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Report to the Committee on Oversight and Government Reform, House of 
Representatives: 

United States Government Accountability Office:
GAO: 

September 2010: 

Drug Safety: 

FDA Has Conducted More Foreign Inspections and Begun to Improve Its 
Information on Foreign Establishments, but More Progress Is Needed: 

GAO-10-961: 

GAO Highlights: 

Highlights of GAO-10-961, a report to the Committee on Oversight and 
Government Reform, House of Representatives. 

Why GAO Did This Study: 

Globalization has placed increasing demands on the Food and Drug 
Administration (FDA), an agency within the Department of Health and 
Human Services (HHS), in ensuring the safety and effectiveness of 
drugs marketed in the United States. Drugs manufactured in more than 
100 countries were offered for entry into the United States in fiscal 
year 2009. FDA inspects drug manufacturing establishments in order to 
ensure that the safety and quality of drugs are not jeopardized by 
poor manufacturing practices. 

In 1998 GAO identified weaknesses in FDAs foreign drug inspection 
program. In 2008 GAO found, among other things, that from fiscal years 
2002 through 2007, FDA inspected relatively few foreign establishments 
each year. GAO also determined that, because of inaccurate information 
in its databases, FDA did not know how many foreign drug 
establishments were subject to inspection. 

In 2008 GAO recommended that FDA increase inspections of foreign drug 
establishments and improve information it receives to manage the 
foreign drug inspection program. This report examines FDAs progress 
since 2008 in (1) conducting more foreign drug inspections, and (2) 
improving its information on foreign drug establishments. GAO analyzed 
information from FDA databases, reviewed documents related to FDAs 
efforts to both improve these databases and supplement its existing 
information on foreign drug establishments, examined staffing and 
funding information, and interviewed FDA officials. 

What GAO Found: 

FDA increased the number of foreign drug inspections it conducted from 
fiscal year 2007 to 2009, but still conducts relatively fewer foreign 
drug inspections each year than it conducts domestically. In fiscal 
year 2009, FDA conducted 424 foreign inspections, compared to 333 and 
324 inspections conducted in fiscal years 2007 and 2008, respectively. 
Using a list FDA developed to prioritize foreign establishments for 
inspection, GAO estimated that FDA inspected 11 percent of foreign 
establishments on this list in fiscal year 2009. At this rate, GAO 
estimated it would take FDA about 9 years to inspect all 
establishments on this list once. In contrast, in that same year, FDA 
conducted 1,015 domestic inspections, inspecting approximately 40 
percent of domestic establishments. GAO estimated that at this rate 
FDA inspects domestic establishments approximately once every 2.5 
years. Further, FDAs approach in selecting establishments for 
inspection is inconsistent with GAOs 2008 recommendation that FDA 
inspect, at a comparable frequency, those establishments that are 
identified as having the greatest public health risk potential if they 
experience a manufacturing defect, regardless of whether they are a 
foreign or domestic establishment. Instead, its foreign inspections 
continue to be driven by the establishments listed on an application 
for a new drug, instead of those already producing drugs for the U.S. 
market. 

FDA is taking steps to improve the information it receives from the 
drug establishment registration and import databases the agency uses 
to manage its foreign drug inspection program. For example, FDA is 
working to obtain more accurate information for its database that 
contains information about foreign establishments registered to market 
their drugs in the United States. In addition, FDA has an initiative 
underway to eliminate duplicate information from its database 
containing information about foreign establishments whose drugs are 
offered for import into the United States. However, these efforts are 
in the early stages. In addition, FDA is exploring other options for 
obtaining better information about foreign drug establishments, such 
as by collaborating with foreign regulatory authorities to exchange 
information about planned inspections and the results of completed 
inspections. 

In 1998, and again in 2008, GAO reported that FDA needed to conduct 
more inspections of foreign establishments and that it was vital that 
the agency strengthen the data it uses to manage its foreign drug 
inspection program. FDA has begun to respond to GAOs recommendations; 
however, it has not yet fully addressed these weaknesses at a time 
when the volume of imported drugs and the number of foreign 
establishments producing these drugs have been increasing. Given the 
long-standing nature of these challenges and the nations reliance on 
drugs manufactured overseas, it is urgent that FDA implement GAOs 
prior recommendations to better protect public health. HHS reviewed a 
draft of this report and agreed that more progress is needed in order 
to meet the challenge of safeguarding the nations drug supply in 
todays global marketplace. 

View [hyperlink, http://www.gao.gov/products/GAO-10-961] or key 
components. For more information, contact Marcia Crosse at (202) 512-
7114 or crossem@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

FDA Conducted More Foreign Inspections in Fiscal Year 2009, but 
Continued to Conduct Relatively Fewer Foreign than Domestic 
Inspections: 

FDA Is Taking Steps to Improve Its Information on Foreign Drug 
Establishments, but These Efforts Are in the Early Stages: 

Concluding Observations: 

Agency Comments and Our Evaluation: 

Appendix I: Comments from the Department of Health and Human Services: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Related GAO Products: 

Tables: 

Table 1: Total Number of FDA Inspections of Foreign Establishments, 
Fiscal Year 2007 through Fiscal Year 2009: 

Table 2: Number of Establishments in FDA's Inventory That May Never 
Have Been Inspected by FDA and the Total Estimated Number of 
Establishments in Its Inventory, by Country, Fiscal Year 2009: 

Table 3: Number of Inspections Conducted by Inspection Type for the 
Most Frequently Inspected Countries in Fiscal Year 2009: 

Figure: 

Figure 1: FDA Foreign and Domestic Drug Establishment Inspections by 
Type of Inspection, Fiscal Year 2009: 

Abbreviations: 

API: active pharmaceutical ingredient: 

CBP: Customs and Border Protection: 

CDER: Center for Drug Evaluation and Research: 

DRLS: Drug Registration and Listing System: 

D-U-N-S: Data Universal Numbering System: 

FACTS: Field Accomplishments and Compliance Tracking System: 

FDA: Food and Drug Administration: 

FTE: full-time equivalent: 

GMP: good manufacturing practice regulations: 

HHS: Department of Health and Human Services: 

OASIS: Operational and Administrative System for Import Support: 

ORA: Office of Regulatory Affairs: 

OT: Cover-the-counter: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

September 30, 2010: 

The Honorable Edolphus Towns: 
Chairman: 
The Honorable Darrell E. Issa: 
Ranking Member: 
Committee on Oversight and Government Reform: 
House of Representatives: 

Globalization has placed increasing demands on the Food and Drug 
Administration (FDA), an agency within the Department of Health and 
Human Services (HHS), in carrying out its role of ensuring the safety 
and effectiveness of drugs marketed in the United States.[Footnote 1] 
The United States has come to depend on drug products and drug 
ingredients manufactured in foreign countries, and FDA is responsible 
for the oversight of drugs marketed in the United States, regardless 
of whether they are manufactured in foreign or domestic 
establishments.[Footnote 2] In March 2010, an FDA official testified 
that while Americans once used drugs that were mostly manufactured 
domestically, this is no longer the case. The volume of imported 
drugs, the complexity of the drug supply chain, and the number of 
foreign establishments producing these drugs have all been increasing, 
making oversight significantly more difficult.[Footnote 3] According 
to FDA import data, drugs manufactured in more than 100 countries were 
offered for entry into the United States in fiscal year 2009. To 
assure that the safety and quality of drugs are not jeopardized by 
poor manufacturing practices, FDA relies on establishment inspections 
to determine compliance with current good manufacturing practice 
regulations (GMP).[Footnote 4] 

Concerns with FDA's foreign drug inspection program have been long- 
standing. More than 10 years ago, in 1998, we reported on weaknesses 
in FDA's foreign drug inspection program.[Footnote 5] Among other 
things, we noted that FDA had significant problems managing its 
foreign inspection data. We also found that FDA infrequently inspected 
foreign establishments to ensure the continued quality of drugs 
already on the market. In that same year, FDA expressed concern that, 
despite recent increases, its inspections of foreign drug 
establishments could not keep pace with the rapid growth of imported 
products.[Footnote 6] Our 1998 report also included information from 
two internal FDA reviews that indicated the agency was aware of 
problems with its inspection data and concerned with the number of 
foreign establishment inspections it was conducting as early as 1988. 
At the time our 1998 report was issued, the agency was planning to 
implement a new data system to establish a comprehensive inventory of 
foreign establishments shipping drug products to the United States. 
However, we recommended that, in addition, FDA conduct more foreign 
inspections. 

In September 2008, we again reported on weaknesses in FDA's foreign 
drug inspection program.[Footnote 7] Among other things, we determined 
that, because of inaccurate information in FDA's databases, the agency 
did not know how many foreign drug establishments were subject to 
inspection. We also found that, from fiscal years 2002 through 2007, 
FDA inspected relatively few foreign establishments each year. Due in 
part to the concerns raised in our September 2008 report, in January 
2009, we added FDA's oversight of medical products--drugs, biologics, 
[Footnote 8] and medical devices[Footnote 9]--to our High-Risk Series, 
citing FDA's ability to ensure the quality of medical products 
manufactured overseas as an area of particular concern.[Footnote 10] 
Our subsequent reports have reinforced these designations of FDA as an 
agency in need of broad-based transformation by identifying additional 
concerns with FDA's ability to manage its growing 
responsibilities[Footnote 11] and plans for modernizing the agency's 
information technology capabilities.[Footnote 12] 

Given continued questions about FDA's oversight of medical products, 
you asked for an update on the status of FDA's foreign drug inspection 
program. This report examines FDA's progress since our September 2008 
report in (1) conducting more foreign drug inspections, and (2) 
improving its information on foreign drug establishments. 

To determine the extent to which FDA has made progress in conducting 
more inspections of foreign drug establishments, we obtained 
information from FDA's Field Accomplishments and Compliance Tracking 
System (FACTS) and analyzed data on foreign and domestic drug 
manufacturing establishment inspections conducted from fiscal years 
2007 to 2009.[Footnote 13] To assess the reliability of these data we 
reviewed related documentation, interviewed knowledgeable agency 
officials, performed electronic data testing, and compared inspection 
counts to published data. We found counts of inspections sufficiently 
reliable for the purposes of our report. We also examined methods used 
by FDA to select establishments for inspection. We obtained data FDA 
used to prioritize foreign and domestic establishments for inspection 
for fiscal years 2007 to 2009. To assess the reliability of these data 
we reviewed related documentation, interviewed knowledgeable agency 
officials, and performed electronic data testing. We found these data 
sufficiently reliable for the purposes of our report. Finally, we 
reviewed staffing and funding information for the foreign drug 
inspection program. To assess the reliability of FDA funding data, we 
reviewed related documentation, interviewed knowledgeable officials, 
and examined the data for consistency. We found these data 
sufficiently reliable for the purposes of our report. 

