oversight

Ensuring Drug Quality in Global Health Programs

Published by the Government Accountability Office on 2012-08-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

United States Government Accountability Office
Washington, DC 20548




              August 1, 2012

              The Honorable G.K. Butterfield
              House of Representatives

              The Honorable Don Manzullo
              House of Representatives

              The Honorable Gregory W. Meeks
              House of Representatives

              The Honorable Dave Reichert
              House of Representatives

              Subject: Ensuring Drug Quality in Global Health Programs

              The United States supports global health programs primarily through the U.S. Agency for
              International Development (USAID) and the Centers for Disease Control and Prevention (CDC)
              and by providing contributions to the Global Fund to Fight AIDS, Tuberculosis and Malaria
              (Global Fund). USAID and CDC implement the President’s Emergency Plan for AIDS Relief
              (PEPFAR), which provides antiretroviral treatment to more than 3.9 million people, and the
              President’s Malaria Initiative (PMI), which has procured and distributed over 67 million malaria
              treatments. In addition, the Global Fund provides antiretroviral drugs to about 3.3 million people,
              has supported tuberculosis treatment for 8.6 million, and enabled treatment of 170 million
              malaria cases.

              Concerns have been raised about the potential for substandard drugs to enter the supply chains
              of global health programs. Substandard drugs, which may be caused by poor manufacturing
              practices, improper storage or distribution, or tampering, can have serious public health
              consequences. These include ineffective treatment of diseases, adverse reactions in patients,
              and drug resistant strains of pathogens.

              Given these concerns about substandard drugs, we were requested to review safeguards in
              place to ensure drug products procured with U.S. foreign aid funds are of assured quality.1 We
              examined (1) the regulatory and policy requirements intended to ensure the quality of drugs


              1
               This review was conducted in response to a 2010 request from Representative Gregory Meeks—then Chairman,
              House Financial Services Subcommittee on International Policy and Trade—to review the safety and effectiveness of
              prescription medicines being purchased by USAID. By 2012, other Members had joined on as requesters and we
              commenced the review when staff with the required skills were available.




                                                                                                     GAO-12-897R Global Health
procured with U.S. aid funds and (2) the systems in place to monitor drug quality in supply
chains used by programs receiving U.S. foreign aid funds.

Scope and Methodology
Our work focuses on drugs and other commodities with pharmaceutical ingredients purchased
by USAID, CDC, and the Global Fund for use in global health programs. To address our
objectives, we reviewed relevant laws, regulations, agency policy guidance, and standard
operating procedures relating to assurance of drug quality and supply chain monitoring, as well
as reports on program implementation. We also interviewed USAID, CDC, and Global Fund
officials knowledgeable about drug procurement and supply chain systems.

We conducted this performance audit from February 2012 to August 2012 in accordance with
generally accepted government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that the evidence obtained
provides a reasonable basis for our findings and conclusions based on our audit objectives.

We briefed congressional requesters’ staff on our findings on May 31, 2012. This report
summarizes that briefing, which is reprinted in full as enclosure I.

Background
USAID, CDC and the Global Fund provide grants, contracts, or cooperative agreements to
implementing partners, who execute health activities with drugs they procure from
manufacturers or wholesalers. Implementing partners include host country governments, for-
profit development assistance firms, nonprofit nongovernmental organizations, and United
Nations organizations. Challenges to ensuring drug quality include the global pharmaceutical
industry’s increasing reliance on foreign manufacturers, especially in India and China, and
difficulties overseeing their production processes. Also, in developing countries, drug theft and
diversion to informal markets can result in tampering, improper storage, and inappropriate use.

