QbD
(Quality by Design a.k.a. having a robust and repeatable process which produces
quality product without rework or re-testing) is financially important for the
pharmaceutical industry and highly beneficial for the consumers; as it will
ensure quality all the time, potentially alleviate shortages and lower costs.
In order for QbD to become part of pharma landscape “C” and “E” levels of the
companies need to have a very clear understanding of cost of regulatory compliance
and financial benefits of QbD. Even with the understanding, timely
implementation will need considerable cajoling within each company. I am not
being opportunistic or pessimistic but being realistic.
I
have discussed some of the ways to drive to QbD in my earlier articles (1,2,3).
I have deliberately not been explicit about the methods because I want the
companies to find their own justifications. Pride of ownership is an excellent
driver. I have, however, eluded on “how to” methods and ways. In this article I
have further expanded on my perspective and source of QbD justification
funding.
Unless
QbD related costs are financially justified, especially for the existing
products, not much will change. One source of funding is to pass the costs through
drug sale price increase. That might be very difficult. The other source of
funding can be the savings achieved from lower compliance cost expenditures
once the QbD processes are in place. I expect that once the QbD based processes
are in place and companies have rationalized their manufacturing practices and
strategies, they will have significant savings which will offset their QbD
effort. Regulatory bodies and the regulators at the companies might not agree
with me about lowering compliance costs but besides yield improvements this is
an area in the manufacturing hemisphere where I believe significant cost saving
opportunities exist. There are other cost saving areas and each company has to
define and identify them.
Companies
have to think QbD for the new products from the start. If it happens, it will
be a win-win for the companies and patients.
Basic
premise of regulations is that we have to be able to track everything we do in
the manufacture of drugs and the processes have to be reproducible and
repeatable. Pharmaceutical industry should have taken the lead to track,
control and monitor their processes. Since self-policing did not happen on a
dependable basis, regulations had to be established to ensure product consistency
and quality. With the establishment of regulations companies have focused on
how to satisfy the regulatory requirements and in turn have lagged and are
stifled on manufacturing technology innovation. Since the associated regulatory
and compliance costs are passed on to the customers, need to have the best and
sustainable manufacturing technology has not been a primary concern.
Since
pharmaceutical products are for human consumption, they have to have the
highest quality. However, the producers have not been proactive in exceeding
quality or regulatory standards. To achieve quality for the active
pharmaceutical ingredients and formulated drugs they have relied on QbA
(repeated analysis) methodologies. This practice has delivered quality product
but it is an expensive way to comply. Even with such effort poor quality
products have ended up in the market, had notable recalls and product shortages
are an ongoing saga.
Due
to lack of significant movement toward QbD based processes, regulatory bodies
are establishing additional regulations. These regulations will force the
industry to have robust processes that are optimum and sustainable. Industry
will blame regulations but will have to comply, increasing drug costs. Had the
industry seen value in QbD it would have seen touting the benefits in print.
Industry
has spent money on “how to comply” rather than how to innovate and have
processes that will exceed the regulatory guidelines. The current regulatory
guidelines are minimal at best and the industry should not have any trouble
complying or exceeding but has had on going issues as discussed above.
In
order to offset QbD associated costs, total “compliance costs” incurred at a
company site or associated with every drug have to be completely understood. It
is my conjecture that majority of the “C” and “E” levels do not know their
actual compliance costs including costs associated with every quality related
mishap. They are probably buried in the accounting maze and different
department budgets.
For
QbD to happen and if it happens, it is very possible that eventually it could
result in some thinning of the workforce. The very thought of such a scenario
in the current environment is not an exciting perspective. Could the work force
reduction possibility be a QbD deterrent? I do not know the answer. I believe
that QbD implementation will presents opportunities at the pharmaceutical
companies and should create jobs at universities and companies who create
methods and products to advance manufacturing technologies.
I
believe that going the QbD path could also reduce the workload of the
regulatory bodies and actually allow more to be done. Approval process could be
shortened. Penalties for poor product quality and non-compliance have to be
stiffer than what they are today.
Strategic
manufacturing, technology innovation, higher profits and shortened time to
market are the QbD drivers. Industry should have been there fifty plus years
ago. The current blockbuster business model absorbed all of the manufacturing
deficiencies. Shareholders got accustomed to the fast paced introduction of new
drugs and profits. With the drying product pipeline, companies are looking at
different methods to shore up their profits. Higher profits through better
technologies and lowering compliance costs could be one additional and simpler
way.
Biotech
processes have to be carefully reviewed to ensure that they do not fall into
the existing manufacturing technology mold that has been around for the small
molecule drugs. What I have read so far does not seem very innovative. We have
to have processes that produce quality products by design rather than analysis.
Is
it time to relinquish the current practices?
Are
the recent increasing recalls, 483 citations and plant shutdowns due to lack of
industry’s proactive stance to produce quality products or their stance to
barely meet regulatory guidelines? These incidences suggest that the industry
is having a difficult time meeting the minimum established guidelines to manage
their manufacturing practices. This clearly begs a question. Does the industry
fully understand their raw materials, equipment and manufacturing practices or
have they put a square plug in a round hole with the hope that all will be OK
at the end if they monitor every step of the manufacturing process?
If all the above is true then the pharmaceuticals are the prime candidates for
creative destruction (4) and/or disruptive innovation (5)
or their combination.
As
long as humans will live they will need drugs. Costs related to drug approval
will not go away. Costs related to regulations outlined in 21 CFR 210& 211
and others that control and track manufacturing are here to stay.
