In the summer of 2010, the FDA announced it would be making some upgrades to current good manufacturing practices (cGMPs) targeting control of raw materials, excipients, and components used in pharmaceutical manufacturing. According to the announcement, drug manufacturers will be required to know the original manufacturers for all excipients, APIs, repackers, and relabelers involved in the processing of their products throughout the supply chain. Of course, this may prompt you to ask, “Why don’t companies already know who their suppliers are and from where their raw materials are coming?”
The FDA’s announcement was made at the 2010 Global Outsourcing Conference at Xavier University by Brian Hasselbalch, compliance team leader, guidance and policy development team, Center for Drug Evaluation and Research (CDER) at the FDA. Previous guidance published in 2009 specified that pharmaceutical companies are ultimately responsible for ensuring that processes are in place with regard to the control of outsourced activities and quality of purchased materials. Going forward, not only is a company ultimately responsible, but now held accountable. There is an existing rule that allows for executives to be prosecuted and barred from industry, even if they have left the company where compliance issues were uncovered. It seems now an executive at a pharmaceutical company could be held accountable for noncompliance by one of its supply chain partners. As a result, companies will need to establish and implement processes that can determine the suitability and competency of a vendor. These processes should include the establishment of an approved procedures checklist regarding prequalifying, auditing, monitoring, selecting, and requalifying vendors at established time intervals. In addition, companies should establish and maintain approved vendor lists, quality agreements, and storage for vendor qualification documentation.
Norman Klein, the principal at Core Results, LLC and former director of purchasing with BASF, agrees there needs to be tighter control. From his perspective, the challenge is how to do that when “sourcing a lot of these things gets to be farther and farther away geographically.” According to Klein, it is much easier to regulate U.S.-based suppliers and manufacturing facilities as opposed to the challenges faced when importing raw materials from countries such as China or India. He believes that unless you are able to perform daily oversight of your suppliers, you can never be certain they are “not going to cut corners to try to make an extra buck on supplying the raw materials.” This is one of the problems the new guidance is intended to resolve.
Why The Change
Hasselbalch believes “adulteration issues represent credible threats to our marketplace and that raw material controls have to be improved.” He says the number of products manufactured outside the United States and the number of manufacturing sites abroad have doubled from 2001 to 2007. Some of these imports come from countries with regulatory systems that utilize different and often lower standards than those of the United States. Consequently, gaps in quality control systems have resulted from the increased utilization of outsourced manufacturing. For example, in December 2010, McNeil Consumer Healthcare recalled all lots of Rolaids Extra Strength Softchews, Rolaids Extra Strength plus Gas Softchews, and Rolaids Multi-Symptom plus Anti-Gas Softchews distributed in the United States, following consumer reports of foreign materials in the product, including metal and wood particles. The company’s investigation determined the materials were potentially introduced into the product during the manufacturing process at a third-party manufacturer.
According to Klein, companies like McNeil are only as good as their last mistake, and these mistakes seem to be increasing. In 2000, 5 safety alerts were issued for medical devices, and 59 were issued for drugs and therapeutic biological products. As of Dec. 14, 2010, the FDA had issued 55 safety alerts for medical devices and 73 for drugs and therapeutic biologics. The new guidance should eventually result in a decrease in safety alerts as companies begin implementation.
What Are The Proposed Changes?
In the new guidance, manufacturers will be expected to audit their suppliers and develop approved vendor lists. Klein sees this as an expensive proposition considering the existing global supply network. The FDA recognizes this, as well, and is proposing to allow for third-party auditing arrangements by credible organizations.
Additionally, the new guidance will require security features applied by the original manufacturer or repacker, such as tamper-evident packaging and use of recognized-as-safe–for-intended-use components. Manufacturers will be required to notify the FDA of serious defects in any components or excipients, so they can, in turn, notify other users of the same material. This should speed up the process of removing the defective material from the market.
The guidance will also establish management responsibilities, requirements for self-inspection, change control procedures, documentation of training and its effectiveness, and enhanced existing regulations regarding defect and problem response. There is also a plan for specific guidance on the use of water in manufacturing, such as, explicit instructions for testing of potable water and purified water being the de facto quality of water for drug manufacturing.
Are All Excipients Created Equally?
