Introduction
Mr. Chairman and members of the Committee:
I am Sharon Smith Holston, Deputy Commissioner for External
Affairs for the Food and Drug Administration (FDA or the Agency). I
am pleased to appear before you today to discuss the Sectoral Annex
for Pharmaceutical Good Manufacturing Practices (the Annex) of the
Agreement on Mutual Recognition between the United States of
America and the European Community (MRA). Accompanying me
today is Walter M. Batts, Director Office of International Affairs and
lead negotiator of the Annex, and several other colleagues who
contributed to development of the Annex's provisions.
I will begin by describing the challenge FDA faces with respect to
foreign drug products imported into the United States. I also will
describe what we have been doing to address this situation with
available resources, provide an overview of the mutual recognition
agreement with the European Community (EC) and how it was
achieved, and point out the key safeguards achieved in the MRA to
assure our ability to promote and protect public health.
FDA's Mission and Mandate
Under the Federal Food, Drug, and Cosmetic Act (the Act), FDA is
charged with, among other things, assuring that drugs marketed in the
U.S. are safe and effective, and are manufactured in accordance with
current Good Manufacturing Practices (GMPs). The Act applies to
any drug for which marketing is sought or which currently is
marketed in the U.S., regardless of where it is manufactured. FDA
also is responsible for implementing the provisions of the Public
Health Service Act (PHS Act) applicable to vaccines, allergenic
products, and biological therapeutic products licensed for marketing
in the U.S., regardless of their place of manufacture. (These
biological products are also within the scope of the agreement we will
be discussing today.) Thus, FDA carries out inspections of
manufacturing facilities, both domestically and in foreign countries,
before a product is approved for marketing, and periodically after
approval for marketing. FDA also does a limited number of GMP
inspections of foreign facilities that produce drugs not requiring pre-market
approvals. For domestic drug manufacturers, the Act requires
registration and biennial inspections. No such statutory inspection
requirement exists for foreign drug manufacturers and a registration
requirement was imposed only last year in the Food and Drug
Administration Modernization Act of 1997 (FDAMA). The PHS Act
does not make distinctions between the requirements for foreign and
domestic manufacturers of biological products.
The Global Marketplace
The demands of product regulation have changed as a result of the
increasingly global economy. Therefore, FDA has been compelled to
develop an international strategy that addresses the fact that an
increasing proportion of the products we regulate originate outside our
borders, from numerous locations all around the globe. What we have
had to do is devise practical approaches to this reality that uphold our
central mission, which is to provide a high level of consumer
protection to our citizens.
To facilitate this mission, in the early 1990s, FDA began to devote an
increasing amount of its inspectional resources to inspections of
foreign pharmaceutical firms. Through this effort, FDA has more
than doubled the number of foreign drug inspections that it carries out
each year. In 1997, FDA personnel inspected a total of 390 foreign
firms, including human and veterinary drug, and biological products
facilities.
But in spite of the increases in foreign inspections, the reality is that
FDA simply does not have the capacity needed to inspect foreign
firms at the optimum rate. Yet, the need to obtain information about
foreign drug manufacturing practices through inspections is great.
Reliance on International Agreements in General
FDA recognized as long ago as the 1970s, that we could not increase
foreign inspections at a pace that would keep up with the rapidly
growing number of imported products. This led the Agency to seek
new ways to cooperate with foreign partners. Since that time, the
Agency repeatedly has reaffirmed the value of agreements with our
foreign counterparts to help fulfill our mission, and the desirability of
seeking out such agreements.
FDA's 1995 Compliance Policy Guide on International Memoranda of
Understanding (MOU) set forth the Agency's overall policy for
developing, initiating, and monitoring MOUs with agencies of foreign
governments or international organizations:
"It is the policy of FDA to pursue the development of MOUs
that will further the Agency's domestic public health mission.
MOUs between the FDA and an agency of a foreign
government or an international organization should be
designed to:
- Enhance FDA's ability to ensure that regulated
products are safe, effective, of good quality, and
properly labeled;
- Allow FDA to utilize its resources more effectively or
efficiently, without compromising its ability to carry
out its responsibilities; and
- Improve communication between FDA and foreign
officials concerning FDA-regulated products.
