manufacturers.  The evaluation
detailed several instances in which a database with a comprehensive
history of each establishment's previous inspections would have
assisted in identifying problems in foreign pharmaceutical
manufacturers.  FDA's 1993 evaluation recommended that the agency use
its automated field information system to develop an accurate and
comprehensive inventory of all foreign manufacturers shipping
pharmaceutical products to the United States. 

It remains difficult for FDA to determine the number of foreign
manufacturers shipping pharmaceutical products to the United States
that should be considered for periodic inspections.  Recently, an FDA
official told us that the agency had to search four data systems just
to determine the number of foreign manufacturers that should be
considered for routine postapproval surveillance inspections.\14 They
found that the systems did not include a common data element to
permit them to easily identify a foreign manufacturer from system to
system.  Because the names and addresses of foreign manufacturers are
sometimes incomplete or inaccurate, FDA officials found that matching
data among the systems was an arduous, manual, and inconclusive
effort. 

The June 1997 report by FDA's foreign inspection working group
acknowledged that the agency still lacked a complete list of foreign
manufacturers that were shipping pharmaceutical products to the
United States.  According to the report, about 3,200 foreign
pharmaceutical firms were listed with FDA as indicating their intent
to ship products to the United States.  However, FDA internal
databases indicated that only about 1,100 pharmaceutical firms had
been inspected by the agency.  FDA officials could not explain why
the remaining 2,100 firms had not been inspected. 

The foreign inspection working group proposed two options for
developing an official inventory of all foreign manufacturers that
ship pharmaceutical products to the United States.  One option would
be for FDA to seek authority to require foreign pharmaceutical
manufacturers to register and update their registration information
annually.  The other would use data from existing information systems
to develop an official establishment inventory of foreign
pharmaceutical manufacturers. 

FDA's efforts to reconcile data from several of its databases to more
accurately estimate the number of manufacturers that it should
consider for inspection under its four-tier inspection strategy
should identify all foreign manufacturers that are shipping
pharmaceutical products to the United States.  When completed by
April 1998, FDA should have a comprehensive inventory of all foreign
manufacturers shipping pharmaceutical products to the United States. 
This information could then be used to improve FDA's planning and
scheduling of foreign pharmaceutical inspections. 


--------------------
\14 The systems were the Compliance Status Information System, the
Drug Registration and Listing System, and the Travel and Inspection
Planning System.  (These systems and their functions are described in
table 5.) The fourth system was the Drug Master File Information
System that is used to track the receipt of submissions to the agency
and may include foreign drug manufacturing processes. 


   CONCLUSIONS
------------------------------------------------------------ Letter :7

Since 1955, FDA has inspected foreign pharmaceutical manufacturing
facilities to ensure that drug products exported to the United States
meet the same standards of safety, purity, and quality required of
domestic manufacturers.  However, two internal FDA evaluations in the
past 10 years identified serious problems with the foreign inspection
program that raised questions about FDA's ability to ensure that
American consumers are protected from contaminated or adulterated
drug products.  FDA has taken some action to address these problems. 
However, we found indications that certain aspects of the foreign
inspection program still need improvement. 

FDA continues to experience problems in ensuring that inspection
reports are submitted in a timely manner and that necessary
enforcement actions are promptly initiated to prevent contaminated
and adulterated pharmaceutical products from entering the United
States.  In addition, when FDA headquarters downgrades the severity
of the inspection classifications recommended by field investigators,
FDA is not verifying corrective actions that foreign manufacturers
have promised to take to resolve serious manufacturing deficiencies. 
This impairs FDA's ability to ensure that American consumers are
protected from potentially serious health risks posed by adulterated
drug products. 

FDA's risk-based inspection strategy recognizes that the agency does
not have sufficient resources to routinely inspect all foreign
manufacturers of pharmaceutical products imported into the United
States.  However, even though the strategy is intended to direct
inspection resources according to risk, FDA's foreign inspection
program continues to be driven by new drug applications and the
agency acknowledges that it may never inspect most foreign
manufacturers exporting pharmaceutical products to the United States. 


