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Jane M. Henney, M.D.
Commissioner of Food and Drugs
Subcommittee on Oversight and Investigations
Committee on Commerce
Chairman Fred Upton
October 3, 2000
Mr. Chairman and Members of the Committee, I am Jane M. Henney,
M.D., Commissioner of Food and Drugs, Food and Drug Administration
(FDA or the Agency). I appreciate the opportunity to be here
today to discuss our efforts to detect and prevent the introduction
of counterfeit bulk drugs into the drug supply of the United
States, and specifically, to report on our actions since your
hearing on this matter in June.
As we stated in our testimony at your June 8 hearing, FDA
believes that the authenticity and quality of drugs in this
country is high, but we must take very seriously any allegations
regarding the counterfeiting or adulteration of drug products.
The Agency agrees with the Committee's assessment that more
can and should be done to help ensure that imported bulk drugs
or Active Pharmaceutical Ingredients (APIs) and finished drug
products meet the requirements of the Federal Food, Drug,
and Cosmetic (FD&C) Act. Since June 8, the Agency has
been developing and implementing additional strategies for
assessing the scope of the threat of imported counterfeit
APIs to U.S. consumers and responding appropriately to that
The growth in international trade over the past few decades
has had a substantial impact on the ability of FDA to cope
with the volume of regulated products, including APIs. Despite
an increase in overall Agency funding in recent years, those
increases have been allocated to new initiatives, and the
Agency's core operations have not received commensurate increases.
Field personnel and resources have been stretched so thin
that FDA has been struggling to fulfill many of our program
mandates. The increasing number of APIs from overseas makes
policing the global drug marketplace to deter or interdict
imported substandard drugs a daunting task. We have looked
for additional ways in which we can use our own resources
wisely, as well as leverage with others to increase our effectiveness.
On June 8, you asked FDA for a plan to improve our ability
to detect and interdict imported counterfeit and substandard
APIs. We forwarded a preliminary report to you, Mr. Chairman,
on August 10, 2000, which outlined the Agency’s plans and
additional ideas under consideration for better handling imported
counterfeit and substandard APIs and finished drugs.
Let me begin by providing the Committee with an update on
the five initiatives FDA announced at the June hearing.
- In February 2000, additional funds were allocated to
the Forensic Chemistry Center (FCC) by the Office of Regulatory
Affairs for sampling, analytical work and assessments of
APIs gathered through targeted inspections of importers.
With these funding increases, the FCC has conducted 20
targeted API inspections, including nine at importers of
foreign APIs, ten at domestic finished dosage manufacturers
and one at a domestic animal drug manufacturer. The FCC
inspectors are now reviewing imported API documents and
samples of product, labeling, packaging schemes and certificates
of analyses obtained during these inspections. Information
derived by these analyses will be used to
help determine whether additional follow-up by district
office investigators or the Office of Criminal Investigations
is needed and to support to any enforcement actions that
may be warranted. At each of these inspections, the FCC
worked with local FDA district drug investigators to detect
suspect API shipments through product and records examinations.
This activity also provided an opportunity for FCC staff
to train field investigators and raise the awareness of
District Investigation Branches to the problem of counterfeit
API's. Additional hands-on training is planned for investigators
in other strategic locations.
- Make the FCC API database available electronically
to all field inspectors by January 2001.
This database currently contains information or "fingerprints"
on 330 API's that have been collected and chemically analyzed
by FCC. This information is one important tool which FDA
can use to more quickly identify whether or not a product
is authentic or counterfeit.
The technology necessary to make FCC's API database available
electronically on a real-time, searchable basis to field
import and drug inspectors is being developed, and training
for field personnel is being planned. We expect to have
this system in place by January 2001.