Further, before accepting the procedures and activities,
including enforcement methods, of foreign governments as
equivalent to its own, FDA will seek assurance that such
activities provide the same level of product quality, safety and
effectiveness that is provided under the FFDCA; the Fair
Packaging and Labeling Act; the Public Health Service Act;
and any other relevant law of the U.S. FDA may find it
necessary to confirm by on-site review or other appropriate
means that the foreign government agency has the necessary
authorities, product standards, capabilities, and infrastructure
to successfully achieve the proposed terms of the MOU, and,
therefore, that a determination of equivalence can be made."
FDA currently has approximately 50 agreements with its counterparts
in other countries. These agreements cover all FDA product areas,
and vary in their purposes. The Agency publishes these agreements in
the Federal Register (21 CFR 10.90(d), 20.108), and also has issued a
compilation of all such agreements, through November 1996, in a
volume known as the FDA International Cooperative Agreements
Manual.
Three of these already-existing agreements concern pharmaceutical
GMP inspections:
- Exchange of Letters with Switzerland (1968);
- Memorandum of Understanding with Sweden (1972); and
- Agreement of Cooperation with Canada (1973).
Inspectional Strategies
In 1995, FDA established the Foreign Inspection Working Group to
examine the strengths and weaknesses of its foreign inspection and
import monitoring programs and determine how these programs could
be improved. The Working Group's Summary Report noted that a
high percentage of significant GMP problems had been observed at
foreign manufacturers, compared with domestic facilities.
In order to address these concerns, the Working Group proposed,
where appropriate, using risk-based criteria for prioritizing the foreign
firms that will be inspected. Based on the risks associated with the
product and the inspectional history of the facility, resources available
for foreign inspections can be targeted to the areas where those
resources can be most effective, or where the risks are greatest.
Risk-based inspectional strategies are an important mechanism for
targeting limited foreign inspection resources in the face of increasing
imports. In addition, the Foreign Inspection Working Group noted
that:
Developing more effective international agreements with
foreign regulatory counterparts would help to maximize FDA's
limited inspection and surveillance resources. Appropriate
foreign regulatory peers can share the responsibility for
assuring the safety of products offered for entry to the U.S.
from companies under their jurisdiction. Greater confidence
in the validity of product certifications and inspection reports
produced by foreign inspectors can assist FDA with its public
health protection responsibilities and optimize FDA's
constantly dwindling resources. Therefore, FDA's most
important criterion for such agreements must be determining
the equivalence of foreign government regulatory programs to
FDA's programs (i.e., that they each afford the same level of
consumer protection) . . . .
International agreements, such as the MRA, can be a helpful tool for
determining where foreign inspection resources can be most effective.
Relying on the expertise of competent counterpart agencies abroad
can provide inspectional coverage in their respective areas and
provide information to FDA to allow the Agency to determine
whether GMPs are being adhered to by foreign manufacturers which
are exporting products to the U.S. This information will complement
FDA's activities to observe manufacturing facilities directly and
enhance public health protection.
The Food and Drug Administration Modernization Act (FDAMA)
It is important to note that, in the recently enacted Food and Drug
Administration Modernization Act of 1997 (FDAMA), FDA is
required to "support the Office of the United States Trade
Representative, in consultation with the Secretary of Commerce, in
efforts to move toward the acceptance of mutual recognition
agreements relating to the regulation of drugs, biological products,
devices, foods, food additives, and color additives, and the regulation
of good manufacturing practices, between the European Union and
the United States" (to be codified at 21 U.S.C. 383(c)(2)).
In addition, FDAMA incorporates into FDA's mission the concept of
developing agreements with other countries. The law directs the
Agency to "participate through appropriate processes with
representatives of other countries to reduce the burden of regulation,
harmonize regulatory requirements, and achieve appropriate
reciprocal arrangements" (to be codified at 21 U.S.C. 903(b)(3)).
FDAMA also requires that FDA develop and make public a plan
establishing "a framework for achieving mutual recognition of good
manufacturing practices inspections." This plan, which is broadly
applicable and not restricted to the EC, has been developed and was
posted on the FDA Internet Home Page in May. A copy is attached to
my testimony.
