Generic Drug Makers May Soon Pay for Inspection of Overseas Plants

Aug. 16, 2011— -- One of the world's largest generic drug makers is calling on its fellow manufacturers to help foot the bill for the U.S. Food and Drug Administration to conduct inspections of overseas pharmaceutical plants.

Up to 40 percent of the drugs Americans use are imported, and around 80 percent of the active ingredients in those drugs are made in foreign facilities. The FDA only inspected 11 percent of the more than 3,700 foreign manufacturing sites in 2009, according to data from the U.S.Government Accountability Office. All manufacturing facilities in the United States, however, are subject to FDA inspection every two years.

In addition, the GAO determined the FDA does not have accurate information on all of the overseas facilities, meaning the agency could not keep track of where inspections were needed.

One infamous result of such oversight problems occurred in 2008, when Chinese manufacturers substituted a fake ingredient for the main one in a supply of the blood thinner heparin. The contaminated drug killed 81 people in the United States and sickened hundreds of others. The FDA never inspected the plants that manufactured the main ingredient.

Hoping to prevent similar situations from happening again, Mylan Pharmaceuticals is helping to negotiate an agreement between the FDA and generic drug makers that would provide $299 million a year for inspections. That sum would come from fees paid by the manufacturers themselves.

The plan, which was first reported by the New York Times, was the brainchild of Mylan's president, Heather Bresch, who discovered that Mylan's foreign plants weren't held to the same quality and safety standards as the company's U.S.-based facilities.

"Every American has the right to know that whenever they go to have a prescription filled, it's held to the same standard of quality, whether it's made in the U.S. or overseas," Bresch told ABC News.

Bresch worked hard to win support for the plan from other generic drug makers.

"Generics account for 75 percent of prescription drug volume, and our industry was willing to step up," she said. "It's our chance to address issues of safety and standards."

Critics: Proposal Gives Industry More Control Over FDA

The proposed inspection fees are part of a broader plan under negotiation called the Generic Drug User Fee Act (GDUFA). Under GDUFA, companies would pay fees to the FDA to facilitate faster review of new drugs. There is a backlog of applications for new drugs.

Bresch also hopes to eventually update the Food, Drug and Cosmetic Act to require that the entire drug industry -- both domestic and foreign -- get inspected at least every two years. The FDCA, she said, has not changed since it became law in 1938, well before the pharmaceutical industry became global.

"I think it's important to have a level playing field and make sure we're competing with the same footing," she said.

The proposed inspection plan would have no bearing on brand-name or over-the-counter drugs. Manufacturers of brand-name drugs are covered under the Prescription Drug User Fee Act (PDUFA). PDUFA allows the FDA to collect fees from drug manufacturers, but the fees are contingent upon the FDA meeting certain benchmarks related to how quickly new drug applications are reviewed.

While experts believe pushing for inspections is an important step toward a safer drug supply, some question the user fee model as a way to do it.

"There's no doubt it should be done, but it should be done through the congressional appropriations process," said Dr. Sidney Wolfe, director of Public Citizen, the nonprofit consumer advocacy group.

The generic drug industry, he said, should not be funding these inspections.

Wolfe is critical of PDUFA and the concept that fees are being used to pay for the drug-approval process. He also expressed concern that GDUFA will give the drug industry more power over the FDA.

"It also isn't clear who is going to do the inspections," he added. "My guess is it will be some jumble of U.S. and foreign inspectors."

Bresch of Mylan Pharmaceuticals said that under the proposed plan, inspections will fall under control of the FDA.

Other experts believe the inspection plan is promising, even though there are still unanswered questions.

"Costs will be passed along to the consumer, but if that means it eliminates another source of concern, then it sounds like a great idea," said Paul Doering, distinguished service professor of pharmacy practice at the University of Florida in Gainesville.

"If there's a concern that the standards overseas are different, then let's make the standards the same," he added. "I can't see what harm there is in that."

The FDA has not yet responded to questions from ABC News about the plan, but commissioner Dr. Margaret Hamburg told the New York Times that she welcomes the proposed assistance.

"If a program along the lines of what the parties are working on is enacted by Congress, it would represent a real breakthrough," she said. "FDA's entire generic drug program would be placed on a much more stable footing."

Bresch has high hopes Congress will pass the measure next year. "This is a very important consumer issue," she said.