Results in Brief
U.S.-funded global health programs have put regulatory and policy requirements in place to help
prevent procurement of substandard drugs. USAID, for example, reviews quality assurance
information for all drugs before they are procured. Specifically, USAID requires implementing
partners to obtain written approval from the agency before purchasing drugs. Through its
approval process, USAID determines whether there is sufficient information available to assure
that the drug is of acceptable quality. Although USAID’s review process varies for some drugs,
the type of information USAID reviews generally includes prior FDA approval of the drug or
approval by a comparable stringent regulatory authority, as well as results of prior testing of the
drug by an independent laboratory. As an additional quality assurance measure, USAID
prequalifies selected wholesalers to procure drugs for U.S.-funded global health programs
based on factors such as site visits to the wholesaler’s facility and a review of the wholesaler’s
quality assurance practices and procedures. According to CDC officials, CDC requires its
implementing partners to follow program-specific quality assurance requirements. For example,
CDC’s implementing partners must follow the same requirements as the USAID/PMI program
when procuring malaria drugs and as the PEPFAR program when procuring antiretroviral drugs.
The Global Fund requires grant recipients to procure antiretroviral, tuberculosis, and malaria
drugs that are prequalified by the World Health Organization or authorized by a stringent
regulatory authority. When there is only one drug available or no drug meeting these



Page 2                                                                      GAO-12-897R Global Health
requirements, grant recipients may procure drugs recommended for use by an independent
expert review panel convened by the Global Fund.

Procedures for monitoring drug quality in supply chains used by global health programs vary
based on the nature of the program and capacity of implementing partners. USAID takes a
case-by-case approach to monitoring drug quality by considering factors such as the
vulnerability of drugs to deterioration and the capacity of implementing partners to safeguard
them. To monitor supply chains, USAID may maintain chain of custody until delivery, or conduct
postshipment testing to verify the active ingredients of drugs. To help ensure drug quality,
USAID may also provide assistance to implementing partners in host countries, such as
technical assistance designed to improve management capacity. Officials told us CDC’s
monitoring procedures vary based on the size and complexity of CDC’s agreement with an
implementing partner. For example, for agreements covering large or multiple regions, CDC
may require quarterly site-level reports on drug usage or on-site reviews of pharmacy records
and storage. For smaller agreements, such as those covering a one-time purchase of drugs for
a single country, CDC advises implementing partners on drug storage and usage. The Global
Fund requires grant recipients to have quality assurance systems in place for procurement,
warehousing, product testing, distribution, and monitoring of storage and distribution sites, and
to ensure that drugs are randomly tested at different points in the supply chain. The Global
Fund’s local agents verify these quality assurance practices before grant funds are disbursed.

A recent USAID initiative aims to increase drug procurement and supply by host governments
and local organizations. However, as highlighted in recent reports, reliance on these
implementing partners potentially introduces risks related to capacity and corruption. According
to USAID global health officials, USAID is taking measures to mitigate theses risks by (1)
conducting country assessments to identify risks to drug quality, program outcomes, and
financial management and (2) taking steps to develop risk mitigation plans with implementing
partners before funding malaria and reproductive health programs.

We are not making any recommendations in this report.

For additional information on the results of our review, see the briefing slides in the enclosure.

Agency Comments
We provided a draft of this report to USAID, CDC, and the Office of the Global AIDS
Coordinator, and the Global Fund for review and comment. USAID and the Global Fund
provided technical comments, which we incorporated as appropriate. USAID officials clarified
that USAID provides administrative approval for antiretroviral drugs; only the U.S. Food and
Drug Administration (FDA) has the regulatory authority to approve these drugs. All antiretroviral
drugs procured by USAID meet FDA standards.




Page 3                                                                       GAO-12-897R Global Health
We will send copies of this report to appropriate congressional committees, the Administrator of
USAID, the Director of CDC, and the Global Fund liaisons at the Office of the Global AIDS
Coordinator and the U.S. Mission in Geneva. In addition, this correspondence will be available
at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions concerning this report, please contact David Gootnick at
(202) 512-3149 or gootnickd@gao.gov or Marcia Crosse at (202) 512-7114 or
crossem@gao.gov. Jim Michels (Assistant Director), Kay Halpern, Erika Navarro, and Chad
Davenport made key contributions to this correspondence; Grace Lui and David Dayton
provided technical support. Contact points for our Offices of Congressional Relations and Public
Affairs are found on the last page of this report.




