US, Europe and Australia are to jointly inspect Indian and Chinese facilities manufacturing pharmaceutical raw materials.
Bush administration officials said Wednesday the agreement will allow regulators to coordinate their inspections and share information.
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"What we are seeing is the maturing of a global market and we have to invent new tools to deal with a changing environment," Health and Human Services Secretary Michael Leavitt said.
The pilot program will concentrate primarily on facilities in third countries, such as China and India, which produce much of the world's pharmaceutical raw materials, but are sometimes beyond the reach of U.S.
Heparin - made with active ingredients from a Chinese facility - was linked to dozens of deaths and hundreds of severe allergic reactions in this country. The drug was recalled by Baxter International and the U.S. blocked imports from the Chinese company.
The Food and Drug Administration found the heparin was contaminated with a nutritional supplement that costs less, but mimics the real drug in routine tests for potency, and thus was not detected. Investigators suspected deliberate contamination.
The FDA had not previously inspected the Chinese facility because of a mix-up. And neither had Chinese drug safety regulators, because the plant was registered as a chemical factory.
The FDA expects to soon open offices in three Chinese cities - Beijing, Shanghai and Guangzhou, ABC News reported.
Under the program announced Wednesday, authorities would share inspection schedules, results and other information. The goal is to try to reduce duplication and identify potential problems more quickly. The U.S., the European Union and Australia have similarly stringent safety standards, so coordinating inspections seemed like a natural next step.
The agreement on third-country inspections is part of a broad effort to foster cooperation among U.S, European and Australian regulators. Officials are considering whether to limit production of certain "high risk" medications to designated facilities that meet specified standards.
India has the world's third largest API (active product ingredient) manufactuing industry, valued at nearly $2 billion. The country is a major exporter of drug formulations to the US. Around 80% of APIs and 40% of finished drugs sold in the US come from foreign sources. Emerging markets such as India, Brazil, Russia, and China contribute almost a quarter of the US's pharmaceutical market growth.
D G Shah, secretary general of the Indian Pharmaceutical Association (IPA), said: "The FDA probe is just a ploy to create roadblocks to the growth of Indian generics.''
An official of Cipla, which has nine API plants exporting HIV drugs to the US, said:
"Draft legislation has also been proposed—the FDA Globalisation Act of 2008—which would require the US FDA to inspect foreign manufacturing plants every four years. Indian firms are quite used to this.''
Lupin too has five API plants approved by the US FDA, as does Zydus Cadila. The US FDA databases list anywhere from 3,000 to 6,800 foreign firms that ship drugs to the US.
As many as 714 of these are in China, only 13 of which FDA inspected in 2007, and 410 are in India, where the FDA checked only 65.
IPA's Shah said: "Indian manufacturing units are periodically inspected, not just by the US FDA but by regulatory authorities in South Africa, Brazil, the UK and other European agencies...At any given point of time, Indian plants are subjected to 5-6 different inspections by different agencies during one year. India is an easy target for most drug multinationals.''
India's pharmaceutical exports to the US is said to have increased 2,400%, to $789 million, from 1996 to 2006, making it the fastest-growing drug exporter. Last year, Indian firms won US FDA approval to export over 100 generic drugs, Times of India says.