Supply Chains Without Borders

April 1, 2008

Pharmaceutical Executive

Volume 0, Issue 0

International outsourcing carries risks for marketers and regulatory challenges for FDA

Pharmaceutical manufacturing has become a global business, transforming the way drugs are produced, regulated, and marketed. Along with many benefits, this development carries added risks, as illustrated by the Baxter heparin case. It may make economic sense to shift heparin production to a land with millions of pigs and cheap labor. But that can open the door to product contamination or fraud.

Jill Wechsler

When Baxter International was hit by hundreds of serious adverse event reports earlier this year, including up to 20 deaths, it took the manufacturer, its supplier, and the Food and Drug Administration months to uncover the "root cause" of the problem. Baxter had to recall thousands of vials and shut down production of heparin, a blood thinner used by thousands of patients undergoing surgery and kidney dialysis. Soon after, similar adverse events prompted recall of heparin made in Germany, but with ingredients from a different supplier.

Although the cause of contamination was initially a mystery, the fact that Baxter's API (active pharmaceutical ingredient) came from China quickly captured national attention. With unsafe Chinese food, toothpaste, and drugs making headlines, the media had a field day running stories on how small Chinese operators process an extract from pigs' intestines into crude heparin.

Compounding the problem was the unexpected discovery that FDA never inspected API manufacturer Changzhou SPL, nor did Chinese regulators (see sidebar). At a contentious hearing in February before the House Appropriations subcommittee that approves FDA funding, chair Rosa DeLauro (D-CT) termed the heparin-inspection error one more example of "FDA's myriad failures" in dealing with drug safety issues. Rep. Frank Pallone (D-NJ), chairman of the House Energy and Commerce Health subcommittee, said the inspection error reflects "sloppy work" and "carelessness that seriously jeopardized the health of American patients."

The Heparin Contamination Hunt

Obsolete Oversight

Certainly the heparin debacle highlights FDA's difficulties in overseeing a fast-expanding volume of imported drugs and medical products. FDA officials admit that their tracking system is so obsolete that they have only a vague idea of what drugs are manufactured where and which overseas facilities have been inspected. The House Energy and Commerce Committee held a hearing last November on FDA's inability to monitor imported drugs and active ingredients, and the heparin debacle has fueled that ongoing investigation.

The case also focused attention on FDA's preapproval inspection (PAI) program, which has narrowed in recent years as part of agency efforts to reduce redundant site visits and to target inspections to higher-risk products. E&C subcommittee chair Bart Stupak (D-MI) said that if FDA fails to adequately assess new drug production, Congress might consider legislative changes that would "prohibit the marketing of any drug from a plant that has not been properly inspected."

Such a statutory PAI requirement would further stress FDA's depleted field inspection operations. About 80 percent of drug APIs come from foreign manufacturers, reported Janet Woodcock, FDA deputy commissioner and acting director of the Center for Drug Evaluation and Research (CDER), at the Appropriations hearing. However, the agency now inspects only about 10 percent of foreign drug producers due to inadequate field force funding.

"We have raised red flags for years" about the overseas shift in drug manufacturing and clinical trials," Woodcock commented. Although imports of finished drugs now are much lower than for APIs, she predicted that this "is going to change" as operators in "many regions of the world have indicated that they want to take over drug manufacturing." FDA says it conducted a record 1,000 inspections of overseas facilities last year. But it cannot sustain that volume without hundreds of additional inspectors and an updated data system to better control drug imports into the United States and to ensure product quality.

A coalition of agency advocates is campaigning to boost FDA's budget significantly, but Congressional support is mixed. While DeLauro backed added funding to support FDA's mission, she also insisted that FDA first improve its management and operations. "All this agency ever does is cry about resources," she complained, noting "serious negligence" in using what it does have to enforce regulations.

Foreign Affairs

Even with more funding, FDA Commissioner Andrew von Eschenbach acknowledges that FDA can never inspect every production facility around the world. He looks to strengthen ties with foreign regulatory authorities to enhance FDA's ability to respond quickly to safety problems. When FDA inspectors sought to examine Chinese upstream pig processors that make crude heparin, it helped that US and Chinese health officials had signed a memorandum of agreement (MOA) last December supporting regulatory cooperation. FDA hopes to establish regulatory offices in China and in other regions of the world as part of the "FDA Beyond our Borders" initiative to boost US regulatory presence overseas.

At the same time, FDA had to tread lightly with Chinese officials anxious to save face. Last year, the Chinese government executed the former head of the State Food and Drug Administration (SFDA) for fraud in approving unsafe drugs, and Chinese regulators bristled at speculation that widespread pig disease may have contaminated China's heparin supply chain. SFDA officials insisted that they strictly regulate chemicals used in pharmaceutical products and emphasized that importing countries and companies are responsible for ensuring product safety and quality.

Pharma Accountable

US regulators agree that government agencies are not solely responsible for the quality of drug products, whether imported or not. Although FDA inspects API manufacturers, the agency still relies on industry product testing, and most foreign regulators leave API monitoring entirely to manufacturers.

At a February conference on FDA enforcement sponsored by the Food and Drug Law Institute, David Elder, director of FDA's Office of Enforcement, emphasized that the manufacturer of the finished product has to take responsibility for problems with drug quality or safety. Too often, he said, manufacturers want to blame suppliers for product failures. He pointed to pharmaceutical companies in asserting that FDA "will continue to hold them accountable" for such problems.

Under the Food, Drug and Cosmetic Act, the marketer of a finished drug product is ultimately responsible for quality and safety, even if a contractor is at fault, explained Eric Blumberg, FDA deputy chief counsel for litigation. Peter Arduini, president of Baxter's Medication Delivery business, acknowledged that Baxter takes "this responsibility to produce quality products very seriously."

An earlier FDA inspection of Changzhou probably would not have prevented all these problems, whether the contamination was intentional or just an error. Baxter had been using heparin API from China for several years without any serious reactions. But the crisis illustrates the risks as well as benefits of international sourcing—and the challenge for FDA in retaining its "gold standard" regulatory status.

Jill Wechsler is Pharmaceutical Executive's Washington correspondent. She can be reached at jwechsler@advanstar.com