David Gootnick
Director
International Affairs and Trade




Marcia Crosse
Director
Health Care

Enclosure




(320925)




Page 4                                                                    GAO-12-897R Global Health
Enclosure




   Ensuring Drug Quality in Global
          Health Programs

       Briefing for
       Congressional
       Requesters


                                                A community worker explains preventative malaria treatment to a pregnant
                                                woman in Mali. Copyright © UNICEF/MLIA2009-00123/Giacomo Pirozzi

    For more information, contact David Gootnick at gootnickd@gao.gov                                          Page 1




            Page 5                                                                                 GAO-12-897R Global Health
Overview

• Objectives and Scope
• Methodology
• Background
• Summary
• Drug Procurement
  Requirements
• Supply Chain Monitoring
• Looking Ahead
                            A woman and her baby receiving medication at a Kenyan clinic.




                                                                                            Page 2




     Page 6                                                                 GAO-12-897R Global Health
Objectives and Scope

In response to your concerns, we examined
   • the regulatory and policy requirements intended to ensure the
     quality of drugs procured with U.S. aid funds; and
   • the systems in place to monitor drug quality in supply chains
     used by programs receiving U.S. aid funds.
Scope
   • Drugs and other commodities with pharmaceutical ingredients
     (e.g., test kits, hormonal contraceptives, vaccines) purchased
     by the U.S. Agency for International Development (USAID),
     the Centers for Disease Control and Prevention (CDC), and
     the Global Fund to Fight AIDS, Tuberculosis and Malaria
     (Global Fund) for use in global health programs.
                                                                   Page 3




      Page 7                                             GAO-12-897R Global Health
Methodology

• We reviewed relevant laws, regulations, agency policy guidance, and standard
  operating procedures relating to assurance of drug quality and supply chain
  monitoring, as well as reports on program implementation. We also interviewed
  USAID, CDC, and Global Fund officials.

• We conducted this performance audit from February 2012 through August 2012
  in accordance with generally accepted government auditing standards. Those
  standards require that we plan and perform the audit to obtain sufficient,
  appropriate evidence to provide a reasonable basis for our findings and
  conclusions based on our audit objectives. We believe that the evidence
  obtained provides a reasonable basis for our findings and conclusions based
  on our audit objectives.




                                                                             Page 4




        Page 8                                                     GAO-12-897R Global Health
Background
U.S. Support for Global Health Programs

• The United States supports global health programs,
  primarily through USAID and CDC, and by providing 27
  percent of total contributions to the Global Fund.
  • President’s Emergency Plan for AIDS Relief (PEPFAR)
    provides antiretroviral treatment to more than 3.9 million
    people.
  • President’s Malaria Initiative (PMI) has procured and
    distributed over 67 million malaria treatments.
  • Global Fund provides antiretroviral drugs to about 3.3 million
    people, has supported tuberculosis treatment for 8.6 million,
    and enabled treatment of 170 million cases of malaria.

                                                                      Page 5




      Page 9                                                GAO-12-897R Global Health
Background
Dangers and Causes of Substandard Drugs

Substandard drugs can have serious public health consequences:
   • Lead to ineffective treatment of diseases
   • Cause adverse reactions in patients
   • Promote drug resistant strains of pathogens
Causes of substandard drugs:
   • Poor manufacturing practices
   • Improper storage or distribution
   • Tampering



                                                                Page 6




      Page 10                                         GAO-12-897R Global Health
Background
Challenges to Ensuring Drug Quality

•   Global pharmaceutical industry’s increasing reliance on foreign
    manufacturers* creates oversight challenges for the U.S. Food
    and Drug Administration (FDA).
•   Risk of drug theft and diversion to informal markets is high in
    developing countries and can result in tampering, improper
    storage, and inappropriate use.
•   Malaria drugs may be at particular risk for theft and diversion
    due to
     •    High demand because of common practice of treating all fevers in
          endemic areas with malaria drugs
     •    High price of certain new malaria drugs in informal markets in Africa
*According to the FDA, the number of drug products manufactured at foreign establishments has
more than doubled since 2002, with China and India accounting for the greatest shares of this growth.

