By Louis Garguilo, Chief Editor, Outsourced Pharma
It’s like a scene from a Brothers Grimm folk tale. One late afternoon at an industry conference, a cross section of biopharmaceutical leaders gather in a room to take a hard look into a large mirror. It reflects that they — not their suppliers or service providers, as was assumed — are culpable for, and thus can control, many of the product reliability problems in their supply chains.
According to Marla Phillips, co-chair of PharmaLink Conference and director at Xavier Health, “It was a sudden and profound paradigm shift.” The gathering is a culmination of months of investigation into these questions:
Why isn’t the drug product supply more reliable, and why can’t we assure greater consistency in product quality for patients?
Attendees from companies such as Boston Scientific, Cook, Eli Lilly, General Mills, J&J, Kroger, Merck, Meridian Bioscience, P&G, and Shire know the data is conclusive; in fact, the data is culled directly from the manufacturers themselves.
“I remember the meeting clearly,” says Phillips. “The silence when we said, ‘Your own data is showing you are causing the lack of reliability in your products.’ Then you heard comments like, ‘Oh my gosh, it really is.’”
Perhaps some comments said under breath were a bit more colorful.
David Lowndes, senior vice president of supply chain management for Shire, was there. For him, what we’ll document in this article boils down to this: “The industry should achieve the same results in safety, quality, and availability from a fully outsourced supply chain as from a vertically integrated one. Patients, practitioners, and regulators expect nothing less.”
INTEGRITY OF SUPPLY INITIATIVE AND GOOD SUPPLY PRACTICES (GSPs)
“Fixing the supply chain” is a topic where seemingly the amount written about it is inversely proportional to the amount actually done to improve it.
However, what is coming out of the FDA/ Xavier PharmaLink Conference, specifically the discussion about a set of GSPs regarding the Integrity of Supply Initiative, is substantial and important. The data mentioned above was derived via rigorous research and methodology, including detailed cause-and-effect matrixes, Pareto analysis, failure-mode models, and scientific surveying techniques.
The GSPs, being drafted as this article is written, could become recognized by the FDA and regulatory bodies as defining practices for biopharma, food, and medical device companies. For suppliers and outsourcing service providers, this process should usher in improved client relationships and performance. For patients, it means a safer and more reliable drug supply.
The GSPs address three categories determined by the data as the drivers for change. First is Supply Chain Development and Management. There is a need for more rigorous supplier selection processes. Currently, even when implemented, they don’t get followed. Manufacturers then spend years managing unqualified suppliers that shouldn’t be in the supply chain to begin with.
The second is Product and Process Knowledge and Development. The assumption at the outset of the Integrity of Supply Initiative was that suppliers lack reliability and quality. Instead, it was discovered manufacturers don’t understand their own specifications or processes well enough to predict the impact of material variances on final products.
As the title suggests for the third category, Driving Ideal Behavior, manufacturers exhibit negative traits vis-à-vis their supplier networks. One-sided supplier-manufacturer relationships need to change to the “partnerships” often talked about but not practiced. The Initiative recognizes suppliers play an integral role in the success of the final product and bring applied expertise throughout the supply chain. It also stresses manufacturers need strong internal alignment of goals and measurements before engaging suppliers.
CATALYSTS: FDASIA, AND AN OIL SHOCK?
Xavier Health hosts two annual conferences:
PharmaLink for biopharma and
MedCon for medical device. Discussions at
both identified the need for the Integrity
of Supply Initiative. Lowndes of Shire
sits on the governing board. "The overall
initial driver and why I got personally
interested was because of FDASIA [Food
and Drug Administration Safety and
Innovation Act of 2012]. Embarrassingly
for our industry, the FDA has legislated
for us to pay more attention to our own
supply chains," he says.
He adds, "It was important when the
FDA came out with a clear message
regarding what they saw as the issues,
and their desire to work with us. I think
back to the PharmaLink conference when we talked about why FDASIA was being
put in place, specifically Title 7 for the
safety and quality of supply and Title 10
for drug shortages."
Both Lowndes and Phillips bring up
another seminal scene that unfolded during
a 2014 meeting of Initiative leaders.
Norman McLennan, VP of supply chain
at Sasol Petroleum International (U.K.),
presented on his industry's best practices
for working with suppliers.
"He brought the whole upside-down
nature of the way we look at our suppliers
to light," Lowndes explains. "Here's oil
and gas saying they treat their suppliers
as if they are dependent upon them and
need to look after them. Meanwhile, we
often behave as though the opposite is
true, as if they should be glad to have us
as customers even while we are dependent
on their performances to meet the
profound needs of our patients."
READY FOR A NEW ATTITUDE…
Lowndes presides over a fully outsourced
supply chain for some Shire products.
PharmaLink was a vehicle to interface with
the FDA and fellow biopharma companies,
and a way to share best practices. He
also wants to change the entire supplier-manufacturer
According to Lowndes, the current
model was created by "Big Pharma moving
late life cycle products out of their
plants to make space and harvest as much
residual value as possible. The process is
frequently led by a part of a procurement
organization. CMOs get negotiated down
to small margins for large quantities."
