How to avoid the pitfalls of global outsourcing

Published: Speciality Chemicals – February 23, 2016

Pharma is a global industry, with approximately 16 countries having what the World Health Organisation calls the “innovative capacity” to produce new molecular entities. But in 2016, it will take more than skilled scientists to successfully get a drug approved to be sold in the United States, by far the world’s largest market for medicine.

It will also take a clear understanding of trends and changing regulatory environment in the US, which will impact the global pharma sector. In fact, regulatory professionals will continue to be an increasingly critical function in the global outsourcing sector.

For example, manufacturers outside the US that want to get their drugs approved by the FDA need to understand and be in compliance with US regulations. According to Regulatory Focus, which is published by the Regulatory Affairs Professionals Society (RAPS), “regulatory professionals working with FDA needed to know just 16,329 requirements in 2000, [but] they needed to know 18,777 in 2012” (Figure 1).

Figure 1 – Number of regulatory restrictions by FDA, 2000-15
Source: Regulatory Focus

That 15% growth in the number of new regulations represents a major issues for facilities both inside and outside the US. In 2016 and beyond, that trend is likely to continue. Staying abreast of the changing requirements can be challenging even for facilities located inside the US.

Because it can take persistent effort to stay in regular contact with the FDA to get guidance on how those regulations are changing, that represents an additional hurdle for international facilities. Moreover, it is not just the number of new regulations but the complexity of them since regulations tend to evolve, sometimes while a drug is in development.

Updated regulations could be the result of shifting priorities. The latest area of concern is drug substance impurities. Because in-process development does not necessarily get grandfathered in, those regulatory changes of emphasis can derail a project’s progress.

Companies might have to go back and retroactively update the paperwork at every step to meet new requirements that didn’t exist when the project started. If they do not respond appropriately, they may have their applications rejected. A solution may be to find partners or consultants with deep expertise of knowing how to work with the FDA to get actionable guidance from it.

More inspections

Another way the global outsourcing sector is changing is that the number of international inspections has increased. With the fees generated under the Generic Drug User Fee Amendment (GDUFA), the FDA has expanded the number of foreign inspections and now conducts more international inspections than ever.

The regulatory body says its goal is to inspect all international facilities developing or manufacturing drugs for the US market. It will be a challenge to meet that goal, however, because many international facilities, especially in China, either have never been inspected or have not been inspected as frequently as similar facilities based in the US – and the Chinese government continues to block inspection requests.

(Interestingly, despite the increase in the overall number of international facilities that have been inspected, the percentage of those that have failed inspection has not increased, as would have been expected. According to RAPS, for the years 2011-2013, international facilities that failed inspections held steady at 6-7% and those asked to take voluntary action to resolve minor problems held steady at 41-43%.)

Beyond price

Meanwhile, rising wages will likely have a negative impact on Chinese CMOs. Since 2001, Chinese wages have been rising an average of 12%/year, according to The Economist. Higher costs in China may drive new interest in the US-based CMOs, but price may not be the only reason for sponsor organisations based outside the US.

Figure 2 – FDA inspection process
Source – FDA

For those in the generics business, getting access to reference listed drugs (RLDs) is critical to developing bioequivalent generic versions of the already FDA-approved brand-name drugs. RLDs enable us to test our versions against an FDA-approved standard, which ensures quality control and consistency of the drug.

My company, PCI Synthesis, a CMO based in Newburyport, Massachusetts, which is the largest small molecule drug substance manufacturer in the New England area, recently came across a sponsor who was working with a CMO in India that had failed an FDA inspection putting all of its referenced applications on hold. Making matters worse, the RLD used during development for a particular product had expired.

All of the development had been completed and FDA approval was pending. Unfortunately, since no more RLD could be obtained, an alternative drug substance manufacturer could not be brought online. The situation might have been better if more RLD could have been available or if the CMO had been in the US to begin with, but there was nothing that could be done. The nearly finalised product, along with its potential value, sits locked up in regulatory limbo.

Some of the rules set up roadblocks for working globally when what we need is a pathway to genericise drugs. Another way that arcane RLD rules have a negative impact on the industry and its customers emerged in an episode that attracted attention across the globe.

Former Turing Pharmaceuticals CEO Martin Shkrelli was able to increase the price of Daraprim by more than 5,000% from $13 to $750/pill because there was no competition, due to the so-called closed distribution loophole, which restricts access to the drug to certain distributors, pharmacies and doctors. Shkrelli had a virtual monopoly. He backed off only due to the huge social media outcry, not because of FDA regulations.

Although Shkrelli ultimately subsequently announced that he would “modestly lower” the price for Daraprim, the cost of drugs will continue to rise. The reasons include inefficiencies with the global supply chain, differing FDA and EMA regulations, the industry’s pursuit of ever more complex molecules, rising fees, like those generated by GDUFA, and increased oversight.

Imagine that after the investment in development and years to get a generic to market, you find out that you do not get approval – not because the drug is safe and bioequivalent to the brand name drug, but because processes, including paperwork, were not filled out properly, and that is the only thing keeping it from approval. In the world we live in, sometimes the regulatory personnel are even more important than the lab technology people.