In her testimony, Hamburg offered numbers to show the FDA’s record in reviewing applications for new drugs. In fiscal year 2011, FDA approved 35 new drugs, and almost 70% of these drugs were approved by FDA before any other regulatory agency, including the European Medicines Agency. Of 57 novel drugs approved by both FDA and the European Union between 2006 and 2010, 43, or 75%, were approved first in the United States. Preliminary data show that in 2011, over half of all new active drug substances were first launched in the US.

Although Hamburg offered these numbers to show the agency’s record in approving new drugs, they offer another important insight: namely, the US is an important source and market for drug innovation and pharmaceuticals. The US is the largest national market for pharmaceuticals, accounting for 36%, or $310.6 billion, of the $856 billion global pharmaceutical market in 2010, according to data from the IMS Institute for Healthcare Informatics. The top five EU markets (United Kingdom, France, Germany, Italy, and Spain) accounted for 17%, or $147.4 billion, in 2010. Emerging pharmaceutical markets, which include the BRIC countries (Brazil, Russia, India, and China) and 13 other emerging markets collectively accounted for $150.5 billion, or nearly 18%, of the global pharmaceutical market in 2010, according to IMS.

The data reveal the attractiveness of the US for launching new drugs and marketing existing drugs, but when it comes to manufacturing drug products or active ingredients, the US falls short. Approximately 40% of the drugs consumed in the US are manufactured outside the US, and up to 80% of the APIs in those drugs come from foreign sources, noted Hamburg in her testimony.

In her testimony, Hamburg outlined FDA’s efforts to deal with this increased globalization. In July 2011, FDA published a special report, “Pathway to Global Product Safety and Quality,”  a global strategy and action plan for the agency to more effectively oversee the safety of all products that reach US consumers. As detailed in the plan, over the next decade, FDA will focus on strengthened collaboration, improved information- sharing and gathering, data-driven risk analytics, and better allocation of resources through partnerships with counterpart regulatory agencies, other government entities, international organizations, and other key stakeholders, including industry.

Although these efforts by FDA are important and necessary from a public health and safety perspective, the underlying fundamentals engender a larger public policy question beyond the scope of FDA’s regulatory strategy. In a competitive global economy, what should the US be doing to encourage, cultivate, and retain domestic manufacturing of drug products and APIs? In this election year, debates over how to stimulate economic and employment growth are center stage, but what is noticeably absent is a focused plan to stimulate growth in the bio/pharmaceutical industry, a coveted source of high-technology, science-based innovation. That is one debate that is certainly worth having and one that hopefully will be had.

But what’s good for Ranbaxy has been causing some discomfort for FDA. Whistleblowers from FDA’s Center for Devices and Radiological Health have sued the agency over allegedly being harassed and dismissed after publicly questioning the agency’s approval methods for devices. The suit brought by the whistleblowers alleges, among other things, that FDA improperly read private emails to support a case for dismissing the plaintiffs. This prompted a letter to FDA commissioner Margaret A. Hamburg from Senator Charles Grassley, in which he castigates the agency for perceived mistreatment of the whistleblowers, and includes a series of questions for the agency to answer to clarify their actions with respect to email monitoring.

Among the questions to the agency, Grassley asks “What steps have you taken to reassure employees that they have a right to direct communications with Congress?” The answer to that question is an important one. FDA should expect no less from itself with respect to whistleblower protection than it demands of others.

Ranbaxy’s troubles stretch back at least to 2006, when FDA found significant deviations from CGMP at the company’s Dewas and Paonta Sahib, India, plants. The agency sent a Warning Letter that year and two more in 2008. In September 2008, FDA decided to deny any new drug applications or abbreviated new drug applications that listed either of the two plants as a manufacturer. It also issued an Import Alert that allowed US border officials to detain imported products manufactured at those facilities.

As if the manufacturing problems were not serious enough, federal officials, reportedly including FDA employees, searched Ranbaxy’s New Jersey offices in 2007. The US Department of Justice (DOJ) later launched an investigation into allegations of conspiracy, false statements, and healthcare fraud at the company. DOJ suspected Ranbaxy of fabricating bioequivalence and stability data to support abbreviated new drug applications, and of attempting to conceal CGMP violations.