- Expand the Philadelphia pilot nationwide by the end
A pilot program was begun in the Philadelphia District
office in 1997 to evaluate the value of providing
drug approval information to import field personnel. The
pilot provided import inspectors in the Philadelphia District
with access to information contained in the Establishment
Evaluation System (EES) database maintained by the Center
for Drug Evaluation and Research (CDER). EES tracks information
related to the approval process for drug applications. The
program allows inspectors to retrieve additional important
data in about three to four minutes on any API entry, which
increases the probability of confirming authentic sourcing
In light of this success, access to the EES system has
been expanded to the three FDA Districts handling the vast
majority of APIs - New York, New Orleans and San Juan District
Offices. Training for these inspectors has been completed
and accounts have been established. The system has been
up and running for approximately two months, and our inspectors
in these districts report that the EES information is very
useful in helping to assure that the declared destinations
of imported APIs are appropriate. Currently, we are completing
plans for the additional technology upgrades and training
for field personnel necessary to expand the program to the
rest of our districts, which we plan to complete early next
- Put all importers on notice that they are required
to provide the name of the foreign manufacturer upon entry
into the U.S., and that the entry of their products into
the U.S. will be contingent upon it.
The Agency has placed the import industry on notice regarding
the existing requirement to provide FDA with accurate data
regarding the identity and location of the manufacturer
of imported drugs. These requirements were previously made
clear to importers and brokers through notices issued on
January 29, 1999, and March 24, 2000. However, this requirement
was not being fully met. Therefore, on July 20, 2000 the
Agency again posted an updated version of its requirements
on the Internet with links to and from FDA’s import operations
pages. On July 28, 2000, a U.S. Customs Service (Customs)
Automated Broker Interface (ABI) system administrative message
was issued to all filers with a reference to the Internet
site containing these requirements and a physical mailing
address where a filer may request a hard copy from the Agency.
A copy of the July 28 ABI notification was provided in FDA's
August 10 letter to the Subcommittee.
Compliance with this requirement is assessed as the Agency
carries out routine filer evaluations and is one of the
factors considered in providing continued electronic filing
privileges on OASIS. Customs has informed FDA that these
types of reporting failure may
be the basis for Customs civil actions. This information
will be useful to the Agency in better defining and identifying
the universe of foreign manufacturers shipping to the U.S..
- Require domestic manufacturers to provide information
to FDA when they discover that the bulk materials they receive
are substandard, ineffective, or appear not to be from the
As you know, the Committee proposed this idea to the Agency
last year. We stated in June that we agreed this is a promising
approach, and FDA is examining what would be required to develop
a proposed regulation that would establish this requirement.
Agency Examination of Imported Counterfeit Bulk Drugs
Immediately following the June 8 hearing, FDA established
a Counterfeit Drug Working Group (Working Group) which has
spent the past three months exploring the full range of issues
concerning imported counterfeit and substandard drugs. The
Working Group has looked carefully at FDA’s import operations
and our foreign drug inspection program, and has been developing
a plan to better assess the extent of the counterfeit drug
problem in the U.S. The Working Group also has been examining
ways the Agency can more readily detect these products to
better ensure that the public is protected from potentially
FDA's Counterfeit Drug Working Group consists of representatives
from many Agency components, including: the Office of Criminal
Investigations (OCI), the Division of Import Operations and
Policy (DIOP), the Office of Enforcement, the Forensic Chemistry
Center (FCC), the Division of Federal-State Relations (DFSR),
the Division of Information Systems (DIS), and the Division
of Emergency and Investigational Operations (DEIO), all of
which are components of the Office of Regulatory Affairs (ORA),
as well as the Offices of Compliance within the Center for
Drug Evaluation and Research (CDER) and the Center for Veterinary
Medicine (CVM), and the Office of Chief Counsel (OCC).
While FDA is still in the process of assessing the effectiveness
of the regulatory tools, compliance programs, staffing and
procedures that already exist within the current statutory
construct to monitor imported APIs, the Agency already has
implemented a number of program initiatives, including the
FDA has cleared and forwarded to the Office of Management
and Budget (OMB) a final rule requiring foreign establishments
whose products are imported or offered for import into the
U.S. to register with FDA and to identify a U.S. agent. As
you know, this requirement was mandated in the Food and Drug
Administration Modernization Act of 1997. It will provide
for the collection of information needed to establish an accurate
Official Establishment Inventory for foreign drug firms.