To examine FDA's efforts to improve its information on foreign drug 
establishments, we reviewed FDA's initiatives for improving the 
accuracy of the agency's data on foreign establishments contained in 
its registration and import databases,[Footnote 14] which are both 
used to manage the foreign drug inspection program. We obtained data 
from FDA's Drug Registration and Listing System (DRLS) on the number 
of establishments registered to market their drugs in the United 
States. In addition, we interviewed representatives from FDA's Office 
of Critical Path Programs, which is responsible for managing aspects 
of the annual registration of drug establishments, and from FDA's 
Office of Information Management. We also obtained data from FDA's 
Operational and Administrative System for Import Support (OASIS) on 
the number of establishments that have manufactured drugs that were 
shipped to the United States. To assess the reliability of the data 
from both databases we reviewed related documentation, interviewed 
knowledgeable agency officials, and compared the data to published 
information from the same databases. Through this review, we 
identified inaccuracies with some aspects of FDA's registration and 
import databases. We found these data sufficiently reliable for 
illustrating the variability in information that FDA's databases 
provide to agency officials on the number of foreign drug 
establishments marketing drugs in the United States. Finally, to 
further examine FDA's efforts to improve its information on foreign 
drug establishments, we reviewed documents related to the agency's 
efforts to augment its existing information on foreign drug 
establishments, such as information obtained from foreign regulatory 
authorities. 

To address both of our objectives, we interviewed officials from FDA, 
including its Center for Drug Evaluation and Research (CDER) and the 
Office of Regulatory Affairs (ORA), which each have responsibilities 
for managing the foreign drug inspection program. Our work focuses on 
human drugs regulated by CDER and not on biologics,[Footnote 15] 
medical devices, veterinary medicines, or other items or products for 
which FDA conducts inspections.[Footnote 16] Further, our work focuses 
on activities related specifically to the foreign drug inspection 
program. As part of its oversight of imported drugs, FDA undertakes 
other activities, such as providing capacity building to foreign 
regulatory authorities and working toward international harmonization 
of regulatory requirements, which are beyond the scope of our 
review.[Footnote 17] Our work also excludes FDA's efforts to screen 
imported drugs that enter the United States illegally.[Footnote 18] 

We conducted this performance audit from November 2009 to September 
2010, in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

Background: 

As part of its efforts to ensure the safety and quality of imported 
drugs, FDA may conduct inspections of foreign establishments 
manufacturing drug products and active pharmaceutical ingredients 
(API) that are imported into the United States.[Footnote 19] The 
purpose of these inspections is to ensure that foreign establishments 
meet the same requirements as domestic establishments to ensure the 
quality, purity, potency, safety, and efficacy of drugs marketed in 
the United States. 

Requirements governing FDA's inspection of foreign and domestic 
establishments differ. Specifically, FDA is required to inspect every 
2 years those domestic establishments that manufacture drugs in the 
United States, but there is no comparable requirement for inspecting 
foreign establishments that market their drugs in the United States. 
However, drugs manufactured by foreign establishments that are offered 
for import may be refused entry to the United States if FDA 
determines--through the inspection of an establishment, a physical 
examination of drugs offered for import, or otherwise--that there is 
sufficient evidence of a violation of applicable laws or regulations. 
[Footnote 20] 

Within FDA, CDER establishes standards for the safety, quality, and 
effectiveness of and manufacturing processes for prescription and over-
the-counter (OTC) drugs. ORA's activities are intended to assure that 
regulated establishments comply with laws and regulations. ORA 
supports CDER by, among other things, inspecting these establishments, 
conducting sample analysis on regulated products, and reviewing 
imported products offered for entry into the United States. CDER 
requests that ORA inspect both foreign and domestic establishments to 
ensure that drugs are produced in conformance with federal statutes 
and regulations, including current GMPs. ORA investigators and, as 
needed, laboratory analysts,[Footnote 21] conduct two primary types of 
drug manufacturing establishment inspections, preapproval inspections 
and GMP inspections: 

* Preapproval inspections of domestic and foreign establishments may 
be conducted before FDA will approve a new drug to be marketed in the 
United States. These inspections occur following FDA's receipt of a 
new drug application or an abbreviated new drug application[Footnote 
22] and focus on the manufacture of a specific drug.[Footnote 23] 
Preapproval inspections are designed to verify the accuracy and 
authenticity of the data contained in these applications to determine 
that the establishment is following commitments made in the 
application. Preapproval inspections also assess whether the 
establishment can manufacture the product in the application in 
conformance with GMPs. FDA's decision to inspect a particular 
establishment listed on the application is based on multiple factors, 
including the compliance history of the establishment--that is, the 
results of previous inspections, product recalls, and other compliance 
information--and the attributes of the product being proposed for 
manufacture.[Footnote 24] 

* GMP inspections are conducted at establishments manufacturing drugs 
already marketed in the United States to determine ongoing compliance 
with laws and regulations. These inspections focus on an 
establishment's systemwide controls for ensuring that its 
manufacturing processes produce drugs that are of high quality. 
Systems examined during these inspections include those related to 
materials, quality control, production, facilities and equipment, 
packaging and labeling, and laboratory controls. These systems may be 
involved in the manufacture of multiple drugs. For surveillance 
purposes, some establishments may be selected for GMP inspections 
through CDER's risk-based selection process, which draws on a variety 
of factors to identify those establishments that FDA considers to be a 
priority for inspection. Establishments may also be selected for GMP 
surveillance inspections for other reasons, such as FDA's focus on a 
particular product or geographic region. Establishments may also be 
the subject of a GMP inspection conducted for cause if FDA receives 
information indicating problems in the manufacture of marketed drugs 
or when FDA follows up on establishments that were not in compliance 
with GMPs during previous inspections.[Footnote 25] 

While FDA may conduct a preapproval-only inspection or a GMP-only 
inspection, FDA may also conduct an inspection that combines both 
preapproval and GMP components in a single visit to an establishment. 
As the results of a GMP inspection can often be generalized to all 
drugs manufactured in a similar manner at a particular establishment, 
FDA can use the results of the combined inspection to make decisions 
in the future if the establishment is listed on another application. 
Therefore, when an establishment has already been selected to receive 
a preapproval inspection, FDA may also conduct a GMP inspection during 
the same visit.[Footnote 26] 

FDA uses multiple databases to select foreign establishments for GMP 
surveillance inspections, including the following: 

* DRLS contains information on foreign and domestic drug 
establishments that have registered with FDA to market their drugs in 
the United States. This information includes company name and address 
and the drugs they manufacture for commercial distribution in the 
United States, as reported by the establishment. 

* FACTS contains information on foreign and domestic establishments 
inspected by ORA, the type of inspection conducted, and the outcome of 
those inspections. ORA investigators and laboratory analysts enter 
information into FACTS following completion of an inspection. 

* OASIS contains information on drugs offered for entry into the 
United States, including information on the establishment that 
manufactured the drug. The information in OASIS is automatically 
generated from data managed by Customs and Border Protection (CBP), 
within the Department of Homeland Security. The data are originally 
entered by customs brokers based on the information available from the 
importer.[Footnote 27] CBP specifies an algorithm by which customs 
brokers generate a manufacturer identification number from information 
about an establishment's name and address. 

In September 2008 we reported that FDA did not maintain a list of 
foreign drug establishments subject to inspection, instead relying on 
information from DRLS and OASIS to help select establishments for 
inspection. However, we noted that these databases contained incorrect 
information about foreign establishments and did not contain an 
accurate count of foreign establishments manufacturing drugs for the 
U.S. market. For example, some establishments included in DRLS did not 
actually manufacture drugs for the U.S. market.[Footnote 28] As a 
result, FDA did not know how many foreign establishments were subject 
to inspection. 

To select foreign establishments for GMP surveillance inspections, 
CDER continues to rely on information from multiple databases, 
including those with which we previously identified inaccuracies. CDER 
uses data from DRLS and FACTS to annually compile an inventory of 
foreign establishments that may be subject to inspection; it does not 
maintain a list of such establishments. While DRLS provides 
information on all registered establishments, FACTS provides 
information about additional establishments that may not appear in 
DRLS.[Footnote 29] To prioritize establishments for GMP surveillance 
inspections, CDER applies a risk-based model to this inventory of 
establishments each year to identify those establishments that, based 
on the characteristics of the establishments and of the drugs being 
manufactured, pose the greatest public health risk potential should 
they experience a manufacturing defect. Establishments are further 
prioritized based on whether, according to OASIS data, they are 
actively importing their products to the United States. Establishments 
that have not shipped a product to the United States in the previous 3 
years are not scheduled for inspection. Through this process, CDER 
annually prepares a list of a selected set of foreign establishments 
from this inventory that it forwards to ORA,[Footnote 30] requesting 
that ORA staff conduct GMP surveillance inspections at a certain 
number of establishments on this prioritized list. In order to use 
resources efficiently, officials told us that ORA staff may select 
establishments for inspection from CDER's prioritized list based on 
geographic proximity to other planned inspection trips. 

In September 2008 we also reported that FDA inspected fewer foreign 
drug establishments than it inspected domestically. We noted that 
while the majority of domestic establishments inspected were selected 
to examine the manufacture of drugs already marketed in the United 
States, FDA generally only selected foreign establishments for 
inspection if they were named in an application for new drug approval. 
As a result of our findings, we made a number of recommendations to 
the FDA Commissioner, including that FDA should improve the accuracy 
of the data it uses to manage its foreign inspection program. We also 
recommended that FDA increase the number of foreign inspections so 
that foreign establishments are inspected at a frequency comparable to 
domestic establishments with similar characteristics. In response, FDA 
described plans to improve the databases it uses to manage the foreign 
drug inspection program and agreed that it should conduct more 
inspections of foreign drug establishments. 

FDA Conducted More Foreign Inspections in Fiscal Year 2009, but 
Continued to Conduct Relatively Fewer Foreign than Domestic 
Inspections: 

FDA conducted more foreign drug inspections in fiscal year 2009 than 
in prior fiscal years through staffing changes and dedicating 
additional resources to conducting foreign inspections. However, FDA 
continued to conduct relatively fewer foreign drug establishment 
inspections than domestic inspections. FDA's selection of foreign 
establishments for inspection was mainly for preapproval purposes, 
while domestic establishments were mainly inspected to examine the 
manufacturing of drugs already marketed in the United States. 

FDA Increased the Number of Foreign Drug Inspections Conducted in 
Fiscal Year 2009: 

FDA increased the number of foreign drug inspections conducted in 
fiscal year 2009 compared to previous fiscal years. In fiscal year 
2009, FDA conducted 424 foreign inspections, an increase from the 333 
and 324 inspections conducted in fiscal years 2007 and 2008, 
respectively. The rate at which FDA increased foreign drug inspections 
from fiscal year 2007 to fiscal year 2009 was higher than the increase 
in the annual inventory FDA compiled of foreign drug establishments 
during the same period. In fiscal year 2009, FDA conducted 27 percent 
more inspections than in fiscal year 2007.[Footnote 31] In comparison, 
the total number of foreign establishments in FDA's inventory 
increased by 16 percent--from 3,249 to 3,765--during the same period. 
[Footnote 32] FDA conducted inspections in 37 countries in fiscal year 
2009, with 77 percent of the inspections conducted in 10 countries, as 
shown in table 1. 

Table 1: Total Number of FDA Inspections of Foreign Establishments, 
Fiscal Year 2007 through Fiscal Year 2009: 

Most frequently inspected countries: India; 
Number of inspections: Fiscal year 2007: 64; 
Number of inspections: Fiscal year 2008: 64; 
Number of inspections: Fiscal year 2009: 59; 
Number of inspections: Total: 187; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 502. 

