FDA Inspection and Enforcement Developments During the COVID-19 Pandemic

COVID-19 has shifted global enforcement priorities and required novel approaches to the regulation and inspection of pharmaceutical manufacturing facilities. In the midst of the pandemic, regulatory agencies have both expanded existing capabilities and added new tools to their arsenals. Likewise, criminal and civil enforcement authorities are actively pursuing cases involving COVID-related fraud, false advertising, and manufacturing issues. We expect that this “new normal” will continue to raise new risks for life sciences companies—particularly as new treatments and vaccines are developed, authorized, and marketed. Now is the time to proactively assess and take steps to mitigate those risks.

The changing landscape of FDA enforcement

In March, the Food and Drug Administration (FDA) announced a suspension of all domestic and foreign routine surveillance inspections due to the pandemic. However, the Agency noted that it would continue for-cause and pre-approval inspections deemed to be “mission critical.” In determining mission criticality, FDA considers several factors that relate to the public health benefits of the product under review, such as breakthrough therapy designation, drug shortages, and the availability of appropriate substitutes.

Beginning in July, FDA resumed domestic inspections in areas with reduced COVID-19 infection rates. Even so, pandemic-related travel restrictions continue to significantly limit the Agency’s ability to conduct inspections. In light of these limitations, FDA has expanded the use of other tools and approaches to assess the quality and safety of drug products.

• Records requests. Under Section 704(a)(4) of the Federal Food, Drug, and Cosmetic Act (FDCA), FDA has authority to request records or information “in advance of or in lieu of” an on-site inspection. Over the past several months, FDA has issued over 500 records requests to pharmaceutical manufacturing facilities.¹ Nevertheless, the Agency has emphasized that information requests under 704(a)(4) do not satisfy the inspection requirement, and that video conferences or phone calls related to 704(a)(4) requests are not considered to be “virtual” inspections.²
• Border testing. FDA has stated that it is conducting more inspections of drug products arriving at U.S. borders to compensate for its limited ability to inspect foreign facilities. If testing indicates that a product has substandard safety, effectiveness, or quality, FDA can refuse admission. In a recent Warning Letter, for example, FDA stated that it detained and refused admission of hand sanitizer from a Mexican manufacturer after laboratory testing found high levels of methanol in the product.³ Companies should plan on increased levels of such testing going forward, particularly while the Agency’s limitations on foreign inspections continue and in light of concerns raised about those limitations by members of Congress.⁴
• Information sharing agreements. Another resource on which FDA has increasingly relied is information shared by other regulatory agencies. Mutual recognition and confidentiality agreements afford the Agency greater flexibility in evaluating foreign-manufactured products. Under these agreements, the Agency has leveraged inspection reports completed by trusted regulatory partners like the European Medicines Agency (EMA) and the UK Medicines and Healthcare Products Regulatory Agency (MHRA). Companies should consider whether it may be beneficial to proactively inform FDA about foreign inspection results.

Virtual inspections: opportunities and risks

A number of regulatory authorities, including the EMA and MHRA, have responded to the COVID-19 pandemic by pivoting toward virtual inspection models. While FDA has not yet adopted such an approach, on November 2, an FDA official stated that the Agency is developing guidance on remote evaluations, indicating that FDA is considering virtual alternatives to on-site inspections.⁵ While the adoption of virtual inspections opens the door to efficiencies, companies should identify and prepare for corresponding risks.

• Technology. Before submitting applications for facilities that FDA may want to inspect, manufacturers should ensure that they have the necessary infrastructure in place to accommodate a virtual review. For instance, manufacturers should assess whether facilities have access to appropriate technology and whether relevant personnel have been trained on new platforms. This includes the possibility that a facility’s physical limitations could impact the ability of FDA to observe, for example, aseptic behavior by operators.
• Quality metrics. Virtual inspections will likely result in an increased focus on documents and records, and a reduced focus on the physical facility. Accordingly, companies should prepare for FDA to direct greater attention to key performance indicators (KPIs) and other quality metrics that can demonstrate an effective quality management system.
• Good Documentation Practices. In a virtual setting, FDA will likely scrutinize data and documentation practices even more closely due to its decreased ability to speak to subject matter experts in person. Companies should consider detailed self-assessments, including analyzing metrics, to verify compliance with good documentation practices. Regulatory agencies expect quality systems to self-identify such issues, and have more confidence in companies that detect and address problems.
• More rigorous inspections. Generally for on-site inspections, FDA only sends one or two inspectors. With the flexibility offered by remote inspections, companies can expect FDA to call on additional subject matter experts (SMEs) as needed, which may result in more directed questions and more comprehensive inspections. For these reasons, companies should remain vigilant in their inspection preparation activities, despite the workplace challenges presented by the pandemic. Sites should ensure that all relevant SMEs are available and ready to answer Agency questions, regardless of their physical location. FDA has been providing advance notice of inspections in order to comply with COVID-19 protocols, but sites should prepare to be ready on a moment’s notice as they normally would for an unannounced inspection.

COVID-19 enforcement

To date, enforcement actions related to the COVID-19 pandemic have primarily involved unapproved and misbranded products with fraudulent COVID-19 claims. In March, FDA launched “Operation Quack Hack,” an initiative to identify and investigate fraudulent and unproven medical products related to COVID-19. FDA, in many cases jointly with the Federal Trade Commission (FTC), has issued close to a hundred Warning Letters to companies for marketing unapproved products for COVID-related uses.⁶

The investigation of pandemic-related fraud has also been an enforcement priority for the Department of Justice (DOJ). In a memorandum dated March 16, Attorney General William Barr directed all U.S. Attorneys “to prioritize the detection, investigation, and prosecution of all criminal conduct related to the current pandemic.”⁷ DOJ’s enforcement efforts have leveraged both criminal prosecution and civil enforcement actions, which have resulted in dozens of injunctions and indictments against individuals and smaller entities involved in COVID-related fraud.

