Foreign Drug and Medical Device Manufacturers Under a Second Trump Administration: Increased Enforcement Scrutiny?

Footnotes for this article are available at the end of this page.

As discussions intensify about how the second Trump administration will reshape the regulatory landscape for U.S.-based life sciences firms, less attention has been given to the new administration’s regulatory impact abroad. While the administration’s focus on deregulation and government downsizing may hint at some regulatory relief for domestic manufacturers, its emphasis on an “America First” agenda could signal increased enforcement scrutiny for foreign drug and medical device manufacturers, among other interested parties.

FDA’s Regulation of Foreign Drug and Device Manufacturers

The Federal Food, Drug, and Cosmetic Act (“FDCA”) and related acts extend the Food and Drug Administration’s regulatory reach globally, requiring foreign manufacturers that supply drugs and medical devices to the U.S. to meet the same stringent safety and quality standards as domestic companies, including that manufacturing sites comply with current Good Manufacturing Practices (“cGMP”). Such compliance is essential to ensure, among other things, the integrity of manufacturing processes, product quality, accurate labeling, and the timely reporting of adverse events to enable corrective action.

While FDA does not have direct extraterritorial inspection authority, the agency has a powerful indirect mechanism to assure compliance: if a firm refuses to allow (or significantly delays) an FDA inspection, the agency can refuse entry of the firm’s products into the U.S. As many foreign manufacturers depend on U.S. market access, most opt to comply with inspection requests rather than risk losing the ability to sell their products in the U.S. In turn, FDA leverages firms’ voluntary compliance to conduct both routine and for-cause inspections of those firms’ foreign manufacturing facilities. Pre-approval inspections assess compliance before products are approved for U.S. distribution, while surveillance inspections ensure ongoing adherence to FDA regulations. These inspections are vital, as approximately 60% of manufacturing establishments supplying drugs and devices to the U.S. are located overseas, primarily in countries such as India and China.

Between 2015 and 2019, FDA conducted an average of 1,574 foreign inspections annually.¹ Although the COVID-19 pandemic disrupted inspection schedules — leading to a suspension of most foreign inspections from March 2020 into 2022 — inspection activity has rebounded significantly. In 2023 and 2024, FDA conducted nearly 1,200 foreign inspections annually, reflecting the agency’s focus on “dramatically improv[ing] the quality and quantity of [its] inspections to keep pace with global supply realities and consumer demand.”²

This new wave of post-pandemic inspections has revealed an increased frequency of compliance violations. In 2023 and 2024, foreign facilities were classified as “Official Action Indicated” (“OAI”) or “Voluntary Action Indicated” (“VAI”) nearly three times more frequently than domestic facilities, including VAI classifications in 47.89% of instances and OAI classification in 8.35%.³ An OAI classification indicates significant regulatory violations that may result in enforcement actions such as warning letters or import alerts, while a VAI classification denotes less severe deficiencies requiring corrective actions. Persistent historical noncompliance by manufacturers in India and China has heightened concerns about the safety and quality of products entering the U.S. market.

Adverse Consequences for Foreign Firms

Foreign inspections are primarily conducted by investigators from the Office of Inspections and Investigations (“OII”).⁴ These OII staff members either travel from the United States to the foreign site or are assigned to one of FDA’s overseas offices.⁵ Inspections may also include subject matter experts from the relevant FDA product center — such as the Center for Drug Evaluation and Research (“CDER”) for drug facilities or the Center for Devices and Radiological Health (“CDRH”) for medical device manufacturers — who lend specialized technical expertise.

FDA employs a range of enforcement tools to address cGMP violations at foreign manufacturing facilities. The first step is often the issuance of Form 483 inspectional observations, which detail conditions or practices that may violate cGMP standards. These observations serve as a formal notification, prompting corrective action. If issues are not adequately resolved, FDA may escalate enforcement by publicly issuing a warning letter, which outlines significant violations and warns of potential regulatory consequences if remediation is not undertaken.

For more serious or unresolved violations, FDA may impose an import alert, barring the facility’s products from entering the U.S. market. Import alerts can have immediate and long-term financial consequences, disrupting supply chains, delaying shipments, and leading to reputational damage. The restrictions often extend beyond the remediation process, as companies must undergo follow-up inspections to lift the alert, which may take months (or even years) for FDA to schedule and complete.

