In session 4 of our Executive GxP Training program, Teresa Gorecki discusses understanding and managing the regulatory compliance risks to your business. The two provide an overview of the FDA’s history and the consequences of non-compliance and what assuming too much compliance risk can do to your business.
Table of Contents
Formation and Purpose of the FDA
The FDA, established as a law enforcement agency, was created to manage the safety and efficacy of products in the food, drug, and cosmetic industries. It was established in a direct response to the dangerous practices that existed during the early 20th century.
The passage of the Food, Drug, and Cosmetic Act in 1938 marked a significant turning point, granting the FDA authority to oversee and enforce guidelines to protect public health. This pivotal legislation addressed consistent issues of dishonest practices by companies, ensuring that foods, drugs, and medical devices met health standards prior to reaching consumers. Due to this, the FDA’s foundational mission prioritizes protecting and promoting the well-being of the American public through rigorous oversight and enforcement.
The FDA Safety and Innovation Act (FDASIA)
Created on July 9, 2012, the FDA Safety and Innovation Act (FDASIA) represents a significant update to the regulatory framework governing drugs and medical devices under the FD&C Act. One of its pivotal provisions, Title 7 – Drug Supply Chain, introduces critical laws intended to enhance safety and further enable FDA oversight.
Among its key updates, FDASIA strengthened the Good Manufacturing Practice (GMP) requirements, particularly through expanded definitions and increased penalties for non-compliance. This includes broader oversight over the manufacture of drugs, including the safety of raw materials, materials used in drug manufacturing, and finished drug products.
Moreover, FDASIA shifted the inspection focus from a periodic schedule to a more dynamic, risk-based approach. This grants the FDA the ability to allocate inspection resources where they are most needed, ensuring stricter scrutiny for firms with higher risk.
Additionally, FDASIA allows the FDA to collaborate with foreign governments, enabling mutual recognition of inspections of FDA-registered foreign establishments. This international cooperation facilitates more effective and efficient risk-based inspections, promoting global cooperation in drug safety standards.
Furthermore, FDASIA grants the FDA authority to request records remotely from regulated entities, which streamlines the inspection process and enables timely access to critical information necessary for regulatory oversight.
In essence, FDASIA reinforces the FDA’s regulatory authority and underscores the commitment to enhancing public health through careful oversight and regulatory practices innovation.
Consequences of Non-Compliance with FDA Regulations
Failure to comply with FDA regulations can create severe consequences for companies, ranging from civil penalties to criminal prosecution. The FDA, often in collaboration with the Department of Justice (DOJ) and other agencies, supplies a variety of enforcement tools to promote compliance and protect public health.
Warning Letters: Sent by the FDA to notify companies of violations and prompt corrective action.
Consent Decrees: Legal agreements between the FDA and a company, enforced by a court that outlines specific actions required to address violations.
Import Detention: Restricts entry of products into the U.S. that do not meet FDA standards.
Civil Money Penalties: Monetary fines sent for regulatory violations.
Seizure and Destruction of Product: Permission to remove and destroy products that pose a risk to public health.
Injunctions: Court orders restricting certain actions or compelling compliance with FDA regulations.
Criminal Prosecution: Companies and individuals can face criminal charges under various statutes, including Title 18 USC, which covers conspiracy, false statements, mail and wire fraud, obstruction, and RICO (Racketeer Influenced and Corrupt Organizations Act).
Imprisonment and Fines: Individuals convicted under criminal statutes may face imprisonment and significant fines, highlighting the serious consequences of non-compliance with FDA regulations.
These enforcement measures emphasize the FDA’s commitment to maintaining rigorous standards and ensuring the safety and efficacy of products in the United States. Compliance with FDA regulations is not only a legal obligation, but also essential for protecting public health and maintaining consumer trust.
Evaluating Compliance Risks
Risk assessments involve crucial considerations that impact both regulatory adherence and business success:
- Risk Tolerance: Define acceptable types of compliance risks aligned with business objectives. The Executive Team should align on the level of risk they are willing to accept and manage. It is important to make this determination and establish a line that cannot be crossed. Managing risks as they occur without establishing this line usually results in an organization assuming a higher level of risk than they want for their business, or they can afford.
- Monitoring and Mitigation: Conduct compliance risk assessments and implement corrective and preventative actions to avoid exceeding acceptable levels.
- Resource Allocation: Ensure proper resources are available to remediate compliance issues promptly.
- Regulatory Timelines: Align compliance efforts with approved schedules and timelines for new products to avoid new product launch delays.
- Protecting Assets: Prioritize compliance to protect product integrity, brand reputation, and industry standing.
By proactively addressing these common compliance risks, organizations can navigate challenges effectively and maintain better business operations.
To learn more about evaluating compliance risks and abide by FDA guidelines, fill out the form below.