In 2007 and 2008, more than 80 people in the U.S. and worldwide died from heparin contaminated with oversulfated chondroitin sulfate (OSCS), which costs a fraction of the ingredient used in real heparin. Scientific Protein Laboratories, Changzhou, China (partially owned by Wisconsin-based Scientific Protein Laboratories) supplied some of the contaminated heparin.
Fast Forward to 2011
One would expect that Waunakee, WI-based Scientific Protein Laboratories (SPL) would have taken immediate corrective action. However in a January 20, 2011 Warning Letter after a long 2010 inspection of SPL’s active pharmaceutical ingredient (API) manufacturing facility, the FDA stated that SPL did not conduct a formal investigation of potential OSCS in its heparin until 11 months after a 2008 complaint, did not extend investigation to other lots of heparin made using the same crude lot contaminated with OSCS until another eight months later, and only recalled three heparin lots in October 2010, two years after receiving the complaint and only after the FDA inspection! SPL’s lack of quality oversight extended to other products — the FDA said SPL did not properly evaluate or audit the contract laboratory that reported passing results for pancreatin product after tests failed.
Baxter lost the first lawsuit in its ongoing legal battle over the contaminated heparin scandal in June 2011. A U.S. court awarded $625,000 to the estate of Steven Johansen1, who died in 2007 after taking a Baxter heparin blood thinner product contaminated with the man-made counterfeit OSCS. (The heparin was imported from China and it would be interesting to know if China’s government or the Chinese suppliers will compensate anyone.)
In June 2011, members of the House Energy and Commerce Committee expanded their investigation, into the entry of contaminated heparin from China into the U.S., holding hearings and sending letters requesting information to 10 companies involved with heparin supply during the period of concern. In a press release, committee leaders wrote, “There is reason to believe all or some of the individuals responsible for the adulteration are still actively engaged in the Chinese pharmaceutical supply chain and pose a continuing threat to pharmaceutical products imported to the [U.S.]. How the heparin came to be contaminated and the exact nature of the contaminant remain unknown. It is important to determine how the adulteration happened so that industry and government can take more effective proactive measures to reduce the risk of such adulteration in the future”2. The investigation was still ongoing at the time of writing this article.
Don’t Rely on Marketing Literature
I recently audited a chemical supplier based in the U.S., one that advertises that it manufactures and distributes GMP-compliant pharmaceutical ingredients. The site I audited repackages chemicals and APIs sourced from brokers and suppliers that it does not audit. This company “qualifies” brokers and suppliers by Self Audit questionnaires and by limited verification of Certificate of Analysis testing of selected materials, not all. It does not have Quality Agreements or change control agreements with these suppliers, who may get the materials from different sources, depending on price and market conditions. This company puts its name and U.S. address on materials it supplies, but the materials could come from anywhere. A material could be from Synbiotics in Vadodara, India — the API manufacturer that refused admittance to FDA Inspectors in August 20103. Or a material could come from Glochem Industries Ltd. in Visakhapatnam, India, which the European Medicines Agency declared had failed in GMP4. (Among other problems observed, Glochem threw over 70 discarded batch records into the dump and replaced the records with new ones).
The point is, you would not know. The U.S. supplier I audited did not test a recently distributed batch of Glycerine (labeled USP) for the poisonous contaminant Diethylene Glycol, even though required. Nor did its supplier perform the test, yet the U.S. supplier reported on its C of A that the material had passed the test.
There are good reasons for the recently enhanced FDA and EMA focus on supplier qualification and supply chain verification! At present the FDA and European authorities are creating strategies to promote supply chain integrity, but some of their strategies seem to be based on different philosophies as to who is responsible for regulatory control and enforcement.
