Moving to Risk-Based Inspections

On Oct. 1, 2012, the Generic Drug User Fee Act (GDUFA), which was signed into law by President Barack Obama on July 9, 2012, goes into effect and provides important changes for generic-drug manufacturers and producers of generic APIs. The law imposes generic-drug user fees, payable by producers of generic finished drugs and APIs, to provide additional funding to FDA to improve the regulatory review process, including inspections for drug-manufacturing facilities, for generic drugs. These measures, which are supported by the generic-drug and fine-chemical industries, are intended to speed the delivery and ensure the quality of generic drugs (1).

Generic-drug user fees
Under the GDUFA, FDA will receive $299 million annually (adjusted for inflation) during the five-year authorization of GDUFA from Oct. 1, 2013 to Sept. 30, 2017 (i.e., fiscal year [FY] 2013 to FY 2017) (2). The user fees required by the GDUFA are:
• A one-time fee for original abbreviated new drug applications (ANDAs) pending on Oct. 1, 2012 (also known as backlog applications)
• Annual fees for API and final dosage-form facilities
• Fees for new ANDAs and prior approval supplements (PASs)
• A one-time fee for drug master files (DMFs) (1).

Seventy percent of the GDUFA fees will be derived from annual facility fees for facilities producing or pending review to produce APIs or finished dosage forms for a generic-drug application, and approximately 30% of the user fees will be derived from one-time application fees (DMF fees and ANDA and PAS fees). Overall fees were structured to reflect the respective weight in the supply chain, so that 80% of the fees are paid by finished dosage form manufacturers and 20% by API manufacturers. In the first year of the program, $50 million of the total GDUFA user-fee funding will be generated by the one-time backlog fee for ANDAs pending (except for ANDAs that are pending but have received tentative approval) on Oct. 1, 2012. Overall, it is estimated that FDA will receive the funding through approximately 750 ANDAs per year submitted electronically, 750 PASs, 350 newly referenced DMFs per year, and 2000 facilities associated with ANDAs (2).

Major program goals
With the additional funding provided by generic-drug user fees under the GDUFA, FDA is obligated to meet certain performance goals with respect to its regulatory review of generic drugs. The GDUFA outlines goals in five main program areas.
 • Application metrics: By the end of FY 2017, FDA will review and act on 90% of complete electronic ANDAs within 10 months after the date of submission. Certain amended applications may have differing metrics. 
 • Backlog metrics: FDA will review and act on 90% of all ANDAs, ANDA amendments, and ANDA PASs of current review status (whether electronic, paper, or hybrid) pending on Oct. 1, 2012, by the end of FY 2017.
• cGMP inspection metrics: FDA will conduct risk-adjusted biennial cGMP surveillance inspections of generic API and generic finished dosage form manufacturers, with the goal of achieving parity of inspection frequency between foreign and domestic firms in FY 2017.
• Efficiency enhancements: FDA will implement various efficiency enhancements, which include efforts by industry and FDA to populate and maintain databases as necessary for facilities, fee assessments, efficiency, and other enhancements. FDA also will make DMF- and inspection-based enhancements as well as create a current chemistry manufacturing, and controls (CMC) records database to aid in the efficiency of reviews and inspections.
• Regulatory science : FDA will continue or begin various regulatory-science initiatives. Some key issues are continuing quality-by-design initiatives for generic drugs, including developing science-based recommendations for product development, raw material, API and process controls, and life-cycle management of complex dosage forms (e.g., orally inhaled drug products and modified-release dosage forms). Another key goal is to develop a risk-based understanding of potential adverse impacts to drug-product quality resulting from changes in API manufacturing and controls. This effort will aid in the ability to predict the potential impact manufacturing changes will have on product quality, so manufacturers can target assessments and controls on high-risk areas and regulators can focus their reviews on these areas (2).

Industry response
Industry response to the GDUFA has been largely positive with groups, such as the Generic Pharmaceutical Association (GPhA), the European Fine Chemicals Group (EFCG), and the Bulk Pharmaceuticals Task Force (BPTF), an affiliate of the Society of Chemical Manufactures & Affiliates (SOCMA), supporting the passage of the GDUFA and offering input throughout the legislative process.

“The historic user-fee legislation—the most important pharmaceutical legislation since the 1984 Hatch-Waxman Act—will provide FDA with additional resources and ensure all participants in the US generic-drug system, whether US-based or foreign, comply with our country’s strict quality standards,” said Ralph G. Neas, president and CEO of GPhA, in a July 9, 2012, GPhA press release. The new fees are expected to reduce the average review time for most generic-drug applications by nearly two years—from more than 30 months today to 10 months by the end of the program’s fifth year, according to GPhA, and will provide increased funding for generic-drug manufacturer facility inspections.

For fine-chemical and API producers, one of the key provisions of the GDUFA is the adoption of a risk-based inspection process to achieve parity in facility inspection between US and foreign manufacturers, a point made by FDA Commissioner Margaret Hamburg earlier this year (3). “Under the GDUFA, FDA will also ensure that manufacturers—foreign or domestic—who participate in the US generic drug market are held to the same, consistent, high quality standard,” said Hamburg at the GPhA Annual Meeting on Feb. 23, 2012 (3). “We will conduct risk-adjusted biennial surveillance inspections of all generic API and finished form manufacturers—with the goal of achieving parity of inspection frequency between foreign and domestic firms by year five. Having the resources to undertake these regular inspections will level the playing field for foreign and domestic manufacturers...”(3).