According to the FDA, a generic drug must be shown to be bioequivalent to the reference drug and have the same API. However, they do not need to contain the same inactive ingredients or excipients. Klein says because there is huge pressure today in the pharmaceutical industry for cost reductions, cost containment, and profitability, less-expensive inactive ingredients can often be substituted. He sees this as one of the biggest challenges for sourcing internationally. Cost containment can invite shortcuts, unless there is a level of confidence between the supplier and buyer. The new guidance is intended to mandate that confidence. Klein believes that if one member of a company’s supply chain is going to make a change, such as trying to substitute a different raw material supplier, then there needs to be a quality process in place that goes all the way back to the original company. If pharmaceutical companies are going to be held accountable, then they need to approve any change made throughout the supply chain, all the way down to the supplier of raw materials and excipients. “Otherwise, you’re at risk,” said Klein. “If you substitute raw materials and there’s a problem, you’re going to pay for it.”
Do You Know Who Your Supplier Is?
Supply chain security starts with the raw materials: the excipients, APIs, and water that go into a company’s final product as evidenced by the proposed changes. Even if your company is using a CMO, it is the pharmaceutical company’s responsibility to qualify all of the vendors that CMO is using in relation to their product.
And remember, the benefits to having a secure supply chain include more than just peace of mind. Having a secure supply chain can minimize harm to your company’s brand equity, trust, and pocketbook. Recent FDA warning letters have gone into detail on the brand-holder/contractor relationship. For example, a letter to River’s Edge Pharmaceuticals reads, “Regardless of who manufactures your products or the agreements in place, you are required to ensure that these products meet predefined specifications prior to distribution.” The previously cited Rolaids recall involves 13 million packages. According to a study by the American Society for Quality (2003), each product recall costs an organization, on average, more than $8 million. This conservative estimate included reimbursement expenses to consumers, recall execution costs, and compensatory damages from litigation. This estimate would be on the low side in today’s dollars and did not include lost sales and lost market share. Product recalls in the pharmaceutical industry have exceeded $20 billion. Because the financial risk is so great, pharmaceutical companies need to successfully manage the integrity of their supply chain.
Another benefit to having a secure supply chain is that, for emerging pharmaceutical companies, it allows for proper positioning. According to Scott Rizzo, president of Value Chain Performance, emerging pharmaceutical companies have three primary product launch/exit strategies. Whether the company is looking to be acquired, selected as a marketing partner, or launching its own product, having a buttoned-down supply chain is critical. Rizzo believes good commercial logistics practices (GCLP) should be addressed as early as Phase 2 of the drug development process. Not doing so can have exponential costs, not only in manufacturing, but company valuation for acquisition. For example, if a company’s API supply chain strategy involves importation from countries with low regulatory standards, it needs to consider the costs associated with importation, waiting for inspection, rejection, quarantine of shipment, or the need to have high API safety-stock levels. High safety-stock levels tie up dollars in inventory that could be utilized elsewhere, as well as pose a risk for spoilage or contamination. To mitigate this possibility, companies should have multiple qualified and approved vendors, whenever possible, to supply the product or service needed.
Once a vendor is qualified, a quality agreement should be developed and approved between company and vendor. Good quality agreements should include members from all relevant areas within the company’s organization, define required quality standards, and specify the products or services provided as well as the necessary training, key contact information, monitoring expectations, roles and responsibilities, locations, and communications necessary for quality-related activities.
From Guidance To Regulation
The newly proposed FDA guidance provides a “how-to” for selecting, qualifying, auditing, training, and approving critical and noncritical vendors. In addition, the guidance recommends the use of a standardized template to ensure consistency and that requirements are being met during the vendor approval and qualifying process.
The FDA is not the only organization working on new guidance. The United States Pharmacopeia (USP), a nongovernmental, official public standards–setting authority for prescription and OTC medicines and other healthcare products manufactured or sold in the United States, is also developing new recommendations at the request of the USP Excipient Expert Committee. Catherine Sheehan, director of excipients for USP, informed me that the USP has created an expert panel for the purpose of developing a General Information Chapter (<1197>) on good distribution practices for bulk pharmaceutical excipients. This panel was established shortly after the FDA’s request to strengthen several excipient monographs, including Glycerin at risk for adulteration with diethylene glycol, a known hepatotoxin and nephrotoxin, used as an industrial solvent and antifreeze. The primary difference between the FDA guidance and what the USP is developing is enforcement. The FDA uses the term guidance to provide a time period, usually three to six months, for companies to get used to the new guidance and provide comment. After the commentary period is complete, the guidance is then converted to regulations. At the writing of this article, the final guidance had not been released. However, based on the presentation by Hasselbalch, the new guidance will certainly assist pharmaceutical companies in the process of securing the supply chain — and harshly penalize those who do not.