Most frequently inspected countries: China; 
Number of inspections: Fiscal year 2007: 19; 
Number of inspections: Fiscal year 2008: 36; 
Number of inspections: Fiscal year 2009: 52; 
Number of inspections: Total: 107; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 920. 

Most frequently inspected countries: Germany; 
Number of inspections: Fiscal year 2007: 26; 
Number of inspections: Fiscal year 2008: 34; 
Number of inspections: Fiscal year 2009: 36; 
Number of inspections: Total: 96; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 228. 

Most frequently inspected countries: Italy; 
Number of inspections: Fiscal year 2007: 28; 
Number of inspections: Fiscal year 2008: 28; 
Number of inspections: Fiscal year 2009: 30; 
Number of inspections: Total: 86; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 168. 

Most frequently inspected countries: Canada; 
Number of inspections: Fiscal year 2007: 20; 
Number of inspections: Fiscal year 2008: 19; 
Number of inspections: Fiscal year 2009: 35; 
Number of inspections: Total: 74; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 310. 

Most frequently inspected countries: United Kingdom; 
Number of inspections: Fiscal year 2007: 16; 
Number of inspections: Fiscal year 2008: 17; 
Number of inspections: Fiscal year 2009: 32; 
Number of inspections: Total: 65; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 191. 

Most frequently inspected countries: France; 
Number of inspections: Fiscal year 2007: 24; 
Number of inspections: Fiscal year 2008: 14; 
Number of inspections: Fiscal year 2009: 26; 
Number of inspections: Total: 64; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 188. 

Most frequently inspected countries: Japan; 
Number of inspections: Fiscal year 2007: 22; 
Number of inspections: Fiscal year 2008: 17; 
Number of inspections: Fiscal year 2009: 20; 
Number of inspections: Total: 59; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 207. 

Most frequently inspected countries: Switzerland; 
Number of inspections: Fiscal year 2007: 17; 
Number of inspections: Fiscal year 2008: 15; 
Number of inspections: Fiscal year 2009: 18; 
Number of inspections: Total: 50; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 100. 

Most frequently inspected countries: Ireland; 
Number of inspections: Fiscal year 2007: 14; 
Number of inspections: Fiscal year 2008: 11; 
Number of inspections: Fiscal year 2009: 19; 
Number of inspections: Total: 44; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 63. 

Most frequently inspected countries: All other countries; 
Number of inspections: Fiscal year 2007: 83; 
Number of inspections: Fiscal year 2008: 69; 
Number of inspections: Fiscal year 2009: 97; 
Number of inspections: Total: 249; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 888. 

Most frequently inspected countries: Total; 
Number of inspections: Fiscal year 2007: 333; 
Number of inspections: Fiscal year 2008: 324; 
Number of inspections: Fiscal year 2009: 424; 
Number of inspections: Total: 1,081; 
Estimated number of establishments in FDA's inventory, fiscal year 
2009[A]: 3,765. 

Source: GAO analysis of FDA FACTS and risk-based process data. 

Note: The number of inspections includes preapproval inspections, GMP 
inspections, and inspections that include both preapproval and GMP 
components. The number of inspections does not include a small number 
of other foreign drug inspections, such as inspections for the 
President's Emergency Plan for AIDS Relief, inspections of clinical 
trial sites, and inspections conducted to determine whether drug 
manufacturers are submitting to FDA, as required, complete and 
accurate data on adverse drug experiences associated with marketed 
drugs, which were not included in the scope of our review. 

[A] There were an estimated 3,249 and 3,559 foreign drug 
establishments in FDA's inventory in fiscal years 2007 and 2008, 
respectively. 

[End of table] 

According to FDA officials, the agency has made two types of staffing 
changes--by creating a drug cadre based in the United States and by 
staffing overseas offices with investigators--to increase the number 
of foreign drug establishment inspections it conducted in fiscal year 
2009. First, FDA created a foreign drug cadre consisting of 15 
domestically based members in January 2009.[Footnote 33] Cadre members 
are specifically dedicated to conducting foreign drug inspections. The 
cadre members began conducting foreign inspections in January 2009 and 
conducted 152 foreign inspections in 27 countries by the end of fiscal 
year 2009.[Footnote 34] The countries most frequently inspected by the 
foreign cadre were China and India, with 23 and 19 inspections, 
respectively. Second, in late 2008 FDA opened overseas offices in 
China and India and, since the middle of 2009, has had two medical 
product investigators staffed to each office to conduct drug 
inspections.[Footnote 35] These investigators receive a mix of 
inspection assignments, including GMP inspections, and have additional 
responsibilities not related to conducting inspections.[Footnote 36] 
FDA officials told us that investigators in the overseas offices will 
not conduct the majority of the inspections of foreign drug 
establishments in these two countries.[Footnote 37] According to our 
FACTS analysis, investigators in the overseas offices conducted one 
drug manufacturing establishment inspection in China and two in India 
in fiscal year 2009.[Footnote 38] These staffing changes have provided 
FDA officials with a larger pool of investigators to conduct foreign 
inspections. According to FDA officials, the agency plans to sustain 
the increases in foreign inspections by maintaining the foreign drug 
cadre and the overseas offices. 

In addition to staffing changes, FDA has increased the resources 
dedicated to conducting foreign drug inspections, with the largest 
increase occurring in fiscal year 2009. FDA dedicated approximately 
$10 million to foreign drug inspections in fiscal year 2007,[Footnote 
39] and approximately $12 million for this purpose in fiscal year 
2008. In fiscal year 2009, FDA dedicated approximately $41 million to 
foreign drug inspections, which includes a portion of the supplemental 
appropriation FDA received in fiscal year 2008.[Footnote 40] According 
to FDA officials, the supplemental appropriation allowed the agency to 
conduct more inspections in fiscal year 2009.[Footnote 41] The 
supplemental appropriation also allowed FDA to hire additional 
investigators to conduct foreign inspections. FDA officials told us 
that although the agency hired additional investigators, the effect of 
this hiring will not be fully realized until fiscal year 2011 due to 
the time it takes to train investigators to become qualified to 
conduct foreign drug inspections. FDA estimates it will dedicate about 
$42 million in fiscal year 2010 to foreign drug inspections, and 
approximately $50 million in fiscal year 2011. 

FDA Continues to Inspect Few Foreign Establishments Relative to Its 
Inspection of Domestic Establishments: 

Although FDA increased the number of foreign drug establishment 
inspections it conducted in fiscal year 2009, the agency continues to 
inspect relatively few foreign establishments compared to its 
inspection of domestic establishments. The number of foreign 
establishments the agency inspected in fiscal year 2009 remained a 
small portion of the total number of foreign establishments in FDA's 
inventory, compared to the portion of domestic establishments 
inspected. FDA inspected 11 percent of the total number of foreign 
establishments in its inventory in fiscal year 2009, an increase from 
the 10 percent and 9 percent of foreign establishments inspected in 
fiscal year 2007 and fiscal year 2008, respectively.[Footnote 42] In 
comparison, FDA inspected approximately 40 percent of domestic 
establishments in fiscal year 2009. If FDA continued to conduct 
foreign inspections at the rate it adhered to in fiscal year 2009--424 
a year--it would take FDA about 9 years to inspect each of the 3,765 
foreign establishments in FDA's inventory in fiscal year 2009 at least 
one time.[Footnote 43] In contrast, FDA conducted 1,015 domestic 
inspections in fiscal year 2009.[Footnote 44] If FDA continued to 
conduct domestic inspections at this rate, it would inspect the 2,498 
establishments in its fiscal year 2009 domestic inventory about once 
every 2.5 years. 

However, the rate at which FDA inspects establishments within any 
given country differs. For example, in fiscal year 2009, FDA conducted 
59 inspections in India and 52 in China. If FDA continued to inspect 
establishments in its fiscal year 2009 inventory in these two 
countries at the rate at which it inspected establishments in these 
countries in fiscal year 2009, it would take FDA about 8.5 years to 
inspect all of the 502 establishments in India once and about 18 years 
to inspect all of the 920 establishments in China once. 

FDA officials acknowledged that the agency is far from achieving 
foreign inspection rates comparable to domestic inspection rates and, 
without significantly increased inspectional capacity, its ability to 
close this gap is highly unlikely. FDA also indicated that the agency 
cannot respond to the nation's increasing reliance on the 
globalization of the drug supply chain, in which manufacturing steps 
may be outsourced to multiple foreign establishments, at its expected 
fiscal year 2011 funding level. According to FDA, the sheer number of 
foreign establishments, the complexity of the drug supply chain, and 
the rapidly changing use of suppliers all pose formidable challenges 
to its ability to gather comprehensive information about foreign 
establishments and take action against them when necessary. In 
addition, FDA noted that its current legal authorities limit the 
agency's ability to improve its oversight of imported products. 
[Footnote 45] 

FDA's concern about its ability to close the gap in foreign and 
domestic inspection rates is underscored by the proportion of 
establishments in the agency's inventory that FDA may never have 
inspected. A majority of foreign establishments in FDA's inventory may 
never have been inspected by the agency, and almost half of these 
establishments are in China and India. According to agency officials, 
after compiling its inventory of foreign establishments that may be 
subject to inspection, FDA identifies establishments in the inventory 
that may never have received an FDA inspection. Of the 3,765 foreign 
establishments in FDA's inventory for fiscal year 2009, there were 
2,394 foreign establishments that may never have been inspected by FDA 
(see table 2).[Footnote 46] This is an increase from the 2,133 foreign 
establishments that may have never been inspected in fiscal year 2007. 
In fiscal year 2009, 47 percent of the foreign establishments in FDA's 
inventory that may never have been inspected by FDA were in China and 
India. In comparison, 10 percent, or 253, of the 2,498 domestic 
establishments in FDA's inventory for fiscal year 2009 may never have 
been inspected.[Footnote 47] Agency officials told us that the count 
of foreign establishments that FDA may never have inspected includes 
registered establishments whose drugs are being imported into the 
United States,[Footnote 48] as well as establishments that may not 
actually be subject to inspection.[Footnote 49] 

Table 2: Number of Establishments in FDA's Inventory That May Never 
Have Been Inspected by FDA and the Total Estimated Number of 
Establishments in Its Inventory, by Country, Fiscal Year 2009: 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: China; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 811; 
Estimated number of establishments in FDA's inventory: 920; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 88. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: India; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 323; 
Estimated number of establishments in FDA's inventory: 502; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 64. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: Canada; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 206; 
Estimated number of establishments in FDA's inventory: 310; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 66. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: France; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 107; 
Estimated number of establishments in FDA's inventory: 188; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 57. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: Japan; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 99; 
Estimated number of establishments in FDA's inventory: 207; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 48. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: Germany; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 97; 
Estimated number of establishments in FDA's inventory: 228; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 43. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: United Kingdom; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 82; 
Estimated number of establishments in FDA's inventory: 191; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 43. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: South Korea; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 69; 
Estimated number of establishments in FDA's inventory: 75; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 92. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: Mexico; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 57; 
Estimated number of establishments in FDA's inventory: 76; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 75. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: Italy; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 55; 
Estimated number of establishments in FDA's inventory: 168; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 33. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: All other countries; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 488; 
Estimated number of establishments in FDA's inventory: 900; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 54. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: Foreign total; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 2,394; 
Estimated number of establishments in FDA's inventory: 3,765; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 64. 