The fine-chemicals industry agrees. “The Congressionally mandated inspection frequency of every two years has been very difficult to achieve due to insufficient resources within FDA and the rapid globalization of generic-drug manufacturing,” says BPTF Executive Director John DiLoreto. “While US facilities have been inspected approximately every 2.5 years, many foreign facilities have never been inspected at all. Successful implementation of the GDUFA will result in the identification and registration of all drug-production facilities,” he explains. “Previously, FDA even had difficulty determining how many facilities were producing generic drugs that enter the supply chain every day,” he said. By the end of the first five years of the GDUFA, it is expected that all foreign and domestic facilities will be inspected at the same nominal rate of every two years. “This will level the playing field for foreign and domestic producers and establish a balance in drug quality by ensuring that all manufacturers are implementing cGMPs,” says DiLoreto.

Under the GDUFA, FDA will conduct risk-adjusted biennial cGMP surveillance inspections of generic API and generic finished dosage-form manufacturers, with the goal of achieving parity of inspection frequency between foreign and domestic firms in FY 2017. FDA will prioritize inspections of establishments associated with ANDAs that are otherwise approvable or eligible for tentative approval except for an outstanding inspection, as well as establishments associated with ANDAs that have not been inspected previously. In appropriate circumstances, FDA can rely on a routine surveillance inspection in lieu of an application-specific inspection. Generally, FDA relies on a previous inspection of a finished product site occurring within two years of the cGMP evaluation for a pending application, three years for an API site or a control testing laboratory, and four years for a packaging-only site (2). There are exceptions to this general practice, which are usually related to the nature of the drug being processed or the complexity of the associated processing operations. Under the GDUFA, FDA intends to continue the practice of using a risk-based assessment in determining the length of time since the last inspection, guided by a two-year cycle for finished dosage product sites and a three-year cycle for API sites with consideration of the type of finished product or API in the application. For making decisions about pending applications for which FDA does not have current inspection information within the time period indicated, FDA may use previous FDA inspection information and/or use inspection information from another regulatory authority as appropriate (2).

 “Risk-based inspections will have a positive effect on FDA and generic-drug manufacturers,” says DiLoreto. “In managing resources most efficiently, FDA will be able to focus on those manufacturers having the most difficulty in implementing and maintaining quality drug-production programs. Manufacturing facilities that have never been inspected will be considered high risk, and manufacturers with a history of active successful quality programs will be considered to be lower risk,” he explains.

Carla Vozone, business development director at Hovione and industry representative of the EFCG during the negotiation process for the GDUFA, also points to the benefit of the GDUFA in “correcting the mismatch that existed in the inspection schedule and the actual supply chain.” Although approximately 80% of APIs for drugs marketed in the US come from India or China, inspections of drug-manufacturing facilities in these countries are not proportional to these levels, explains Vozone. “Parity in inspections is critical to ensure safety of generic medicines,” she says. She also points to the value in the provisions of the GDUFA that provide for a risk-adjusted surveillance inspections system to prioritize inspections of higher-risk facilities.

Also of significance is increased authority for FDA to deal with low-quality and counterfeit drugs. “Prior to the GDUFA, FDA had little authority to prevent low-quality and counterfeit drugs from entering the supply chain,” explains DiLoreto. As of Oct. 1, 2012, FDA will have the authority to consider misbranded any drugs not produced in a registered and inspected manufacturing facility. All drugs considered misbranded may be destroyed rather that returned so they will not be allowed to enter the supply chain through different supply chain channels, he explains.

As the quality bar for generic drugs and APIs are raised under the GDUFA, the supply chain for generic drugs also may be affected, notes Vozone. “Generic-drug manufacturers will have to do a risk assessment of their supply chains,” she says. Issues, such as increasing secondary sourcing or further evaluations of existing suppliers, will come into play. She also notes that the amount of the user fees, which are still being  determined, will oblige producers to evaluate their cost structures for supplying a given generic API, and as a result, certain producers may exit the market for that product or the sector. These issues will be important to take into consideration in the sourcing strategies for generic-drug manufacturers.

References
1. FDA, “Agency Information Collection Activities; Proposed Collection; Comment Request; Generic Drug User Fee Cover Sheet; Form FDA 3794,”  Federal Register 77 (144), 43844–43846  (2012).
2. FDA, Human Generic Drug Performance Goals and Procedures Fiscal Years 2013 through 2017 (Rockville, MD), July 7, 2012, www.fda.gov/downloads/ForIndustry/UserFees/GenericDrugUserFees/UCM282505.pdf, accessed Aug. 15, 2012.
3. M. Hamburg, “Challenges and Opportunities for the Generic Drug Industry Remarks,” presented at the GPhA Annual Meeting, Orlando, FL, Feb. 23, 2012.