In the FDAMA plan, FDA defined mutual recognition agreement as
follows:
A "mutual recognition agreement" is an agreement between
two countries which provides for a reciprocal reliance upon
facets of each other's regulatory systems, to the degree
specified in the agreement. The requirements being met are
those of the importing country, i.e., in the case of the United
States, the FFDCA, the Public Health Service Act, and FDA
implementing regulations.
The concept embodied in this definition was used by FDA in
negotiating the pharmaceutical GMP annex with the EC. As you
know, the Annex focuses on GMP inspections, not review of product
applications or approval of such applications.
The U.S. -- EC MRA
It is important to note that the idea of an agreement with the EC on
pharmaceutical GMPs is not a new concept. FDA has had bilateral
meetings with representatives of the European Commission
(Directorate-General III (DG-III), which covers Industrial Products,
Pharmaceutical, Medical Devices, and Processed Foods units) who
are responsible for most of the products we regulate and have been
since 1989. Discussions of a possible MOU, similar to the bilateral
MOUs mentioned above, began in this context in the early 1990s. It
was necessary to hold these discussions with the European
Commission because the Member States could not negotiate on these
issues independently under EC rules.
Although the U.S. Trade Representative (USTR) or the Department of
Commerce is in a better position to discuss more details, suffice it to
say that in 1993, the EC embarked on an ambitious plan to expand
market access for regulated goods through a number of Mutual
Recognition Agreements with major trading partners. The EC's goal
was (and in the long term still is) to conclude agreements which
provide that products approved under European regulations would be
accepted without further scrutiny by regulators of importing countries
and vice versa. Directorate-General I (DG-I), which for the EC
fulfills the combined roles of USTR and the trade functions of the
Departments of State and Commerce, has responsibility for carrying
out this plan. For negotiations with the U.S., the negotiating mandate
under which DG-I is operating includes both the pharmaceutical and
medical device sectors. [The inclusion of these sectors in the scope of
the MRA mandate superseded DG-III's authority to pursue the MOU
directly with FDA.] FDA determined that we could maintain control
of our issues and accomplish our objectives, despite changes in the
authority of our European counterparts, and we continued our
negotiations in the new context. FDA's objectives for the MRA, as
developed in our internal discussions, were to:
- Enhance FDA's ability to ensure that the health and
safety of American consumers are protected;
- Obtain the information necessary to determine whether
the EC Member State regulatory systems for GMPs are
equivalent to FDA's;
- Establish enhanced communications between FDA and
the Member State regulatory authorities concerning the
quality of pharmaceutical products exported to the
U.S.; and
- Eliminate unnecessary regulatory burdens on industry.
Description of the MRA with the European Community; Sectoral
Annex on Pharmaceuticals
The MRA includes an "umbrella agreement" describing a framework
for the functioning of all of the MRA's annexes. Several provisions
of the umbrella agreement affect FDA's operation under the sectoral
annex on pharmaceuticals. Examples of such provisions include the
provision establishing the Joint Committee (Article 14 of the
umbrella) and the provision regarding confidentiality (Article 17 of
the umbrella). Other provisions in the umbrella agreement will not
apply to FDA's activities under the pharmaceutical GMP annex. For
example, umbrella provisions concerning conformity assessment
bodies do not apply to the pharmaceutical annex, because that annex
does not utilize such bodies.
The MRA includes several sectoral annexes covering various
products, two of which cover products regulated by FDA:
pharmaceuticals and medical devices. The pharmaceutical GMP
annex covers human drugs regulated by the Center for Drug
Evaluation and Research (CDER), animal drugs regulated by the
Center for Veterinary Medicine (CVM), and certain biological
products regulated by the Center for Biologics Evaluation and
Research (CBER). In so doing, the Annex applies to post- and pre-approval good manufacturing
practice (GMP) inspections for the
stated products. The Annex describes procedures under which the
participating parties and regulatory authorities will exchange
information and how the equivalent authorities will regard
information they receive from one another. In no way does the MRA
or any of its annexes change current FDA requirements for these
product areas.
The stated purpose of the Annex is to
"govern the exchange . . . and normal endorsement . . . of
official Good Manufacturing Practices (GMP) inspection
reports after a transitional period aimed at determination of the
equivalence of the regulatory systems of the Parties . . . ."
(Article 2)
Toward this end, the Annex describes activities and processes that
will occur during two distinct periods: the transitional period and the
operational period. FDA's participation in these activities and
processes will lead to exchange and possible "normal endorsement" of
pharmaceutical GMP inspection reports.
