United States: FDA Supply Chain Oversight And Inspections During COVID: What's Happening And What's Next

The COVID-19 pandemic has changed the priorities for many businesses and government agencies and the ways in which they operate. Even before the pandemic, the Food and Drug Administration (FDA) grappled with how best to oversee the medical product supply chain. Medical product shortages and dislocations in the supply chain during the pandemic have highlighted this issue, and FDA is implementing new authorities that could significantly affect its oversight over industry. FDA has also changed how and when it inspects. Because of COVID, FDA has been unable to conduct many inspections and has instead relied on alternatives to inspections. This article discusses the changes in FDA's supply chain oversight and inspection program and what they will look like in the future.

Over the last 20 years, the complexity and global nature of medical product supply chains has greatly expanded. Nowadays, it is common for a pharmaceutical to be manufactured in one country but be made from active pharmaceutical ingredients (APIs) and excipients from other countries. Routinely, a company may use several API manufactures from around the world for one drug. As the supply chain has grown more complex, FDA has obtained more resources and new authorities. For example, Title VII of the FDA Safety and Modernization Act of 2012 gave FDA new authorities to develop a risk-based schedule to inspect overseas facilities, enter into agreements with trusted foreign regulators to recognize each other's inspections, share sensitive information with foreign regulators, and obtain documents from regulated entities.

Even before the pandemic, FDA increased its inspections over API facilities and issued warning letters to finished drug manufacturers for failing to oversee their suppliers and to API facilities for violating current good manufacturing practices. With the pandemic's spotlight on the supply chain, Congress gave FDA new authority under the CARES Act of 2020. Section 3112 creates an important new authority to require manufacturers to prepare and implement risk management plans that identify and evaluate risks to the supply of drugs (including quality issues). The statute specifically gives FDA the authority to inspect these risk management plans, which means FDA will likely use supply chain risk when evaluating applications for approval or when deciding on whether to take compliance action for manufacturing issues related to the supply chain.

The emphasis on the supply chain is not all sticks; there are carrots as well. FDA has emphasized the importance of new advanced manufacturing technologies and created an Emerging Technology Program to enable users of these technologies to discuss the agency's expectations prior to submitting an application. There are also many bills in Congress that would provide financial incentives for the use of new technologies and also for moving manufacturing back to the United States. The Biden Administration is also embarking on a supply chain initiative to provide incentives to onshore manufacturing of finished products and API.

What does all of this mean for industry? On the carrot side, industry should monitor developments and consider making use of incentive programs for new technologies or onshoring. It is also important for industry to assess supply chain risk and to hold suppliers to high compliance and quality standards. Failure to do so increases the risk of an FDA compliance action or for delays or denials of applications to market new brand or generic products.

A major tool for FDA in overseeing the supply chain is, of course, inspections, and the pandemic has dramatically altered the inspection landscape.

FDA conducts inspections across all of the commodities it regulates. There are three basic types of inspections. The agency conducts surveillance inspections to determine whether products already on the market comply with applicable laws and regulations. The schedule for surveillance inspections is risk based, meaning that FDA decides whom to inspect based on a general assessment of the risk that a facility will be non-compliant. FDA performs for cause inspections in response to a specific significant public health or compliance risk, such as a recall or lab tests indicating that products are contaminated. Finally, FDA conducts pre-approval inspections to evaluate applications to market pharmaceuticals and some medical devices. These inspections evaluate whether manufacturing facilities would produce new products in a compliant manner or whether clinical research used to support applications was obtained appropriately.

In March 2020, FDA announced that it was suspending much of its domestic and foreign inspection program. The agency focused on "mission critical" inspections, a narrow category that includes for cause inspections and pre-approval inspections for essential medical products, such as those required to treat or prevent COVID-19. As the pandemic subsided in late 2021, FDA resumed many domestic inspections. However, with the rise of the omicron variant, FDA still has not resumed most foreign inspections.

The slowdown of inspections has created a number of challenges for industry and consumers. Although pre-approval inspections are not required by statute or regulation for every application, as a practical matter, FDA requires manufacturing inspections in many circumstances, such as for new facilities or difficult to manufacture products. The agency has published a list of factors it uses in determining when pre-approval inspections are required.

Recognizing the need to provide consumers with access to new therapies or generic drugs that would lower costs, FDA has published guidance outlining alternatives to physical inspection that the agency can use when it is unable to inspect. These alternatives include using FDA's existing authority to obtain inspection records remotely; requesting information and records from applicants, facilities, and other inspected entities; conducting remote interactive evaluations (real-time video interactions with facilities that cover the same ground as inspections); and relying on inspections conducted by capable foreign regulatory authorities.

In order to meet FDA's expectations regarding these inspections, companies have to prepare almost as thoroughly as for in-person inspections. This is particularly so for remote interactive evaluations. When FDA signals its interest in performing one of these evaluations, the company and the agency must discuss the logistics of a video hookup, the timing of an evaluation for overseas facilities, documents that FDA would like to review prior to the evaluation, and how to facilitate FDA's ability to interview employees. During the evaluation itself, a company will need to have available a set of employees to provide documents to FDA in real time, employees to take notes, English translations of FDA-requested documents, and technical personnel to ensure that the remote link functions.

As the pandemic subsides, FDA will be able to resume its full inspection program, but it's likely that FDA will continue using some of the alternatives to inspections. These alternatives do not involve foreign travel and are thus often more efficient for FDA. The agency may well decide to mix efficient alternatives with in-person inspections from time to time. It is, therefore, important for companies to familiarize themselves with inspection alternatives and be ready to work with FDA, if the agency wishes to use an inspection alternative.

It is a time of a change for supply chain oversight and FDA inspections. Companies should keep up to date on FDA's evolving policy and practices in these areas.

For more information, check out the author's FDA After COVID-19: Trends and Emerging Issues segment from PLI's Life Sciences 2021: Navigating Legal Challenges in Drug and Device Industries, available from PLI Programs On Demand.