“If your time to you is worth savin’, then you better start swimmin’ or you’ll sink like a stone, for the times they are a changin’” – Bob Dylan
Two pieces of US legislation impact the future of the life sciences industry: the Food and Drug Administration Safety and Innovation Act (FDASIA) and the Affordable Care Act (also known as Obamacare). FDASIA establishes user fee acts, brings generic drugs under a stronger set of guidelines and sets into motion a countdown to May 2017 when all submissions to the US Food and Drug Administration (USFDA) must be made electronically. The main purpose of the Affordable Care Act is to drive down the cost of health care. To that end the act encourages the use of less expensive generic drugs.
The generic drug industry is based primarily in Asia, Africa and South America where generic drug companies have typically not been subject to the same level of scrutiny, industry standards and best practices that the new FDA regulations now require. They will need to comply with more stringent FDA mandates by deploying new electronic document management, quality management and submission management systems, and they will not be able to do business with the FDA in the same way they have done business with their own governments in the past.
Generic drug companies need to understand that compliance risk equals brand risk. The FDA can and does place import bans on non-compliant foreign companies. If a company is out of compliance, there is a very real possibility that it will soon be out of business.
The global pharmaceutical industry can be divided into aligned vs. non-aligned countries. In aligned countries such as Japan, US, Canada and most European Union countries, most companies rigorously follow industry best practices and established standards and maintain a genuine commitment to quality.
In aligned countries, when people are trained in the correct processes for doing their jobs, they usually adhere to those practices. But in non-aligned countries, there might be a tendency for people to try to find ways to shortcut the process (“I don’t need to fill out all those forms or follow those procedures. I can get this done quicker.”) They might believe these shortcuts benefit their company because they can create more of a product faster if they skip a few steps. But those steps are built into the process to ensure safety, control quality and enforce traceability that supports defensibility for auditors and inspectors.
New mandates established in FDASIA will have a substantial impact on pharmaceutical companies in non-aligned countries, and this has implications for US markets. The vast majority of the generic drugs consumed in the US come from pharmaceutical companies in the Asia-Pacific (APAC) region and other non-aligned countries. The US market can or soon will represent as much as 80 percent of their profits. A significant number of pharmaceutical companies in non-aligned countries will go out of business if they can’t sell their products in the United States.
Half of the drugs consumed in the US are used by people over the age of 65 and are paid for by Medicare. The largest integrated healthcare system in North America is the US Veterans Administration (VA). With more than 1,700 hospitals, clinics, community living centres, and other facilities, the VA writes the most prescriptions and dispenses a large percentage of drugs in the US.
A major objective of the Affordable Care Act is to lower the cost of health services that the US Government directly funds – including Medicare and the VA–and this initiative is compelling a move toward generics and biosimilars that are often not manufactured in the US. So if Obamacare is to lower the cost of national healthcare in the US, that must be done by a move toward less expensive generic drugs that come from Asia and other non-aligned regions.
FDASIA dictates that generics and biosimilars companies must now pay user fees to the FDA, and by May 5, 2017 all submissions to the FDA must be made electronically. The purpose of these policies is to create a more efficient industry and safer products for consumers by streamlining the submission and approval process for new drugs and by generating funds for the FDA to inspect pharmaceutical factories in foreign countries more frequently.
Senior management and decision makers in pharmaceutical companies based in non-aligned countries must understand how serious this is. It’s not realistic for them to expect that they can comply with these mandates without investing in their business or changing the way they operate.
The Electronic Common Technical Document (eCTD) is an interface used by the pharmaceutical industry to transfer regulatory information to agencies like the FDA. This interface is supported and enabled by enterprise Document Management Systems (eDMS). Why is it better for companies to have eDMS systems? Some years ago that was the conversation within the industry. We talked about improving return on investment by making processes more efficient and enforcing unified information and standardisation. But today the conversation has changed. Soon companies will not be able to communicate with the FDA without eDMS. They will not be able to make regulatory submissions to the FDA without eCTD publishing software.