   RECOMMENDATIONS TO THE
   COMMISSIONER OF THE FOOD AND
   DRUG ADMINISTRATION
------------------------------------------------------------ Letter :8

To improve the effectiveness of FDA's foreign inspection program to
ensure that only safe, pure, and high quality drugs are imported into
the United States, we recommend that the Commissioner of FDA

  -- ensure that serious manufacturing deficiencies are promptly
     identified and enforcement actions are initiated by requiring
     investigators to prepare inspection reports and CDER to issue
     warning letters within established time periods and

  -- reexamine and revise FDA's foreign inspection strategy to
     provide adequate assurance that all foreign manufacturers
     exporting approved pharmaceutical products to the United States
     comply with U.S.  standards.  At a minimum, the strategy should
     include (1) timely follow-up inspections of all foreign
     manufacturers that have been identified as having serious
     manufacturing deficiencies and that promised to take corrective
     action and (2) periodic surveillance inspections of all foreign
     pharmaceutical manufacturers, not just high-risk manufacturers. 


   AGENCY COMMENTS AND OUR
   RESPONSE
------------------------------------------------------------ Letter :9

In commenting on a draft of this report, FDA took issue with a number
of our findings and recommendations.  As discussed earlier, FDA
believes it has made substantial improvement in the timeliness of
inspection reports and enforcement actions.  While we recognize FDA's
progress, we note that the agency is still falling short of its
standards for timeliness.  As a result, we believe that FDA needs to
monitor its investigators and CDER to ensure that they comply with
established time periods in preparing inspection reports and issuing
warning letters. 

FDA was critical of our draft on several counts.  FDA said we had
accepted the recommendations in the 1993 discussion paper without
verifying their validity or feasibility.  FDA claimed that the
findings and recommendations in the 1993 discussion paper were flawed
in significant ways that limited its usefulness to the agency.  We
note, however, that subsequent to the discussion paper, in a 1995
memorandum to the agency's Assistant Inspector General, FDA officials
reported that they had thoroughly reviewed the discussion paper,
investigated the issues raised, verified program weaknesses, and had
either begun or agreed to implement 10 of the 13 recommendations
contained in the discussion paper.\15

FDA also took issue with how our report described the processes
followed by its district and headquarters for classifying domestic
and foreign inspection reports.  Specifically, FDA stated that the
review performed by the supervisor or team leader in the district
office is not considered to be a district endorsement of the
investigator's recommendation.  However, our review of FDA documents
that describe the process for classifying domestic and foreign
inspection reports supports our characterization.  FDA issued
guidance to its district offices in September 1996 indicating that
beginning in fiscal year 1997, before inspection reports are
forwarded to CDER, they "will be reviewed and endorsed by district
management consistent with local procedures and timeframes for
domestic reports." Also, in its memorandum to the Assistant Inspector
General, FDA officials reported that district offices had began
endorsing foreign drug inspection reports before the 1993 discussion
paper was issued. 

FDA did not concur with our recommendation for conducting more
frequent inspections of all foreign manufacturers that have been
identified as having serious manufacturing deficiencies and have
promised to take corrective action.  FDA incorrectly suggests that
our recommendation was based on the premise that a final
classification that is lower than the recommended classification is
always wrong if it results in a less-serious classification.  Rather,
our report questions FDA's ability to verify the adequacy of some
corrective actions that foreign manufacturers promised to take to
resolve serious manufacturing deficiencies without reinspecting them. 

FDA also did not concur with our recommendation regarding the
implementation of its routine surveillance inspection strategy. 
Given further clarification of the strategy, we have modified our
recommendation. 

FDA's written comments on a draft of this report are reproduced in
appendix I.  FDA also provided technical comments, which we
considered and incorporated where appropriate. 


--------------------
\15 Memorandum from Associate Commissioner for Management, FDA, to
Assistant Inspector General for Public Health Service Audits, Office
of the Inspector General, Department of Health and Human Services,
April 20, 1995. 


---------------------------------------------------------- Letter :9.1

As we arranged with your office, unless you publicly announce the
report's contents earlier, we plan no further distribution until 30
days after its issue date.  We will then send copies of this report
to the Secretary of Health and Human Services, the Commissioner of
the Food and Drug Administration, the Director of the Office of
Management and Budget, and others who are interested.  We will also
make the report available to others upon request. 

Please contact me on (202) 512-7119 or John Hansen, Assistant
Director, on (202) 512-7105, if you or your staff have any questions. 
Others who contributed to this report are Gloria E.  Taylor, Brenda
R.  James, and David Bieritz. 

Sincerely yours,

Bernice Steinhardt
Director, Health Services Quality
 and Public Health Issues




(See figure in printed edition.)Appendix I
COMMENTS FROM THE FOOD AND DRUG
ADMINISTRATION
============================================================== Letter 



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