In severe cases, FDA can recommend that the Department of Justice (“DOJ”) take legal action. This may include civil injunctions, consent decrees, and civil monetary penalties. The DOJ may also pursue False Claims Act cases for fraudulent conduct or criminal prosecutions for egregious violations such as fraud, misbranding, or adulteration resulting in human harm. Such actions not only damage business operations but can also cripple a firm’s reputation and financial stability.

Two notable cases underscore the consequences of FDA inspections and subsequent DOJ enforcement. Most recently, in 2021, Indian drug manufacturer Fresenius Kabi Oncology Limited (“FKOL”) pleaded guilty to a misdemeanor violation of the FDCA for concealing and destroying records before a 2013 FDA inspection. The company was fined $30 million and forfeited $20 million. DOJ filings revealed that FKOL’s Kalyani, India, facility manufactured active pharmaceutical ingredients (“APIs”) for cancer drugs distributed in the U.S. Before the FDA inspection, plant employees removed computers, documents, and other materials that exposed noncompliance with FDA requirements, erasing critical evidence of violative practices.⁶

Similarly, in 2013, Indian generic drug manufacturer Ranbaxy USA Inc. pleaded guilty to three felony FDCA counts and four felony counts of making false statements to FDA. These violations included failing to conduct proper safety tests for drugs like gabapentin and ciprofloxacin and falsifying stability testing data to suggest compliance. Ranbaxy paid $500 million to resolve the matter, including $150 million in criminal fines and forfeitures and $350 million to settle civil claims under the False Claims Act.⁷

As the examples above illustrate, adverse FDA inspection outcomes can trigger wide-ranging consequences. They may delay or cause the denial of approval of otherwise ready-to-market products, disrupt entire supply chains through import alerts and detentions, lead to increased scrutiny from regulators — including warning letters and mandatory recalls — and catalyze civil or criminal actions. These events can cause significant financial losses due to halted product flow, additional remediation expenses, potential contract terminations, and catastrophic civil and criminal judgments. Meanwhile, reputational damage and eroded confidence among customers, investors, and other partners can linger long after the immediate regulatory issues are addressed.

“Foreign First” Inspection Focus?

While the overall number of inspections by FDA could decline in the wake of the ongoing reductions in the federal workforce, foreign manufacturers are likely to face heightened scrutiny during the second Trump administration due to multiple interrelated factors. First, high-profile cases, such as Fresenius Kabi and Ranbaxy and the 2018 recall of Chinese-manufactured heart drug valsartan, highlight critical vulnerabilities in the oversight of foreign manufacturing processes. These incidents have brought attention to gaps in quality assurance and regulatory compliance among foreign producers, particularly in industries where safety lapses can have widespread public health impacts. Additionally, the administration’s “America First” trade policies are expected to further amplify enforcement scrutiny on foreign entities, creating a regulatory environment that demands greater accountability and compliance from exporters to the U.S.

Public health concerns will also remain a key driver of regulatory oversight, especially in high-risk categories like sterile injectables, complex medical devices, and products involving sophisticated manufacturing processes. For instance, injectable pharmaceuticals requiring aseptic processing may face intensified scrutiny due to the heightened risks posed by inadequate sterilization practices. These risks are particularly acute in facilities where regulatory oversight has been inconsistent or where prior violations have been documented.

Given these pressures, FDA may place renewed emphasis on in-person inspections to address longstanding limitations in the monitoring of foreign manufacturers. The administration is likely to allocate increased resources toward inspecting high-risk facilities and regions, including India and China. This shift would align with broader public health objectives and reflect a commitment to mitigating the risks posed by global supply chains.

In addition to traditional inspections, FDA may continue to expand the use of advanced technological tools to enhance oversight. For example, the increased use of remote regulatory assessments (“RRAs”)⁸ such as remote document reviews, live video tours, and teleconferences with facility staff, along with other forms of data analytics, and artificial intelligence, could be deployed more frequently to supplement inspections. These tools would allow FDA to maintain a presence in regions where travel remains challenging (or even those on the Department of State’s “Do Not Travel” list), while also providing a more comprehensive view of manufacturing processes and compliance trends.

It is also worth noting that due to the overall perception of deregulation during the second Trump administration, state regulators and private whistleblowers may also step up enforcement efforts against foreign manufacturers. States with robust enforcement programs, such as California and New York, could aggressively pursue violations related to cGMPs. California’s Proposition 65, for example, could intersect with cGMP violations involving product contamination or labeling deficiencies, leading to significant legal and financial consequences for foreign manufacturers.

