Pharmaceuticals - Form 483s - Much Ado About Nothing?; Sector Update :: Edelweiss, PDF link

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Form 483 is a common occurrence when facilities come in for inspection. In case of Indian companies*, as many as 60% of the inspected facilities have received a Form 483 till date. We believe it is difficult to conclude whether a Form 483 will result in a warning letter (WL)/import alert (IA). While further USFDA action is not ruled out, till date very few Form 483s have resulted in a WL/IA situation for Indian companies.

Form 483s: By definition not a determination of compliance

A Form 483 upfront states it contains only observations by the inspector and is not a final determination of the state of compliance of the facility inspected. Further steps involve USFDA response within 15 working days with a detailed action plan. Interestingly, response to a Form 483 is not mandatory, but it could help avoid further action by the agency by way of a WL/IA.

Incidence of Form 483 common and on the rise

We believe Form 483 is a very common occurrence when facilities get inspected as substantiated by plant inspection statistics. In the past few years, there has been a rise in the incidence of Form 483 (refer Chart 1) with many Indian companies receiving the same. Since 2000, Indian companies* have received Form 483s almost 60% (635 in total) of the times inspections held by the USFDA. The incidence rate has risen a little over the past 5 years at 62% and we believe this is a function of increase in complexity of manufacturing operations and USFDA’s stricter approach to quality standards.

Very few Form 483s covert to a Warning Letter/Import Alert

Since 2000, the number of WLs/IAs received by Indian companies has been low - mere 21/10 - versus 383 Form 483s issued involving totally 635 inspections. Excluding Ranbaxy Laboratories/Wockhardt from the list, the number of WLs/IAs drops to 15/4. This implies that majority of Form 483s can be resolved. However, what is worth noting here is that majority of the stricter USFDA action (WL/IA) has taken place in the past five years given USFDA’s stricter stance towards compliance.

A mere Form 483 not conclusive in our view

We believe that a Form 483 is a regular feature in the working of a pharma company with no real impact on its business. If a facility is issued a Form 483, the USFDA does not ask the company to stop manufacturing operations at the facility and business continues. However, a Form 483 can lead to issuance of WL/IA if the USFDA is not satisfied by the action plan/progress submitted by the company in response. Precisely for the same reason, we believe that future of a Form 483 is unpredictable and could also be time consuming. But, as data suggests, in most cases it is resolvable.

Stricter FDA merits more investments towards quality standards

We believe investments towards upgrading regulatory standards should help reduce quality issues.

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