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Showing posts with label Quality. Show all posts
Showing posts with label Quality. Show all posts

Wednesday, November 6, 2019

Drug Shortages, Quality and Prices: Who is Responsible?

Recently US FDA (1, 2) presented its perspective on how to reduce drug shortages and potential solutions. Without a clear road map and a game plan, that is acceptable to all and could be followed to resolve the issues nothing will change and/or happen. In the coming time a very lively discussion/debate about who is responsible and will participate to alleviate shortages will happen. My conjecture is that good bit of finger pointing ‘who is responsible’ will result and not much will happen. All said and done someone has to take the responsibility and must be held responsible for less than agreed quality product, shortages and ever-increasing prices of generics. FDA, Drug producers and the distributors which includes PBMs (Pharmacy Benefit Managers) should be part of the discussion. There is no two ways about it. I have presented my thoughts about the roadmap. There is no financial or any other obligation with any educational/commercial or regulatory body. 

In the drug hemisphere there are two drug classifications (Brand and Generic) and they must be dealt separately. In the process of getting drugs from either classification to the patient there is a common element and its impact on discussion of quality, availability and prices is totally ignored. This element is distribution chain aka PBMs and also includes insurance companies, the whole distribution chain. 

Behavior of PBMs and allies is seldom discussed. They are treated as the savior in healthcare but a deeper analysis suggests that they are significant part of the problem for quality, availability and pricing especially for generic drugs. Their contribution is seldom acknowledged, but if discussed, is generally ignored (3,4,5, 6, 7, 8, 9) by most. Drug innovation is not compromised in this conversation.  

Brand vs. Generic Drugs: 

Brand drugs are produced by limited number of companies but generics are produced by many (6). It is easy to address manufacturing, distribution and quality issues for the brand drugs. Brand companies do everything possible to avoid poor quality and availability issues as the bad publicity can be lethal. They are very powerful companies, who invent and commercialize new drugs and make sure that there are no issues of any kind. 

Influencers in Drug Business: 

Concepts (1,2) to reduce shortage are proposed but, in my estimation, they will not resolve the issues at hand. FDA’s effort is lots of talk and no meaningful results. Alternates to latest recommendations, discussed later, should be considered. Some alternates have also been proposed (10, 11,12, 13, 14) and should be reviewed.

     FDA. ----> Drug Producer [API manufacturer + Formulator ----> PBM + Drug Distributor -----> Patient
                                   Figure 1: Parties involved in drug business

Figure 1 reiterates who all is involved in the drug business (no pun intended). In the current system FDA, for sales in the United States, makes sure brand and generic quality drugs are approved, manufactured and distributed. Drug producers must make sure that they produce and sell ONLY approved repeat quality drugs day in and day out and follow USFDA guidelines. Drug distributor is the intermediary who assures quality drugs are bought and sold to the patients.  
In the current business model “drug distributor, includes PBMs” buy and sell drugs and is a for profit intermediary. They presume they are selling quality drugs. This may or may not be true. In the current system PBMs are not held accountable for sale of less than quality drugs. They should be held accountable. Drug distributors, as discussed later, can be a major cause of the drug shortages and less than quality products. 

Every drug distributor, like any seller, is in the business to sell quality products and maximize their profits. Based on my experience, I would negotiate purchase prices with the manufacturer/supplier to maximize my profits. Sellers, in turn to stay in business, must improve their business practices to maintain their profit margins. Margin retention can come from economies of scale and/or improved processes/technologies or taking short cuts. 

Taking short cuts can result in less than quality product and if not caught by the buyer, is the easiest way to retain profits. These in Pharma’s API manufacturing and their formulations can come from less than efficient processes (3), lax process controls and management. These are known facts. In manufacturing, taking shortcuts can result in losing track of the process and if the quality suffers no one would know where the problem occurred and cannot be corrected. Financial losses can result. 

FDA’s inspections in pharma manufacturing are data capture based. If short cuts have been taken they are covered up by falsification of data. Companies, who can manage data, can get away with less than quality product being shipped. However, if caught the worst scenario would be a 483 citation or their continuance. Lack of FDA’s stern action and not being held accountable on a continuing basis leads to complacency. Examples of citations are available at FDA site. 

It is expected that every manufacturer of API and their formulations has absolute command of their processes and produces quality products using cGMP practices. Lack of data integrity is a clear suggestion that processes are out of control. Inspections by walking around can tell an experienced inspector general management philosophy of companies. They can see signs of management’s practices with respect to quality. 

