Mutual Recognition Agreement: Food and Drug Administration's Progress in Assessing Equivalency of European Union Pharmaceutical Inspection Programs

Published by the Government Accountability Office on 1999-02-26.

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

      United States

GAO   General Accounting
                    D.C. 20548

      Health,    Education,  and
      Human      Services Division


      February 26,1999

      The Honorable Thomas J. Bliley, Jr.
      The Honorable John D. Dmgell
      Ranking Minority Member
      Committee on Commerce
      House of Representatives

      The Honorable Fred Upton
      The Honorable Ron Klink
      Ranking Minorily Member
      Subcommittee on Oversight and Investigations
      Committee on Commerce
      House of Representatives

      Subject:      Mutual Recognition Agreement: Food and Drug Administration’s Progress in
                    Assessing Eauivalencv of Euronean Union Pharmaceutical Insnection Programs

      On December 1,1998, a mutual recognition agreement @IRA) between the United States and
      the European Union became effective. The MRA affects billions of dollars in trade and
      includes six annexes covering telecommunications equipment, electromagnetic compatibility,
      electrical safety, recreational craft, medical devices, and good manufacturing practices
      (GMP) inspections of pharmaceutical facilities. The pharmaceutical GMP annex of the MRA
      provides that the United States will assesswhether the pharmaceutical GMP inspection
      systems in the 15 European Union member states are equivalent to those in the United States
      during a S-year transition period that began when the MRA became effective. The Food and
      Drug Administration (FDA)-which conducts GMP inspections in the United States and
      abroad to ensure the safety and quality of domestic and imported pharmaceutical products’-
      is responsible for making these assessments.

      ‘The European Union, formerly referred to as the European Community, currently consists of 15 counties commonly referred to
      as member states. The 15 member states are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
      Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom.
      “we use pharmaceutical products to refer to pharmaceuticals imported in finished dosage forms as well as bulk drug substances
      (for example, active pharmaceutical ingredients or bulk pharmaceutical chemicals).

                                                         GAO/HEHS-99-71R              Mutual     Recognition        Agreement

During the 3-year transition period, the United States and the member states of the European
Union will jointly develop standard operating procedures for conducting inspections and a
common inspection report format. They will also undertake equivalency assessments of the
respective regulatory systems, which will include evaluations of laws, professional standards
and conduct, administrative controls, inspection competence, and systems of enforcement
and surveillance. The United States and the European Union will also establish an alert
system for the exchange of information on the safety of drug products and conduct joint
training sessions. For countries determined to have equivalent systems, the MEA provides for
the exchange and endorsement of the U.S. and European Union pharmaceutical GMP
inspection reports after the transition period. According to FDA, such an exchange will help
it handle the growmg demands to inspect foreign pharmaceutical facilities that manufacture
drug products.

FDA has been involved in the negotiation of the MEA since 1994. In anticipation of the
ratification of the MFL4, FDA prepared in February 1998 a management plan that provided an
organizational and procedural framework identifying the groups and functions needed for
implementing the pharmaceutical GMP annex. In April 1998, FDA began drafting the
regulation to implement the pharmaceutical section of the MEA. The final regulation was
published on November 6,1998, and became effective on December 7,1998.

During a hearing on October 2,1998, Subcommittee Members expressed concern about FDA’s
lack of progress in developing plans to implement the MEA Specifically, the Members were
concerned that FDA was not able to provide details on the tasks necessary to conduct FDA’s
equivalency determinations and the costs to complete this effort. Because of these concerns,
you asked us to report on the status of FDA’s efforts to implement the MEA.

In summary, we found that nearly 3 months into the transition period, FDA does not have a
comprehensive plan that identifies the key tasks to complete an equivalency assessment of
the European Union member states. In addition, FDA could not provide us an update of the
estimated costs and resources that will be needed to implement the MEA,

More specifically, we found that FDA’s current plan establishes an organizational framework,
including a steering committee to oversee and coordinate MEA-related activities and a project
management team to develop and execute a plan for the conduct of equivalency assessments.
The plan also includes an implementation project time line, which provides a schedule of
general activities and milestones that FDA anticipates completing during the transition period
and through the operational period of the MEA.’