The situation worsened in 2009, when FDA charged Ranbaxy Laboratories’s Paonta Sahib facility with falsifying data and test results in approved and pending drug applications. The agency stopped all substantive scientific review of new and pending drug-approval applications containing data generated by the facility. A few months later, Malvinder Mohan Singh stepped down as the company’s chairman, CEO, and managing director.

Last week, Ranbaxy signed the consent decree in hopes of resuming US sales of drugs manufactured at the two banned plants. In a press statement, Ranbaxy pledged to ensure the integrity of its data and to comply with CGMP. Indicating that DOJ’s suspicions had some foundation, the company also set aside $500 million to resolve civil and criminal liability arising from the department’s investigation.

Ranbaxy has taken unspecified “systematic corrective steps” to straighten itself out, according to the statement. Although we might be skeptical about these measures, the company’s new owner Daiichi Sankyo might bring the rigor and discipline that Ranbaxy seems to need. Let’s hope on behalf of patients everywhere that Ranbaxy can turn over a new leaf in 2012.

Last Thursday, FDA issued an interim final rule requiring manufacturers that are the only producer of certain drug products to report all manufacturing interruptions to the agency. Early notification will help FDA work with drug manufacturers and doctors to make sure that patients have access to life-supporting products. The interim rule was spurred by President Obama’s Oct. 31, 2011, executive order, which directed FDA to reduce and prevent drug shortages.

But the agency is not relying on just one tactic. In addition to the interim final rule, FDA is developing a tracking database to monitor drug shortages. The database will record the numbers of shortages, the reasons for shortages, and what steps FDA is taking to address and prevent them. The database is a high priority for the agency, which hopes to complete it in 2012.

Also, several observers have expressed concern that unscrupulous organizations could attempt to reap large profits from drug shortages. In response, FDA has begun analyzing reports about drug stockpiling and exorbitant pricing. The agency plans to provide the Department of Justice with information about these reported activities, and the Department will determine whether they are consistent with the law. This issue is on Congress’s radar, too: Senator Charles E. Schumer (D-NY) recently introduced a bill to make price gouging on scarce drugs a federal crime.

As any supply-chain professional knows, having one source of a crucial item is far from an ideal situation. If a drug is crucial but not profitable, we may not see new sources spring up to provide additional supply-chain security. But FDA’s initiatives promise to ease the threat of drug shortages and reduce patients’ suffering.

After reviewing the data, obstetricians, gynecologists, and pediatricians at the Center for Drug Evaluation and Research (CDER) determined that Plan B One-Step “was safe and effective in adolescent females, that adolescent females understood the product was not for routine use, and that the product would not protect them against sexually transmitted diseases,” according to a statement by FDA Commissioner Margaret Hamburg. CDER also concluded “that adolescent females could use Plan B One-Step properly without the intervention of a healthcare provider,” according to the statement. And FDA is not alone—the American Academy of Pediatrics also supports over-the-counter access to emergency contraception.

Sebelius’s concern about the ostensible lack of studies including 11-year-olds seems unusual when one considers that many over-the-counter drugs have not been studied in preadolescents—and some are far more dangerous than Plan B One-Step. “Acetaminophen can be fatal, but it’s available to everyone,” Susan Wood, a former FDA assistant commissioner, told The New York Times. “So why are contraceptives singled out every single time when they’re actually far safer than what’s already out there?”

FDA places great emphasis on scientific data, as any manufacturer contemplating a process change well knows. In this instance, FDA’s informed decision seems to have been overruled for reasons other than scientific ones.

Also see Christopher Allen and Angie Drakulich’s sidebar “Behind the Counter.”

Citing interviews with stakeholders, GAO recommended creating an information clearinghouse, through which companies could share information anonymously on adulterated ingredients with FDA and other companies. A clearinghouse could help FDA disseminate information about adulterated products quickly and enable the agency and industry to respond to adulteration rapidly. If the clearinghouse were managed by a neutral third party, it could ensure that the information did not identify specific companies.

