Impact of Regulations, Drug Manufacturing and Pharma Supply Chain (PBMs and allies) in Drug Shortages and Affordability Part 1

Drug prices and shortages are becoming an ever-increasing issue. They need to be addressed. Regulations, Parma manufacturing and Benefit Managers and the supply chain have an impact. Since there is too much to cover, I am presenting my perspective in two parts. 

There are opportunities and they might be worth attention. Observations and views are mine and no reflection of any entity’s performance. Opportunities are there, waiting for us to be exploited and improve the landscape. There is no financial relationship with any company. 

Landscape and some “out of box” thoughts on how and what to improve are considered and reviewed. My perspective is on issues from “FDA to patient” which includes regulators, pharmaceutical manufacturers and distribution”. 

Part 1: 

Many have expressed their opinions. Legislators⁽¹⁾ and regulators ^{(2, 3, 4)} have organized meetings and discussions to figure out how shortages can be alleviated and drug prices contained to a reasonable degree. Pharmaceutical companies and PBMs (Pharmacy Benefit Managers) have stalled and intervened every attempt to control drug pricing that will upset their apple cart as they could lose a lot. Legislators want to intervene but due to political influence of the industry have shrugged away from the wants of their electorate. Suggestions have been made to ease drug shortages but nothing has worked except for talk.  

“Creative Destruction” ⁽⁵⁾, “Nondestructive Creation” ⁽⁶⁾ or coup d’état are potential improvement pathways. Persistent effort and planning would be needed. We must recognize that there will be significant internal resistance and powers to be will intervene and make sure “nothing to very little” is altered.

Not much will happen instantly. We must understand the existing landscape, reconfigure it and make the necessary changes. It seems process of “continuous improvement” has been overlooked from FDA to patient. Unless an effort is made we could be still talking about the change for the next 10 or 20 years. 

Drastic measures like single payer system, drug price controls and government edicts can control price increases and shortages. A President’s “National Healthcare Emergency” equivalent to “National Border Emergency” ⁽⁷⁾ is another alternate. There will be significant opposition against altering the current way of doing business. Intent here is not to take drastic steps but create wins that would lead to big wins for all involved. 

What all is possible?

Since there are many players (regulators, pharma companies, middlemen) involved, my conjecture is that selective application of “Nondestructive Creation” and “Creative Destruction” would be needed to achieve lower drug prices, reduce shortages, and retain profitability of everyone. Assistance of legislators would be helpful to smooth out the landscape. Even though each participant is independent but influences each other. If we can simplify/improve each, we will improve a lot. 

Existing processes can be simplified, innovated and competition instilled with two objectives: enhance profitability of pharma related companies and improved drug affordability with minimum or no shortages. If we put our heart and mind to improve the existing system it can be improved. As I said earlier there will be resistance as the easiest thing us humans love to say “NO” it won’t work. Unless we try, nothing will change. 

We all know that competition leads to manufacturing technology innovation, better and consistent product quality, better prices, minimum shortages, and improved profits of every participant in the business. It seems that in generic pharma manufacturing and distribution we have “organized lack of competition”. It could be due to influence of brand drugs and the sentiment “patient will pay the demanded price to extend their life. It is interesting to note that no one knows the real drug prices except what patients pay after copay. What patients pay is not realistic as they are mutually subsidized prices. We also need to look at the total landscape to see interferences and simplify them to tackle affordability, profitability, and price issues.  

Regulations (ANDA and NDA Approval Processes): 

In the United States FDA is responsible for assuring product quality and consistency. Companies are expected to get approval of every new (NDA), generic (ANDA) or OTC (over the counter) drug prior to their sales ⁽⁸⁾. For product consistency and quality, companies must follow FDA’s established cGMP guidelines. They are expected and do use established and appropriate economics and engineering principles and methods to produce drugs. Economic justification, like in any other business, is necessary for use of every process and technology.  

FDA has a guidance (process or road map) for ANDA/NDA approvals ⁽⁸⁾. I consider filing and approval process equivalent to a manufacturing operation. For these filings FDA must give precise road map of their expectations (I call them operating instructions) that any company (equivalent to a plant operator) should be able to follow and get approval (create a quality product) in three months. These operating instructions must be clear and broad enough to cover every ANDA/NDA filing and produce a quality product from the get go. 