There are countless business advantages compelling pharmaceutical companies to invest in integrated systems, unified data, end-to-end information flow and standard ways of identifying records across all systems and departments. However, it can be difficult to sell that story into Asia and other non-aligned regions today. Because labor is cheap there, company decision makers often solve problems not with automation, standardised processes and best practices—but with people.
In some non-aligned countries, companies don’t care if they need to re-run an experiment or process to restore data that was lost due to poorly integrated or non-existent information systems. They simply dedicate plentiful and inexpensive human resources to solving the problem. Unfortunately, this tactict ends to compromise data quality and data integrity, which can lead to violations in current Good Manufacturing Practices (cGMP). In April 2016 the FDA issued new guidance for the pharmaceutical industry to clarify the role of data integrity in cGMP for drugs. The regulator drafted the guidance because its inspections were increasingly revealing cGMP violations due to poor data integrity.
Throwing more manpower at issues like process duplication, siloed information and other common challenges doesn’t truly solve problems. Companies that do this may have found a shortcut, loophole or a quick way around an issue. But that doesn’t help the industry move toward an optimal outcome. We want safer products on the market. That can only be accomplished when every company makes regulatory submittals using the same standardised forms and with data that can be trusted.
It’s a tall order to ask large established companies in non-aligned countries to change their culture, systems and processes. But the message from the FDA is clear. If companies want a piece of the lucrative US generic drug market, they can only get it through compliance with regulations in a way that is defensible to FDA auditors and inspectors.
As US policy makers push to lower the cost of healthcare, eliminate millions of pieces of paper from FDA processes and enforce safety guidelines, many companies in APAC and other non-aligned countries will no longer be able to continue doing business the way they previously did. The US is not trying to compel these companies into compliance just because it is easier for its regulatory bodies and safer for consumers. In the long run, improved compliance will shorten manufacturing cycles, accelerate processes, and improve productivity. Deploying best-practice systems and processes will make companies more capable, responsive and proactive.
Some industry watchers in APAC and non-aligned countries imagine there will be a massive failure of the supply chain if the FDA enforces the new mandates. They think regulators will be forced to make exceptions to the rules and companies won’t need to invest in new systems or enforce best practices. Because so many generics come from non-aligned regions and the US wants lower-cost healthcare, some executives might think they will have negotiating power in this dispute.
But over the centuries, people have united to establish rules that minimise threats to human populations. FDA regulators bring the full weight of that momentum to bear as they implement new guidelines for the global life sciences industry. Companies that have previously been out of compliance have an opportunity to be on the right side of history.
The short-term ramification of compliance means large investments but the benefits include a strong competitive advantage. Having the right document management systems in place meets demands from more sophisticated sponsors who want controlled, audited environments to exchange information across their supply chains—from research phases through commercialisation. The generic drug company that can quickly deliver CFR21 Part 11 compliant data for audits and inspections stands to gain more business. CFR21 Part 11 of the Code of Federal Regulations establishes the USFDA regulations on electronic records and electronic signatures (ERES). Understanding these regulations is essential for a successful deployment of any system that is subject to FDA inspection.
Companies that postpone this initiative until the regulations go into effect will find it much more difficult and expensive to achieve compliance. There might not be enough technology vendors with the time and bandwidth to get complex information systems installed and validated by the deadline. Now is the time for generic drug companies to align with policies and practices that support a stronger, safer, more unified and compliant global pharmaceutical industry.
Warren Perry has held various positions during his twelve years with BIOVIA including Product Marketing Manager, Marketing Manager, and Project Lead. He applies his understanding ofgovernance, risk management, and compliance (GRC), regulatory publishing,and eDMS systems in global markets with clients such as Takeda, Samsung Biologics, Roche, BoehringerIngelheim, GlaxoSmithKline, Fidelity Investments, Bank of America, Logica CMG, and Aspen Pharmaceuticals.