How Good Are Your Drugs? (Part 4) - Page 2

We are also concerned that the two previous inspections also noted failure to maintain complete and accurate records, and that your firm may not have taken this type of discrepancy seriously and thus has not corrected the documentation practices of your employees. In addition, during a regulatory meeting with your firm on May 7, 2004, management indicated to us that inappropriate documentation practices have occurred at your facility. Practices such as back dating and signing for actions not performed are serious violations.”

Traditionally, the burden of proof that a prescription drug is FDA approved and legal at time of dispense and administration has been on those who profit from the manufacture, distribution, authorization and dispense of prescription drugs. Increasingly, the burden of proof appears to be shifting from those who profit to those who pay the bills.A 2001 Lancet article reveals that, according to the WHO, India produces as much as 35% of the counterfeit and substandard drugs in the world. In addition, a recent series of Business Week articles exposes systemic infrastructure gaps in India’s water and distribution systems that likely increase prescription drug adulteration and tampering. FDA OversightThe FDA has many issues concerning oversight of the manufacture of pharmaceuticals within the borders of the United States:1. Manpower – As with many governmental agencies, there are not enough inspectors to oversee the process and identify issues.2. The Regulatory Process – When a pharmaceutical manufacturer is warned, there is an appeals process that gives the manufacturer an opportunity to respond. A company can also file for injunctive relief. During this process, the manufacture of the compounds continues.3. FDA Funding – It is estimated that 40% of the FDA’s operating budget comes from the sale and licensing of rights to pharmaceuticals, so the agency’s funding is largely dependent on the industry it is charged with regulating, leading to complex and shifting priorities within the FDA.4. State Pharmacy Boards – Most state pharmacy boards are under-funded and lack resources and jurisdiction to adequetely oversee the three big drug wholesalers, large chain pharmacies and PBMs. Oftentimes, state pharmacy boards include representatives from these companies.It appears that oversight is even more of a problem overseas. According to a recent Washington Post article, pharmaceuticals and pharmaceutical components manufactured in China, India, Japan and Europe are not inspected as often by the FDA. In 2006, according to FDA records, 32 inspections were conducted in India and 15 in China. Some of these inspections were done as part of the approval process and not for quality control oversight, although the FDA would not comment on the nature of these 47 inspections.This is in contrast with the 1,222 quality control inspections conducted in the United States in 2006. It is estimated that 20% of finished pharmaceutical products and 40% of active ingredients come from China and India. It is predicted that within 15 years, 80% of the components of pharmaceuticals will come from these two countriesSetting the StandardWith the revelations that there are glaring irregularities in the manufacture of pharmaceuticals and the oversight by US federal and state regulatory agencies, you would think that Congress would move to strengthen the rules governing all of these industries. Instead, Congress is seeking to relax the rules, ostensibly to lower cost to the consumer to justify the increased lack of oversight.In 1984, Congress passed the Hatch-Waxman bill, expanding the distribution of generics to reduce cost to the patient. The strength of this bill was FDA enforcement. Today, with the proliferation of adulterated and fraudulent pharmaceuticals through the Internet, the FDA has proven that it can’t or worse, won’t keep up. Powerful forces are now lobbying Congress to provide an FDA framework for the production of biogeneric drugs - generics in the area of biologics. Biotech or biologics are not chemically manufactured but produced from live cells, and are used to treat a variety of chronic and terminal patient populations, including AIDS, diabetes and cancer.

Article Author: Rick Vassar

Rick Vassar CPCU, ARM, AIS, ARM-P is a career commercial risk manager and the author of Hide! Here Comes the Insurance Guy, where he uses humor to explain insurance strategies in language everyone can understand.
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