My conjecture is that most likely FDA knows what is needed for approval but either the companies don’t completely understand the needs and wants or have become accustomed to FDA’s hand-holding to take them across the finish line. Based on my review, the current process is complex and needs significant legal and engineering manpower to file an application and get an approval. There is some discussion to lower the current approval times but it is not going to be significantly different ⁽⁹⁾.

In every manufacturing organization, process operating instructions are pilot tested. My expectation is that FDA similarly pilot tests their ANDA/NDA instructions internally before these instructions are issued (commercialized). If FDA’s operating instructions cannot be followed the first time, it suggests these instructions may not have been pilot tested. In FDA’s own terms if they do not fit quality by design (QbD) process but fit quality by analysis (QbA) (A could be aggravation) mode. Based on my experience, I have found that practicing/testing the operating instructions before commercialization is an excellent way to learn their shortcomings. This exercise is an excellent example of “nondestructive creation” can be used NDA/ANDA filings also. 

My speculation of “untested instructions” is confirmed by significant “back and forth” (long time) the current review process takes to get an approval. To me that means that the operating instructions are not precise and/or clear. The resulting product (ANDA application) is not a quality first time but a re-worked product. In manufacturing operations “re-work” means lower profits. In financial terms “ANDA approval after rework” is delay in commercialization and delayed profits to the applying company. I believe significant improvements can be made to simplify the existing process so that better than 95% of the hand-holding can be eliminated. Saved time would have higher profitability, lower cost and affordability implications, a big win for all.

Since the current filing and approval process takes time, question needs to be asked to the Regulators is “what can they do to simplify the path and approval to bring drugs to the market?” Again, this would be a great  profitability through simplicity opportunity.

Companies deciding to file for approval can take as much time as necessary to complete and file the application. Each filing company will submit their information in FDA’s requested format even though they produce different products. Again, I want to emphasize that these pilot tested operating instructions, if followed precisely, should produce a quality product which would result is an ANDA approval in three months. 

Recently introduced Competitive Generic Therapies Guidance draft ⁽¹⁰⁾ is supposed to give companies competitive advantage. Competition, to me, means be first in the market. I don’t believe companies will get any such advantage as the suggested process is cumbersome and battery of personnel (legal and otherwise) would be needed for submission. I also ask the question “has the guidance been pilot tested within FDA to see the challenges it poses for submission and approval and does it meet FDA’s own Quality by Design (QbD) expectations proposed in 2005?” It would be extremely useful if FDA, based on its internal pilot test, can simplify the process and suggest the time it would take from start to finish to file and get an approval. 

Regulations: ANDA Term: 

FDA’s existing evergreen ANDA approval regimen can be exploited and abused. US FDA should consider changing its evergreen policy. As explained later, if adopted, it may encourage competition. US being the largest and most profitable market, almost every company would like to sell their products in this market. However, their products must be on some formulary. If a company’s approved ANDA drug is not manufactured for sale in the US and is also not on any US formulary one-year after approval, ANDA should be revoked. In addition, if the approved ANDA is licensed out to and produced at an un-inspected FDA facility, ANDA should be voided. If a company later wants to sell their products in US, they would have to re-apply. This would prevent companies from using and overloading US approval system to promote their products in other countries. My conjecture is only companies with best technologies, cost and quality based on economies of scale should serve the US market. 

About 30% (~2491) of the ANDAs are with 90 companies ⁽¹¹⁾ and this basically suggests that likelihood of economies of scale, optimum processes, is minimal to none. Rest (~69%=5,475) are with ten companies ⁽¹⁰⁾ which are being manufactured in about 200+ plants. Again, my conjecture is that these products have no benefits of economies of scale most drugs are produced using mediocre manufacturing processes and are not the lowest cost producers. It is very likely that they, as explained later in Part 2, face many challenges. 