PBMs putting pressure, as discussed above, on API manufacturer and formulators to lower their selling price can result in selling less than quality product. If companies cannot achieve their margins they can stop production and it can lead to shortages. Irony is that no PBM is held accountable for product quality or the shortages. Blame is put squarely on the manufacturers. Under the current scenario PBMs reap huge profits (12, 13, 14) with no expense or blame. Unless PBMs and drug manufacturing companies are not collectively held responsible for quality, affordability and shortages, world would be still discussing these issues in 2030. 

Excellence comes from within. However, in the current scenario, due to PBM pressures to lower selling prices, pharma manufacturing companies are also forced to be minimalistic in innovation and excellence. Sometimes excellence can be forced by external threat as discussed later. It may be just the incentive manufacturing companies need.

FDA’s New Proposal for Drug Quality and Shortages (1, 2):

FDA’s ANDA/NDA drug approval is considered getting the toughest “seal of approval”. If companies have this approval then why is FDA suggesting purchasers (PBMs and others) do not recognize its “seal of approval”. If FDA is suggesting that the approved sites do not have mature quality system then “is FDA suggesting that the current cGMP practices and the ANDA/NDA approval processes are a failure as they do not weed out marginal producers?” These remarks raise a question “why do we need FDA?” 

If FDA is suggesting that patients should abandon proven drugs that work in favor of higher priced marginally better drugs, question needs to asked who is paying for the drugs. what have the companies done to improve their processes to improve their profits. Disparity between sales prices between illustrated drugs (4, 8) suggest that many drugs can be imported. It seems that no one has benchmarked sales prices of drugs in different countries.  

It seems that PBMs role in drug shortages, quality and prices is not recognize or understood. They, as explained above, are BIG part of the quality and shortage problem. 

My conjecture is that FDA’s recommendation to incentivize and rate manufacturers is not going to solve quality or shortage issues. Companies, as explained above, will still be under PBM price negotiation pressures and even after incentives, quality and shortage issues would still be there. If external incentives to manufacturing companies is considered, it will be essentially subsidizing profit-making companies. It would be interesting to see how and why patients and tax payers will participate in such an adventure. Legislators, who, in our legalized corrupt system (lobbying) could care less about shortages and prices, will have an issue to talk about with their constituents.  

With respect to ranking or rating manufacturers (1, 2), it is an audacious and ambitious task which could take more than five years to fully implement. Does FDA have the finances, resources and expertise to create such a system? If legislative help is going to be needed, my speculation is that various vested interests will do everything possible to mute such a system if their profits are impacted. 

If the ranking system idea comes to pass and if FDA is designated to develop such a system many questions need to be addressed. For such a rating system to be created, question would be, who would be rating the companies. If it is FDA, it would have to develop rating criterion for the sites. Many at FDA would have to be very familiar with manufacturing of API and their formulations. System would have to address every possible scenario to assure quality. For the ranking to be applicable across the board every “t” will have to be crossed and every “I” will have to be dotted. I am not sure FDA has staff with experience in process design, development and hands on manufacturing to establish and pinpoint the road map for ranking of manufacturing companies. 

FDA’s proposed ranking system would be similar to developing a manufacturing process. Development of ranking system would require testing as the system as it is developed. I am not sure FDA is capable of developing a Quality by Design (QbD) process as it has not been practicing it for the ANDA approval process. 
While the ranking system is being developed, shortage and quality issues will continue. We cannot afford them.  

In our mutually subsidized healthcare system prices at different levels are extremely well camouflaged. Most of this report is difficult to understand as there is no explanation of what is being analyzed. Figures in this report are just numbers gymnastics. Basically, reality is being not addressed but an impression is given that the authors know how they can solve drug shortage issues. I hate to say it but it is very obvious that authors have no understanding of the role PBMs and what happens to prices between the drug manufacturer and patient (8). It would have been nice if they had given a real case explanation to illustrate issues. 

I don’t believe if the involved do understand what all it would take to translate their suggestions into reality. Practicality of the suggestions made have not been considered. 

Alternate process:

Since FDA’s “Drug Shortage: Root Causes and Potential Solutions” (1, 2) will take time (as much as 5-10 years or more) to come to fruition, there are alternates that can be implemented very quickly. Pieces parts exist. Some will have to be added. Reconfiguration and tweaking of the existing landscape will be needed.  

