On May 6, 2025, the U.S. Food and Drug Administration (FDA) announced a plan to expand its use of unannounced inspections of foreign manufacturing facilities that produce foods, essential medicines and other medical products intended for American consumers and patients. The FDA stated that this new inspection strategy will ensure that foreign manufacturers receive the same level of oversight and regulatory scrutiny as domestic companies. Key aspects of the FDA’s plan include:
- Increased Frequency: The FDA will increase the frequency of unannounced inspections at foreign facilities.
- Elimination of Double Standard: The FDA stated that the move ensures that foreign manufacturers are held to the same standards and oversight as domestic companies.
- Exposing Bad Actors and Ensuring Safe Prescription Drugs: The FDA explained that unannounced inspections will help expose bad actors (e.g., those who falsify records or conceal violations) and ensure that every product entering the U.S. is safe, legitimate and honestly made.
- Increased Enforcement Activity: The FDA emphasized that it is authorized to take regulatory action against any company that attempts to delay, deny or limit an unannounced inspection.
The FDA’s announcement aligns with the Trump administration’s broader efforts to increase oversight of foreign manufacturers and incentivize domestic pharmaceutical manufacturing, as seen in President Donald Trump’s executive order, signed a day before the FDA’s announcement, promoting the domestic production of critical medicines. The executive order called for the FDA to “enhance inspection of foreign manufacturing facilities” by developing and advancing improvements to the risk-based inspection regime that ensures routine reviews of overseas manufacturing facilities involved in the supply of U.S. medicines. This article evaluates the FDA’s new policy and offers key considerations for stakeholders. While the new policy applies to drugs and food, the focus of this alert is drug regulation.
FDA’s Foreign Inspection Authority
The Food, Drug, and Cosmetic Act (FDCA) authorizes FDA regulatory investigators to enter and inspect, at reasonable times and in a reasonable manner, facilities where drugs are manufactured, processed, packaged or held for introduction into interstate commerce or after such introduction. 21 U.S.C. § 374(a)(1). The FDCA defines “interstate commerce” to include commerce between “any State or Territory and any place outside thereof.” 21 U.S.C. § 321(b). The FDA has interpreted its statutory authority to authorize unannounced inspections of foreign establishments that manufacture drugs intended for U.S. distribution.
A majority of the FDA’s foreign inspections have focused on ensuring that finished pharmaceutical and active pharmaceutical ingredient (API) manufacturers are compliant with current Good Manufacturing Practice (cGMP) requirements. In recent years, the FDA has also conducted foreign inspections of clinical research firms (such as contract research organizations), medical device testing labs and food processing facilities. To schedule an inspection and enter a foreign country, the FDA coordinates with the government of the country where the inspection will take place. Though not required to do so by statute, the FDA typically preannounced its planned inspection, giving the firm advance notice prior to the inspection. Historically, nearly 90% of the FDA’s foreign inspections have been preannounced.
An FDA inspection of a foreign firm can result in several outcomes, ranging from a classification of “No Action Indicated” (meaning that the FDA observed no material objectionable practices or conditions during the inspection) to the issuance of an FDA Form 483 (indicating that an FDA investigator observed conditions that may violate the FDCA). When a Form 483 is issued, the FDA will evaluate the need for further regulatory or enforcement action, including the possibility of issuing a warning letter to the inspected firm. The FDA will typically consider issuing a warning letter in response to significant violations of the FDCA, such as a firm’s failure to comply with cGMP requirements or falsification of clinical or preclinical research. For example, in February, the FDA issued a series of warning letters to drug manufacturing establishments in China and India citing the firms for serious deviations from cGMP involving quality control, testing methods and contamination prevention in connection with drug manufacturing and production.[i]
Whether an inspection is preannounced or unannounced can significantly affect the accuracy and integrity of what FDA regulatory investigators observe on-site. A key concern with preannounced foreign inspections is that they may give unscrupulous actors the opportunity to conceal deficiencies or destroy or falsify records prior to the FDA’s arrival on the scene. When companies receive advance notice, they may attempt to conceal problems or mimic compliance in their facilities and thereby mislead the FDA about how the company truly operates. Indeed, the FDA has found indications of such misconduct (e.g., removal of hardcopy records, deletion of electronic files) during preannounced foreign inspections in the past, raising the question of whether bad actors might have successfully concealed such information from the FDA on prior occasions. [ii]
Implications of FDA’s New Policy
The FDA’s new policy of conducting unannounced foreign inspections is a significant development with potentially major implications for drug manufacturing, distribution and research firms in the U.S. and abroad. While the concept of unannounced foreign inspections is nothing new (in 2022 Congress directed the FDA to pilot an unannounced inspection program in India and China), the FDA’s new policy will likely result in substantially more unannounced FDA inspections in China and India, especially given that approximately 40% of all API manufacturing for U.S. prescription drugs takes place in these countries.[iii] Moreover, many drug manufacturers in the European Union, which manufactures approximately 20% of all API for U.S. prescription drugs, may, for the first time, see unannounced FDA inspections.