A 3-year transition period will begin immediately after the MRA
enters into force. For FDA, preparations for entry into force have
included publishing a proposed rule on the MRA for notice and
comment. Although FDA was committed to conducting this
negotiation with the maximum possible transparency, which included
holding two public meetings, meeting with relevant stakeholders, and
speeches in appropriate fora, it was determined that informal notice
and comment rulemaking was appropriate for the final agreement.
The MRA was published in the Federal Register as a proposed
regulation on April 10, 1998. The Agency has reviewed the
comments received in response to the proposed rule and is preparing a
final regulation for publication in the near future.
During the transitional period, FDA will participate in equivalence
assessment activities with its counterpart pharmaceutical regulatory
authorities in the EC Member States. As specified in the Annex,
activities will include information exchange, joint training, and joint
inspections (Article 6). These activities will enable FDA to assess the
equivalence of its counterpart regulatory authorities and to enable
those authorities to assess the equivalence of FDA. FDA and Member
State regulatory authorities will assess equivalence according to
certain criteria specified in the Annex (Appendix 4).
According to the Annex, "equivalence" means that
"regulatory systems are sufficiently comparable to assure that
the process of inspection and the ensuing inspection reports
will provide adequate information to determine whether
respective statutory and regulatory requirements of the
authorities have been fulfilled. 'Equivalence' does not require
that the respective regulatory systems have identical
procedures." (Article 1)
At the end of the 3-year transition period, FDA will assess the
information it obtained through the transition period. The EC
regulatory authorities that carried out equivalence assessment
activities will, likewise, assess the information they obtained.
Representatives from FDA and the EC then will meet in the Joint
Sectoral Committee (JSC) to discuss which regulatory authorities will
be determined to be equivalent. FDA will make available for public
review the complete record on which each equivalence assessment
and determination is based.
Provisions concerning the role and composition of the JSC are found
in Article 17 of the Annex. The JSC will be co-chaired by a
representative of FDA and a representative from the EC. Each
representative will have one vote for each matter before the JSC, and
decisions in the JSC will be taken by unanimous consent. Thus, an
EC regulatory authority can not be determined to be equivalent to
FDA unless FDA agrees that it is equivalent. The JSC's functions
include monitoring activities under the Annex, determining
equivalence of the authorities at the end of the transition period (as
discussed above), developing and maintaining a list of equivalent
authorities, and consideration of suspension of an authority listed as
equivalent (Article 16).
During the operational period, pre- and post-approval GMP inspection
reports for products covered under this Annex will be transmitted to
the regulatory authority requesting such report. Once an authority
receives an inspection report from an equivalent authority (post- or
pre-approval reports), the receiving authority will "normally endorse"
the report. Normal endorsement will occur "except under specific and
delineated circumstances," and will be "based on the determination of
equivalence in light of the experience gained" (Article 12). This
language allows FDA to make final determinations as to compliance
with U.S. GMP requirements. FDA expects to be able to accept most
findings in inspection reports received from authorities listed as
equivalent. The Annex provides, however, that "under specific and
delineated circumstances," including "serious concern in relation to
product quality or consumer safety," the regulatory authority of the
importing party may seek more information regarding an inspection
report and, if not satisfied, carry out its own inspection.
The Annex contains several other provisions governing its operation.
For example, during the transitional period, the authorities will
develop an alert system, and will develop means of exchanging
information on confirmed problem reports, corrective actions, recalls,
rejected import consignments and other regulatory and enforcement
problems for products subject to the Annex (Article 20).
In addition, the Annex contains a number of provisions that FDA
negotiated to provide safeguards to ensure or enhance FDA's ability
to provide consumer protection. I'd like to highlight some of those
provisions.
Once the agreement becomes operational, equivalent authorities will
participate in activities to monitor equivalence, including review of
inspection reports, a limited number of joint inspections, and common
training sessions (Article 15). In addition, the Annex requires that the
Parties and the regulatory authorities "inform and consult" each other
on changes affecting their pharmaceutical GMP inspection programs.