                                                                                               Page 7




         Page 11                                                                     GAO-12-897R Global Health
Background
Entities Involved in U.S.-Supported Global
Health Assistance Programs
• USAID, CDC, and Global Fund provide grants, contracts, or
  cooperative agreements to implementing partners, such as
      • Host country governments (generally low and lower-middle
        income countries)
      • For-profit development assistance firms
      • Nonprofit, nongovernmental organizations
      • United Nations organizations

• Implementing partners execute health activities with drugs they
  procure from vendors, such as
      • Manufacturers
      • Wholesalers

                                                                   Page 8




      Page 12                                            GAO-12-897R Global Health
Background

Steps for Ensuring Drug Quality

• Determining that regulatory bodies have assessed drug quality
  at the point of manufacture
• Conducting assessments of selected wholesalers
• Monitoring the supply chain to verify that drug quality has not
  been compromised
• Methods used for one or more of these steps:
   • Document review or on-site inspection to check
     conformance with standards
   • Testing drug samples
   • Monitoring patients for adverse reactions
   • Other quality assurance procedures

                                                                    Page 9




      Page 13                                            GAO-12-897R Global Health
Summary

• U.S.-funded global health programs have regulatory and policy
  requirements to help prevent procurement of substandard drugs.
• Procedures for monitoring drug quality in supply chains—through
  which goods travel from their point of origin to the point of
  consumption—vary based on nature of program and capacity of
  implementing partners.
• Involving host countries in drug procurement and supply chains
  entails heightened risk.
      • Evaluations of U.S. and multilateral programs have
        highlighted this risk.
      • A new U.S. initiative to increase host country role includes
        measures to mitigate risks.
                                                                   Page 10




      Page 14                                             GAO-12-897R Global Health
Regulatory and Policy Requirements
USAID Reviews Quality Assurance Information
for All Drugs Before They Are Procured
• Implementing partners must obtain written approval from USAID
  prior to procuring drugs.
• This approval is for a specific drug from a specific manufacturer
  and site, or from a specific procurement agent or other source.
• Through this process, USAID determines whether it has sufficient
  information available on the quality of a drug, such as
       • Prior approval by the FDA or a comparable Stringent
         Regulatory Authority (SRA)*
       • Results of prior product testing by independent laboratory
       • Proposed use of drug, such as clinical use or field trials

*As used in USAID guidance, an SRA is a drug regulatory body that closely resembles FDA in the
standards it uses. SRAs include, for example, regulatory bodies in Japan, Europe, and Canada.
                                                                                           Page 11




        Page 15                                                                   GAO-12-897R Global Health
Regulatory and Policy Requirements
USAID’s Review Process Varies for Some
Drugs
• USAID’s review process varies
  depending on drug and
  program needs. For example:

   • Malaria drugs are reviewed
     on a case-by-case basis
     due to their limited
     availability.

   • For antiretroviral drugs and
     HIV test kits, USAID has
     created lists of approved      Malaria medication and a positive test result lie on the paperwork
     products.                      of a child in Sierra Leone. Copyright © UNICEF/NYHQ2010-
                                    1022/Olivier Asselin


                                                                                             Page 12




      Page 16                                                                    GAO-12-897R Global Health
Regulatory and Policy Requirements
USAID Review Process for Malaria Drugs

According to USAID, under the malaria program
• USAID reviews and documents evidence of drug safety and
  quality, including
    • FDA or SRA approval
    • Prequalification by the World Health Organization (WHO)
    • Inclusion in WHO malaria treatment guidance
• USAID arranges preshipment quality testing for any malaria drugs
  not approved by FDA or another SRA.
• USAID has also developed special handling procedures for each
  type of malaria product, used as needed, including
    • Postshipment testing for drugs
    • Postshipment inspection for diagnostic products

                                                                Page 13




     Page 17                                           GAO-12-897R Global Health
Regulatory and Policy Requirements
USAID Requirements for Antiretroviral Drugs
and HIV Test Kits
• Implementing partners can procure antiretroviral drugs and HIV
  test kits on USAID’s approved lists.
   • Drugs must have FDA approval or tentative approval,* or
     USAID approval, where USAID has information attesting to
     drug “safety, efficacy and quality.”
   • Kits must have FDA or SRA approval, or must be evaluated by
     USAID to determine whether the kits meet documentation
     requirements and pass testing by CDC.