Drug manufacturers in these countries, including contract drug manufacturing facilities, will need to maintain continuous compliance with cGMP in day-to day operations, as they can no longer rely on advance notice to prepare for inspections. Moreover, foreign clinical research organizations are likely to see a spike in unannounced inspections, as these facilities constitute another large area of outsourcing that may dovetail with the administration’s efforts to ensure prescription drug safety and shift pharmaceutical operations back to the U.S.
In the near term, an increase in unannounced inspections may result in the FDA issuing more 483s and warning letters to foreign companies that fail to implement cGMP, good clinical practice or good laboratory practice requirements. If these inspections uncover significant violations with drug safety implications, the FDA is likely to use additional regulatory enforcement tools, such as import alerts, to ensure that noncompliant products do not enter the U.S. supply chain.
The FDA’s policy announcement explicitly mentions a powerful — and to date underutilized —enforcement tool in the government’s arsenal: the FDCA’s prohibition on delaying, denying or limiting an inspection. The FDCA makes it a criminal violation for a foreign firm to conceal information or otherwise attempt to delay or limit the FDA’s access to records during an inspection.[iv] This prohibition brings a substantial amount of conduct within its grasp and extends its reach far beyond that of other federal obstruction statutes. For example, the FDA has explained that “unreasonably” redacting records or providing some but not all requested records would constitute limiting an inspection in violation of the FDCA. The FDA has also described as potentially violative limiting direct observation of portions of the manufacturing process, interrupting production activities to prevent FDA observation and limiting photography by FDA investigators.
Thus, if a foreign firm withheld records during an inspection or limited an FDA investigator’s ability to photograph a manufacturing plant, the U.S. Department of Justice (DOJ) — which prosecutes criminal violations of the FDCA — could pursue criminal charges against that foreign corporation in a U.S. court, seeking a conviction that could require payment of substantial monetary fines, forfeiture and restitution, and give rise to FDA debarment and HHS-Office of Inspector General exclusion. While the FDCA allows for strict liability enforcement, the DOJ would typically pursue such charges only with evidence of criminal intent, such as evidence that one or more employees sought to impede the inspection.
Best Practices for Stakeholders
Although the specifics of how the FDA will implement this policy remain to be seen, foreign firms should expect an imminent increase in unannounced inspections and related enforcement activity, particularly given the administration’s broader push to increase domestic drug production.
Stakeholders should consider several principles in anticipation of the FDA’s implementation of its recent announcement.
- Establish FDA Regulatory Compliance. Foreign firms should build regulatory compliance into their daily operations. For example, a drug manufacturer should implement a quality management system along with training and regular audits to ensure compliance with cGMP requirements. Firms should develop written and standardized operating processes and procedures that address all aspects of cGMP, ranging from facilities, equipment and personnel management to batch testing and packaging and labeling controls. A firm’s day-to-day work should be documented in accordance with cGMP requirements, and records should be organized, accessible and thorough.