Countries with the largest number of establishments in FDA's inventory 
that may never have been inspected: Domestic total; 
Number of establishments in FDA's inventory that may never have been 
inspected[A]: 253; 
Estimated number of establishments in FDA's inventory: 2,498; 
Percent of establishments in FDA's inventory that may never have been 
inspected: 10. 

Source: GAO analysis of FDA risk-based process data. 

[A] This count represents the number of establishments for which FDA 
could not identify a previous inspection when FDA compiled its 
inventory in fiscal year 2009. Officials told us that this count could 
include establishments that received an inspection other than a GMP 
inspection prior to fiscal year 2000, but that these data may not have 
been transferred when the agency began using FACTS in fiscal year 
2000. This count could also include establishments that are not 
subject to inspection, such as those establishments that may have gone 
out of business or those that have never shipped to the United States. 

[End of table] 

Inspections Conducted for Preapproval Purposes Continued to Drive the 
Selection of Foreign Establishments for Inspection in Fiscal Year 2009: 

While FDA mainly selected domestic establishments for inspection to 
examine the manufacture of drugs already marketed in the United 
States, it mainly selected foreign establishments for inspection for 
preapproval purposes. Unless a foreign establishment is listed on an 
application for a new drug, FDA is still unlikely to select that 
establishment for inspection. In fiscal year 2009, 83 percent of 
foreign drug establishment inspections contained preapproval 
components--preapproval-only inspections and inspections including 
both preapproval and GMP components--compared to 18 percent of 
domestic drug establishment inspections. When a foreign establishment 
was already selected to receive a preapproval inspection, FDA often 
included a GMP inspection.[Footnote 50] However, relatively few 
foreign establishments are selected for inspection solely to examine 
the manufacture of drugs already marketed in the United States. In 
fiscal year 2009, 17 percent of the 424 foreign inspections were GMP-
only inspections--that is, GMP inspections that do not include a 
preapproval component (see fig. 1).[Footnote 51] In comparison, for 
fiscal year 2009, GMP-only inspections continued to make up about 82 
percent of domestic establishment inspections. This approach--in which 
foreign establishments are primarily selected for inspection for 
preapproval purposes while domestic establishments are primarily 
selected to examine the manufacture of drugs already marketed in the 
United States--is inconsistent with one of the recommendations we made 
in 2008. Specifically, we recommended that FDA inspect, at a 
comparable frequency, those establishments that are identified as 
having the greatest public health risk potential if they experience a 
manufacturing defect, regardless of whether they are a foreign or 
domestic establishment. 

Figure 1: FDA Foreign and Domestic Drug Establishment Inspections by 
Type of Inspection, Fiscal Year 2009: 

[Refer to PDF for image: 2 pie-charts] 

Foreign drug establishment inspections: total 424: 
Preapproval: 9%; 
GMP-only: 17%; 
Both preapproval and GMP: 74%. 

Domestic drug establishment inspections: total 1,015: 
Preapproval: 3%; 
GMP-only: 82%; 
Both preapproval and GMP: 15%. 

Source: GAO analysis of FDA FACTS data. 

[End of figure] 

The majority of foreign inspections conducted in the 10 most 
frequently inspected countries in fiscal year 2009 had a preapproval 
component (see table 3). For example, of the 59 inspections conducted 
in India in fiscal year 2009, 50 had a preapproval component; that is, 
these included both preapproval-only inspections and inspections 
including both preapproval and GMP components. In China, 35 of the 52 
inspections conducted had a preapproval component. 

Table 3: Number of Inspections Conducted by Inspection Type for the 
Most Frequently Inspected Countries in Fiscal Year 2009: 

Most frequently inspected countries: India; 
Number of preapproval-only inspections: 5; 
Number of both preapproval and GMP inspections: 45; 
Number of GMP-only inspections: 9; 
Total number of inspections: 59. 

Most frequently inspected countries: China; 
Number of preapproval-only inspections: 7; 
Number of both preapproval and GMP inspections: 28; 
Number of GMP-only inspections: 17; 
Total number of inspections: 52. 

Most frequently inspected countries: Germany; 
Number of preapproval-only inspections: 6; 
Number of both preapproval and GMP inspections: 24; 
Number of GMP-only inspections: 6; 
Total number of inspections: 36. 

Most frequently inspected countries: Canada; 
Number of preapproval-only inspections: 0; 
Number of both preapproval and GMP inspections: 30; 
Number of GMP-only inspections: 5; 
Total number of inspections: 35. 

Most frequently inspected countries: United Kingdom; 
Number of preapproval-only inspections: 3; 
Number of both preapproval and GMP inspections: 26; 
Number of GMP-only inspections: 3; 
Total number of inspections: 32. 

Most frequently inspected countries: Italy; 
Number of preapproval-only inspections: 5; 
Number of both preapproval and GMP inspections: 20; 
Number of GMP-only inspections: 5; 
Total number of inspections: 30. 

Most frequently inspected countries: France; 
Number of preapproval-only inspections: 1; 
Number of both preapproval and GMP inspections: 23; 
Number of GMP-only inspections: 2; 
Total number of inspections: 26. 

Most frequently inspected countries: Japan; 
Number of preapproval-only inspections: 0; 
Number of both preapproval and GMP inspections: 14; 
Number of GMP-only inspections: 6; 
Total number of inspections: 20. 

Most frequently inspected countries: Ireland; 
Number of preapproval-only inspections: 0; 
Number of both preapproval and GMP inspections: 16; 
Number of GMP-only inspections: 3; 
Total number of inspections: 19. 

Most frequently inspected countries: Switzerland; 
Number of preapproval-only inspections: 4; 
Number of both preapproval and GMP inspections: 13; 
Number of GMP-only inspections: 1; 
Total number of inspections: 18. 

Most frequently inspected countries: All other countries; 
Number of preapproval-only inspections: 9; 
Number of both preapproval and GMP inspections: 73; 
Number of GMP-only inspections: 15; 
Total number of inspections: 97. 

Most frequently inspected countries: Foreign total; 
Number of preapproval-only inspections: 40; 
Number of both preapproval and GMP inspections: 312; 
Number of GMP-only inspections: 72; 
Total number of inspections: 424. 

Most frequently inspected countries: Domestic total; 
Number of preapproval-only inspections: 35; 
Number of both preapproval and GMP inspections: 151; 
Number of GMP-only inspections: 829; 
Total number of inspections: 1,015. 

Source: GAO analysis of FDA FACTS data. 

[End of table] 

Although preapproval inspections drove the selection of establishments 
for inspection, FDA increased the number of foreign establishments 
inspected from the agency's annual prioritized list. Based on the 
application of its risk-based process, CDER forwarded to ORA a list of 
104 and 120 foreign establishments that it considered to be a priority 
for inspection in fiscal years 2007 and 2008, respectively. In fiscal 
year 2007, ORA inspected 29 establishments from the prioritized list, 
and FDA increased this number of establishments inspected in fiscal 
year 2008 to 56. CDER followed the same process in fiscal year 2009, 
submitting a list of 220 foreign establishments. ORA inspected 88 
establishments from the fiscal year 2009 prioritized list.[Footnote 52] 

FDA Is Taking Steps to Improve Its Information on Foreign Drug 
Establishments, but These Efforts Are in the Early Stages: 

FDA is pursuing initiatives to improve the information it receives 
from its drug establishment registration and import databases, DRLS 
and OASIS, respectively, but these efforts are in the early stages. 
FDA is taking additional steps to improve its information on foreign 
drug establishments. 

FDA Is Pursuing Initiatives to Improve Its Information on Registered 
Foreign Drug Establishments, but Efforts Are Preliminary and 
Inaccuracies Remain: 

FDA is taking steps to improve the information it obtains from 
establishments through the registration process by moving from a paper-
based registration system--DRLS--to an electronic registration and 
listing system, known as eLIST. In June 2009, FDA began requiring all 
drug establishments marketing their products in the United States to 
submit their annual registration and listing information 
electronically through eLIST, rather than submitting the information 
on paper forms to be entered into DRLS.[Footnote 53] The intent of 
eLIST is to provide FDA with more accurate information on foreign 
establishments by reducing the potential for human error associated 
with the transcription of information from paper forms to electronic 
files. According to an FDA official, the agency currently does not 
have enough data to tell whether the implementation of electronic 
registration has improved the agency's foreign establishment 
registration data.[Footnote 54] However, FDA will continue to study 
the effect that the implementation of electronic registration has had 
on the accuracy of data obtained from establishments.[Footnote 55] 

In another initiative designed to improve registration information, 
FDA issued guidance that requests that establishments voluntarily 
submit a unique identification number--a Dun and Bradstreet Data 
Universal Numbering System (D-U-N-S) Number--as a part of their 
electronic registration.[Footnote 56] The D-U-N-S Number is intended 
to serve as a recognized identifier to avoid duplications and errors 
in FDA's data systems. Also, the D-U-N-S Number and the associated 
data to which it is linked should allow FDA to verify information 
about foreign establishments, including whether they have gone out of 
business or relocated. 

According to FDA officials, as the first part of a larger planned 
verification effort using the D-U-N-S Number, when an establishment 
submits a D-U-N-S Number with its registration data, FDA verifies the 
country code in the establishment's address and has done so since the 
fall of 2009.[Footnote 57] If the country code submitted with an 
establishment's registration does not match the country code on file 
for that establishment in the Dun and Bradstreet database, the 
registration file is returned to the establishment for correction. FDA 
and Dun and Bradstreet are developing an algorithm that is intended to 
allow FDA to implement a more complete verification process that will 
include additional aspects of an establishment's registration 
information, such as the establishment's full name, city, and street 
address. The time frame for implementing this more complete 
verification procedure is unclear, although FDA officials told us that 
they hoped to implement the algorithm by the end of calendar year 
2010.[Footnote 58] 

FDA acknowledged that the implementation of eLIST and the related 
guidance requesting that establishments submit a D-U-N-S Number at 
the time of registration do not represent a comprehensive solution to 
the problems we previously identified regarding the accuracy of FDA's 
registration information. For example, in 2008 we reported that FDA 
did not enforce the requirement that establishments submit their 
registration information annually. Some foreign establishments may not 
report to FDA if they stop manufacturing drugs for the U.S. market or 
go out of business, although establishments are required to do so. 
Because FDA did not enforce the annual registration requirement, these 
establishments may still be listed as actively registered 
establishments. Also, we reported that FDA's registration data 
contained information on foreign establishments that may have 
registered with FDA whether or not they actually manufacture drugs for 
the U.S. market. DRLS, which in fiscal year 2009 contained information 
on approximately 3,200 foreign drug establishments, still does not 
provide FDA with a complete count of establishments subject to 
inspection.[Footnote 59] FDA confirmed that establishments that do not 
need to register with FDA continue to submit registration files, that 
those required to update their registration information annually do 
not always do so, and that FDA still relies on multiple databases to 
estimate the number of foreign establishments actually shipping drugs 
to the United States. 

