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December 01, 2014 (Vol. 34, No. 21)

FDA’s Supply Chain Initiative

Full-spectrum oversight—that’s how an increasingly global-minded FDA proposes to secure vulnerable supply chains.

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    With drug ingredients being sourced from foreign lands in ever greater abundance and variety, the distinction between imported and domestic products is fast disappearing, prompting the FDA to assemble a coalition of the willing (and not so willing) to oversee global supply chains.

    Title VII of the U.S. Food and Drug Administration’s Safety and Innovation Act (FDASIA) of 2012 seeks to quell the invisible hand that until now has guided sourcing and supply of raw ingredients and drug substances. The law, which is based on the European Union’s Falsified Medicines Directive, seeks to tame and modernize an increasingly global network through which the substances that make up drugs funnel into the smaller but still vast global network of manufacturers and suppliers.

    Through Title VII, the FDA acknowledges that national borders prove insufficient to the entry of ingredients and drugs that are adulterated, misbranded, or counterfeit, and that patrolling the global supply chain is beyond the capabilities of any one regulatory body. The diverse, disjointed overseas supply chain has forced FDA to step up inspections from around 700 per year in 2008 to 2,700 in 2013. A further anticipated increase would be impossible without assistance from overseas regulators.

    The most far-reaching—and controversial—component of Title VII is the Agency’s assumption of legal and enforcement capabilities beyond U.S. borders—powers whose legal status (and justification) remain to be settled.

    Speaking at an FDA public meeting on August 12, 2013, Commissioner Margaret Hamburg, M.D., noted that “while FDA‘s mission and focus remains domestic, we rapidly are becoming a global agency.”

    Under FDASIA, the agency officially adopts a risk-based approach to oversight of suppliers based on a facility’s track record: The cleaner a supplier’s history, the lower the likelihood of audit. Also, companies supplying drugs or materials for U.S. markets must register with the FDA through a unique facility identifier and document their suppliers.

  • The Morphing Supply Chain

    Up until the 1980s, U.S. pharmaceutical producers sourced ingredients and APIs domestically or from trusted overseas vendors. Today they import nearly 40% of finished drugs and 80% of APIs, from more than 150 countries where, for the most part, regulation and oversight are lax by U.S. standards. As of 2013, U.S. drug manufacturers and distributors received 24 million shipments from more than 300,000 facilities. With more “touches” than ever between raw ingredient and consumers, the distinction between domestic and imported products essentially disappears.

    “There has definitely been an uptick in oversight of overseas suppliers,” says Gabrielle Cosel, who manages the Drug Safety Project at the Pew Charitable Trusts. Pew’s interest in pharmaceutical supply chain security began in 2007, after the 2008 heparin incident that resulted in 785 reported serious adverse events and 81 deaths. In 2009, the FDA inspected 11% of registered foreign facilities. By 2014 the agency extended its reach to 24% of such suppliers.

    The heparin tragedy goaded the U.S. Congress to act as well. FDASIA included provisions for user fees, drug review, generics/biosimilars, and pediatric studies in addition to supply chain oversight. When the law was being written, it was hoped that it would cover the supply chain end to end, from raw ingredient to distribution point. While Title VII plugs a good many holes in upstream supply chain oversight, the language and scope of the law with respect to distribution could not be hammered out to the satisfaction of major stakeholders. “The challenge was arriving at consensus, how to implement traceability on a national level as California serialization deadlines approached,” Cosel explains. Hence the 2013 Drug Supply Chain Security Act (DSCSA), which addressed the distribution chain with strict timelines.

    Full DSCSA compliance will occur in stages over 10 years beginning January 1, 2015, when manufacturers will be required to deal only with authorized trading partners and begin maintaining transaction histories for six years. On the distribution side, unique serialization doesn’t kick in until two years later. During the next 30 months manufacturers are expected to improve technology for tracking medicines between manufacturer and pharmacy. By 2019, all entities in the supply chain may receive only serialized drugs. A fully electronic, interoperable system for tracking drugs down to the package level will be in place by 2023.

    Before FDASIA, FDA inspections concentrated on domestic and European manufacturers, using a different schedule and approach for plants in other jurisdictions. Now the law requires the FDA to employ a single risk-based schedule to both domestic and overseas inspections. “That means the agency must go after the highest-risk sites wherever they are in the world,” Cosel says.

    Consequently, inspections of Chinese and Indian manufacturers has risen substantially. At the same time it is expected that the FDA will come to rely increasingly on inspections of Western European facilities by European regulators, with whom the agency already enjoys significant parity. This is part of FDASIA’s “foreign cooperation” initiative, but as Cosel notes the practice involves some risks. “They’re moving in that direction, have participated in pilots with European regulators, and have even begun to make decisions based on the findings of non-FDA regulators. It’s become a question of making that sort of cooperation more efficient.”

    Charlotte Hicks, project manager for life sciences at supply chain software and consulting firm Resilinc, suggests that Title VII has provided the impetus for pharmaceutical manufacturers to map their supply chain. “And that is based on each [supplier] location having a unique identifier, like a DUNS number.”

    Hicks further believes that unique identifiers might have prevented the heparin disaster. “The automotive industry already maps their supply chain to keep track of which supplier sites are which. Pharma and biotech are somewhat behind on this.”

  • Mapping the Chain

    Supply chain mapping is a difficult exercise that will keep chief information officers at pharmaceutical and biotech manufacturing operations busy for some time. It has historically also been a factor for why pharma/biotech companies needed prodding to embrace the idea. In the long run, however, supply chain mapping help them comply with Title VII and provide traceability and flexibility should supply-related problems arise.

    Jim Bedford, R.Ph., director at Chicago-based consulting firm West Monroe Partners, is skeptical about the potential positives of Title VII. “Our clients are clearly challenged by supply chain issues. Regulations aside, the companies, particularly well-established firms, are self-motivated and inclined toward self-policing for where they source their raw materials.” That is why Bedford is unsure that the unique facility identifier required by Title VII will add significantly to supply chain safety.

    Similarly for direct oversight overseas, which the FDA hopes to achieve by establishing overseas offices that provide the agency with greater and more immediate control over raw material and API production. “But there are so many registered facilities,” observes Bedford. “I don’t know how they would get their arms around it all.”

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