Professor Gary Liu discussed regulatory and safety problems associated with pharmaceutical outsourcing. He stated that pharmaceutical outsourcing has increased because the costs are lower and the profit margin greater. However, these benefits of outsourcing came at the expense of drug safety due to the lack of enforcement mechanism. In the United States, the Food, Drug, and Cosmetic Act of 1938 consists of two enforcement tools—outcome-based tool and production-based tool. Professor Liu specifically argued that without proper inspection, it is difficult to enforce other aspects of enforcement tools, such as seizures and injunctions, criminal sanctions, and Good Manufacturing Practices. However, both outcome-based tool and production-based tool are weakened in the context of imports. Furthermore, Professor Liu notes that solutions, such as the outsourcing regulatory power to China and a past agreement with China regarding import safety, have been inadequate to offset the lack of enforcement. Professor Liu concluded the solution is for the FDA to stop “outsourcing” regulatory power to China and for the FDA to increase efforts to inspect foreign establishments. I agree that the first step is for the FDA to retain regulatory power regarding import safety. However, as a practical problem, inspecting all establishments in China would take years. Furthermore, Professor Liu’s argument did not elaborate on the role that consumer awareness plays in improving safety standards abroad.
Practically speaking, improving inspection efforts is not a feasible option as it is costly and time-consuming. Furthermore, as Professor Liu noted, foreign governments and U.S. pharmaceutical companies could hinder proper inspections. I doubt that solely increasing inspection at the borders and inspecting foreign establishments are the solution. Instead, I think a better approach is to decrease imports by enacting more stringent regulations on imported products and increase public awareness about drug outsourcing. Decreasing imports reduces price and regulation discrepancy between products produced domestically and abroad.
In his article The Obstacles to Outsourcing Imported Food Safety to China, Professor Liu dismissed increasing domestic production as a solution because of consumer demand. Consumers are unaware of the conditions under which these products are produced and cannot tell the difference in quality between regulated domestic products and cheaper imported products subject to lesser regulation. Thus, the consumers naturally demand the inexpensive imported products. However, he does not elaborate on whether improving consumer awareness of the potential dangers posed by the imported drugs could naturally drive down consumer demand and force domestic pharmaceutical companies to more attentively select foreign establishments. While I agree that direct supervision by the FDA through frequent inspection and certification of Chinese establishments are helpful, FDA’s resources may be better served to focus on increasing public awareness.
By increasing public awareness, the FDA demand for imported drugs may decrease, and the FDA can focus on increasing domestic production. While raising public awareness is difficult, the FDA will be serving a worthier goal of protecting the physical health of U.S. consumers and the economic health of domestic establishments.
 Gary Liu, Address at the University of North Carolina Journal of International Law & Commercial Regulation Symposium (Feb. 1, 2013).
 See, e.g., Elizabeth Williamson, FDA Was Aware of Dangers to Food, Wash. Post, Apr. 23, 2007, at A1.
 Gary Liu, Address at the University of North Carolina Journal of International Law & Commercial Regulation’s Annual Symposium (Feb. 1, 2013).
 See generally Vincent R. Johnson, Regulating Lobbyists: Law, Ethics, and Public Policy, 16 Cornell J.L. & Pub. Pol'y 1 (2006) (providing the effect that lobbysts has on law and policy).
 Gary Liu, The Obstacles to Outsourcing Imported Food Safety to China, 43 Cornell Int’l L.J. 249, 304-05 (2010).
Posted by Susan Park on Mon. March 25, 2013 9:18 PM
Categories: Medical Markets, Symposium