OASIS Continues to Contain Inaccurate Data on the Number of 
Establishments Offering Drugs for Import, but FDA Is Exploring Options 
to Prevent Future Inaccuracies: 

According to FDA officials, OASIS still provides an inaccurate count 
of foreign establishments manufacturing drugs offered for import into 
the United States, and the agency is exploring options for preventing 
this problem in the future. In fiscal year 2009, OASIS contained 
information on about 7,000 foreign establishments that offered drugs 
for import into the United States, compared with the approximately 
3,200 foreign drug establishments that were registered with FDA in 
that year.[Footnote 60] As we previously reported, this inaccurate 
count of establishments in OASIS is the result of unreliable 
manufacturer identification numbers generated by customs brokers when 
a drug is offered for import.[Footnote 61] 

FDA has initiated a project to identify and resolve duplication of 
existing data, including duplication of data on foreign drug 
establishments offering their products for import into the United 
States. It is taking steps to identify and remove all duplicate drug 
establishment records from existing import data within the next couple 
of years. As a result of this effort, FDA expects that it may be 
easier to more precisely identify the total number of establishments 
that have offered drugs for import into the United States. Identifying 
and resolving duplicates in existing import data is important because 
FDA uses information on establishment shipping history from OASIS to 
select establishments for inspection.[Footnote 62] 

In addition to its project to resolve existing duplications in OASIS 
data, FDA officials told us that the agency continues to support a 
proposal that could help prevent future duplication errors in OASIS 
across all product areas, but FDA does not control the implementation 
of this proposal. FDA, in conjunction with 20 of the nearly 50 federal 
agencies involved in the oversight of products imported into the 
United States, requested that CBP use the D-U-N-S Number as a unique 
establishment identifier for all establishments whose products, 
including drugs, are imported into the United States. The 
implementation of this unique establishment identifier depends on 
changes to CBP's import and export system. In 2009, CBP agreed to 
modify its import and export system to accept the D-U-N-S Number for 
all FDA-regulated products (e.g., foods, drugs, and medical devices). 
However, as of March 2010, the system had not been modified, and CBP 
had not established a schedule and target date to do so. 

FDA officials told us that they are developing a pilot program to 
study the feasibility of obtaining and validating additional 
information from establishments during the import process, such as the 
D-U-N-S Number, in the event that CBP does not adopt changes to its 
import and export system. This may help FDA address the problems with 
information on the number of foreign drug establishments in OASIS. As 
of July 2010, FDA had not yet developed an implementation plan for the 
pilot program. The agency has, however, identified 10 potential 
participants for the program, but some of these participants had not 
yet submitted their updated electronic annual registration as of May 
2010. In addition, FDA is in the process of updating some of its 
information-technology infrastructure, further delaying implementation 
of the pilot program. 

FDA Is Taking Additional Steps to Improve Its Information on Foreign 
Drug Establishments: 

In addition to initiatives to enhance DRLS and OASIS, FDA is taking 
other steps to improve the information that the agency maintains on 
foreign establishments shipping drugs to the United States. In August 
2008, FDA contracted with two external organizations to implement the 
Foreign Registration Verification Program.[Footnote 63] Through this 
program, contractors conduct site visits to verify the existence of 
foreign establishments that are registered with FDA and confirm that 
they manufacture the products that are recorded in U.S. import 
records. According to FDA officials, establishments that are new to 
the U.S. market or are importing products not typically manufactured 
at the same establishment are considered candidates for the 
verification program.[Footnote 64] For example, FDA officials told us 
about an establishment that was selected for the program because, 
according to agency records, it was offering for import into the 
United States pickles and an API--two products not normally 
manufactured at the same establishment. 

As of July 2010, the contractors had visited 43 foreign drug 
establishments located in Canada, Europe, and Asia, 7 of which did not 
appear to exist at the address provided by the establishments at the 
time of registration.[Footnote 65] According to agency officials, FDA 
took action against 2 of the establishments that appeared not to exist 
by deactivating their registration and alerting FDA import staff so 
they can detain any products offered for import by these 
establishments, thus preventing these products from being imported 
into the United States.[Footnote 66] FDA officials noted that most of 
the drug establishments visited under the Foreign Registration 
Verification Program were OTC manufacturing establishments, which are 
infrequently inspected under FDA's foreign drug inspection program, 
and API manufacturing establishments. 

FDA has also implemented collaborative efforts with foreign regulatory 
authorities to exchange information about planned inspections as well 
as the results of completed inspections. In December 2008, FDA, along 
with its counterpart regulatory authorities of the European Union and 
Australia, initiated a pilot program under which the three regulators 
share their preliminary plans for and results of inspections of API 
manufacturing establishments in other countries. For example, FDA 
could receive the results of inspections conducted by these regulatory 
bodies and then determine if regulatory action or a follow-up 
inspection is necessary. FDA contends that prospectively sharing this 
information will allow these regulatory bodies to more efficiently use 
their resources by minimizing the overlap in their inspection plans. 
Since September 2008, FDA had requested 47 inspection reports for API 
manufacturing establishments. As of July 2010, it had received 13 of 
the 47 reports requested. According to agency officials, this 
information was used by FDA to improve its knowledge of 
establishments, most of which had not been inspected in the last 3 
years, but that it was interested in inspecting due to a pending drug 
application. In addition to the inspection reports received through 
this pilot program, FDA also received 13 additional inspection reports 
from various foreign drug regulatory authorities, including New 
Zealand and Canada. These reports helped FDA evaluate the GMP 
compliance status of several API and finished drug product 
manufacturing establishments. 

Concluding Observations: 

Our work over the last decade has identified long-standing concerns 
regarding FDA's ability to respond to the challenges posed by the 
globalization of drug manufacturing. In 1998, and again in 2008, we 
reported that FDA needed to conduct more inspections of foreign 
establishments and that it was vital that the agency strengthen the 
data it uses to manage its foreign drug inspection program. Among 
other things, our 2008 report recommended that FDA conduct more 
inspections of foreign establishments and that it address weaknesses 
in the data systems it uses to help select establishments for 
inspection. FDA has acknowledged that its approach to inspecting 
foreign drug manufacturing establishments has not kept pace with the 
realities of the global marketplace. 

We recognize that FDA has made improvements in its foreign drug 
inspection program since our 2008 report was issued by increasing the 
number of foreign inspections it conducted. However, we recommended 
that FDA inspect, at a comparable frequency, those establishments that 
are identified as having the greatest public health risk potential if 
they experience a manufacturing defect, regardless of whether they are 
a foreign or domestic establishment. FDA has not done so. Instead, its 
foreign inspections continue to be driven by the establishments listed 
on an application for a new drug, instead of inspections of 
establishments already producing drugs for the U.S. market. FDA is 
also taking steps to obtain more complete and accurate information on 
foreign establishments marketing drugs in the United States. We 
believe that these efforts to collect and maintain more complete and 
accurate information on foreign establishments may be instrumental in 
helping FDA improve its oversight. However, these steps appear to 
involve long-term efforts that are in their early stages and it is 
unclear if these efforts will prove successful. In the meantime, FDA's 
data systems continue to contain inaccurate information on foreign 
establishments, compromising the agency's oversight of the nation's 
drug supply. 

The challenges FDA faces in managing its foreign drug inspection 
program are not new, as our prior work shows. Given the long-standing 
nature of these challenges and the nation's reliance on drugs 
manufactured overseas, we believe that there is an urgent need for FDA 
to better protect the public health by implementing our prior 
recommendations. 

Agency Comments and Our Evaluation: 

HHS reviewed a draft of this report and agreed that more progress is 
needed in order to meet the challenge of safeguarding the nation's 
drug supply in today's global marketplace. HHS underscored FDA's 
position that relying solely on inspections is insufficient to secure 
the drug supply chain and noted that, due to globalization and 
outsourcing, the drug supply chain has become more nebulous and 
complex. According to HHS, drug products are more likely to change 
hands during manufacture and distribution without adequate 
traceability. As a consequence, HHS said that FDA faces challenges 
from a proliferation of new entry points through which contaminated, 
adulterated, and otherwise violative products can infiltrate the drug 
supply. In addition, HHS described several practical and 
jurisdictional issues that affect FDA's ability to gather information 
during foreign inspections, such as the need to obtain permission from 
the foreign government of the country in which an establishment is 
located in order to conduct an inspection. HHS emphasized that, to be 
effective, inspections must be informed by relevant data from other 
sources. To that end, it elaborated on FDA's efforts to enhance its 
global presence and cited additional efforts that FDA has initiated 
that may lead to greater international cooperation on drug safety 
issues, such as the opening of FDA offices in several foreign 
countries and conducting joint inspections with foreign regulatory 
authorities. 

HHS also stressed that FDA has made many of the improvements 
recommended in our 2008 report, such as enhancing its registration 
data. However, it also specifically cited obstacles related to one of 
our 2008 recommendations regarding the varying rates of inspections 
between foreign and domestic establishments. HHS pointed out that, if 
FDA were to conduct foreign GMP surveillance inspections at a rate 
comparable to domestic GMP surveillance inspections, given current 
resources, the inspection frequency for both would be, at most, about 
once every 7 years. However, we did not recommend that FDA inspect all 
foreign and domestic establishments at a comparable frequency, rather, 
we recommended that FDA inspect foreign establishments at a frequency 
comparable to domestic establishments with similar characteristics. We 
continue to maintain that FDA should ensure that it is frequently 
inspecting those establishments, foreign or domestic, that pose the 
greatest potential risk to public health should they experience a 
manufacturing defect. 

HHS's comments are reprinted in appendix I. HHS also provided us with 
one technical comment, which we incorporated. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to the 
appropriate congressional committees, the Commissioner of FDA, and 
other interested parties. The report also will be available at no 
charge on the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-7114 or crossem@gao.gov. Contact points for 
our offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix II. 

Signed by: 

Marcia Crosse: 
Director, Health Care: 

[End of section] 

Appendix I: Comments from the Department of Health and Human Services: 

Department Of Health & Human Services: 
Office Of The Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

September 9, 2010: 

Marcia Crosse: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street N.W. 
Washington, DC 20548: 

Dear Ms. Crosse: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) report entitled: "Drug Safety: FDA Has Conducted More Foreign 
Inspections and Begun to Improve its Information on Foreign 
Establishments, but More Progress Is Needed" (GAO-10-961). 

The Department appreciates the opportunity to review this report 
before its publication. 

Sincerely, 

Signed by: 

Jim Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

[End of letter] 

General Comments Of The Department Of Health And Human Services (HHS) 
To The Government Accountability Office's (GAO) Draft Report Entitled, 
"Drug Safety: FDA Has Conducted More Inspections And Begun To Improve 
Its Information On Foreign Establishments, But More Progress Is 
Needed" (GAO-10-961): 

The Department appreciates the opportunity to comment on the GAO's 
findings in this draft report. HHS and FDA appreciate GAO's 
recognition of the progress FDA has made toward strengthening its 
foreign inspection capability within the past two years, and agree 
that more progress is needed in order to meet the challenge of 
safeguarding the nation's drug supply in today's globalized 
marketplace. 

In 2008, GAO published a report recommending that, among other things, 
FDA conduct more inspections of foreign establishments and address 
weaknesses in the data systems FDA uses to manage its foreign 
inspection program. Since then, FDA has made many of the recommended 
improvements and initiated additional efforts that may lead to greater 
international cooperation on drug safety issues. 