This strategy could help allay industry’s concerns about sharing information when an adulterated ingredient has not entered into commerce. Companies are afraid that they may be sued if they reported that a supplier intentionally adulterated a product and the accusation is later found to be baseless. A wrongful accusation “can have serious consequences, such as compromising the integrity of the company’s brands and products if certain information became public,” according to the report.

Because potential adulterants often are unknown or unidentified, it can be hard for FDA to detect them. “For example, during the heparin incident, the available test methods for heparin were not able to detect the contaminant oversulfated chondroitin sulfate,” said the report. “Industry may be the best source of tests to detect adulteration because companies develop such tests to monitor the products they receive from their suppliers; however, industry officials indicated that they are often reluctant to share such information because it is proprietary.”

By eliminating details that could identify specific pharmaceutical companies, an information clearinghouse could allay industry’s concerns, help FDA dedicate its resources efficiently in the event of potential adulteration, and protect citizens from ingesting harmful drugs. It sounds like a win for all involved. GAO has done us a service in writing this report, and I hope FDA takes its recommendations seriously.

After reviewing its documentation, the company concluded that routine preventive maintenance and requalification of manufacturing equipment at the site was overdue. Ben Venue suspended manufacturing so that it could assess the entire site and take appropriate corrective actions to ensure the safety of its products. The suspension will affect Johnson & Johnson, which markets Doxil, as well as Pfizer, Hospira, and Teva.

Last month, President Obama ordered FDA to take various steps intended to prevent and reduce drug shortages. The agency will require advance notice from manufacturers likely to face manufacturing disruptions, and it will expedite reviews of new drug suppliers, production sites, and manufacturing changes.

These steps, while helpful, do not address an important factor that contributes to drug shortages: manufacturing deficiencies. Even before Ben Venue conducted its own review, FDA found 48 quality concerns during an inspection of the Bedford site in May 2011. FDA likely needs a larger pool of inspectors to oversee drug manufacturing sites more thoroughly. But the government’s current desire for austerity will probably preclude the budget increase that would make hiring possible.

Maybe FDA should prioritize manufacturing sites for inspection if they are among a few that produce a medically necessary drug such as Doxil. Greater attention to crucial sites could identify problems earlier and, ideally, resolve them without disrupting drug supply.

One technique was accelerated approval for drugs to treat serious diseases. This authority allows the agency to approve a drug based on clinical data showing that it is reasonably likely to have a clinical benefit, even if data do not demonstrate that the drug has this benefit. Almost half of the newly approved drugs received Priority Review because they had the potential to offer major advances in treatment, or because no adequate therapy existed. FDA sets a six-month target date to review such drugs.

Although these changes in procedure are well-intentioned, we may legitimately ask how they will affect patients’ safety. After all, GSK’s diabetes drug Avandia received fast-track approval, but an article published in The New England Journal of Medicine later linked the drug to an increased risk of heart attacks. The Wall Street Journal notes that a Senate Finance Committee report last year accused the company of hiding data showing Avandia’s cardiovascular risks, and GSK has just agreed to pay the US government $3 billion to settle this and other claims.

Creating a short timeline for drug approval could hurt the agency’s reviews of clinical data. FDA approved Pfizer’s smoking-cessation drug Chantix after an accelerated priority-review process. The agency concluded that the drug did not increase the risk of psychiatric problems such as depression. But researchers from Wake Forest Baptist Medical Center found that Chantix was eight times more likely to result in suicidal behavior or depression than nicotine-replacement products. One reason for the discrepancy could be that, unlike FDA, the researchers performed disproportionality analysis on the data—a technique that is increasingly being used to find links in side-effect data that normally escape detection in clinical trials.

FDA’s staff includes well-vetted and experienced scientists, but they need sufficient time to work thoughtfully and thoroughly. Even though the agency’s initiative has increased the number of new-drug approvals, it may also be increasing the risk that a company can hide negative data from regulators, or that the agency’s own analyses will not be as complete as they could be. In light of the problems with Avandia and the conflicting studies about Chantix, I think FDA should review its efforts to promote innovation to be sure that the agency maintains high standards for drug safety.

