FDA, OTC Industry Look To Protect Supply Chain Security From Global Threats

FDA and the pharmaceutical industry have some catching up to do to mitigate the import safety and counterfeiting risks amplified by the globalization of supply chains, says the agency's policy chief.

Assistant Commissioner for Policy David Horowitz spoke on controlling supply chains that pass through parts of the world where regulatory schemes are ineffective and counterfeiting flourishes - China, in particular - at the Consumer Healthcare Products Association's Manufacturing Control Seminar Oct. 7 in Morristown, N.J.

Horowitz emphasized gathering more information through product screening and organizing it in a searchable database to help FDA "focus and target on the problems and expedite commerce when there are not problems."

On the industry side, Ron Guido, brand protection VP for Johnson & Johnson's global pharmaceutical supply group, said the global pharmaceutical supply chain is a "bird's nest" of product flow lines that practically invites counterfeiting (see chart: " ¹ Making Supply Chains Stronger ").

A Plan Of Action

Before moving to his current position in July 2007, Horowitz was executive manager on policy in FDA's Office of Regulatory Affairs and played a lead role in developing import safety strategies in the Bush administration's Interagency Working Group on Import Safety (² (Also see "FDA’s Office Of Regulatory Affairs Loses Chief, Policy Manager" - Pink Sheet, 7 Jul, 2008.), p. 10).

Horowitz highlighted key features of the working group's November 2007 Import Safety Action Plan that would empower FDA to police imports more effectively, including granting the ability to issue guidance for importers on clarifying good importer practices.

"We think that importers, like manufacturers, have greater ability to identify key information for us and mitigate risk," he said.

The action plan also asks Congress to grant FDA authority to require mandatory certification of imported products that have raised red flags. Horowitz explained that such certification might come from a third-party inspector or foreign government.

Import screenings at borders rely on the appearance standard, Horowitz said, meaning inspectors will halt a shipment if it appears to be in violation.

However, "that puts the burden on us, which often is a burden we can't meet in the current system because of the lack of information," he added.

A pilot program launched by FDA in July with Australia and the European Union will split facility inspection responsibilities between regulators, thus reducing redundancy and decreasing reliance on expensive and time-intensive border inspections (³ (Also see "Import Safety Pilot Casts Global Net For Inspecting Drug Manufacturers" - Pink Sheet, 14 Jul, 2008.), p. 13).

Horowitz also underscored the agency's need for better internal data and said one of its "largest initiatives" currently is piecing together a harmonized, easily searchable inventory of every firm and product regulated by FDA.

"It's embarrassing to admit that we don't already have it," he said, adding that a harmonized database is "the backbone of any regulatory structure."

Guiding China's Policy

Despite signing a memorandum of agreement with China on food, drug and medical device safety in December 2007, FDA is not yet fully confident in the information it receives from China's State Food and Drug Administration, Horowitz said.

The pact covering drug and device safety, which Horowitz helped negotiate, includes joint development of a program to certify Chinese exports to the U.S. and formulation of technical guidance documents and laws (⁴ (Also see "U.S. Expects “American Standards” From Food, Drug Pacts With China" - Pink Sheet, 17 Dec, 2007.), p. 9).

He explained that the Chinese have been "somewhat resistant" to U.S. efforts to "lift them up and push them at the same time" toward adoption of FDA and international standards.

China has not formally adopted the International Conference on Harmonization's Q7A Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients, Horowitz pointed out.

That "is a problem," particularly because China has been attending ICH functions as an observer and still elects not to adopt the guidance, he added.

However, Horowitz said he remains confident that making firm demands of China's food and drug regime will benefit both that country and the U.S.

"It's not always clear to me that public health is necessarily their greatest concern, but opening up markets is extremely important to them," he said. "I think in this case, public health is the vehicle for them to do that."

Counterfeits Rising

Within 30 days of introducing a consumer product to the Chinese market, J&J sees counterfeit versions appearing there, according to Guido. He also noted that 30 percent of certain health care products consumed in developing markets are counterfeit.

Part of the problem behind pharmaceutical fakes is that, in many developing nations, the idea that "imitation is the sincerest form of flattery" trumps intellectual property or patent rights, Guido said.

However, he added "some of the problem is our own fault" since drug companies designed their supply chains around speed, efficiency and cost-effectiveness rather than safety and security. "Now we're trying to retrofit those supply chains and those networks to protect ourselves," he said.

Companies need to move toward implementing track and trace systems to ensure supply chain integrity, since "now counterfeiters laugh at" authentication technology such as holograms and color-shifting inks on packaging, Guido said.

Much as FDA is engaging in partnerships to ensure that U.S. borders are not the only line of defense, Guido encouraged OTC firms to further increase their supply security operations and more effectively safeguard their products, customers and business.

"We need to create new business models around our supply chains," he said. "We need to make supply chain security a competitive advantage for our companies."

- Dan Schiff ([email protected])