Since FDA must monitor each ANDA facility at a prescribed schedule, I am not sure FDA has sufficient staff. It is ironic that FDA does not know how many of the ANDAs are not being marketed ⁽¹¹⁾. If an annual report is not submitted within FDA’s guidelines and the granted facility inspected, related ANDA should be voided and could present opportunities to the companies that are producing the same product/s to other companies. All voided ANDAs should be publicly listed. Expiration and voiding of ANDAs might result in consolidation and competition for the market through economies of scale (better technologies) and costs, which is dearly needed. 

If PBMs are forcing companies to have certain number of ANDAs to be on the formulary but not marketing all, ANDAs not being marketed should also be voided. This is discussed in Part 2. 

In Part 2 of this blog I will share my perspective on Manufacturing and Pharmaceutical Supply Chain (PBMs), Drug Shortages and Affordability. 

Girish Malhotra, PE

EPCOT International 

1. Senate Finance Hearing on Drug Pricing, C-SPAN, February 26, 2019
2. Strategic Plan for Preventing and Mitigating Drug Shortages, FDA, October 2013, Accessed November 21, 2018
3. FDA is Advancing New Efforts to Address Drug Shortages, FDA, November 2018, Accessed November 19, 2018
4. The Duke-Margolis Center for Health Policy, Identifying the Root Causes of Drug Shortages and Finding Enduring Solutions, November 27, 2018
5. Schumpeter, Joseph:Capitalism, Socialism and Democracy, 1942, Accessed November 29, 2018
6. Kim, Chan W., Mauborgne: Nondisruptive Creation: Rethinking Innovation and Growth, MITSloan Review, February 21, 2019
7. National Emergency, The New York Times, February 15, 2019 
8. ANDA Submissions — Content and Format Guidance for Industry
9. Testimony of Drs. Woodcock, Marks and Shuren Accessed March 23, 2017
10. Draft Competitive Generic Therapies Guidance, FDA, February 2019 
11. Berndt, Ernest R., Conti, Rena M. and Murphy, Stephen J: The Generic User Fee Amendments: An Economic Perspective, NBER Working Paper 23642, August 2017

What Is Needed for a Regulatory Approval of NDA/ANDA Filings in 90 Days?

Approving pharmaceutical manufacturing NDA/ANDA [New Drug Application/Abbreviated New Drug Application] applications at FDA in three months could be considered a Herculean task for the application filer (company) and the regulators (FDA) and it would be. But, what if, it could be done. If achievable, we would see significant changes on the pharmaceutical landscape ⁽¹⁾. Monies would be saved in dealing with regulatory affairs, would reduce the time to market. That would mean higher revenues and profits for the brand and the generic companies. It could also lead to increased competition and potentially improve drug affordability though lower costs. There would be challenges to create and incorporate such a modified filing and approval process but the benefits achieved should outweigh them.  

The existing process of NDA/ANDA filing and approval is cumbersome and a challenge for the regulated and the regulators. I have not been involved but just reviewing the documents, what is expected and needs to be done, the process is cumbersome. I have to admit that I got lost in acronyms (alphabet soup), numbers e.g. xxx (w) (a) etc. and the legal jargon. No disrespect for the creators of the jargon, this alphabet soup gave me indigestion. 

I am sure there is process to accomplish approval in ninety days. For it to happen a precise roadmap ⁽²⁾has to be created and it has to be so good that it can be followed even with eyes closed.  

Expectations from the Road Map and What would be Expected from the Regulators and the Regulated:

Putting my process development, manufacturing and management hats simultaneously I am proposing a process that would have to be developed by the regulators (FDA) and the companies for their NDA/ANDA approval. I consider filing an NDA/ANDA filing equivalent to a manufacturing process that has to be followed precisely by both sides to create a quality product ⁽³⁾, an approved NDA/ANDA filing. 

Regulators based on their years of experience will write down precise step by step recipe that has to be followed by the NDA/ANDA filing company to get their approval in the slated time. I need to emphasize that if the regulators (FDA) precisely define their expectations, the process will be smooth. There will be no doubts about the expectations in the mind of the filers. Again, information asked has to be precise and cover every detail of type of manufacturing, synthesis as well as formulation, process. It is not going to be easy and can only come from chemists, chemical engineers and other engineering disciplines who have developed, designed, commercialized and reviewed such processes and products from head to toe day in and day out.