The FDA Approach
Various FDA guidances, including those for melamine, glycerol and the Good Importer Practices Guidance, state that manufacturers need to know and monitor their supply chain for any at-risk components, and they need to know the identity and role of the actual manufacturer of components and any repackers and distributors that handle the components before receipt by the manufacturer. Agents, brokers, traders, distributors, repackers and relabelers have long been required by the FDA/ICH Q7A guidance for API GMPs5 to comply with GMP and to maintain complete traceability of APIs and intermediates that they distribute, but in many cases it has not been enforced and it is difficult for companies to check on the supply chains for all the components they use. Agents, brokers, traders, distributors, repackers and relabelers often use commercial confidentiality concerns to shield their operations from customers finding out who the real suppliers are and whether the materials really were made in compliance with GMPs. Brokers are not presently required to register with FDA, which contrasts with the EU requirement, and U.S.-based registrants do not have to provide information on their brokers.
In June 2011, the FDA issued a special report, Pathway to Global Product Safety and Quality6 which describes the enormous growth in global trade and imports into the U.S. and elsewhere of food, drugs, medical devices and drug and device components during the past few years, and the trend is expected to continue. In 2011 there will be 24 million shipments of FDA-regulated goods passed through the 300 ports of entry in the U.S., up from six million shipments a decade ago. Each year during the last seven years, food imports have grown by an average of 10%, while imports of pharmaceutical products have increased at nearly 13% and devices have grown at over 10%. The report states that goods entering the U.S. will come from new and different markets, flowing through long, multi-step processes to convert globally-sourced materials into finished goods. The shift in global product flows will make it difficult to identify the “source” of a product and to ensure that all players along the supply chain meet their safety and quality responsibilities. Increasingly, the FDA must contend with ever more sophisticated threats of fraud, product adulteration, and even potential terrorism.
The Pathway report states that current international efforts at addressing these challenges are not sufficient and, despite significant effort and investment of resources, FDA’s successes in engaging foreign partners have not helped the agency substantially increase the coverage of its safety and quality assurance activities. It suggests that FDA and its partners need to make faster progress toward meaningful collaboration and impactful output than some of the current programs are on pace to produce. There is no doubt that the FDA has made tremendous efforts — the agency set up offices in China and India a couple of years ago to facilitate inspections and to help their authorities improve their regulatory capacity.
The report fails to state that, while the European countries have been very collaborative, at present, there is not much incentive for some foreign countries to collaborate because, despite refusing the FDA access to some or all of their manufacturing and testing documents or even their facilities, they are still allowed to import their products into the U.S. According to the GAO 2010 report on the Response to Heparin Contamination, the FDA said that with some exceptions, a firm’s refusal to allow for a complete FDA inspection is not one of the bases for product detention at the U.S. border7.
The report states that several of FDA’s foreign counterparts have begun to implement innovative solutions to address the global safety challenges facing FDA. I would regard some solutions as innovative and productive, such as standardized inspection information-sharing developed through the Pharmaceutical Inspection Convention and the Pharmaceutical Inspection Co-operation Scheme (jointly referred to as PIC/S) and the creation of a tiered approach to facility inspections, adjusting the length and depth of the inspection based on the degree of risk associated with the particular facility, enabling countries to quickly conduct a large number of inspections of low-risk sites. The qualified person (QP) requirement in Europe is a good solution, where each drug manufacturer is constantly supervised by a QP employed by that manufacturer but responsible to the government for ensuring the safety and quality of all batches of the approved product, regardless of where it was produced.
“Solutions” adopted by some countries merely pass the responsibility and cost of regulatory control to the country and company receiving the import. Mexico and Costa Rica recently announced that they would treat device reviews conducted by the FDA as equivalent to reviews conducted by their regulators. The Pathway report (diplomatically) states that some regulators in Asia have made the strategic decision to rely on the determinations of certain trusted foreign counterparts, directing their own resources instead to facilities and jurisdictions that are not already covered by these trusted parties. Apparently the “strategic decision” to rely on the determinations of trusted foreign counterparts does not involve cost sharing of the regulatory effort, thus helping the Asian countries remain low-cost suppliers while the FDA and other well regulated Boards of Health are funded by taxpayers to do the work for the Asian regulators. At present the U.S. still appears to accept a situation in which some countries do not exercise adequate regulatory control but continue to export their medicinal products to the U.S. This leaves the FDA with the responsibility, together with the sponsor of a medical product, to verify GMP compliance of a particular foreign manufacturer, apparently without expecting the supplying country to contribute in a meaningful way.
