USFDA rush after 2-year lull: 20-30% new products may be open to inspection

With all major US export-oriented drug manufacturing plants in the country up for inspection in 2022, some estimates peg that at least 20-30 per cent of the new product launches lined up for the US will be subject to on-site inspection by the US Food and Drug Administration (USFDA).

The last two years saw limited physical inspections due to travel restrictions during the pandemic. “Pre-Covid, the frequency and number of inspections of manufacturing plants in India by USFDA had increased significantly,” analysts from ICICI Securities Research noted. With growing ANDA filings, especially for complex products. We expect this trend to return with the environment normalising,” analysts from ICICI Securities Research noted.

Last week, stocks of two drug majors with sizeable businesses in the US fell on the bourses.

The drop was after the US drug regulator’s audits ended with form 483 listing several observations. Aurobindo stock hit a 52-week low, while Sun Pharma stocks went down nearly 3 per cent.

“Almost every Indian plant that exports to the US is going to be up for inspection after a two-year lull. So, we can expect to hear that several plants received form 483 with observations from the regulator. Therefore, unless a warning letter or import alert is issued for any facility, such routine updates are unlikely to be stock-sensitive,” said a veteran analyst, who did not wish to be quoted.
 

Typically, after a USFDA inspection team visits a site, they may issue a form 483, with the list of observations on which they want the firm to work on. After the firm responds to these observations, and presents a remedial course of action, the FDA may either come for a re-inspection, or issue an establishment inspection report (if everything is satisfactory), or a voluntary action indicated (VAI) or official action indicated (OAI), warning letters or import alerts from the site. Unless an import alert is issued, the site can continue to supply to the US market. In case of an OAI status, the firm cannot apply for new product approvals from the respective site.

For example, Sun Pharma’s Halol plant has an OAI status. The site was inspected by the FDA this May after almost two years. Sun Pharma had taken remedial action after observations by the FDA the last time and had invited the regulator for site inspection. A source close to the development said no repeat observations were issued by the three FDA inspectors who visited the site this time. There was also no data integrity-related observation. The inspectors, however, had come unannounced.

Among the top firms, 86-90 abbreviated new drug applications are pending for approval from the FDA. Future product launches, however, are contingent on these audits for several Indian firms. For example, Umang Vohra, MD and Global CEO of Cipla, said during the firm’s post-Q4FY22 results, “two product launches have to be cleared by the USFDA before launch. Inspection has to happen for those product categories before we can launch in the US. One product is in the dry powder inhaler (DPI) category”.

Vohra said the Goa and Indore plants need to have inspections on account of these launches. “Indore is the plant from where our respiratory products pipeline is lined up,” he said.

Vadodara-based drug maker Alembic Pharmaceuticals is running exhibit batches at its Karkhadi facility (F3) to keep the plant alive, while it awaits a final go-ahead from the USFDA.
 

“This way, once the plant is cleared by the USFDA, we will be able to file applications to double the number of products than we would have usually. Typically, we would have been able to do four to six filings a year from the Karkhadi plant, but as we are keeping the plant alive with exhibit batches… we will be able to do 10-12 filings a year,” explained RK Baheti, director, finance and CFO, Alembic Pharmaceuticals.

Kharkhadi plant responses have been made to the FDA and more clarity is expected soon.

Companies have started to pull up their socks to be compliant with the USFDA requirements. “After one unsuccessful inspection, we sat down with the team to deep-dive and do a root-cause analysis. The most common response we got from our employees was that the manager who was in charge of the project was not available (on leave) on the day the USFDA inspectors visited unannounced,” the MD of a leading drug firm said, adding that this rang a warning bell. “Compliance cannot be dependent on one person’s absence or presence. It is a continuous process and everyone in the facility should be in a position to give satisfactory answers. We understand the language barrier with inspectors is a challenging area, and we have started working on training our employees to develop a compliance culture,” the MD explained.

The Indian drug regulator has also signed a memorandum of understanding (MoU) with the US regulator whereby local inspectors accompany the US inspectors during a facility audit. Their role, however, is of an observer only.

India is one of the largest suppliers of generic drugs to the US market; additionally, fourth-highest pharma imports to the US are from India ($9bn in CY21).

“Pre-Covid, India underwent the highest USFDA inspections (around 14 per cent in FY20) outside of the US. Increased inspections were not only due to more ANDA filings, but also change of filings towards complex products, which require more scrutiny,” ICICI Securities said. These inspections were followed by observations, OAIs, warning letters, which kept impacting pharma supplies to the US.

Prior to the pandemic, the USFDA issued 220 warning letters globally in FY20, versus an average of 150 warning letters per year before FY15-20. Therefore, the upcoming audits are critical for Indian firms to resume steady supplies, and launch new products in the US market.