Yes, the companies might take their own time to file, their own choice, but the expected information has to be such that there is no finger pointing suggesting “we did not know what was expected”. If companies fulfill and deliver the information as expected and every deliverable is there, company should get their approval/disapproval decision in ninety days or less. That would be a huge win for all involved. There could be some back and forth but it would be minimal and the ninety-day clock, from the day the filing was submitted, will keep ticking. i.e. no stoppage. 

I would call regulator’s road map a quality by design recipe for a perfect process created by the regulators that the filing company will follow. If for some reason the regulator’s (FDA) recipe, the defined road map, cannot be followed or understood by the company, the application process will go from Quality by Design (QbD) to Quality by Analysis, aggravation, (QbA) and that means delays and added costs.  

Once the regulators have defined their needs to approve a filing, chemists and chemical engineers at the companies have to understand the questions and deliver the answers through their submissions. Both entities will have to understand each other’s paper conversation about every process. Only their dialog will produce repeatable quality product through the asked questions and the delivered answers. If this happens, the review process will go smoothly and time reduction mission will be accomplished. 

Companies submitting information will have to have an absolute command and knowledge of their processes and will have to present information so that it will convince the regulatory examiner/s that the product is going to follow every claimed expectation and regulation that has been laid out. In short product will be of consistent and repeatable quality. If this happens I envision that the approval process in the long run will be simpler and quicker than the current process.

Examiners at the regulatory bodies will have to understand the conversed information. In some instances clarification and or additional information might be needed. My expectation is that with time such cases might be few and far in between and the expended time would be significantly less than the present process. 

What would the Showstoppers say or think? 

There will be many who will be apprehensive of the suggested process. Their perspective would be mis-information could be submitted to get fast approval. Yes that is possible but the regulators have a recourse of barring or shutting down such rouge operations. That privilege will have to be used if the current legal system stands in the way. 

I am conjecturing that for the success of this proposal regulators will draw a precise map of what they need to have from the filers. It is going to easier said than done. Regulatory staff will have to be envision and document from their past experiences what all they need for a first-time complete submission. We have to recognize that it can be done but no one is going to welcome a voluminous dissertation. 

Let’s assume that every possible information FDA or any other regulatory body asks/needs for the approval is submitted to the utmost correctness the first time and the regulator have no questions. Would the regulators accept such an application without any apprehension and approve the filing in the 90 days or sooner from the first day of filing? I am sure that there will be doubters on both sides. It will take time to accept this process as it is outside the comfort zone of filers and the regulators.  

We have to accept that will not have a perfect road map from the get go. To get to the perfect stage, I am envisioning there will be lot of obstacles from the legal and consulting firms and even the manufacturing companies. Pilot program might have to be developed by the regulators and tested and over tested. Naysayers and doubters will have their days. However, if successful pharma’s landscape will change. I believe the best minds can create a process that is much simpler than what is being followed. 

I don’t have every “t” crossed and “i” dotted for the proposed process. I may sound repeating myself at times.  Objective here is to use the proposed process to build a system that will expedite the approval process. As stated earlier results will be higher revenue for the brand and the generic companies through speedier introduction of new therapies and out of patent generics, additional competition, possibly lower drug prices and inclusion of better technologies after the products are commercial. Process of continuous improvement would be included more than ever. 

We have an opportunity to play outside the box. It could be a hip-hip hurray moment. 

Girish Malhotra. PE

EPCOT International

1.     Malhotra, Girish: Can the Review and Approval Process for ANDA at USFDA be Reduced from Ten Months to Three Months? Profitability through Simplicity, March 25, 2017

2.     Malhotra, Girish:ANDA (Abbreviated New Drug Application) / NDA (New Drug Applications) Filing Simplification: Road Maps are a Must. Profitability through Simplicity, May 11, 2017

3.     Juran, Joseph M., Juran on Quality by Design, Simon and Schuster, ISBN 9780029166833, May 1992

ANDA (Abbreviated New Drug Application) / NDA (New Drug Applications) Filing Simplification: Road Maps are a Must.