- Implement an Inspection Readiness Plan. A regulated firm should develop a rigorous and comprehensive plan for handling an unannounced FDA inspection. The plan should be tailored to the activities of the firm — e.g., a contract research organization should anticipate a Biological Research Monitoring (BIMO) inspection —and the anticipated objectives of the FDA inspection — e.g., BIMO inspections focus on protecting human subjects and ensuring data integrity. Among other things, firms should consider forming an inspection readiness team, developing written inspection readiness standard operating procedures (SOPs), training employees on SOPs and related topics, and conducting one or more mock FDA inspections.
- Address Supply Chain and Data Integrity Vulnerabilities. Domestic companies that contract with foreign drug manufacturers and clinical research organizations should ensure that they are vetting and overseeing their foreign partners. If a U.S. firm has outsourced clinical research to a foreign company, the U.S. firm should exercise sufficient diligence to protect itself from potential application integrity and research misconduct issues. In the context of drug manufacturing, U.S. firms should consider audits of foreign partners and be poised to handle supply chain disruptions that could result from an unannounced FDA inspection, which could result in a warning letter or import alert and thereby limit or discontinue distribution of a prescription drug or API to the U.S.
- Promote Transparency and Preclude Enforcement Action. While the FDA’s new policy creates risk for regulated industry, that risk can be mitigated by taking steps to achieve regulatory compliance and ensuring transparency during FDA inspections. The latter point is particularly critical in terms of potential judicial action against foreign firms, as companies that intentionally conceal the truth are far easier targets for enforcement action than companies that make honest mistakes. A foreign firm should ensure that its inspection readiness plan promotes transparency, and U.S. firms should evaluate their foreign partners with this critical criterion in mind.
McGuireWoods is nationally recognized for its healthcare and life sciences counseling, litigation and enforcement capabilities. The team is comprised of former high-level federal prosecutors, a former FDA associate chief counsel and regulatory compliance specialists. McGuireWoods attorneys are experienced at managing every stage of complex FDA inspections and DOJ investigations and helping clients navigate the intricacies of FDA-related laws. For assistance on any matter, reach out to the authors of this alert.
[i] Granules India Limited, U.S. Food & Drug Administration (Feb. 26, 2025), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/granules-india-limited-697115-02262025 (Granules India was found to have widespread contamination in its air ducts that were used in the preparation of its finished drug products. This contamination led to the detection of residues from previous products and microbial contamination.); Wuhu Nuowei Chemistry Co., Ltd., U.S. Food & Drug Administration (Feb. 11, 2025), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/wuhu-nuowei-chemistry-co-ltd-697727-02042025 (Wuhu Nuowei failed to establish appropriate standards to ensure that its batches did not contain more impurities than what was allowed under the United States’ impurity standards, and one of their batches ended up with too many impurities.); Chengdu Innovation Pharmaceutical Co., Ltd., U.S. Food & Drug Administration (Feb. 5, 2025), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/chengdu-innovation-pharmaceutical-co-ltd-698786-02052025 (Chengdu Innovation did not perform identity testing on each shipment of each lot of incoming material before they were used in drug manufacturing. According to the FDA, without adequate testing, the Company did not have scientific evidence that incoming materials conformed to appropriate specifications prior to use in the manufacturing of their drugs.).
[ii] Global Calcium Pvt. Limited, U.S. Food & Drug Administration (Jan. 16, 2025), https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/global-calcium-pvt-limited-692000-01162025 (among other violations, Global Calcium was found to have deleted multiple electronic records during the inspection and created falsified records to misrepresent API production activities so incentives could be claimed regarding production in the plant.).
[iii] Consolidated Appropriations Act of 2023, H.R. 2617, 117th Congress, § 3615 (2022).
[iv] See 21 U.S.C. § 351(j) (providing that a drug is deemed to be adulterated if it “has been manufactured, processed, packed, or held in any factory, warehouse, or establishment and the owner, operator, or agent of such factory, warehouse, or establishment delays, denies, or limits an inspection, or refuses to permit entry or inspection”); see also 21 U.S.C. § 331(e) (prohibiting the refusal to permit access to records during an FDA inspection).