It costs the FDA twice as much to inspect a foreign manufacturer, compared with domestic, and the FDA does not have the resources or the legal right of full access to inspect all the foreign suppliers, so the GMP status of most foreign suppliers and the quality of their products are unknown. A majority (54%) of known foreign drug manufacturing facilities was not inspected at all between 2002 and 2007, and yet their products are used in this country. This contrasts tremendously with the regulatory control of domestic drug manufacturers, which are nearly all inspected every two years and are subject to unscheduled (read: surprise) general inspections.
Foreign FDA inspections are always announced in advance, because FDA inspectors are obliged to notify the foreign authorities beforehand. Thus a foreign manufacturer gets advance warning to prepare for an inspection, clean up and possibly remove from view any items it knows are unacceptable. Thus the statistical probability of undetected noncompliance with GMPs is far higher with foreign producers, which not only creates an unacceptable risk, but an unfair trade advantage to these foreign producers, insofar as they can spend less on training, compliance and on all aspects of manufacturing, including facility and equipment design and maintenance and raw materials.
Other than not holding exporting countries accountable for regulatory control of their products, the new FDA pathway to strengthening the product safety net around the world is forward looking and rests on four core building blocks:
- partnership with its foreign counterparts to assemble global coalitions of regulators
- developing a global data information system and network to share realtime information and resources across markets
- intelligence gathering, risk analytics and modernized IT capabilities, and
- leveraging the combined efforts of government, industry, public- and private-sector third parties.
FDA hopes Congress will modernize its antiquated authorities so that the agency’s legal tools can keep pace with globalization.
The European Approach
The European Parliament recently issued a new Directive (2011/62/EU 8 June 20118) to its Member States, regarding prevention of the entry into the legal supply chain of falsified medicinal products, in response to “an alarming increase of medicinal products detected in the Union which are falsified in relation to their identity, history or source.” European Member States must put Directive requirements into legislation and implement them by January 2013. Legislation must address all manufacturers and all actors in the supply chain, not only wholesale distributors, whether or not they physically handle the medicinal products, but also brokers involved in the sale or purchase of medicinal products without selling or purchasing those products themselves, and without owning and physically handling the medicinal products. The Directive also discusses harmonization within the European Union (EU) of safety features to prevent falsification and tampering with medicinal products and measures to prevent falsified medicinal products flowing through internet sales.
The Directive defines a falsified medicinal product as any medicinal product with a false representation of identity (including its packaging and labeling, its name or its composition as regards any of the ingredients including excipients and the strength of those ingredients), source (including its manufacturer, its country of manufacturing, its country of origin or its marketing authorization holder) or its history, including the records and documents relating to the distribution channels used. This definition does not include unintentional quality defects.
The Directive requires the manufacturer of a medicinal product to conduct on-site audits of both manufacturers and distributors of active substances for compliance with GMPs and good distribution practices as applicable. The written confirmation of GMP compliance by the Marketing Authorization Holder must show the dates of the audits and a declaration that the outcome of the audits confirm that the manufacturing complies with GMPs and distribution complies with GDPs.
The manufacturer of a medicinal product is also required to verify that the manufacturers, importers or distributors from which it obtains an API are registered in the Member State in which they are established. If the manufacturer of the medicinal product obtains APIs from outside the EU, it must be ensured that the legislative provisions and inspections in that country are equivalent to those in the EU, and the “third” country must verify GMP compliance for the manufacturer and provide certification, as discussed below.
The holder of the marketing authorization must ensure that the excipients are suitable for use in medicinal products by ascertaining what the appropriate GMP is, on the basis of a formalized risk assessment and must ensure and document that the appropriate GMP is applied.
The Directive requires that any “actor” within the EU verify that its supplier complies with requirements for registration with the Member State. Manufacturers, distributors and brokers of medicinal products, APIs and excipients must all register and are subject to inspection. Member States will be required to ensure that the manufacture, import and distribution on their territory of active substances, including for export, comply with good manufacturing practice and good distribution practices for active substances. It certainly makes sense to hold everyone responsible for verifying that the “actors” they and their clients rely on are registered. Registration of all “actors” and required on-site audits of API facilities and distributors will create major advances in holding the marketing authorization holder responsible for supplier qualification at all steps in the supply chain.