As the unemployment rate hovers around 9.1%, the federal government needs to find ways to create jobs. Congress is debating whether a tax break on repatriated money would prompt companies to hire more workers, as I mentioned last week. Meanwhile, the Obama administration is eyeing another potential means of stimulating job growth: investing in biological research.

When he signed the America Invents Act in September, President Obama committed to developing a National Bioeconomy Blueprint by January 2012. The blueprint will describe ways to manage investment in biological research to improve the nation’s health and create the “jobs of the future.” Aside from identifying potentially productive investments in R&D, the blueprint will also describe regulatory reforms to reduce burdens on biopharmaceutical manufacturers.

Illustrating the maxim that great minds think alike, FDA is already seeking to identify and reform burdensome and inefficient regulations as part of its own initiative to stimulate biomedical innovation. At the same time, the agency plans to establish a common understanding among stakeholders to clear the approval pathway for exceptionally promising therapies. These goals are included in the agency’s recent report titled Driving Biomedical Innovation: Initiatives to Improve Products for Patients.

Biological research is the foundation of a significant portion of the American economy, as the White House website notes. The combined efforts of the president and FDA could help discover and develop new therapies. If they also encourage biopharmaceutical companies to hire new employees, they will help mitigate an urgent problem that has not yet been addressed sufficiently.

Looking at the pharmaceutical industry as a microcosm for economic activity, there are certain fundamentals that cannot be ignored: demand in established markets is weak and demand in emerging markets is strong. In 2010, on a constant dollar basis, the North American pharmaceutical market increased only 1.9% compared with 2009, and Europe’s pharmaceutical market increased only 2.4%, according to data from IMS Health. In contrast, the pharmaceutical markets for Asia/Africa/Australia (excluding Japan) increased 14% and 14.2% in Latin America in 2010, both on a constant dollar basis. Admittedly, the sizes of emerging markets are less than established markets. In 2010, North America’s pharmaceutical market was valued at $335 million, Europe’s at $253 million, Asia/Africa/Australia (excluding Japan) at $130 million, and Latin America at $54 million on a constant dollar basis.

What these numbers show, however, is a basic truth that policymakers cannot ignore: when companies are investing, they are investing where there is market demand, namely, in emerging markets. Although some proposals in the President’s plan, such as payroll tax relief or accelerated deductions for businesses, would be helpful to businesses in the short term, they cannot alter the demand–supply fundamentals that are behind the shifts in capital investment.

Within specific sectors, it is more helpful to examine where federal policy can make a difference. One area in the pharmaceutical industry where there seems to be a disconnect in federal policy is in the manufacture of pharmaceutical ingredients and related supply to the US market. A recent report by the US Government Accounting Office (GAO) points to the ongoing challenges that FDA faces in overseeing the foreign drug-manufacturing supply chain. In 2010, GAO estimated that FDA inspected 11% of foreign drug-manufacturing establishments subject to inspection, and that it would take approximately nine years for the agency to inspect such establishments at that rate. In contrast, in fiscal year 2009, FDA conducted 1015 domestic inspections, representing approximately 40% of facilities, which would allow the agency to inspect domestic facilities at the rate of once every 2.5 years. To address this challenge, in its recent report, Pathway to Global Product Safety and Quality, FDA outlined its efforts to increase foreign inspections, increase staffing overseas for such inspections, and other cooperative measures among national regulatory agencies.

Although such efforts are important and necessary from a product-safety perspective, a more fundamental question arises for federal policymakers: is it really prudent for the US to allocate federal resources to increase inspection staff to support offshore manufacturing for pharmaceutical ingredients and products for the US market?  Would it be better policy to align product supply with what can be reasonably overseen by national regulatory agencies through domestic production and in the process not only support but expand domestic pharmaceutical production? Given the regulatory oversight required to ensure quality and safety, a pharmaceutical product is different than other industrial or consumer products, and therefore, the rules of market engagement would seem to differ. There is always much discussion on the value of keeping technology-based and science-based jobs in the US, but in the context of pharmaceutical development and manufacturing, are we really pursuing a cohesive federal policy? That perhaps is the question we should be debating.

See related stories,”Big Pharma’s Manufacturing Blueprint for the Future.”

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