Alternate plan would involve management of influence of suppliers (PBMs and associates) and manufacturers of drugs. Since drug distributors and manufacturers due to reasons mentioned above influence quality, cGMP, prices and shortages, it would be best if all the parties involved are held accountable for quality and shortages. 

Alternate plan is a two-step approach. For the first step, involving manufacturers, most of the methods and practices are in place. Implementation of such a plan would be quick, easy and effective. Second step will involve PBMs and distributors. We can expect challenges and resistance. They can be overcome if everyone lives up to their responsibilities. 

My hypothesis is that drug manufacturers have not taken FDA’s 483 issuance seriously. They have taken 483 issuances as “medal of honor (9)” and considered them as part of the process with minimal or no financial consequences. It is time that issuance of 483s be treated differently. 

Going forward drug manufacturing companies have to deposit refundable $200,000.00 per 483 per site as soon as they receive a citation. If corrective actions are not completed in a verified time and sustained, company would not only loose the deposit but would also be forbidden to supply products to the US market for the following four years. Financial loss would be incentive enough for the companies to be on top of their manufacturing and quality game. No variances would be entertained.

It is expected that if drug manufacturer is barred from supplying to the US market, PBMs and associates will suffer loose source of drug supply and it would mean financial loss. To prevent such incidents to happen they would be forced to get involved with manufacturers about quality of products. PBMs and associates so far have been unscathed by quality, price and shortage issues. Drug distribution has been a cash cow of all involved. 

An attempt to demystify PBMs and their associates “profit black box” has been made (8). It is time they should also be held responsible for having a relationship with questionable drug manufacturers in the form of distributing tainted/adulterated less than quality medicines and shortages. There would be tremendous political pressure to exclude PBMs and associates being corralled in with less than quality manufacturers but it is time and necessary. 

If PBMs and manufacturers shrug the responsibility for less than quality on products that are recalled or found out of compliance on random checking by FDA, they should be held financially responsible through a refundable deposit of up to $500,000.00 per incident. Refund would be issued after quality is guaranteed. This will assure that products being sold meet FDA’s quality expectations. 

Drug manufacturers, PBMs and their associates might consider suggested proposals to be cumbersome and financially strict but the current system is designed for the benefit of manufacturers and suppliers and has no regulatory accountability. Patients are the sacrifice for the financial gain of suppliers and manufacturers. Accountability is necessary as we are dealing with human life. If profits are important but so is human life. Thinking outlined above will be questioned and challenged. Anyone questioning this should think about lack of quality drugs and shortages. A plausible compromise can be achieved if we put our thoughts to it. 

It is possible that drug prices might temporarily go up but my conjecture is that if a 90-day ANDA approval time/process (15,16,17,18) is implemented additional companies would step in to fill shortages in minimal time. Competition through economies of scale, technology, quality and cost would be good for the total landscape. Competition should level or bring down the prices.  

As discussed earlier, no one would admit but price reduction pressures are significant for the manufacturers and result in drug shortages and quality issues. 

I believe that Drug Formulary is discrimination of drugs and another way to keep competition away. Why is a formulary necessary when only FDA approved drugs can be sold in the United States? If it is for price and drug efficacy then shouldn’t the patient and their physicians decide which drug and price level suits patient’s needs. 

Success of a plan proposed by Amazon, Berkshire Hathaway and JPMorgan (19) could have a significant impact on the drug pricing, shortage and quality landscape, if successful. Another plan, Generic Alliance (20) a generic drug distribution conglomerate, could market directly by mail to patients. Safeguards would be necessary. Since it would by-pass PBMs, they could present a challenge to the 76% monopoly of the three largest PBMs (21). They are not hurting for profits as they are ranked in the top 10 Fortune 500 companies (22) in the United States. Success at startup internet pharmacy, Truepill (23), would be a needed “creative destruction” event. 

Vested interests will prevent consideration of any alternate option. In our mutually subsidized healthcare system profits are more important than patients. This latent consideration is based on patients will die sooner or later. With such thinking imbedded our thoughts, proposed changes may be difficult and a long-drawn-out process, if it happens. FDA’s drug shortage plans, if enacted, will amount to delays of several years. We need alternates and NOW. 