   *As used in USAID guidance, FDA tentative approval means the drug meets FDA standards but
   may not be sold in the United States due to existing patents or data exclusivity agreements.

                                                                                          Page 14




      Page 18                                                                    GAO-12-897R Global Health
Regulatory and Policy Requirements
USAID Prequalifies Wholesalers

• In some cases, implementing partners purchase drugs from
  wholesalers instead of directly from manufacturers.
• USAID has prequalified selected wholesalers as an additional
  quality assurance measure, based on factors such as
   • Site visit to wholesaler’s facility
   • Review of quality assurance practices and procedures
• Some prequalification requirements vary by program, such as
   • Periodic, risk-based sampling/testing for HIV/AIDS and
     reproductive health drugs
   • Possible audit of manufacturing sites and follow-up review and
     monitoring of wholesalers for reproductive health programs

                                                                  Page 15




      Page 19                                            GAO-12-897R Global Health
Regulatory and Policy Requirements
CDC’s Implementing Partners Follow the
Requirements of Individual Aid Programs
According to CDC officials,
• CDC provides funding to implementing partners to procure
  drugs for use in global health programs but does not generally
  procure drugs directly.
• CDC’s funding agreements with implementing partners
  reference program-specific quality assurance requirements.
  For example, implementing partners are to
       • Follow the same requirements as USAID/PMI and
         PEPFAR programs for malaria drugs, and antiretroviral
         drugs and HIV test kits, respectively
       • Require WHO pre-qualification for all vaccines and drugs
         for neglected tropical diseases

                                                                Page 16




      Page 20                                          GAO-12-897R Global Health
Regulatory and Policy Requirements
Global Fund Requires Approval of Drugs
Procured
• Global Fund provides grants for procurement of antiretroviral,
  tuberculosis, and malaria drugs, which must be
    • WHO prequalified or authorized by an SRA, or
    • Recommended by an independent expert review panel,
      convened as needed* by the Global Fund
             • Panel may review potential risks and benefits associated
               with use of the drug.
             • Panel recommendation is valid for 12 months or until the
               drug is WHO-prequalified or authorized by an SRA.
*The panel is convened when there are no drugs available that are WHO prequalified or
 authorized by an SRA, or if there is only one such drug available.
                                                                                            Page 17




        Page 21                                                                    GAO-12-897R Global Health
Systems for Monitoring Supply Chains

USAID Monitoring of Drug Quality in Supply
Chains Varies by Implementing Partner
• USAID monitors drug quality in supply chains through
  implementing partners.
• USAID takes a case-by-case approach to monitoring drug quality
  in supply chains by considering factors such as
   • Vulnerability of drugs to deterioration and tampering
   • Capacity of implementing partners, e.g., host country governments, to
     safeguard drugs and provide appropriate storage and distribution
     conditions
• USAID’s monitoring approach for specific programs and
  implementing partners includes
   • Maintaining chain of custody until delivery to host country
   • Postshipment testing to verify active ingredients of drugs or accuracy of
     diagnostic kits
   • Periodic product evaluations to ensure conformance to specifications

                                                                             Page 18




     Page 22                                                        GAO-12-897R Global Health
Systems for Monitoring Supply Chains

USAID Provides Assistance to Help Ensure
Drug Quality
• USAID has provided assistance intended to strengthen
  safeguards for ensuring drug quality in host countries.