As a result of these initiatives, FDA's presence abroad is greater 
today than it has ever been, and FDA's foreign inspection capacity is 
on the rise. In 2009, FDA conducted 424 foreign inspections concerning 
drugs intended for human use, the highest number of inspections to 
date, representing nearly a 31 percent increase over the 324 foreign 
inspections that FDA conducted in 2008. 

Establishment inspections -- both domestic and foreign -- provide a 
system for determining that a firm's manufacturing practices comply 
with U.S. legal standards for assuring the safety, quality and purity 
of active pharmaceutical ingredients (APIs) and drug products. 
Although establishment inspections are an essential element of FDA's 
drug safety efforts, given the ever-increasing scope and ever-changing 
design of the drug production and distribution systems, FDA cannot 
rely solely on inspections to secure the drug supply chain, and to be 
effective, inspections must be informed by relevant data from other 
sources. 

In the past decade or so, the pharmaceutical industry has shifted a 
large part of its manufacturing operations and supply sourcing 
overseas. Today, nearly 40 percent of the finished dosage form drugs 
Americans take are imported, and nearly 80 percent of the active 
ingredients used to formulate the drugs on the American market come 
from overseas sources. Furthermore, due to globalization and 
outsourcing, the supply chain -- from raw material to finished 
product -- has become more nebulous and complex, so that drug products 
are more likely to change hands during manufacture and distribution 
without adequate traceability. Like any chain, the drug supply chain 
is only as strong as its weakest link, and the proliferation of 
additional handlers, suppliers and middlemen creates new entry points 
through which contaminated, adulterated, counterfeit, and otherwise 
violative products can infiltrate the drug supply. 

FDA protects the American people from unsafe and poor quality drug 
products by holding the industry accountable for the integrity, 
purity, quality and safety of its drug products. A drug company's 
obligation does not begin or end in its manufacturing facility; it 
extends from the first filing of a new drug application or an 
abbreviated new application to every single link in the firm's supply 
chain until the product reaches the consumer. The same is true for 
products not covered by applications (e.g., over-the-counter products). 

Challenges in Meeting GAO's Goals for the Foreign Inspection Program: 

Despite the significant progress FDA has made toward improving the 
Agency's foreign inspection operations and capacity, it is important 
to acknowledge the nature and the depth of the challenges FDA faces in 
the foreign inspection arena. The sheer number of foreign facilities, 
the complexity of the drug supply chain, and the rapidly changing use 
of suppliers all pose formidable obstacles to implementing GAO's 
recommendation that FDA conduct foreign inspections at a rate 
comparable to domestic inspections. FDA has estimated that if it were 
to conduct foreign Good Manufacturing Practices (GMP) surveillance 
inspections at a rate comparable to domestic GMP surveillance 
inspections, the inspection frequency for both, under current 
resources, would be, at most, about once every 7 years. This lower 
bound estimate does not take into consideration several practical 
matters, and so overestimates how often FDA would be able to conduct 
such inspections. For example, FDA does not currently have sufficient 
trained and experienced investigators to conduct inspections at these 
rates, and it would take several years of sustained effort to develop 
sufficient numbers of such investigators. 

As GAO recognized in 2008, the Agency also faces a number of practical 
and other jurisdictional issues that affect its ability to gather 
information during foreign inspections. For instance, during domestic 
inspections, FDA inspectors arrive unannounced to observe drug 
establishments under conditions that represent normal day-to-day 
activities. In contrast and for a variety of reasons, FDA is generally 
unable to conduct foreign inspections unannounced. First, the time and 
expense associated with foreign travel necessitate that inspectors 
ensure that managers of foreign establishments are available at the 
time of the inspection and that the production lines being inspected 
are operational during the inspection. Second, FDA often needs 
permission from the foreign government of the country in which the 
establishment is located in order to conduct the inspection. In some 
countries, visas or letters of invitation are required for the 
inspectors to enter the country in which the establishment is located. 
Third, there is little flexibility to extend inspections in foreign 
countries when the Agency encounters difficulties in an establishment 
because of the need to adhere to a tight schedule. As a consequence, 
FDA generally must contact establishments it identifies for 
surveillance inspections to arrange the inspections, and 
establishments are [far] more likely to schedule the inspections with 
the Agency when they have, or know they will soon have, a drug 
application under review at the Agency for a preapproval inspection. 

Finally, we note that many of the issues raised in GAO's report would 
be affected by legislation currently under consideration by Congress 
to grant FDA new authorities to ensure the safety of our nation's drug 
supply. The Administration has not yet taken a position on additional 
authorities for drugs; however, the Administration strongly
supports passage of pending food safety legislation that would require 
food manufacturers to have controls and systems in place to prevent 
safety problems, and would provide FDA with several important 
enforcement authorities, including civil money penalties, subpoena 
authority, registration of importers, unique identifiers for food 
facilities, explicit authority to refuse entry of food from a facility 
that has refused or delayed an inspection, and mandatory recall 
authority. 

Increasing Global Presence and International Collaboration and 
Capacity: 

Given the challenges that it faces in the foreign inspections arena, 
FDA has undertaken efforts to more effectively secure the drug supply 
chain by complementing its inspections through additional measures, 
such as enhancing its global presence and international collaboration 
and capacity. 

Among other things, such efforts include establishing a physical 
presence in countries that are ever more active in the production of 
raw materials and drug components; creating cooperative agreements to 
leverage inspection capabilities among international regulators; and 
working to create more uniformity among drug safety standards 
throughout the world. Over the past two years, FDA has made 
significant progress toward these mutually supportable goals. 

Foreign Offices: In November 2008 the Agency began posting FDA 
employees in foreign posts in key locations overseas. FDA has opened 
offices in several countries where an FDA presence can help to improve 
product safety and quality, and leverage resources. To date, FDA has 
offices in India (Mumbai and New Delhi), China (Shanghai, Guangzhou, 
and Beijing), Europe (Brussels, Belgium), and Latin America (San Jose, 
Costa Rica; Santiago, Chile; and Mexico City, Mexico), and the Agency 
has plans for a Middle East office. FDA has investigators posted in 
Mumbai, Shanghai, and Guangzhou. The establishment of these foreign 
offices has enabled FDA to enhance its relationships with foreign 
counterpart regulatory officials to obtain more accurate and robust 
information about foreign drug establishments and has facilitated FDA 
access to drug establishments for inspection. 

Dedicated Foreign Cadre: The Agency also has established a specialized 
foreign cadre of investigators located in FDA district offices in the 
United States who are dedicated to foreign inspection assignments. The 
program selects investigators with professional experience 
specifically related to pharmaceutical inspections and other relevant 
knowledge and skills. Now in its second year, the program has 15 
investigators and has already significantly increased the number of 
foreign inspections as it has grown. 

International Collaboration: In addition, FDA has substantially 
increased its collaboration with foreign regulatory authorities. For 
example, FDA participates in the API Pilot Program with the European 
Medicines Agency (EMA) and Australia's Therapeutic Goods 
Administration (TGA), which calls for participants to share 
information, as permitted by law, about API inspections and to use 
this information to leverage the inspectional resources of each 
regulatory body. 

Through this pilot program, FDA has participated in two successful 
joint inspections, one with the EMA in Croatia and one with the TGA in 
Mexico. FDA's goal for the pilot program this fiscal year is to 
conduct four joint inspections (two with each participating authority) 
and to increase the number of information exchanges with the 
participating authorities. In 2009, FDA also conducted joint 
inspections with the drug regulatory authorities of Ireland and the 
United Kingdom and collaborated on investigations with regulatory 
officials in Norway, Canada, Australia, Austria, Israel and New Zealand.
FDA also continues to work with other regulatory partners to establish 
more consistent guidelines and standards for good manufacturing 
practices in many countries throughout the world. 

FDA also maintains Memoranda of Understanding with countries to 
facilitate cooperation and Confidentiality Commitments that allow the 
exchange of non-public information relating to product safety, quality 
and effectiveness. 

Improvements in FDA's Databases: 

The 2008 GAO report highlighted deficiencies in FDA's registration 
data and inspection information systems. FDA's old drug registration 
and listing system (DRLS), for example, relied on manual entry of hard 
copy data, a cumbersome process that required reviewers to add hard 
copy data manually into an electronic database. As GAO noted in its 
prior report, this process created opportunities for human error and 
often resulted in a lag between the time FDA received registration 
information and the time that information was entered into the 
electronic database. 

In keeping with GAO's observations about DRLS, FDA has implemented the 
electronic drug registration and listing system (eDRLS). With the 
implementation of eDRLS, it is mandatory for all drug establishments 
shipping drugs to the United States to register with FDA 
electronically. The implementation of eDRLS helps FDA more quickly to 
assemble information about drug establishments. Also, given that eDRLS 
is updated on a daily basis, FDA's import entry reviewers have near 
real-time access to registration information, and they quickly flag 
unregistered foreign firms and unlisted drugs when offered for 
importation at ports and borders. 

The new registration system also requires that importing firms submit 
more comprehensive information. As the Agency fully implements the 
electronic registration system, reviewers will be able to quickly and 
easily validate information required as part of importation. 

In conjunction with the rollout of eDRLS, FDA also has taken steps to 
use secondary verification of drug establishments in eDRLS through a 
widely used universal establishment identifier. In May 2009, FDA 
published a guidance requesting the submission of a Data Universal 
Number System (D-U-N-S) number during the electronic registration 
process. Each DUNS number is unique to a particular business 
establishment and is available free of charge from Dun & Bradstreet, 
which maintains a database of all DUNS numbers and their corresponding 
business entities. As these DUNS numbers begin to populate eDRLS, they 
can assist FDA in verifying information about foreign establishments. 

Over the last two years, FDA substantially has increased its 
inspection capacity, improved its databases, and expanded its 
infrastructure to increase its global presence. FDA remains dedicated 
to addressing the multiple challenges posed by the globalization of 
the pharmaceutical industry. Building on the progress FDA has made 
since 2008 will require the commitment and engagement of FDA as well 
as its stakeholders. 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Marcia Crosse, (202) 512-7114, crossem@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Geraldine Redican-Bigott, 
Assistant Director; Katherine L. Amoroso; Amyre Barker; Cathleen 
Hamann; Julian Klazkin; and Sarah Resavy made key contributions to 
this report. 

[End of section] 

Related GAO Products: 

Food and Drug Administration: Overseas Offices Have Taken Steps to 
Help Ensure Import Safety, but More Long-term Planning Is Needed. 
[hyperlink, http://www.gao.gov/products/GAO-10-960]. Washington, D.C.: 
September 30, 2010. 

High-Risk Series: An Update. [hyperlink, 
http://www.gao.gov/products/GAO-09-271]. Washington, D.C.: January 
2009. 

Drug Safety: Better Data Management and More Inspections Are Needed to 
Strengthen FDA's Foreign Drug Inspection Program. [hyperlink, 
http://www.gao.gov/products/GAO-08-970]. Washington, D.C.: September 
22, 2008. 

Medical Devices: FDA Faces Challenges in Conducting Inspections of 
Foreign Manufacturing Establishments. [hyperlink, 
http://www.gao.gov/products/GAO-08-780T]. Washington, D.C.: May 14, 
2008. 