Pharmaceutical industry has to figure out how to innovate, manage and control
these costs while complying and/or exceeding what is expected. Pharma might
have to move from the “blockbuster model and “me-too model” to some other model
(3). Strategic bets are needed (6).
Manufacturing
processes that are based on fundamentals of chemistry, chemical engineering and
sound economic principles do deliver quality products. They could fit the QbD
definition. Processes that are inefficient require repeated quality analysis
and their products cost more. To lower compliance costs companies have to have
complete command and control of their manufacturing practices. This can only
happen if they understand physical and chemical properties of the chemicals
they use, their nuances and implication of any raw material changes. In
addition, they have to be able to exploit them to create economic and
sustainable processes. Understanding and exploitation starts as soon as the
process development begins in the laboratory and stays through the life of the
product.
Funding
for QbD
If
regulations become mandatory companies will need funding to move their existing
processes to QbD mode. There are two sources for such funding.
1.
Pass the costs to the patients
2.
Pay for the costs through cost reductions
The
first alternative is not going to work in today’s increasing government cost
controls, declining/drying new product pipeline and the customers asking for
lower prices. The other alternative is to offset some of the current expenses.
This can be achieved by having processes that are efficient (improved yield,
sustainable and better asset utilization) and do not require current levels of
handholding. Processes will have to exceed current regulatory guidelines at
lower cost.
Record
keeping is not going to go away. With that in mind, manufacturing processes,
strategies and technologies need a total revamp. Industry has to take the lead
rather than someone outside the organization i.e. a regulatory body telling
them how to walk. Companies have to sprint the course and win the race
regulatory bodies are asking to walk. It will reduce quality issues, recalls,
shortages and many of the 483 and other citations (7) if we do
prepare for the race correctly. QbD also will improve cash flow and
un-necessary and unproductive capital investment.
Since
I have not seen any published cost of compliance monetary numbers, I am
presenting my perspective as to where the savings can come from. They are based
on certain assumptions. Companies can plug in their own numbers to see what is
possible and doable. Global pharmaceutical sales are expected to be around $1.1
trillion (8) in 2014. Table 1 illustrates saving based on my
assumption.
Global
pharmaceutical revenue, $ billion (Year 2012)
|
900
|
Cost
of Sales @ 30% (avg. an assumption (9)) of revenue, $ billion
|
270
|
R
& D @ 20% (avg. an assumption (9)) of revenue, $ billion
|
180
|
Sum
of Cost of Sales and R&D, $ billion
|
450
|
Assumption:
About 30% (assumption) of the Cost of Sales
and
R&D money are Cost of Compliance.
Total
cost of compliance, $ billion
|
150
|
Table 1
I
have used 30% sum of cost of sales and R&D as cost of compliance. I believe
this to be a conservative number. It can include costs related to current
methods of achieving quality, paper work, quarantine costs, cost of inventory,
cost of recalls, infrastructure costs to quarantine materials and litigation,
recall, rework and disposal costs. If I have missed any other item, the costs
will change accordingly. If any one has a better number, I would appreciate
knowing about it.
If
through better process technologies i.e. improved yield, reduced in-process
quality checks (elimination/reduction of QbA), sustainable processes, plant
consolidations (economies of scale: batch vs. continuous), improved asset
utilization (e.g. moving from 30-40% to 60-75% asset utilization) and better
record keeping companies can save 40 to 50% of the “cost of compliance” as
speculated in Table 1, we could be saving between $60.00 to $75.00 billion per
year.
As
I stated earlier, if my assumption can be on the lower side and the savings
dollars could be higher. If anyone has a better number for cost of compliance,
it would be wonderful to share. These savings relative to the total
pharmaceutical sales revenue might not seem much but still raise a challenge to
all of us “Has the time to excel and exceed quality using innovative
manufacturing technologies come in Pharmaceuticals?” I believe so. Magnitude of
savings outlined above can create many new millionaires. It might even create
few new billionaires.
It
is my firm belief that if we incorporate fundamentals of chemistry and chemical
engineering in our processes to manufacture products from the day we start
developing new manufacturing processes our products will meet quality standards
the first time and every dollar that is not spent on compliance will drop to
the profit before tax line. Pharmaceutical industry has to change its modus
operandi. There are no alternates left.
Girish
Malhotra, PE
EPCOT
International
1. Malhotra, Girish:
Who or What killed QbD? And is there hope for resuscitation? Pharmaceutical
Processing, May 2011, pg 10-14
2. Malhotra, Girish: A
Guide to QbD for APIs, Pharmaceutical
Processing, Volume 27, No. 4 May 2012, pg 46-49
3. Malhotra, Girish:
Focus on Physical Properties To Improve Processes: Chemical Engineering, Vol.
119 No. 4 April 2012, pgs. 63-66
4. Schumpeter,
Joseph A. Capitalism, Socialism and
Democracy, Chapter VII: The Process
of Creative Destruction 3rd Edition
1950, Harper Torchbooks, New York,
1962
5. Christensen, Clayton
M., The Innovator's Dilemma: The Revolutionary Book that Will Change the Way
You Do Business, Harvard Business Press Books, Jun 11, 1997.
6. Charan, Ram and
Sisk, Michael, Strategic Bets, Strategy+business May 24,
2011
7. FDA
Citations FY 2010 Inspections,
Compliance, Enforcement, and Criminal Investigations Accessed May
15, 2012
8. Global Pharma Sales Steadily Growing Despite Rise of Generics
Accessed May 15, 2012
9. Based on
Annual reports of different Pharmaceutical companies.