Unfortunately, this leads to a need to
standardize production and relationships
to drive efficiency. It might have worked in
the past with high-volume products, but
with the increasing demand for specialty and rare-disease products, more flexibility
and agility are required. "In the
current model suppliers can't respond
to specific needs driven by our products,"
says Lowndes. "They may have 40
other customers and can't customize for
everybody. We've created a model that
has CMOs trying to make one-size–fitsall
offerings to meet demand and stay
The status quo is supported by "specs
wide enough to drive a bus through."
Lowndes says manufacturers must provide
a better understanding of how higher
variability on processes and material
impacts products. "As it turned out from
the surveys and investigation of the
Integrity of Supply Initiative," he says,
"we often don't even share what we are
using the material for. This is one reason
why we get product variability. We own
the specs; it's not the supplier's fault."
SHIRE'S APPLIED SOLUTIONS
Lowndes says the three categories
for the GSPs — product and process
knowledge and development, supply
chain development and management,
and driving ideal behaviors — are "pretty
logical when you look at them. You want
to say, ‘It's common sense!'" But common
sense, it appears, in large part, is
not practiced. At Shire, some of what will
come out in the GSPs is already in place.
Lowndes believes the foundation for a
new model is greater product and process
knowledge and development — shared
between sponsor and manufacturer.
"Shire's batch failure rate [for an outsourced
small molecule supply chain]
has gone down from 2 percent to 0.35
percent in a few years. My understanding
is that for small molecule products
0.5 percent [in a vertically integrated
supply chain] is about best practice,"
Shire shares a knowledge management
system with its biggest partners.
There's an overnight exchange of data
and trending to proactively address
potential issues at the manufacturing
site, including such things as operator
"We can identify the probability we will fail batches and the drivers for any
excessive predictive failure rates," he
says. "That helps us and the supplier.
When failure happens in the old model,
it's just an economic argument about
who is accountable."
Shire adheres to its stringent supplier
selection criteria. (Although Lowndes
says the ultimate benchmark is simple:
"If the FDA walks in there, will they be
happy?") Supplier development is also
important. "Issues in the industry creep
up as technology and standards evolve,"
he says. "We work with suppliers
to ensure we keep pace." For example,
Shire recognized that difficulties in
hiring and retaining skilled employees
were causing production problems at
a supplier. Shire sent its HR team to
help the supplier with its HR systems,
and instituted programs for attracting,
retaining, and training staff.
Lowndes says he's most proud of bringing
together Shire's supply chain partners
for its biggest products the same way as
if it were an internal supply chain. "We
review everything from quality to product
strategy and goals. We look at product
performance amongst various sites and
help each other with challenges."
Last year Shire conducted a business
continuity exercise assuming a part
of the supply chain had gone down.
Suppliers strategized on how they would
cooperate to address the situation so
that patients would not be impacted by
And for a supply chain, it's the well-being
of patients that counts most.
"We've actually taken patients to our
CMOs to share our motivation with
all their employees," says Lowndes.
"In the current transactional model,
Big Pharma is more apt to take their
procurement group to the supplier."
LAST CHAPTER NOT WRITTEN
The endings in Brothers Grimm folk
tales don't always turn out well. The
Integrity of Supply Initiative is currently
developing GSPs to increase the
reliability and quality of drug supplies.
GSPs will be tied to return on investment
and take real-world business realities into account, according to Phillips of
Xavier Health. They'll need to; adoption
is not a foregone conclusion. As
with any initiative raised to the level of
best practices and potentially regulatory
considerations, there will be tough
negotiating over nuances in meaning.
For example, while Lowndes is looking
for a new industry model to facilitate
flexibility and customization at suppliers,
Phillips and others seem inclined
to put the onus on the manufacturers
for broader industry "harmonization" of
parameters and specifications. Maybe a
nuance, maybe a mountain.
The best practices themselves could
prove controversial. An idea flowing
from the aforementioned oil and gas
industry is one of having a methodology
for suppliers to rate manufacturers (not
the other way around). Says Phillips: "If
industry is really interested in improving
product reliability, and know they
are part of the problem, then suppliers
should rate manufacturers so they can
assess how they are doing." She quickly
adds, by the way, there are ways to
ensure the anonymity of the suppliers.
Timing is on the side of adoption. The
need for change has become apparent
to patients, their doctors, and healthcare
organizations. Big Pharma and med
device companies appear ready to face
their shortcomings and are looking for
solutions. The suppliers, certainly not
without issues on their side as well,
are caught in the middle of an untenable
situation. The U.S. Congress has
responded by passing FDASIA, and the
FDA has come to the table to assist. Add
the simple fact that outsourced supply
chains, despite current issues, are on
Phillips says nobody involved in the
Initiative will be satisfied with generating
a set of GSPs. "These have to be
adopted industrywide," she says. "We'll
engage the manufacturers and trade
associations to review and endorse the
documents, and work with the FDA to
have GSPs included in risk assessment
of manufacturers and their suppliers.
We'll give the industry every reason to
adopt these measures."