Information Technology Needs Assessment (IT)
As you know, one of the issues of great concern at the June
hearing was the Agency's lack of a well-integrated IT system
for the regulation of drug imports. We acknowledged that FDA
has been working with several independently developed databases
of critical information that need to be integrated. We also
understand the Committee's frustration that this problem has
not yet been remedied.
In early July, FDA engaged the services of a private IT contractor
to assess the Agency’s IT needs for drug imports and to propose
changes to accomplish the goals described below. The contractor
was charged with determining what information FDA import inspectors
need to fully assess the admissibility of all FDA regulated
commodities. The contractor consulted with import inspectors
and compliance officers with expertise in FDA and Customs
laws and regulations, good manufacturing practices, and IT
import applications. The contractors’ report was recently
received by the Agency, and we are currently reviewing both
the recommendations and the estimated resource requirements.
Cross-training with U.S. Customs Service
In June and July 2000, FDA conducted three Import Enforcement
training courses for FDA import personnel including Compliance
Officers, Consumer Safety Officers, and Consumer Safety Inspectors.
A total of 120 students attended one-week courses representing
in total about half of all persons assigned to field import
operations. FDA and Customs jointly developed the curriculum
and taught the course. The instruction course included training
in Strategic Problem Solving (SPS), a Customs training module
developed specifically to facilitate the targeting, investigation
and prosecution of willful violators. Each course included
a facilitated workshop after the pattern of SPS. In each class,
students analyzed and provided recommendations for specific
imported API counterfeiting fact patterns. These facilitated
brainstorming sessions by the field personnel focused on the
imported counterfeit API threat and produced numerous ideas
for strategies in detecting, preventing, and interdicting
counterfeit imported APIs. The Working Group is assessing
these proposals for viability.
This training course is being extended to additional field
personnel in three sessions that began this week.
Other Cooperative Efforts with Customs
FDA's OCI has a close working relationship with Customs,
including a Memorandum of Understanding providing for all
OCI agents to be cross-designated as Customs Officers. OCI
currently is working a number of on-going investigations with
Customs involving unapproved and counterfeit finished human
drugs, and adulterated and misbranded medical devices and
OCI and Customs cooperated in a joint operation targeting
the Internet sales of unapproved pharmaceuticals by Thailand-based
organizations. In cooperation with Thai authorities, Customs
arranged for the consolidation and diversion of international
mail deliveries of these products to JFK Airport, where FDA
personnel were assigned exclusively for review and processing
of these entries. In the period February to August 2000, approximately
300 such shipments were reviewed, found to be non-admissible,
and returned to Customs for forfeiture.
FDA has also had discussions with Customs' Applied Technology
branch and we will be meeting with them this month to explore
the use of countermeasure devices to detect counterfeits and
track shipments where warranted.
FDA's OCI, through liaison with their international law enforcement
counterparts and other regulatory agencies, is a key Agency
component in cooperative international efforts aimed at identifying,
investigating and prosecuting drug crime. OCI participates
in the Permanent Forum on International Pharmaceutical Crime
(PFIPC), an international enforcement forum aimed at exchanging
information and ideas on combating pharmaceutical crime. PFIPC
works in conjunction with a Forensic Group that provides scientific
expertise. OCI also maintains contact with their counterparts
at the World Health Organization, the World Customs Organization,
Interpol, and FDA's counterparts such countries as the United
Kingdom, Germany, Spain and Australia. Additionally, the Forensic
Chemistry Center participates in the International Laboratory
Forum on Counterfeit Medicines.
Forensic Chemistry Center Initiatives
The FCC and Customs have agreed to explore methods to better
leverage their respective resources in the investigation and
analysis of suspect counterfeit products. The FCC hosted the
first meeting in their forensic laboratory on August 10, 2000,
and demonstrated FDA’s current forensic capabilities and strategies.