Excellence is expected from every task we humans do. Definition of excellence differs between humans. Due to lack of product quality consistency and excellence in pharmaceutical produced products, US FDA was created in 1906 ⁽¹⁾. If we review the history of the US Food and Drug Administration its prime motive is to assure consistently excellent quality products (food, pharmaceuticals and cosmetics) that deliver the same performance all the time.  

Going fast forward, since I had not been involved in ANDA filings, I recently started to learn the task. I found it an extreme challenge. The process is cumbersome and even a priority approval takes time ⁽²⁾. I spent significant time to understand, determine and accumulate what all is needed to simplify a filing and create an ANDA application to have an approval in three months from the current expectation of ten months. FDA’s goal of approval in ten months from past practices would be a significant improvement ^{(3, 4)}.  

Being a chemical engineer, I am trained to follow and communicate using a process flow diagram for the process at hand. Block process flow diagrams ⁽⁵⁾ are one of the way chemical engineers communicate information about the processes to their colleagues. Such process flow diagrams have been in use since 1840 ⁽⁶⁾.

Hoping to find a similar diagram for ANDA filings, I searched FDA websites. Yes I did find many documents that tell the readers what all is needed but I could not find a single document (showing a process flow diagram) that would tell me or anyone precisely what are the documents and information needed and their sequence. [If anyone knows existence of such road map at FDA site, please let me know.] There are lots of guidelines and guidances but during discussion with fellow professionals, I found they have different interpretation of requirements.

Simply said these documents (guidances) suggest that if five different companies were filing an ANDA for the same drug it is quite possible that none of the submissions would be exactly the same. I wonder how FDA staff will do if asked to file ANDA for a generic drug. FDA site has links that link to different documents but there are no simple flow diagrams ⁽⁷⁾. One can get lost in the maze. I would not be surprised if the number of pages in these guidances could exceed an ANDA filing application.

Since I could not find a flow chart for ANDA approval process, I thought a flow chart for New Drug Approval (NDA) ⁽⁸⁾ might exist. To my chagrin I was disappointed. Again, there were links.

The US FDA has done an excellent job in documenting and guiding what paper work is needed but I am afraid that paperwork as stated earlier can lead to personal interpretation of what all is needed and it most likely is the main cause of variations and inadequacies in filed applications and leads to delays in ANDA and NDA approvals.  

Best way to simplify the process, my perspective, would be to create/draw a road map that details each marker at every step of the way and nothing is left for interpretation. Each desired parameter has to be defined and even illustrated if need be. Simplicity is needed.

Process of filing approval for the Brand and Generic drugs is similar to any manufacturing or a service process. Every filer desires to produce a quality product (aka QbD “quality by desire”) filing. However, the current filing process can be labeled a QbA product “quality by analysis = aggravation” as it is based on individual interpretation of guidances and guidelines. I believe as stated earlier is the cause of delays and resubmissions.

I hope that once the road map for ANDA/NDA filing is created someone at USFDA will follow the road map and a file an application. Such filings should then be reviewed internally and the roadmap/ flow diagram tweaked to assure perfection. Such a process will define discrepancies and simplify the filing process. There could exceptions but in general the process will assist everyone. If done, it will lower the effort and costs related to filings. Another latent but a magnificent benefit will be that the companies will create an excellent document that is based on filers desire to create excellence. It will be a QbD (design/desire/diligence) document based on a quality by design process. I am confident that it will also assist companies to create repeatable and excellent processes that will produce quality product.

Girish Malhotra, PE

President

EPCOT International

1. US FDA History Accessed May 10, 2017
   
   
2. Malhotra, Girish: Can the Review and Approval Process for ANDA at USFDA be Reduced from Ten Months to Three Months? Accessed May 10, 2017
   
   
3.  Generic Drug User Fee Act Reauthorization (GDUFA II) Accessed May 10, 2017
   
   
4. Testimony of Drs. Woodcock, Marks and Shuren Accessed May 10, 2017
   
   
5. Process Flow Diagrams Accessed May 10, 2017
   
   
6. Cotton Processing Flowchart, Accessed May 10, 2017
   
   
7. Abbreviated New Drug Application (ANDA): Generics Accessed May 10, 2017
   
   
8. New Drug Application Accessed May 10, 2017