Drug Safety: Preliminary Findings Suggest Recent FDA Initiatives Have 
Potential, but Do Not Fully Address Weaknesses in Its Foreign Drug 
Inspection Program. [hyperlink, 
http://www.gao.gov/products/GAO-08-701T]. Washington, D.C.: April 22, 
2008. 

Medical Devices: Challenges for FDA in Conducting Manufacturer 
Inspections. [hyperlink, http://www.gao.gov/products/GAO-08-428T]. 
Washington, D.C.: January 29, 2008. 

Drug Safety: Preliminary Findings Suggest Weaknesses in FDA's Program 
for Inspecting Foreign Drug Manufacturers. [hyperlink, 
http://www.gao.gov/products/GAO-08-224T]. Washington, D.C.: November 
1, 2007. 

Prescription Drugs: Strategic Framework Would Promote Accountability 
and Enhance Efforts to Enforce the Prohibitions on Personal 
Importation. [hyperlink, http://www.gao.gov/products/GAO-05-372]. 
Washington, D.C.: September 8, 2005. 

Food and Drug Administration: Improvements Needed in the Foreign Drug 
Inspection Program. [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-98-21]. Washington, D.C.: March 
17, 1998. 

[End of section] 

Footnotes: 

[1] Drugs are defined to include, among other things, articles 
intended for use in the diagnosis, cure, mitigation, treatment, or 
prevention of disease, and include components of those articles. 21 
U.S.C.  321(g)(1)(B), (D). 

[2] FDA regulations define manufacturing to include the manufacture, 
preparation, propagation, compounding, or processing of a drug. 21 
C.F.R.  207.3(a)(8) (2010). In addition, FDA regulations define an 
establishment as a place of business under one management at one 
general physical location. 21 C.F.R.  207.3(a)(7) (2010). Drug firms 
may have more than one establishment. 

[3] Statement of Joshua M. Sharfstein, M.D., FDA Principal Deputy 
Commissioner, before the Subcommittee on Health, Committee on Energy 
and Commerce, House of Representatives (Washington, D.C.: Mar. 10, 
2010). 

[4] GMPs provide a framework for a manufacturer to follow to produce 
safe, pure, and high-quality drugs. See 21 C.F.R. pts. 210, 211 
(2010). See also International Conference on Harmonisation of 
Technical Requirements for Registration of Pharmaceuticals for Human 
Use, ICH Harmonised Tripartite Guideline: Good Manufacturing Practice 
Guide for Active Pharmaceutical Ingredients Q7 (Geneva, Switzerland: 
Nov. 10, 2000). 

[5] GAO, Food and Drug Administration: Improvements Needed in the 
Foreign Drug Inspection Program, [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-98-21] (Washington, D.C.: Mar. 
17, 1998). 

[6] Statement of Sharon Smith Holston, FDA Deputy Commissioner for 
External Affairs, before the Subcommittee on Oversight and 
Investigations, Committee on Commerce, House of Representatives 
(Washington, D.C.: Oct. 2, 1998). 

[7] GAO, Drug Safety: Better Data Management and More Inspections Are 
Needed to Strengthen FDA's Foreign Drug Inspection Program, 
[hyperlink, http://www.gao.gov/products/GAO-08-970] (Washington, D.C.: 
Sept. 22, 2008). 

[8] Biologics are materials, such as vaccines, derived from living 
sources, such as humans, animals, and microorganisms. See 42 U.S.C.  
262(i); 21 C.F.R.  600.3(h) (2010). 

[9] Medical devices include instruments, apparatuses, machines, and 
implants that are intended for use to diagnose, cure, treat, or 
prevent disease, or to affect the structure or any function of the 
body. 21 U.S.C.  321(h). 

[10] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January 
2009). The January 2009 addition of FDA's oversight of medical 
products to our High-Risk Series followed our inclusion of federal 
oversight--including FDA's oversight--of food safety in our High-Risk 
Series in 2007. 

[11] GAO, Food and Drug Administration: FDA Faces Challenges Meeting 
Its Growing Medical Product Responsibilities and Should Develop 
Complete Estimates of Its Resource Needs, [hyperlink, 
http://www.gao.gov/products/GAO-09-581] (Washington, D.C.: June 19, 
2009); Food Safety: Agencies Need to Address Gaps in Enforcement and 
Collaboration to Enhance Safety of Imported Food, [hyperlink, 
http://www.gao.gov/products/GAO-09-873] (Washington, D.C.: Sept. 15, 
2009); and Food and Drug Administration: Opportunities Exist to Better 
Address Management Challenges, [hyperlink, 
http://www.gao.gov/products/GAO-10-279] (Washington, D.C.: Feb. 19, 
2010). 

[12] GAO, Information Technology: FDA Needs to Establish Key Plans and 
Processes for Guiding Systems Modernization Efforts, [hyperlink, 
http://www.gao.gov/products/GAO-09-523] (Washington, D.C.: June 2, 
2009). 

[13] Our September 2008 report included information on drug 
manufacturing establishment inspections conducted from fiscal years 
2002 to 2007. For this report, we focused on drug manufacturing 
establishment inspections conducted from fiscal years 2007 through 
2009. We obtained inspection data as of December 1, 2009, thus fiscal 
year 2009 represented the most recent complete fiscal year of data 
available at that time. 

[14] Domestic and foreign establishments that manufacture drugs for 
the U.S. market are required to register annually with FDA. 21 U.S.C. 
 360(b), (i)(1). FDA's import database contains information on drugs 
and other FDA-regulated products offered for entry into the United 
States, including information on the establishment that manufactured 
the drug. 

[15] Biologics are generally regulated by FDA's Center for Biologics 
Evaluation and Research. Biologics regulated by this center are not 
addressed in this report. However, some biologics are regulated by 
CDER and inspections related to those products are included in our 
work. 

[16] While our work examines a major part of FDA's foreign drug 
inspection program, it does not examine all foreign drug inspections 
the agency conducts. Our work focuses on inspections related to the 
drug approval process or inspections conducted to determine an 
establishment's ongoing compliance with laws and regulations in the 
manufacture of drugs already marketed in the United States. FDA 
conducts additional foreign drug inspections that are beyond the scope 
of our review, such as inspections conducted to determine whether drug 
manufacturers are submitting to FDA, as required, complete and 
accurate data on adverse drug experiences associated with marketed 
drugs, inspections conducted for the President's Emergency Plan for 
AIDS Relief, and inspections of clinical trial sites. 

[17] For information on additional efforts FDA undertakes as part of 
its oversight of imported products, see GAO, Food and Drug 
Administration: Overseas Offices Have Taken Steps to Help Ensure 
Import Safety, but More Long-term Planning is Needed, GAO-10-960 
(Washington, D.C.: Sept. 30, 2010). 

[18] In 2005, we reported on how federal agencies, including FDA, are 
addressing the illegal importation of prescription drugs. See GAO, 
Prescription Drugs: Strategic Framework Would Promote Accountability 
and Enhance Efforts to Enforce the Prohibitions on Personal 
Importation, [hyperlink, http://www.gao.gov/products/GAO-05-372] 
(Washington, D.C.: Sept. 8, 2005). 

[19] An API includes any component that is intended to provide 
pharmacological activity or other direct effect in the diagnosis, 
cure, mitigation, treatment, or prevention of disease. See 21 C.F.R.  
210.3(b)(7) (2010). In this report, we refer both to drug products-- 
drugs in their finished dosage form--and to APIs as "drugs." 

[20] See 21 U.S.C.  360(h), (i)(3); 381(a). 

[21] ORA investigators lead inspections. Investigators are responsible 
for performing or overseeing all aspects of an inspection. ORA 
laboratory analysts are chemists or microbiologists and have expertise 
in laboratory testing. In some instances, staff from CDER may 
participate in inspections. 

[22] Approval of an abbreviated new drug application is necessary to 
market a generic drug. 

[23] While OTC drugs may reach the market through FDA's review of a 
new drug or abbreviated new drug application, the majority of OTC 
drugs are marketed through a different process. If a manufacturer 
determines that an OTC drug is in compliance with an FDA regulatory 
statement (called a monograph) that specifies such information as 
acceptable ingredients, dosage, labeling, and mode of administration, 
the drug may be marketed without FDA preapproval. Establishments that 
manufacture OTC drugs that reached the market through the monograph 
process may not receive a preapproval inspection. 

[24] The number of preapproval inspections conducted by FDA in a given 
year is dependent on the number of drug applications received. It is 
also affected by the number of establishments included on each 
application and the inspection history of the establishments. 

[25] Although FDA considers nearly all drug establishment inspections 
to include an assessment of GMPs, to differentiate them from product 
specific, preapproval inspections, in this report we describe all 
systemwide, postapproval inspections as "GMP inspections." 

[26] Most combined inspections occur when FDA conducts a GMP 
inspection at an establishment that was already selected to receive a 
preapproval inspection. However, officials told us that if a combined 
inspection was conducted at an establishment selected for inspection 
through CDER's risk-based selection process, the preapproval 
inspection was generally added after the establishment had already 
been selected for a GMP surveillance inspection. 

[27] Customs brokers are private individuals, partnerships, 
associations, or corporations that are licensed, regulated, and 
empowered by CBP to assist in meeting federal requirements governing 
imports and exports. 

[28] Such establishments may have gone out of business, but not 
informed FDA, or the establishments may not actually ship drugs to the 
United States. Some foreign establishments may register with FDA, but 
never ship drugs to the United States. FDA officials told us that such 
foreign establishments may register because, in foreign markets, 
registration may erroneously convey an "approval" or endorsement by 
FDA. 

[29] FACTS provides information about establishments that have 
previously been inspected, including: registered establishments; 
establishments that are required to register, but have not done so; 
and establishments that are not required to register. Foreign 
establishments that manufacture APIs are not required to register with 
FDA if their products are not directly imported into the United 
States. For example, an establishment in China may export an API to 
Germany. The German establishment may use the API in its production of 
a drug that is imported into the United States. Although the German 
establishment would be required to notify FDA of its arrangement with 
the Chinese establishment, and the Chinese establishment would be 
subject to inspection by FDA, the Chinese establishment would not be 
required to register. 

[30] CDER applies the same risk-based model to its inventory of 
domestic establishments to prepare a prioritized list of domestic 
establishments to be forwarded to ORA. 

[31] We are using the number of foreign inspections conducted in a 
fiscal year in our calculations, rather than the number of unique 
foreign establishments inspected. Although FDA can inspect an 
establishment more than once a year, during this time period there was 
not a sizeable difference between the number of foreign inspections 
conducted and the number of unique establishments inspected. For 
example, in fiscal year 2009, FDA conducted 424 inspections at 416 
unique establishments. 

[32] FDA does not know the exact number of foreign drug establishments 
that are subject to inspection. Instead of maintaining a list of such 
establishments, FDA officials told us they annually draw on 
information from multiple databases to compile an inventory of foreign 
establishments to which FDA applies its risk-based model. We are using 
the count of establishments in this inventory for our calculations 
because it represents the best available data on the number of foreign 
drug establishments subject to inspection. 

[33] Members of the 2009 foreign drug cadre signed on for a 1-year 
commitment, which ended in January 2010. Three members returned to 
their original positions at the end of the year and were subsequently 
replaced. 