We fully expect the DOJ, FDA, and FTC to remain vigilant in enforcing violations of consumer protection and safety laws across the industry, both during the continuing pandemic and in its wake. DOJ has repeatedly emphasized a priority on violations of current Good Manufacturing Practice (cGMP) regulations in its enforcement initiatives, and we expect this to be an increased area of focus as new COVID-19 treatments and vaccines are authorized and approved. Additionally, pharmacovigilance and safety data related to Emergency Use Authorization treatments and products will be intensely scrutinized—not only by regulators, but by products liability and class action lawyers.

Although COVID-19 False Claims Act qui tam cases may take time to work through the system, we expect significant activity in this regard as well. Based on our experience, qui tam relators are still continuing to push False Claims Act theories based on violations of Good Manufacturing Practices. This risk may be further heightened if compliance gaps develop during a period of reduced inspections and oversight. Moreover, we expect an increase in filings based on traditional theories of pricing, rebates, and kickbacks related to the reimbursement of COVID-19 treatments, as well as claims associated with CARES Act funding.

Practical guidance for industry

Recent changes to the enforcement landscape may continue even beyond the COVID-19 pandemic. Although the evolution of the government’s enforcement priorities cannot be predicted with certainty, manufacturers can minimize exposure to risk by taking the following steps:

• Comply with any records requests fully, accurately, and within the requested timeframe.Notably, in August, FDA placed two sites on import alert due to inadequate responses to records requests. Consider creating or revising policies to ensure that your company has a standard approach to any 704(a)(4) requests. Also consider whether to engage proactively with the Agency in advance of an expected inspection, so as to obtain additional time to compile documents.
• Develop inspection strategies. The Agency’s decision not to conduct virtual inspections means that sites which require an inspection—either for purposes of an application or to clear Official Action Indicated (OAI) status—cannot rely upon a remote inspection, even if pandemic restrictions will prevent FDA from appearing on site. It is within FDA’s discretion to clear a Warning Letter without a re-inspection, although FDA has not to date expressed a willingness to take this step due to the pandemic. Companies facing these possibilities need to consider proactive engagement with FDA to help facilitate an inspection or encourage the Agency to employ discretion. Additionally, to the extent that FDA initiates virtual inspections, companies should appropriately modify their strategies for inspection preparation and ensure that site personnel are prepared for the potential differences and challenges a remote inspection presents.
• Prepare a post-COVID recovery plan. Plan ahead for the resumption of cGMP activities using a quality risk management approach. Set priorities for remediating cGMP activities that were delayed, interrupted, or otherwise handled differently due to COVID.
• Minimize disruptions by diversifying supply chains. In order to avoid inspection-related delays, broaden your supply chain and consider alternate manufacturing facilities located in the U.S. By avoiding single source supply chains, companies can remain agile in a shifting enforcement landscape.
• Conduct both compliance program and quality systems risk assessments. The risks presented by the current pandemic and post-pandemic course of Agency policy will impact each company differently. Companies should conduct holistic risk assessments that address pressure points within their organizations. While focus should be placed on quality systems and manufacturing risks, do not overlook other risks that may arise in sales, marketing, and distribution, for example—or even HR risks that may germinate whistleblower complaints.

References

1. “US FDA Assesses Over 500 Biopharma Plants Remotely Via Records Review; Refines Process,” The Pink Sheet (Sept. 17, 2020).
2. Parenteral Drug Association Webinar, “Remote Assessments and Inspections during the COVID-19 Pandemic: Regulator Perspectives” (June 29, 2020), available at https://www.pda.org/docs/default-source/website-document-library/task-force-updates/june-29th-webinar-notes.pdf.
3. FDA Warning Letter, Soluciones Cosmeticas, SA de CV (Aug. 4, 2020), available at https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/soluciones-cosmeticas-sa-de-cv-609057-08042020.
4. Letter from Senators Warren and Smith to FDA Commissioner Hahn, available at https://www.warren.senate.gov/imo/media/doc/2020.11.10%20Letter%20to%20FDA%20re%20foreign%20inspections2.pdf.
5. “US FDA Is Developing Guidance For Interactive Video GMP Evaluations During COVID-19,” The Pink Sheet (Nov. 3, 2020).
6. Federal Trade Commission, Warning Letters, available at https://www.ftc.gov/enforcement/warning-letters?field_tags_tid%5B0%5D=361. See also, e.g., FDA News Release, “Coronavirus (COVID-19) Update: November 3, 2020” (Nov. 3, 2020), available at https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-november-3-2020.
7. DOJ, Memorandum from the Attorney General re: COVID-19 – Department of Justice Priorities, available at https://www.justice.gov/ag/page/file/1258676/download.

Raj Pai, Jaime Jones and David J. Ludlow are partners and Kathy Lee is an associate in the Food, Drug and Medical Device Compliance and Enforcement practice of global law firm Sidley Austin LLP.

This article has been prepared for informational purposes only and does not constitute legal advice. This information is not intended to create, and the receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers. The content therein does not reflect the views of the firm.