The two agencies will explore ways to grant access to analytical
data and equipment and cross training in methodologies and
emerging forensic techniques. The FCC will interface directly
with Customs’ laboratories to share information on analytical
procedures FDA’s forensic experts use to detect unapproved
and counterfeit APIs. FDA has placed a high priority on developing
with Customs a unified approach for interdicting counterfeit
Review of Data on Uninspected Firms
In response to a request from Chairman Bliley earlier this
year, FDA produced a report based on unverified data from
the Operational and Administrative System for Import Support
(OASIS) which identified listings for approximately 4,600
firms that appeared to be non-inspected foreign drug manufacturers.
It should be noted that the OASIS data was input by Customs
house brokers at the time that drug entries were filed.
This number of 4,600 "uninspected firms" was the subject
of great concern at the June hearing. As explained in our
previous testimony, that number was the best estimate we were
able to provide on short notice, and was derived by comparing
raw data input by import brokers into OASIS with a known list
of inspected firms. FDA has been reviewed the OASIS data and
manually cross-checked it with other information sources to
weed out duplicates
and incorrect entries and establish a much more accurate
list of uninspected foreign drug manufacturers that appear
to have exported to the U.S. an API that is normally used
to manufacture a finished dosage form which requires an approved
application. So far, the review of this data has enabled us
to produce a much more reliable list of 242 foreign API manufacturers,
in 36 countries, that appear to have exported to the U.S.
in 1999, but have not been inspected, according to the EES
database. The Agency is developing an import alert
for these uninspected foreign drug establishments. The 242
identified firms include forty-six firms in China and Hong
Kong and eleven firms in India.
The final phase of the analysis of the OASIS data will be
to identify firms FDA has not inspected but which are referenced
in approved human and animal drug applications. The human
drug firms will be evaluated using a risk-based analysis stratified
into one of four tiers, incorporated into FDA’s surveillance
list, and subsequently scheduled for inspection.
Additional Strategies for Handling
Imported Counterfeit, Unapproved Drugs and APIs
Joint Industry/Agency Efforts
Members of the Working Group conferred with the FDA’s Field
Drug Committee (FDC) on counterfeit API issues. The FDC historically
has maintained networks with drug industry personnel and trade
associations and has utilized these relationships for furthering
the important message of health and safety through consistency
in GMP compliance. The FDC will assist in developing avenues
through which industry could join forces with the Agency in
combating counterfeits in the market place.
Beyond this initial approach through the FDC, the Agency
is exploring additional routes for encouraging and receiving
intelligence on counterfeit drugs in the world market. Historical
experience in prior counterfeit API investigations has demonstrated
that foreign API manufacturers whose products are being counterfeited
can provide substantial assistance in developing tests for
authenticity and intelligence regarding suspected counterfeiting
operations. The Agency is aware that intelligence gathering
from the trade is a critical element to successfully identifying
suspect counterfeits in the market.
Foreign Inspection Component
When faced with the challenge of a steadily increasing volume
of needed foreign inspections, coupled with limited resources,
a risk-based approach to foreign drug inspection was developed.
CDER established a four-tiered approach to prioritizing and
performing surveillance inspections of firms that FDA had
not previously been able to inspect. At the present resource
level, however, FDA is only able to inspect firms in Tier
I (Official Action Indicated, or OAI, inspection follow-up)
and Tier II (sterile bulks, finished drugs and aerosols).
It should be noted that pre-approval inspections are
required by the Prescription Drug User Fee Act and most are
conducted in accordance with the Act’s mandate. Thus, resources
are the primary factor limiting the Agency’s ability to undertake
additional inspections. As I am sure your Committee staff
reported back to you after their trip to China and India to
observe foreign inspections, foreign inspections are extremely
resource intensive – requiring not only highly trained investigative
and scientific personnel, but linguistically and culturally
competent staff as well. The time needed to conduct a foreign
inspection is also magnified by travel requirements.
The Agency is reassessing these issues and discussing how
to best utilize our current resources given current constraints.
We hold fast to the belief that there is no substitute for
an eyes and hands-on inspection.
