Recent U.S. Legislation is an Important Step in Securing the Supply Chain
Editorial: By Martin VanTrieste, Treasurer Rx-360
On July 9, 2012, President Obama signed into law S. 3187, the “Food and Drug Administration Safety and Innovation Act,” which includes enhanced penalties for trafficking in counterfeit drugs. Last month, U.S. Congressional passage of the “User Fee Act” (June 26, 2012) included Title VII devoted to Supply Chain. I believe that these supply chain requirements will be helpful in protecting the American consumer by strengthening the protections in the pharmaceutical supply chain.
FDA Safety and Innovation Act Strengthens Counterfeit Consequences
The Executive Office of the President provided the following highlights of the new act:
- “PDUFA enhances penalties under Title 18 for trafficking in counterfeit drugs and directs the U.S. Sentencing Commission to review and amend, if appropriate, its guidelines and policy statements related to offenses that involve counterfeit drugs.”
- “It allows the FDA to require that companies notify the Agency if their drug has been counterfeited or stolen.”
- “In addition, the Act allows the FDA to destroy, without the opportunity to export, counterfeit drugs distributed in small packages (valued at $2,500 or less).”
User Fee Act Requires More Accountability for Raw Materials
Among the most important new requirements of Title VII are:
- GMP now requires “…managing the risk of and establishing the safety of raw materials used in the manufacturing of drugs, and finished drug products.” Thus, failure to adequately control the supply chain of raw materials that are used in drug manufacture could result in the product being deemed adulterated.
- FDA must establish good importer practices “that specify the measures an importer shall take to ensure imported drugs are in compliance with the requirements of this Act and the Public Health Service Act.”
- Increased jurisdictional controls and enforcement powers for the FDA
In addition there are significant personal penalties for intentional adulteration and counterfeiting.
Track and trace is not included, but it may be addressed in separate legislation to forestall a myriad of state sponsored efforts. Another notable absence is that FDA was not given recall authority as they requested of Congress, but have received several new enforcement powers. (See further details below).
Rx-360 Contributes to U.S. Legislation on Supply Chain Security
As you may remember in September, 2011, I had the opportunity to testify in front of the U.S. Senate Health, Education, Pension and Labor Committee concerning supply chain security on behalf of Rx-360. Click here to go to the Senate HELP Committee website that includes the video from the testimony and all of the witnesses' written testimonies.
The User Fee Act legislation that just passed includes many of the suggestions recommended by Rx-360 and other key stakeholders such as ingredient manufacturers registration requirements; risk based FDA Inspections of both domestic and foreign suppliers and drug product manufacturers and increased criminal penalties for intentional adulteration and counterfeiting.
The full Rx-360 Testimony recommended the following items to consider in any legislation:
- Ingredient suppliers should disclose the actual manufacturing site to the drug product manufacturer: There are many potential links in a global supply chain where a series of brokers and distributors could be involved. If we try to learn from the contaminated glycerin events in Panama we must recognize that one contributing factor is that the drug product manufacturer in Panama had no idea that the glycerin they were purchasing was sourced from China since at least three distributors or brokers did not disclose the location of the manufacturing site. As such the drug product manufacturer did not have the opportunity to audit the ingredient manufacturer and had to depend on the Quality Systems of several foreign intermediaries that did not act in an ethical manner.
- Foreign ingredient manufacturing sites should be registered with the FDA and only those whose products are actually used in the U.S. and pay a nominal fee should be allowed to maintain registration: This will assure that the FDA has an accurate data set to be used for oversight. There are many suppliers who have no intention to distribute product within the U.S. but use an FDA registration to convey a sense of FDA approval to non U.S.-based manufacturers. This behavior only adds misleading data to any FDA database and makes it harder for the FDA to achieve their objectives.
- FDA should inspect foreign ingredient manufacturing sites using a risk-based approach and those foreign ingredient manufacturers should pay the cost of FDA inspections: The Food, Drug and Cosmetic Act requires the FDA to inspect domestic manufacturers every two years, but has no such mandate to inspect foreign manufacturers with such frequency.
For over 40 years, overseas manufacturers have had unfettered access to the largest biopharmaceutical market in the world with very little regulatory oversight or inspections. This inspection gap between domestic and foreign inspections should be made up quickly, and funded by the sites external to the U.S. According to the recent PEW report, at the current FDA inspection rate, it will take more than 13 years to inspect the sites outside the U.S., and that more than 80% of the drugs consumed in the U.S. are now manufactured outside the U.S.
