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Deal in Place for Inspecting Foreign Drugs

http://www.nytimes.com/2011/08/13/science/13drug.html


By GARDINER HARRIS
Published: August 13, 2011

More than 80 percent of the active ingredients for drugs sold in the United States are made abroad, mostly in a shadowy network of facilities in China and India that are rarely visited by government inspectors, who sometimes cannot even find the plants.
But after decades of failed attempts, the federal government and the generic drug industry have reached an agreement that is almost certain to pass Congress and that will lead to routine inspections of these overseas plants, potentially transforming the enormous global medicine trade.
Under the landmark agreement, expected to be completed within weeks, generic drug companies — which make 75 percent of the prescription medicines sold in the United States — would pay $299 million in annual fees to underwrite inspections of foreign manufacturing plants every two years, the same frequency required of domestic plants.
Self-interest helped drive the agreement because the industry will not only get speedier approvals of new products as part of the deal but also may avoid scandals involving tainted medicines, which tend to hurt confidence in the entire industry.
At its present pace, the Food and Drug Administration would need more than 13 years to inspect every foreign drug plant exporting to the United States. Some plants have never been inspected, which saves them huge sums in cleanup and other compliance costs — an important reason that drug manufacturing is disappearing from the United States and that tainted-drug scandals occur.
In one infamous case, Chinese manufacturers deliberately substituted a cheap fake for the dried pig intestines used to make the blood-thinning drug heparin. The tainted drug was linked to 81 deaths and exposed tens of thousands of people to danger. The F.D.A. never inspected the plants making the crucial ingredients, a larger problem that only now, more than three years later, may be fixed.
“This agreement is epoch-making,” said Guy Villax, chief executive of Hovione, a generic drug maker with plants in New Jersey, Europe and China. Supply chains for many generic drugs often contain dozens of middlemen and “are highly susceptible to being infiltrated by falsified” drugs, Mr. Villax said.
Dr. Margaret Hamburg, commissioner of the F.D.A., said she was pleased with the generic drug fee proposals. “If a program along the lines of what the parties are working on is enacted by Congress, it would represent a real breakthrough,” Dr. Hamburg said. “F.D.A.’s entire generic drug program would be placed on a much more stable footing.”
The agreement will not affect the making of over-the-counter medicines or vitamins, whose global supply chains are even more vulnerable to tampering since government inspectors almost never visit their makers. Aspirin and vitamin C supplements, among others, are now made almost entirely in uninspected plants in China.
Nor will the agreement change the F.D.A.’s oversight of name-brand prescription medicines. Although branded drugs usually have more secure supply chains than those of generics, major pharmaceutical companies have moved aggressively into China in recent years and often rely on rarely inspected suppliers.
Federal officials for years have expressed concerns about the nation’s growing reliance on sometimes mysterious foreign drug suppliers, but they had largely despaired of fixing the problem. Congress has never given the F.D.A. the money needed to inspect these plants, and for nearly two decades the generic drug industry resisted proposals to pay inspection fees.
The industry changed its stance for several reasons. First, the heparin scandal scared everyone. The fake ingredient was good enough to pass a sophisticated test, so the conspirators probably knew that deaths would result, reflecting a callous level of greed. And the Chinese government refused to allow the F.D.A. to investigate, suggesting that the perpetrators were not only smart but politically well connected.
Second, the generic drug industry is no longer a motley collection of struggling mom-and-pop companies. Years of consolidation have created giants like Israel-based Teva Pharmaceuticals that understand that their businesses depend on winning the confidence of patients and regulators alike, and they can afford to pay the fees needed to achieve that confidence.

Third, the industry finally gave up hope that Congress would appropriate enough money for the F.D.A. to perform the job. The agency’s oversight of generics has floundered so badly that new applications to sell generics take a median of 31 months to be approved, and there are now 2,458 applications awaiting approval, up from 2,361 at the end of last year. The new fees are expected to underwrite the hiring of enough reviewers to bring approval times down to 10 months and sharply cut the application backlog — providing cheaper and better drugs to patients.

The fourth reason is Heather Bresch. Ms. Bresch, 42, is the president of Mylan Inc., a generics giant, and the daughter of Senator Joe Manchin III, Democrat of West Virginia. For years, Mylan’s sole drug plant was in Morgantown, W.Va., and the facility is so huge — it produces 22 billion tablets and capsules a year — that the F.D.A. stationed an employee there almost full time. But in 2007, Mylan bought two foreign companies with plants on nearly every continent. When Ms. Bresch visited these and other foreign plants, she was shocked to learn that many had not been visited by an inspector in almost a decade.
“As a mother of four children, I want to know the drugs I’m giving them are safe,” Ms. Bresch said. “And as an American businesswoman, I want to keep jobs here, and that means making sure foreign drug plants have to meet the same standards as domestic ones.”
Last year, she wrote an ambitious proposal to tax the industry $300 million annually so the F.D.A. could do a better job. Agency officials initially reacted skeptically since the industry had repeatedly rejected earlier, far more modest fee proposals. But Ms. Bresch lobbied aggressively, according to several participants, and her proposal was soon largely adopted, although a few small details remain to be negotiated.
Generic drug fees will be included in a package of industry fees — including those for branded drugs and medical devices — in legislation the Obama administration is expected to send Congress in January. Such fees were first approved in 1992 and have become a vital source of F.D.A. financing, although some consumer groups say they have led the agency to become too cozy with those it regulates.

Legislation must pass before October 2012, or numerous F.D.A. functions will halt, imperiling patients and creating chaos in the drug and medical device industries. Since such an outcome is unthinkable to government officials and industry executives alike, most predict that the legislation will pass early and easily. But defaulting on the nation’s debts was once seen as unthinkable and nearly happened this summer, so worries abound.