Even with these limitations, I would hasten to note that
since 1990, the Agency has shifted resources from domestic
to foreign programs to increase our presence in the foreign
drug manufacturing marketplace, recognizing the shift in global
markets. The foreign drug inspection program for the current
fiscal year is on track for accomplishing approximately 450
inspections in all foreign drug program areas. This represents
more foreign inspections than the Agency has ever completed
in a single year. The program continues to be primarily application
driven, and the priorities associated with the product approval
process do impact our ability to conduct drug surveillance
For fiscal year (FY) 2001, ORA is projecting approximately
550 foreign inspections associated with its foreign drug work
plan in all program areas. The FY 2001 foreign work plan focuses
on manufacturers that have not been inspected, as identified
through the analysis of OASIS data discussed previously. This
includes substantial increases in drug surveillance inspections,
which would result in increased coverage of firms in Tiers
III and IV. However, to accomplish this increase, a reallocation
of existing resources would need to occur by reducing our
domestic inspection program.
Import Operations Component
FDA’s Division of Import Operations (DIOP) is responsible
for providing policy guidance
to the field relating to import procedures, overseeing the
development and operation of the Agency’s Import Alert system,
and for maintaining the Agency’s OASIS system. Customs has
identified over 300 designated ports of entry. OASIS data
indicates that approximately 175 ports have seen entries of
APIs. FDA has a notable presence in over 40 ports. The ports
where FDA conducts the bulk of its work represent those through
which the vast majority
of drugs enter. The Working Group is reviewing DIOP’s procedural
and system operations and is assessing the Agency’s personnel
and equipment needs to better monitor U.S. ports of entry.
FDA is engaged in discussions with the Customs’ Applied Technology
Division, which has considerable experience in tracking shipments
within U.S. commerce to verify and document cargo diversion.
We will evaluate the currently available technology in terms
of levels of surveillance capabilities, cost of equipment
and implementation. Additionally, we have
asked the IT contractor to explore the possible use of low
cost security devices by foreign manufacturers such as chemical
taggants in labeling, glue, ink or packaging materials to
detect suspect counterfeit drugs. Other possible solutions
include radio frequency tags for detection during examinations
at ports of entry.
The Agency is considering a wide array of available technology
including encrypted bar code technology in labeling and Certificates
of Analysis containing manufacturing information already submitted
by the foreign manufacturer through a secure web-based environment.
Mr. Chairman, in June you asked us what additional resources,
personnel and funding that may be necessary to fully carry
out our responsibilities for inspecting foreign drug manufacturers
and to increase the surveillance of foreign APIs and finished
drugs. The Agency has long recognized we need additional resources
in the area of post-marketing surveillance, which would encompass
many of the activities I have just discussed. In just the
last two years – FY 1999 and FY 2000 – the President’s budget
included $25.8 million and $39.3 million, respectively, for
postmarketing surveillance activities, none of which was funded.
The lack of new funding, coupled with an absence of increases
for core operations, reduces the number of FTEs available
to perform the Agency’s critical post-market activities.
At this time, only preliminary estimates have been made of
these resource requirements, as the scope of this evaluation
needs to encompass both the Agency’s domestic and foreign
operations, as well as the operations of various FDA Centers.
We look forward to providing more specific information on
our funding needs relating to personnel and technology in
the future, once a complete assessment is made and appropriate
review has occurred.
FDA will continue its assessment of the extent of the counterfeit
drug problem in the U.S. Over the coming weeks, the strategies
outlined above will be further developed and enhanced, and
other potential strategies will be considered. While the Agency
has already made a good deal of progress, we have much work
Mr. Chairman, I want to assure you that all of us at FDA
remain strongly concerned about any possibility that counterfeit
or otherwise unsafe drugs may find their way into the American
drug supply. We will remain vigilant as we refine and improve
the programs and procedures that we use to ensure the availability
of safe medications for consumers.
We appreciate the continued interest of the Subcommittee
in these important issues. Thank you again for the opportunity
to discuss these issues with you, and I will be happy to answer
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