Today, U.S. manufacturers who are inspected by many foreign regulatory agencies pay for the cost of these inspections. By requiring foreign manufacturers to cover the cost of FDA inspections, this will assure that the FDA will have adequate funding for inspections and experienced investigators. It would also have adequate funding to assure that the appropriate numbers of investigators participate in a foreign inspection and that the length of the inspection is appropriate to provide adequate oversight. Inspection fees should also provide adequate funding so that FDA Investigators are not asked to bear unreasonable hardships when making travel and lodging arrangements. Also, given resource constraints, perhaps FDA and Congress could consider allowing qualified third-party inspectors to inspect these foreign facilities.
- Increased criminal penalties for economically motivated adulteration and counterfeiting: Today, a criminal can make astronomical profits by knowingly engaging in economically motivated adulterating or counterfeiting a biopharmaceutical ingredient or drug product, with little chance of getting arrested and even if they are arrested the criminal penalties are small compared to the crime. FDA and other enforcement authorities should make this a focus for enforcement and criminal penalties should be increased to reflect the gravity of the crime and the life-threatening risks to patients, like those that have been proposed in recent legislative proposals.
Regulations and guidance are required for implementation of many of the requirements in this section of the legislation. Links to both the entire legislation as well as only Title VII devoted to Supply Chain follow:
Final Version of FDA Safety and Innovations Act
Title VII, Supply Chain of the User Fee Legislation
Summary of FDA Safety and Innovation Act, Title VII
How regulations must be enacted and/or guidance must be developed are noted below.
- Sec. 701. Registration of Domestic Drug Establishments requires both drug and device registrants to include a point of contact email and unique facility identifier that is to be specified by the Secretary
- Sec. 702. Registration of Foreign Establishments also requires a point of contact email address and unique facility identifier that is to be specified by the Secretary
- Sec. 703. Identification of Drug Excipient Information with Product Listing. This requires that information on manufacturers of excipient(s) must be included for each drug. This information includes an email contact and unique facility identifier “…including all establishments used in the production of such excipient”.
- Sec. 704. Electronic System for Registration and Listing. The FDA must develop an electronic database to store the information identified in sections 701-703 within 2 years after identification of the unique facility identifier by the Secretary. This database is intended to be used as part of the decision making process to establish risk based inspection plans. The database must be able to link to other databases with the FDA.
- Sec. 705. Risk Based Inspection Frequency requires biennial inspections for class II and III devices, and risk based inspection frequency for drugs. This removes the biennial inspection requirement for drugs. The legislation identifies the risk factors that may be included in establishing the inspection interval yet specifies that whether the drug is prescription vs non-prescription cannot be used as part of the risk evaluation.
- Sec. 706. Records for Inspection. This short section permits FDA to conduct a document review in lieu of an on-site inspection, and manufacturers must provide the requested paperwork to FDA at their own expense. This raises some interesting questions about why this is acceptable for FDA while they have said that paper based inspections should not substitute for in-site audits of excipeint manufacturers, or manufacturers of critical raw materials or contract manufacturing sites. It also remains to be seen how this will be implement and how many rounds of document requests will actually happen.
- Sec. 707. Prohibition against Delaying, Denying, Limiting, or Refusing Inspection. Guidance needs to be developed to define the actions that would be considered to be “Delaying….Refusing Inspections.”
- Sec. 708. Destruction of Adulterated, Misbranded, or Counterfeit Drugs Offered for Import. FDA may detain and destroy such drugs if values at < $2,500 (or any other amount set by the Secretary). FDA is to develop regulations to implement this section.
- Sec. 709. Administrative Detention. Implementation of this section requires that regulations are developed.
- Sec. 710. Exchange of Information. FDA may receive confidential information from other governments/regulators and this information is not subject to release under FOIA. FDA may also share information with other governments/regulators who meet certain requirements.
- Sec. 711. Enhancing the Safety and Quality of the Drug Supply. GMP is revised to include “…implementation of oversight and controls over the manufacture of drugs to ensure quality, including managing the risk of and establishing the safety of raw materials, materials used in the manufacturing of drugs, and finished drug products.”
- Sec. 712. Recognition of Foreign Government Inspections. This section identifies the conditions under which FDA may accept the results of other government/regulator inspections
- Sec. 713. Standards for Admission of Imported Drugs. FDA is to develop regulations specifying requirements that must be met and information that must be provided for imported drugs
- Sec. 714. Registration of Commercial Importers. FDA is to develop regulations defining Good Importer Practices
- Sec. 715. Notification. This section identifies who must notify FDA of suspected drug counterfeiting
- Sec. 716. Protection against Intentional Adulteration. Legal consequences for international adulteration have been increased to not more than 20 years prison time, and fines of not more than $1 million.
- Sec. 717. Penalties for Counterfeiting Drugs. The US Sentencing Commission is to revised their guidelines to reflect the intent of Congress in this area.
- Sec. 718. Extraterritorial Jurisdiction. Grants jurisdiction over “…any violation of this Act relating to any article regulated under this Act if such article was intended for import into the United States or if any act in furtherance of the violation was committed in the United States.”