Biennial inspections of all foreign pharmaceuticals facilities would require FDA to spend an additional $225 million per year, according to CDER Director Janet Woodcock.

Achieving the same level of domestic inspections would necessitate a $100 million uptick in FDA funding, she told two House Energy and Commerce subcommittees last week.

The Oversight and Investigations subcommittee met April 29 to further delve into the importation of the contaminated heparin active ingredient. On May 1, the Health Subcommittee reviewed the discussion draft of the FDA Globalization Act.

That measure is being put together by full committee Chairman John Dingell, D-Mich., Oversight Chairman Bart Stupak, D-Mich., and Health Chairman Frank Pallone, D-N.J.

The cost estimates provided by Woodcock are a projection for fiscal year 2011, based on the number of facilities expected to be operating and current inspector productivity rates.

They represent the "fully-loaded costs of inspector per annum, which include overhead costs, costs of enforcement and so on," she explained. As is the goal in the U.S., the estimate assumes that half of the total facilities would be inspected each year.

Woodcock's figure for the cost of foreign inspections is substantially higher than the estimate of $67 million to $71 million per year that was presented to the oversight panel in testimony by Government Accountability Office Director of Health Care Marcia Crosse on April 22. The GAO calculation is based on FDA-estimated average inspection costs of $41,000 to $44,000, and the need to inspect 3,249 foreign drug establishments every other year. Woodcock's estimate did not specify how many or what type of facilities would be inspected.

The agency's proposed fiscal 2009 budget includes $25.2 million for CDER pre-market inspections and $41.9 million for post-market inspections. For CBER, those figures would be $7 million and $24 million respectively (¹ Also see "FDA Fiscal 2009 Budget: Will Congress Throw Money After Rhetorical Salvos?" - Pink Sheet, 11 February, 2008., p. 4). The foreign drug inspections budget is $11 million.

The Commerce Committee has been hammering FDA to provide an accounting of its material inspection needs, and Stupak did not blanch at Woodcock's figure after it was offered. In fact, he noted that proposed fees would provide $300 million a year for inspections.

The discussion draft of the committee's bill authorizes registration fees for domestic and foreign drug establishments to pay for inspections of such facilities, but sets no fee levels and does not project revenues (² Also see "Foreign Drug Inspections Would Be Funded By Registration Fees In Draft Bill" - Pink Sheet, 21 April, 2008., p. 21).

However, an earlier import safety proposal from Dingell, H.R. 3610, would have collected $300 million through fees on each line item of drug imports, indicating the bill sponsors' recognition of the large sums needed to improve import safety (³ Also see "Inspection Of Rx Imports Would Climb Under Bill Setting $300 Mil. In User Fees" - Pink Sheet, 13 August, 2007., p. 21).

Despite the overlap of the proposed revenue collections with FDA's stated needs, the fee proposal has not been met with universal acclaim.

Federal appropriations would be a better funding option than registration fees, the full committee's top Republican, Joe Barton of Texas, suggested. The new fees could "exacerbate" FDA's dependence on user fees to finance agency activities, he protested.

The inspection fees are "intended to supplement, not supplant, current FDA appropriations," Pallone insisted in his opening statement.

Lori Reilly, VP-Policy for Pharmaceutical Research and Manufacturers of America, noted that many issues with regard to fees need to be addressed, including the timing, scope and specific activities to be financed.

The fees should be used only for inspecting foreign facilities and there should be one rate for active pharmaceutical ingredient manufacturers and another for finished dosage suppliers, Barr Laboratories CEO Christine Mundkur said on behalf of the Generic Pharmaceutical Association.

New fees should not duplicate existing registration and establishment fees, Biotechnology Industry Organization CEO James Greenwood contended. BIO members want the money allocated for inspections of their own facilities, not used to subsidize other inspections, he added.

Woodcock also pointed out that for an inspection program to be effective, FDA needs a new information technology system to improve the listing and tracking of drug establishments. "Obviously we can't send our inspectors over there unless they know where to go."

The agency must invest $20 million per year over a number of years to get the IT system it needs, she predicted.

The discussion draft's specification that every facility be inspected every two years was opposed by Woodcock. FDA should have flexibility to use its resources at the highest risk facilities, she said.

For example, she noted, some plants might produce new products that are "redundant" to existing ones, so FDA should be able to designate such situations as lower inspection priorities and "put our resources against the highest risks."

Dingell expressed concern about FDA's ability to move to a risk-based foreign inspection system when its information technology systems are inadequate. He worried that "risk-based" is code for "we have a lack of resources and will only do the minimum."

Woodcock urged that any foreign inspection legislation be "carefully designed" to avoid creating real or perceived trade barriers, noting that "several provisions of the bill may need to be reviewed in light of U.S. trade agreement obligations."

The draft bill would provide FDA with new enforcement tools for imported drugs, including fines, recalls of dangerous products and detainment of products deemed unsafe. In addition, FDA would be allowed to destroy counterfeit or adulterated commercial drug imports.

The proposal also calls for country-of-origin labeling that includes the source of the API and would require drugs lacking safety documentation to enter only at ports equipped with federal testing labs.

Asked by Rep. Diana DeGette, D-Col., if subpoena power, which is not provided by the discussion draft, would be useful, Woodcock responded that it would be beneficial "if we were able to subpoena witnesses and documents ... to aid in our investigations."

As part of its effort to improve safety of imported products, FDA has launched an initiative to build regulatory capacity in developing countries, starting with China and India. New offices in China will provide training for local authorities, according to Malcolm Frazier, acting administrator of FDA's Southeast Region.

At the moment, "I don't believe there are any plans to physically place investigators there," he said at a March international conference on good manufacturing practices in Athens, Ga.

At the same conference, FDA Commissioner Andrew von Eschenbach challenged the tendency of congressional critics to focus on how many FDA investigators are working in China.

"We're trying on the Hill to change the conversation, but they simply want to play the numbers. ... It's not relevant how many inspections we did. It's more important that we inspect the right places with the right frequency."

FDA has faced extensive criticism because it failed to conduct a pre-manufacturing inspection of the Chinese plant that produced contaminated heparin active ingredient linked to hundreds of adverse events and 81 deaths. The agency mistakenly inspected another facility.

Once the Scientific Protein Laboratories plant in Changzhou was identified as the source of tainted heparin API, an FDA inspection resulted in a Form 483 letter for a number of objectionable practices.

Baxter, which utilized the SPL ingredient in its heparin products, had audited the facility five months earlier, finding only one problem, and notified SPL the plan was acceptable.

Energy and Commerce Committee Senior Investigator David Nelson questioned the quality of Baxter's audit, voicing skepticism that the plant could have deteriorated as much as FDA observed between the two inspections.

"Baxter spent one day in the plant. FDA sent two inspectors for five days," Nelson reported. "At best, it was incomplete, bordering on failure," Nelson said of Baxter's inspection.

Nelson agreed with Woodcock's contention that the contaminated heparin would not have been prevented by a pre-market inspection in 2004 before manufacturing began. But he suggested that the plant might not have been allowed to export to the U.S. if the GMP problems were identified at that time.

A hearing on imported medical devices and cosmetics will be held in the coming weeks and then a globalization bill will be marked up.

- Cathy Dombrowski (c.dombrowski@elsevier.com), Cathy Kelly (c.kelly@elsevier.com) and Dan Poppy (d.poppy@elsevier.com)

FDA’s Price Tag For Foreign Facility Inspections Tops $225 Million

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