Good Manufacturing Practice and the global supply chain

Supply chain oversight: what to expect from —and how to prepare for— an increasingly global supply chain and heightened FDA scrutiny

As more drugs are manufactured overseas and supply chains become increasingly fragmented, FDA has heightened its focus on foreign manufacturers, with significant consequences for international pharmaceutical companies.


The U.S. drug industry continues to see a steady uptick in reliance on global supply chains. As pharmaceutical companies have shifted much of their manufacturing abroad, FDA has significantly increased the number of foreign inspections it performs each year. In addition to increasing inspections, FDA recently announced warning letters to human drug manufacturers regulated by the FDA's Center for Drug Evaluation and Research (CDER) have also increased. In FY 2018 alone, CDER issued nearly five times as many warning letters to human drug manufacturers as it did in FY 2015.

This has put drug manufacturers and their supply chains under increased scrutiny, and at greater risk for potential compliance issues that can have dramatic effects on a company’s business. Jim Johnson, partner, and Chris Fanelli, senior associate, at Hogan Lovells’ Washington, DC office, say that managing these supply chains—and staying on top of emerging trends in Good Manufacturing Practice (GMP) compliance—requires companies to prioritize strong oversight at each stage of a product’s life cycle.

“The days of (a single company) manufacturing a drug product from beginning to end are over,” says Johnson. “The vast majority of [pharmaceutical] products are now made abroad.”

Although FDA has long conducted foreign drug inspections, with US drug makers’ increased reliance on booming overseas pharma hubs like China and India—and FDA’s establishment of foreign offices abroad—FDA foreign inspections are now far more common. “There's been much more focus on supply chain oversight in general, whereby the ultimate manufacturer or (drug) application holder needs to manage every level of its supply chain very closely,” he says. “The more fragmented your supply chain, the more difficult this becomes.”

As a result of the increasingly international nature of the drug supply chain, FDA is more efficiently able to take administrative action without involving the Department of Justice or the court system. One such administrative tool is FDA’s ability to refuse approval of a drug that has a GMP issue. That can mean big delays bringing a product to market. “Complete response letters (CRLs) may be issued if one of the facilities that manufactures a component of your drug, or the drug itself, has a poor FDA inspection and a GMP compliance issue,” says Fanelli. “This can trigger months-long delays that may require resubmission to FDA.”

Import alerts are another major enforcement tool being leveraged by FDA. When FDA discovers a GMP issue at a foreign facility, an import alert can effectively stop all imports of a drug, and bring production activity to a screeching halt. “An import alert,” says Johnson. “puts the entire manufacturing site, and in some cases entire companies, on import ban from the US. It can take a few years to get off an import alert, so the consequences for these businesses are huge.”

Another key area in the global supply chain is FDA’s focus on data integrity during foreign inspections. Data integrity refers to the completeness, consistency, and accuracy of data at a manufacturing site, and is a key component of GMP. “There have been a lot of warning letters over the last several years related to data integrity,” Fanelli says. Understanding “where potential hot-button issues could arise, especially when it comes to data integrity at each stage of manufacturing,” allows companies to ensure potential compliance gaps detrimental to a company either do not exist, or have been addressed, before FDA comes knocking.

Johnson and Fanelli say avoiding these potential compliance issues all starts with proper due diligence and a clear understanding of FDA’s GMP compliance priorities ahead of a new partnership with, or acquisition of, a foreign manufacturer. Companies utilizing global supply chains must ensure they understand the GMP landscape and FDA compliance priorities in order to avoid compliance hurdles down the road. “Every company needs to understand that there is a quality oversight responsibility from a GMP compliance perspective for the entire manufacturing supply chain of any drug product” says Johnson. “And ultimately, GMP responsibility lands on the applicant or sponsor of that drug product, no matter how directly involved they might be in the manufacturing process.”

Watch the video above for additional insights from Johnson and Fanelli about how companies can navigate GMP compliance issues in the global pharmaceutical supply chain.

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