The Directive provides for a publicly accessible European Union database showing the compliance status and certificates of good manufacturing practice and good distribution practices issued for entities inspected by Member States.
A List of Countries Outside the EU with Equivalent Regulatory Control to the EU
The Directive states active substances shall only be imported if manufactured in accordance with standards of GMP at least equivalent to those laid down by the EU and if the active substances are accompanied by a written confirmation from the competent authority of the exporting third country that the standards of GMP at the plant manufacturing the exported active substance are at least equivalent to those laid down by the EU and if the manufacturing plant concerned is subject to regular, strict and transparent controls and to the effective enforcement of GMP, including repeated and unannounced inspections, so as to ensure a protection of public health at least equivalent to that in the EU and if findings relating to non-compliance are supplied by the exporting third country to the EU without any delay.
The Directive provides for creation of a list of countries outside the EU which have been voluntarily evaluated by the European Commission as to whether the country’s regulatory framework, inspections and enforcement activity, transparency and frequency applicable to active substances ensures a level of protection of public health equivalent to that of the EU. If the assessment confirms such equivalence, the third country will be included in the list. That country will then certify the GMP or GDP compliance of a particular supplier from that country. The EC will regularly verify a country’s compliance, with the first verification no later than three years after the country has been added to the list.
Even if there is a Mutual Agreement with a third country, a Member State, the Commission or the Agency may require a manufacturer established in a third country to submit to an inspection; the results will go into the EU database.
How the FDA and European Approaches Compare
In my opinion the FDA is being asked to do too much to control foreign production, because it lacks the legal authority, long-term presence and respected stature that it enjoys domestically. Assumption of responsibility by the FDA for regulatory control of foreign producers that do not themselves exert adequate control will merely result in public assumption of the risks and the regulatory costs by the people of the U.S. This is accompanied by privatization of profits for both the foreign countries and for the supply chain actors and U.S. companies that benefit from low prices from these countries. The public assumption of the risks can become very personal when the consumer suffers the consequence of risks of sourcing from these countries — safety problems are often detected first by the people who are harmed, and the health effects often outweigh any compensation that may be awarded after the event. Moreover, I have not seen evidence that the low costs of foreign materials are passed on to the healthcare system or the consumer. It is hoped that the true costs of poor foreign regulatory control will be considered in future by all stakeholders.
The European approach makes more sense because it is more comprehensive and more sustainable — they don’t expect their own regulators to do it all without requiring real effort from the supplying countries and all actors in the supply chain, including brokers. The FDA does not require brokers to register and this is a weakness in supply chain security; brokers could source materials from anywhere at any time without any regulatory control. U.S.-based registrants do not have to provide information on their brokers.
The European approach is very different from the FDA Pathway and general FDA approach so far, in that the Directive places responsibility not only on its Member States and European “actors,” but on countries outside the Member States that wish to export APIs to the EU. These foreign countries must first achieve equivalent regulatory control of API manufacture, as determined by the EU. In addition, the third country needs to verify GMP compliance for any manufacturer in its country and provide certification of this compliance, before product from that manufacturer can be imported into a Member State. This approach should be considered by the FDA, since it is more sustainable and places responsibility where it belongs. If this EU Directive is followed strictly from its implementation date of January 2013, it will place the onus on China, India and other countries to improve their regulatory control tremendously and with great speed, in order to continue supplying Europe. Time will tell how this will play out, but recent EU Inspections and FDA Warning Letters do show that big improvements in regulatory control are needed in numerous third countries. China at present does not have regulations for APIs!
Some of the FDA building blocks in its Pathway report are complementary to the EU plan to develop a database of supply chain actors, and one cannot fail to share FDA’s hope that international coalitions with cutting-edge investigative tools will continue to provide the consistently high level of safety and quality assurance the public expects — and deserves. It will be very interesting to see how this plays out and certainly the concept of global cooperation is very promising.