[34] For fiscal year 2009, one member of the foreign drug cadre 
exclusively conducted inspections of clinical trial sites, which are 
not within the scope of our review. We have therefore excluded these 
inspections from the reported number of inspections conducted by cadre 
members. It is also important to note that not all inspections in 
fiscal year 2009 were conducted by a single cadre member; some 
inspections were conducted by two members of the cadre at the same 
time. 

[35] According to FDA officials, one investigator in the China office 
conducts drug inspections and one investigator primarily conducts 
device inspections, but may conduct drug inspections as well. Two 
investigators in the India Office are responsible for drug 
inspections. In addition to these investigators, the China Office has 
two investigators who focus on food inspections and the India Office 
has one investigator who focuses on medical device inspections. 

[36] In addition to conducting inspections, investigators in the 
overseas offices have other responsibilities to aid in FDA's oversight 
of imported products. These responsibilities include establishing 
relationships with local governments, gathering information about 
regulated products from local sources, and initiating investigations 
to confirm registration information about local establishments. 
Overseas office staff have periodically provided information regarding 
foreign drug establishments to officials in FDA's headquarters. 
However, as of August 2010, FDA had not yet established a formal or 
systematic process for reviewing this information and incorporating it 
into the process for selecting foreign drug establishments for 
inspection. FDA officials told us that the agency is still developing 
such a process and that it is also working to better utilize the 
information it receives to improve its knowledge of foreign drug 
establishments. 

[37] FDA officials told us that the foreign drug cadre and other 
domestically based staff from ORA will conduct the majority of foreign 
inspections. 

[38] The investigators assigned to the China and India offices 
conducted an additional three drug manufacturing establishment 
inspections in fiscal year 2009 that had not been entered into FACTS 
by December 1, 2009, the date on which we received our data. 

[39] This amount includes funding for the entire foreign drug 
inspection program, including foreign drug inspections beyond the 
scope of our review. 

[40] The fiscal year 2008 supplemental appropriation provided $150 
million to FDA in June 2008 and was available through the end of 
fiscal year 2009. See Pub. L. No. 110-252, 122 Stat. 2323, 2345 (2008). 

[41] For fiscal year 2009, FDA estimated that the average cost for ORA 
to conduct a foreign inspection ranged from $60,000 to $62,500. This 
is an increase from the estimated range of $41,000 to $44,000 we 
previously reported for fiscal year 2007. The fiscal year 2009 
estimate includes inflation of the average cost of an ORA full-time 
equivalent (FTE) staff, inflation of travel and per diem costs, and a 
higher average number of hours per inspection in fiscal year 2009 than 
in fiscal year 2007. (One FTE represents 40 hours of work per week 
conducted by a federal government employee over the course of a year.) 
The fiscal year 2009 estimate also includes ORA's share of rent and 
rent-related expenditures, which was not included in the previous 
calculation for fiscal year 2007. There are additional costs, such as 
costs associated with CDER's review of inspection reports, which are 
not included in this estimate. 

[42] We previously reported that comparing the average number of 
foreign establishment inspections per year from fiscal years 2002 
through 2007--247--to the 3,249 foreign establishments in FDA's 
inventory in fiscal year 2007 suggests that the agency inspects about 
8 percent of foreign establishments in a given year. We noted that at 
the average rate of inspections conducted from fiscal years 2002 to 
2007, it would take FDA more than 13 years to inspect this group of 
establishments once, assuming that no additional establishments enter 
the U.S. marketplace and no establishments go out of business. See GAO-
08-970, 23. 

[43] It is important to note that FDA may inspect a unique 
establishment more than once a year. Although we have determined that 
another calculation can be done using the number of unique 
establishments inspected, the result is the same. The 424 inspections 
conducted in fiscal year 2009 were conducted at 416 unique 
establishments. If FDA continued to inspect 416 unique establishments 
each year, it would take FDA about 9 years to inspect each of the 
3,765 establishments in FDA's inventory in fiscal year 2009. Both 
calculations assume that no additional establishments enter the U.S. 
marketplace and no establishments go out of business in the future. If 
more foreign establishments are subject to inspection in subsequent 
years, the length of time it would take FDA to inspect each 
establishment once would also increase. 

[44] This is a decrease from the 1,122 domestic inspections conducted 
in fiscal year 2007 and the 1,033 inspections conducted in fiscal year 
2008. 

[45] FDA officials outlined legal authorities that they believe the 
agency currently does not have which would be helpful in improving its 
oversight of drugs manufactured in foreign establishments. For 
example, these include authorizing FDA to: (1) suspend or cancel drug 
establishment registrations to address concerns, including inaccurate 
or out-of-date information; (2) require drug establishments to submit 
a unique establishment identifier; and (3) implement a risk-based 
inspection process, with flexibility to determine the frequency with 
which both foreign and domestic establishments are inspected, in place 
of the current requirement that FDA inspect domestic establishments 
every 2 years. As of August 2010, FDA had not completed a formal 
analysis to determine the appropriate inspection frequency for foreign 
and domestic drug establishments. However, in response to our 
inquiries and those of congressional staff, FDA has undertaken such a 
review. 

[46] FDA officials told us that this count could include 
establishments that received an inspection other than a GMP inspection 
prior to fiscal year 2000, but for which inspection data may not have 
been transferred when the agency began using FACTS in 2000. 

[47] According to FDA officials, domestic establishments that may 
never have been inspected could be new establishments or those that 
are not generally subject to GMP inspections. 

[48] Registered establishments whose drugs are being imported, but 
which have never been inspected, include OTC manufacturing 
establishments. However, FDA has not conducted a formal analysis to 
determine how many such establishments are in its inventory. 

[49] Establishments that may not actually be subject to inspection 
include those whose drugs were never imported into the United States 
or those that have stopped shipping drugs into the United States 
without notifying FDA. In addition, some establishments may have gone 
out of business without informing FDA. Establishments that have never 
shipped drugs to the United States or have not done so recently remain 
in FDA's inventory. FDA cannot be certain that these establishments 
will not ship products to the United States. 

[50] According to FDA officials, the agency combines preapproval and 
GMP inspections because foreign establishments are inspected 
infrequently, and it increases efficiency to conduct preapproval 
inspections and GMP inspections during the same visit to a foreign 
establishment. When an establishment has already been selected to 
receive a preapproval inspection, FDA may also conduct a GMP 
inspection during the same visit. Although this is the case for most 
combined inspections, officials told us that if a combined inspection 
was conducted at an establishment selected for inspection through 
CDER's risk-based selection process, the preapproval inspection was 
generally added after the establishment had already been selected for 
a GMP surveillance inspection. In fiscal year 2009, of the 312 
combined preapproval and GMP inspections conducted by FDA, 61 
inspections were conducted at establishments selected through the risk-
based process. 

[51] We previously reported that for fiscal years 2002 through 2007, 
about 13 percent of the foreign inspections FDA conducted were GMP-
only inspections, either surveillance or for-cause, compared to about 
85 percent of domestic inspections during the same period. See GAO-08-
970, 27. 

[52] FDA officials told us that since fiscal year 2008, therapeutic 
biologic manufacturing establishments have been included in the 
agency's annual prioritized list. Therefore, the number of 
establishments inspected from the prioritized list in fiscal year 2007 
is not directly comparable to the number inspected in fiscal years 
2008 and 2009. However, FDA inspects relatively few foreign 
therapeutic biologic manufacturing establishments per year. 
Therapeutic biologics are produced using living organisms, such as 
yeast, bacteria, or mammalian cells. 

[53] During 2009, mandatory electronic registration was implemented 
after some establishments had already submitted their registration 
information on paper forms for the year. According to an FDA official, 
establishments that updated their registration on paper prior to June 
1, 2009, were considered registered for 2009 and were not asked by FDA 
to update their registration again for this year. The information 
contained in the agency's paper-based registration system--DRLS--will 
still exist for archival purposes, but no new information will be 
added to this system after December 31, 2010. If an establishment does 
not register electronically, its information will not be in FDA's 
registration database. 

[54] Both foreign and domestic establishments are required to register 
with FDA once each calendar year. FDA has instructed establishments to 
complete their annual registrations between January and July. However, 
according to agency officials, if an establishment has not registered 
in accordance with the schedule FDA does not consider it to be out of 
compliance until December 31. Therefore, eLIST may not be fully 
populated until January 2011. 

[55] FDA will continue to use DRLS to help select establishments for 
inspection until eLIST is fully integrated with other FDA databases. 

[56] The D-U-N-S Number is a unique nine-digit sequence recognized as 
the federal government's universal standard for identifying and 
keeping track of business entities. Submitting the site-specific 
number for an entity would provide, by reference to the number, 
certain business information for that entity that is otherwise 
required for drug establishment registration. For example, a D-U-N-S 
Number could be used to identify trade names used by the entity; 
addresses; additional ownership information, such as the name of each 
partner or the name of each corporate officer and director; and the 
state of incorporation. 

[57] FDA performs this verification by comparing the country code in 
the establishment's registration file to the country code associated 
with the D-U-N-S Number in Dun and Bradstreet's Global Business 
Database, which contains information that the company collects on 
foreign businesses. According to Dun and Bradstreet officials, this 
database contains approximately 170 million records from businesses 
located in more than 200 countries and provides Dun and Bradstreet 
with information on data elements, such as business names, addresses, 
and phone numbers. 

[58] According to FDA officials, once the algorithm is implemented, 
establishment registration information submitted to FDA will be 
verified before being recorded in eLIST. The agency also plans to use 
the algorithm to verify existing electronic registration data 
collected prior to implementation of the algorithm. If errors are 
found in existing registration data, FDA plans to request that 
establishments submit corrected information. 

[59] We previously reported that in fiscal year 2007, about 3,000 
foreign drug establishments were registered with FDA. See GAO-08-970, 
17. 

[60] In September 2008 we reported that, on the basis of the 
information contained in OASIS, 6,760 foreign establishments 
manufactured drugs that were offered for import into the United States 
in fiscal year 2007. See [hyperlink, 
http://www.gao.gov/products/GAO-08-970], 20. 

[61] The algorithm currently used by customs brokers to assign the 
manufacturer identification number does not provide for a number that 
is reliably reproduced or inherently unique. Consequently, according 
to FDA officials, multiple records may be created for a single 
establishment, resulting in an inflated count of the number of 
establishments. 

[62] Establishments that have not shipped a product to the United 
States in the previous 3 years are not scheduled for inspection. 

[63] FDA previously referred to this program as the Foreign Vendor 
Registration Verification Program (see GAO-08-970, 19). 

[64] To select establishments for the Foreign Registration 
Verification Program, FDA uses information from OASIS to determine the 
products that establishments are shipping to the United States and to 
identify establishments that are importing a variety of products. 

[65] According to FDA officials, the Foreign Registration Verification 
Program covers establishments manufacturing all FDA-regulated 
products. In addition to the 43 drug establishments, FDA's contractors 
visited 130 foreign food manufacturing establishments located in North 
America, South America, Asia, Europe, Australia, Africa, and the 
Middle East. 

[66] According to agency officials, as of July 2010, FDA had not yet 
determined the type of action to take against the other five 
establishments that appeared not to exist. 

[End of section] 

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