Further, a crucial provision affirming the regulatory authorities' role in
protecting the public health recognizes that regulatory authorities may
fulfill their "legal responsibilities by taking actions necessary to
ensure the protection of human and animal health." The authorities
may take such actions in accordance with the level of protection they
consider appropriate (Article 21).
The Annex also provides that the equivalence determination of a
regulatory authority can be contested, and the equivalence decision
ultimately suspended, if necessary. Such issues are to be discussed
within the JSC and may be referred to the Joint Committee of the
MRA. In addition to the provisions contained in the Annex, FDA has
taken steps to assure that the Agency will remain in charge of the
equivalence determination process throughout the life of the
agreement. FDA and USTR have entered into a MOU which provides
that FDA will speak for and vote on behalf of the U.S. government
when health and safety issues which are the responsibility of FDA
under the Act, the PHS Act, and related statutes, are discussed in the
Joint Committee. FDA likewise speaks for and votes on behalf of the
U.S. in the JSC on all issues related to the Annex.
The Annex and FDA's Role
I spoke earlier about the roles of the negotiators and regulators on the
EC side of this negotiation. Perhaps it would be useful to discuss the
roles and relationships between the agencies on the U.S. side.
As you know, the Office of the U.S. Trade Representative has the
responsibility for conducting trade negotiations on behalf of the U.S.
government. During the early part of the MRA negotiation, however,
the Department of Commerce (International Trade Administration,
Office of Europe) was responsible for U.S. interagency coordination.
As noted above, both sides recognized and agreed that the regulators
would have to negotiate the sectoral annexes. FDA was in full control
of its sectoral negotiations, including the negotiating objectives and
the parameters of the negotiation. There were clearly times during the
negotiation when DG-I negotiators operated under the assumption that
trade issues were paramount in the negotiation. It was made clear to
them, however, that for legal and policy reasons health and safety
issues would govern. The U.S. trade agencies respected FDA
autonomy in all matters. For its part, as is usual in our relations with
the trade agencies, FDA focused on achieving its goals of protecting
public health and safety while taking into account the broad trade
objectives of the U.S. government.
Within FDA, the negotiating process was a collective effort. A
steering committee, with representatives of all FDA components with
any stake in the outcome, was the vehicle for preparing FDA positions
and negotiating strategies. We felt it was important that such an
undertaking be approached from a basis of total inclusion, and that it
was necessary to expend whatever resources were necessary to
accomplish that objective.
Resource Implications
There is no escaping the fact that negotiating and implementing this
MRA does have significant resource implications for FDA. While a
long-range objective of the MRA is to leverage FDA resources
through cooperation with our counterparts in Europe, we must
acknowledge that there are costs not only on the "front-end" but also
throughout the life of the MRA. We have absorbed, and will continue
to absorb, these costs using our currently available resources. The
constraints of those resources may dictate that the equivalence process
will not be done sufficiently rapidly to meet the expectations of the
European Commission or of the Transatlantic industry. We will,
however, pursue the process to its completion.
In addition, FDA made clear to the EC our concerns about the
adequacy of our resources to conduct equivalence assessment
determinations for all EC Member States, and committed to
implementing the MRA on a resources-available basis. (Article 7)
Conclusion
To summarize, we believe that entering into this MRA will, in the
long run, facilitate FDA's mission to ensure safe and effective drugs
in the U.S. marketplace. The MRA provides a unique opportunity to
take a close look at European regulatory systems, to determine which
are equivalent to FDA's, and, once equivalence has been determined,
to normally endorse the results of foreign GMP inspections.
Inspections by equivalent authorities would provide additional
assurance that imported pharmaceutical products are manufactured in
compliance with GMPs.
Given the intertwined nature of the pharmaceutical industry in the
U.S. and Europe, cooperation with our European counterparts will
enhance our ability to protect the public health and is fully consistent
with FDA's mission, particularly as recently expanded and articulated
in FDAMA. FDA is committed to implementing the mandates of the
FDAMA in relation to this MRA. We recognize concerns regarding
the availability of resources to fully implement the agreement, and I
want to assure you that we will continue to be sensitive to this in our
implementation planning. I hope you now understand the steps that
FDA has taken to ensure our ability to make independent decisions in
the interest of public health at all stages of this process. We are
committed to maintain our vigilance throughout the life of this
Agreement, to ensure that we continue to have this independence and
full control of our sector of the Agreement at all times.