However, FDA has not yet identified in its plan the information needed to make equivalency
determinations, even though the implementation project time line developed in February 1998
required that the plan be completed by about July 1998 to prepare the agency for the
transition period. According to FDA officials, FDA did not begin to prepare the plan for
making equivalency assessments until January 1999because staff was involved in other

“me operational period begins after the end of the transition period and continues for the life of the annex. Activities during the
period include the sltaring of alert information and establishment inspection reports among equivalent authorities, endorsement
of establishment inspection reports among equivalent authorities, and monitoring equivalence among equivalent authorities.

2                                                    GAOLBEHS-99-71R               Mutual      Recognition        Agreement

related activities, such as developing regulations to implement the MRA. In commenting on a
draft of this report, FDA officials said that another reason they waited until after the
implementing regulations were in place to begin preparing the plan was to avoid the
appearance of prejudging the outcome of the formal rulemaking process. This comment
conflicts with FDA’s February 1998 implementation project time line, which specifically
states that the plan should have been completed by about July 1998-several months before
FDA planned to have the final regulations in place. Moreover, FDA has not yet developed a
strategic plan that describes the goals of the MRA and how FDA will measure its performance
in achieving those goals. In our view, FDA could benefit by developing a strategic plan for
implementing the MRA.

On February 2,1999, FDA officials told us that an update of the plan for making equivalency
determinations and cost estimates would not be available until March 1999 and the final plan
would not be completed and shared with the European Union until about July 1999.
However, this timetable appears to have changed. In their comments on this report, FDA said
that a meeting is scheduled this spring with representatives of the European Union to discuss
and exchange plans for conducting equivalence assessments. Once exchanged, the FDA
officials said equivalency assessments would begin. It is not clear, however, whether the plan
FDA now intends to share with the European Union this spring will be the llnal plan.

FDA officials acknowledged that there are several issues that will require the cooperation of
the European Union to execute the MR,A. These include issues such as developing a mutually
agreed upon inspection report format as well as a joint alert system, joint inspection program,
and joint training. FDA expects to address these issues either through informal discussions
with the designated contact points in the European Union and its member states or through
formal meetings of the committees established to oversee the implementation of the MRA.


As indicated above, we obtained comments on a draft of this report from FDA and have
included them where appropriate.

We are sending copies of this report to the Secretary of Health and Human Services, the
Commissioner of FDA and others who are interested. If you have any questions about this
correspondence, please call me at (202) 512-7114or John Hansen at (202) 512-7105. Other
major contributors included Darryl Joyce and Claude Hayeck. A description of our
methodology for conducting this study is enclosed.

Sincerely yours,

William J. Scanlon
Director, Health Financing
 And Public Health Issues


                                      GAOLFIEHS-99-71R      Mutual   Recognition   Agreement
ENCLOSURE                                                                      ENCLOSURE


To examine FDA’s implementation of the pharmaceutical GMP annex of the MRA, we
reviewed the MRA to determine the requirements for the pharmaceutical GMP annex as well
as materials gathered as a part of the Subcommittee’s investigation on the negotiation and
implementation of the MRA.. To obtain information on FDA’s plan for making equivalency
determinations with European Union member states, estimates of costs for implementing the
plan, and actions planned for addressing any unresolved matters, we met with FDA officials
involved in implementing the pharmaceutical GMP annex. These included officials from the
Center for Drug Evaluation and Research, the Center for Biologics Evahration and Research,
the Office of International Affairs, the Office of Regulatory Affairs, and the Office of Chief
Counsel. We also reviewed correspondence dated November 6,1998, and February 2,1999,
prepared by FDA in response to questions posed by the Subcommittee regarding FDA’s
progress in implementing the pharmaceutical GMP annex. We analyzed several
implementation project time lines that were prepared by FDA between February 1998 and
January 1999 to obtain an understanding of the planning process FDA whl follow to
implement the agreement.

We did our work between November 1998 and February 1999 in accordance with generally
accepted government auditing standards.


 4                                     GAOLHJZHS-99-71R Mutual       Recognition   Agreement
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