The European requirement that the manufacturer of a medicinal product conduct on site audits of both manufacturers and distributors of active substances for compliance with GMPs and good distribution practice is a very sensible requirement. I have led many audits of API manufacturers and I have seen the advantages of regular on-site audits that are far more reality-based than “paper” audits. Some API manufacturers maintain consistently high standards, but I have audited others, both national and global, that have let their standards fall, and it is imperative that the drug product manufacturer monitors GMP compliance and ensures that the API manufacturer corrects the situation.
There are many good business reasons to ensure Supply Chain security. Companies and investors are becoming aware of the costs that come with lack of control in the exporting country. Sophisticated investors are becoming more apt to watch a company’s product safety record closely since large numbers of adverse events can mean the product is defective, perhaps from not following GMPs. A recent ruling that publicly traded drug companies are required to disclose adverse drug events to shareholders in order to comply with financial reporting requirements9 is likely to create a similar precedent for device companies and this may promote an evaluation of the real costs of sourcing from poorly regulated, non-GMP-compliant suppliers.
It is time for those who speak of low costs in foreign countries to stop ignoring the fact that the quality of a medical product depends on how it is made, including whether the manufacturer complies with GMPs. At present the majority of foreign manufacturers outside of the U.S and Europe are subject to minimal regulatory control and GMP enforcement action by their own authorities and very few client audits and fewer than half of them have been inspected even once by the FDA. It is nonsensical to consider solely the supposed low prices from unregulated countries, when in fact the products are not comparable due to the higher probability of noncompliance, adulteration and defects. These low prices are derived partly from shifting the burden of regulatory control and GMP enforcement and the risks to the importing country, which in fact has no enforcement authority over the supplying country.
I believe the European approach should be adopted by the FDA — a supplier country should need to achieve equivalent regulatory control before it can import medical products into the U.S. It is time to stop allowing an uneven playing field, where domestic suppliers are subject to current GMP standards, regular customer audits and full FDA enforcement of regulations, while some foreign suppliers have minimal regulatory controls, applied only occasionally and at no cost to their country or to themselves.
2 Press Release – Committee Leaders Expand Investigation Into Tainted Heparin, Seek Assistance & Cooperation From Industry Leaders, http://energycommerce.house.gov/News/PRArticle.aspx?NewsID=8768
3 FDA Warning Letter to Synbiotics, December 16, 2010. http://www.fda.gov/ICECI/EnforcementActions/WarningLetters/2010/ucm237767.htm
4 Press release – European Medicines Agency recommends precautionary recall of batches of clopidogrel-containing medicines from Acino Pharma GmbH. http://www.ema.europa.eu/ema/index.jsp?curl=pages/news_and_events/news/2010/03/news_detail_001010.jsp&murl=menus/news_and_events/news_and_events.jsp&mid=WC0b01ac058004d5c1
5 Q7A Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients, August 2001. http://www.fda.gov/downloads/RegulatoryInformation/Guidances/UCM129098.pdf
6 Pathway to Global Product Safety and Quality – FDA, 6/20/11. I http://www.fda.gov/AboutFDA/CentersOffices/OC/GlobalProductPathway/default.htm
7 GAO Report October 2010 – FOOD AND DRUG ADMINISTRATION Response to Heparin Contamination Helped Protect Public Health; Controls That Were Needed for Working With External Entities Were Recently Added. http://republicans.energycommerce.house.gov/Media/file/News/110910_GAO_Report_Heparin.pdf
8 DIRECTIVE 2011/62/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 8 June 2011 – prevention of the entry into the legal supply chain of falsified medicinal products. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2011:174:0074:0087:EN:PDF
9 http://www.fuerstlaw.com/wp/index.php/25/u-s-supreme-court-rules-that-drug-companies-must-report-adverse-events-to-shareholders-rejects-statistically-significant-risk-argument/ On March 22, 2011, the Supreme Court ruled in a unanimous decision that publicly traded drug companies are required to disclose adverse drug events to shareholders in order to comply with their reporting requirements under 10(b)(6) of the Securities Exchange Act. This case stems from reported adverse effects of Zicam, a cold remedy which Matrixx manufactured until 2009.
Helena Champion, MS, MBA is principal consultant at Drug Quality Assurance, LLC. She can be reached at firstname.lastname@example.org.