In more detail

FY 2019 initially saw an increase in the number of FDA's foreign inspections, with 131³ inspections of drug⁴ manufacturers in China.⁵ Of these 131 inspections, 20 (15.3%) were classified Official Action Indicated (OAI),⁶ meaning that the inspection reports for those 20 inspections recommended regulatory or administrative actions.⁷ In comparison, the number of inspections in China for drug⁸ manufacturers over the past three years (i.e., 2020-2022) ranges from 8 in FY 2022 to 18 in FY 2020. Below is a table summarizing the number of inspections before and during the pandemic, as well as the number of inspections classified as OAI.⁹ Notably, of the eight inspections in FY 2022, 3 (37.5%) were classified OAI.

There is reason to believe with China's travel restriction now lifted, the number of FDA cGMP inspections will rise. In comparison, below is a table summarizing the number of drug inspections in India, showing that the number of FDA inspections quickly picked up in FY 2022. 

In spite of the decrease in inspectional activity and complications due to travel restrictions during the pandemic, overseas establishments are still expected to be in compliance with laws and regulations administered by FDA, including the applicable drug cGMP requirements.  In one recent FDA Warning Letter issued in 2022 after FDA resumed inspections in China, the agency found that the API manufactured at the facility was deemed "adulterated" under the Federal Food, Drug, and Cosmetic Act due to significant deviations from cGMP.¹¹ The observations identified included:

1. Failure to extend investigations to other batches that may have been associated with a specific failure or deviation
2. Failure to establish an impurity profile for identified and unidentified impurities by not conducting a comprehensive evaluation of the manufacturing process to identify all potential impurities
3. Failure to clean equipment appropriately to prevent build-up and carryover of contaminates

FDA also noted that similar cGMP observations were noted at the same facility in 2019 despite the firm having proposed specific actions to correct these issues. 

Key takeaways

• Firms will need to ensure that their manufacturing sites in China or Chinese suppliers are prepared for upcoming FDA inspections and personnel are appropriately trained. 
• Firms can evaluate the readiness of such FDA inspections by focusing on previous findings by FDA and the cGMP implications of any interruption in operation caused by the pandemic "lock down."
• Firms contemplating acquisition of entities that contract with Chinese manufacturing facilities will need to place particular focus on evaluating the cGMP processes of such facilities.

How can Baker & McKenzie help?

Our team has extensive experience assisting clients with navigating FDA cGMP compliance and can provide counsel regarding maintenance or assessment of a cGMP compliance program for foreign establishments in China, including:

• Assistance with identification of key updates in FDA cGMP requirements and enforcement trends particularly with establishments in China
• Assist clients in navigating the legal implications (e.g., liability) of increased FDA inspections in China
• Assist clients in preparing for FDA inspections and interacting with the agency during inspections
• Help clients respond to Form FDA 483 observations, and resolve Warning Letters, Import Alerts, and other FDA enforcement actions
• Assist clients in evaluating internal cGMP compliance programs of acquisition targets

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¹ Drug Safety: FDA should take additional steps to improve its foreign inspection Program, US Government Accountability Office, Jan. 7, 2022, https://www.gao.gov/products/gao-22-103611; Safeguarding Pharmaceutical Supply Chains in a Global Economy, FDA, Oct. 29, 2019, https://www.fda.gov/news-events/congressional-testimony/safeguarding-pharmaceutical-supply-chains-global-economy-10302019.
² COVID-19 Information, US Embassy & Consulates in China, Jan. 27, 2023, https://china.usembassy-china.org.cn/covid-19-information/.
³ Warning Letter Zhejiang Tianyu Pharmaceutical Co., Ltd. MARCS-CMS 631054, FDA, Aug. 17, 2022, https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/zhejiang-tianyu-pharmaceutical-co-ltd-631054-08172022.
⁴ The total includes two inspections conducted at the same site during the same time period for two different subject areas. Hence, 130 sites were inspected, but 131 inspections occurred.
⁵ Our reference to drugs throughout this alert includes both drugs and biologics.
⁶ Based on data gathered on FDA's Inspections Data Dashboard, https://datadashboard.fda.gov/ora/cd/inspections.htm.
⁷ Id.
⁸ Inspections Database Frequently Asked Questions, FDA, May 11, 2020, https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/inspection-references/inspections-database-frequently-asked-questions - classification.
⁹ Our reference to drug inspections includes both drug and biologics inspections.
¹⁰ Based on data gathered on FDA's Inspections Data Dashboard, https://datadashboard.fda.gov/ora/cd/inspections.htm.
¹¹ Of these 177 FY 2020 inspections, there was only one inspection after mid-March of 2020. Other than the one inspection in May 2020, there were no drug inspections for nearly a year (between March 17, 2020 and March 12, 2021).