   • USAID has funded technical assistance designed to improve
     implementing partners’ management capacity.
      • In Zimbabwe, for example, USAID collaborated with the
        health ministry to streamline distribution of malaria and
        tuberculosis drugs to reduce stockouts and expired drugs.

   • USAID has funded establishment of new supply chains.
      • In Malawi, for example, USAID created its own, more
        secure supply system for malaria products due to concerns
        over diversion of malaria drugs.

                                                                      Page 19




      Page 23                                               GAO-12-897R Global Health
Systems for Monitoring Supply Chains
CDC’s Monitoring of Drug Quality Varies by
Implementing Partner Agreement
• According to CDC officials, CDC’s monitoring procedures vary
  based on size and complexity of implementing partner agreement.
    • For agreements covering large or multiple regions, CDC
      requires some or all of the following:
         • Monthly, semiannual, and/or annual reports
         • Quarterly site-level reports on drug usage
         • On-site reviews of pharmacy records and storage
         • Site visits and other interactions with implementing partners
    • For simpler or smaller agreements,* CDC advises
      implementing partners on proper drug storage and usage.
 *For example, an agreement covering a one-time purchase of drugs for a single country.
                                                                                             Page 20




        Page 24                                                                    GAO-12-897R Global Health
Systems for Monitoring Supply Chains
Global Fund Grant Recipients and Local Agents
Monitor Supply Chains
• Global Fund grant recipients are required to have quality
  assurance systems in place for procurement, central
  warehousing, product testing, distribution, and monitoring of
  storage and distribution sites.
• Grant recipients are required to ensure that drugs are randomly
  sampled and tested by qualified laboratories* at different points
  in the supply chain, from initial receipt to delivery to end users.
• Grant disbursements are contingent on verification of quality
  assurance practices by Global Fund’s local agents.**

*Laboratories qualified by WHO or the International Organization for Standardization (ISO).
**Global Fund contracts with external organizations, such as PricewaterhouseCoopers and KPMG, to
  oversee grants.

                                                                                            Page 21




        Page 25                                                                   GAO-12-897R Global Health
Looking Ahead
Relying on Host Countries’ National Health
Systems Can Be Risky, According to Reports
• Evaluations of U.S. malaria program and Global Fund have highlighted risks
  associated with host country management of drug supply chains. For example:
      • External review of the President’s Malaria Initiative* reported in 2011 that
        some host country malaria drug procurement, storage, and distribution
        systems were subject to large-scale theft and corruption.
      • Independent review of Global Fund** reported in 2011 on quality assurance
        shortfalls by Global Fund grant recipients, typically host governments.
            • Recipients had not consistently complied with Global Fund
              requirements, increasing risk of patients receiving counterfeit or
              substandard products.
            • Few had systematically tracked adverse patient reactions.

*External Evaluation of the President’s Malaria Initiative Final Report, prepared by J. Simon, K. Yeboah-Antwi, A. Schapira, M.
 Kabir Cham, R. Barber-Madden, and M. Ibrahim Brooks through the Global Health Technical Assistance Project, for review by
 the U.S. Agency for International Development, December 2011.
**Turning the Page from Emergency to Sustainability, The Final Report of the High-Level Independent Review Panel on
  Fiduciary Controls and Oversight Mechanisms of the Global Fund to Fight AIDS, Tuberculosis, and Malaria, September 19,
  2011.
                                                                                                                      Page 22




            Page 26                                                                                        GAO-12-897R Global Health
Looking Ahead
New USAID Initiative to Increase Host Country
Role Includes Measures to Mitigate Risks
• New USAID initiative aims to increase drug procurement and
  supply by host governments and local organizations.
• Reliance on these implementing partners potentially introduces
  risks related to capacity and corruption.
• USAID is conducting country assessments to identify risks to
   • Drug quality
   • Program outcomes
   • Transparency, accountability, and communication
   • Financial management
• USAID plans to work with implementing partners to develop risk
  mitigation plans before funding them for malaria and reproductive
  health programs.
                                                                  Page 23




      Page 27                                            GAO-12-897R Global Health
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