Minimizing Legal Risk During the Second Trump Administration

Foreign drug and medical device manufacturers should not wait for a reenergized FDA to come knocking. Successfully navigating an evolving regulatory landscape and minimizing legal risks requires adopting a proactive approach.

• Strengthening compliance functions is paramount, beginning with a thorough review and enhancement of internal quality management systems. Manufacturers should ensure that cGMP requirements are fully integrated into their operational frameworks, with dedicated compliance teams overseeing adherence to U.S. regulations.
• Comprehensive training programs for staff at all levels of the organization are critical. Employees must be educated on FDA standards, inspection protocols, and best practices for maintaining accurate records. There should also be checks in place to ensure employees are following and maintaining the policies in practice. A strong emphasis on data integrity is essential, as issues such as falsified records or incomplete documentation risk costly enforcement actions, as seen in the Ranbaxy and Fresenius Kabi cases. By fostering a culture of compliance and transparency, manufacturers can reduce the likelihood of violations.
• Foreign firms can further prepare for FDA inspections by conducting regular mock audits simulating real-world inspection scenarios, allowing companies to identify and address potential weaknesses before regulators visit their facilities. Engaging third-party consultants to conduct independent assessments can provide an additional layer of assurance and demonstrate a commitment to compliance.
• Supply chain management is another area requiring close attention. Manufacturers must ensure rigorous qualification processes for suppliers and conduct periodic audits to ensure that raw materials and components meet required standards. This is especially important for firms relying on APIs or other inputs from high-risk regions.
• Establishing open lines of communication with FDA can also help minimize enforcement risks. Manufacturers should not wait for inspections to identify compliance issues; instead, they should proactively engage with regulators to seek guidance on complex requirements or report potential problems.
• Foreign firms would be well advised to monitor regulatory developments at both the federal and state levels. Federal regulators, state attorneys general, and private litigants are likely to remain active in pursuing cGMP-related cases. Staying informed about evolving legal standards and enforcement priorities will help manufacturers anticipate risks and adjust their compliance strategies accordingly.

By taking these proactive measures, foreign manufacturers can strengthen their compliance frameworks and reduce the likelihood of costly enforcement actions, mitigate penalties in the case of inadvertent noncompliance, and safeguard the reputation of foreign firms in the highly competitive U.S. market.

The potential for increased enforcement scrutiny under a second Trump administration should not be underestimated. By understanding the applicability of the FDCA, preparing for increased inspections, and learning from past enforcement actions, foreign manufacturers can better navigate the shifting regulatory landscape and avoid costly penalties and reputational harm.

 

[1] U.S. FOOD & DRUG ADMIN., Inspections, FDA Data Dashboard, https://datadashboard.fda.gov/ora/cd/inspections.htm (last visited Feb. 17, 2025) (hereinafter “FDA Inspection Data Dashboard”).

[2] Douglas Stearn, FDA Inspections: A Vital Public Safety Net, U.S. Food & Drug Admin. (Aug. 2024), https://www.fda.gov/about-fda/regulatory-news-stories-and-features/fda-inspections-vital-public-safety-net.

[3] FDA Inspection Data Dashboard.

[4] OII was formed as part of FDA’s restructuring of the Office of Regulatory Affairs (“ORA”) in October 2024.

[5] FDA has established a global footprint to help oversee the rising number of foreign facilities involved in producing FDA-regulated products. The agency maintains offices in regions such as China, Europe, India, and Latin America, staffed by a mix of U.S.-based employees and locally hired personnel. These teams typically include investigators, policy analysts, and technical experts who work directly with foreign regulators, inspect manufacturing sites, and coordinate oversight activities.

[6] United States v. Fresenius Kabi Oncology Ltd., No. 2:21-CR-020-JAS-BNW (D. Nev. Aug. 11, 2021).

[7] See Press Release, U.S. Dep’t of Justice, Generic Drug Manufacturer Ranbaxy Pleads Guilty and Agrees to Pay $500 Million to Resolve False Claims Allegations (May 13, 2013), https://www.justice.gov/archives/opa/pr/generic-drug-manufacturer-ranbaxy-pleads-guilty-and-agrees-pay-500-million-resolve-false.

[8] FDA does not categorize RRAs as formal inspections (i.e., no Form FDA 483 is issued), and the agency retains discretion about whether, how, and when to conduct them. If FDA identifies major issues or cannot verify compliance via remote means, the agency may schedule an on-site follow-up inspection. RRAs do not eliminate the possibility of a standard, in-person foreign inspection.