Girish Malhotra, PE
EPCOT International 


  1. Woodcock, Dr. Janet: To Help Reduce Drug Shortages, We Need Manufacturers to Sell Quality — Not Just Medicine, FDA, October 24, 2019
  2. Report | Drug Shortages: Root Causes and Potential SolutionsOctober 29, 2019
  3. Malhotra, Girish: May Day May Day: Can Someone Help and Lower Drug Prices?, Profitability through Simplicity, May 1, 2015
  4. Malhotra, Girish: Opportunities to Lower Drug Prices and Improve Affordability: From Creation (Manufacturing) to Consumption(Patient), Profitability through Simplicity, March 9, 2018
  5. Malhotra, Girish: Impact of Regulations, Drug Manufacturing and Pharma Supply Chain (PBMs and Allies) in Drug Shortages and Affordability Part 1, Profitability through Simplicity, March 9, 2019
  6. Malhotra, Girish: Impact of Regulations, Drug Manufacturing and Pharma Supply Chain (PBMs and Allies) in Drug Shortages and Affordability Part 2, Profitability through Simplicity, April 3, 2019
  7. Malhotra, Girish: Opportunities for Generic Pharma to Clear the Quality Stigma, Profitability through Simplicity, May 23, 2019
  8. Malhotra, Girish: Systematic Demystification of Drug Price Mystique and the Needed Creative Destruction, Profitability through Simplicity, October 2, 2019 
  9. Malhotra, Girish: Are USFDA 483 Citations a "Medal of Honor" or “Rite of Passage” to Disgrace for the Pharma companies? Profitability through Simplicity, October 16, 2019
  10. Malhotra, Girish: Identifying the Root Causes of Drug Shortages and Finding An Enduring Solution, Profitability through Simplicity, December 7, 2018 
  11. Malhotra, Girish: Pharmaceutical Quality: Concepts, Misconceptions, Realities and Remedies, Profitability through SimplicityCPhI 2019 Annual ReportNovember 4, 2019
  12. Malhotra, Girish: Systematic Demystification of Drug Price Mystique and the Needed Creative Destruction, Profitability through Simplicity, October 2, 2019
  13. Herman, Bob: The data showing drug pricing games, Axios, August 1, 2018 Accessed October 30, 2019
  14. Pitts, Peter, J. PBMs are hogging our Drug Discounts, Fortune, August 28, 2018 Accessed October 30, 2019 
  15.  Malhotra, Girish: What Is Needed for a Regulatory Approval of NDA/ANDA Filings in 90 Days? Profitability through Simplicity, October 24, 2018
  16.  Malhotra, Girish: ANDA (Abbreviated New Drug Application) / NDA (New Drug Applications) Filing Simplification: Road Maps are a Must, Profitability through Simplicity, May 11, 2017
  17. Malhotra, Girish: Simplified Roadmap for ANDA/NDA Submission and Approval will change Pharma Landscape, Profitability through Simplicity, November 25, 2018
  18. 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
  19. Malhotra, Girish: Could Amazon (A), Berkshire Hathaway (B) and J.P. Morgan Chase (M) be the Anti Ballistic Missile (ABM) needed to Control/Curb Rising Healthcare Costs? Profitability through Simplicity, February 9, 2018
  20. Malhotra, Girish: Improving Drug Affordability for the United States Populous through Alternate Business Models, Profitability through Simplicity, May 4, 2018
  21. CVS, Express Scripts, and the Evolution of the PBM Business Model, May 29, 2019, Accessed November 5, 2019
  22. Fortune 500
  23. Feldman, Amy: Dose Of Digital Disruption To The $400 Billion Pharmacy Industry, Forbes, November 1, 2019, Accessed November 6, 2019

Thursday, May 23, 2019

Opportunities for Generic Pharma to Clear the Quality Stigma

Recently there has been significant press (1)in the United States about quality of generic drugs. India and China were singled out. Increased exposure (recalls and FDA citations) are par for the course. These are indications that issues of varying degree are there and they need to be addressed. Press in general looks for opportunities to get on the band wagon. It is ironic that many in press might not have any clue of what a drug is, how they are developed, costed or for that matter what the manufacturing processes entail but are riding the news horse. They have power of the pen. We must remember that negativity sells and influences. 

The current negativity unless harnessed is going to cause increasing damage and the publicity will not end soon. I consider this an opportunity for various companies to re-work/re-look the current business model/plans to see how and what can be done to improve the affordability of generic drugs to the largest global market while producing quality drugs. If nothing is done to excel in product quality eventually lack of action will come back and haunt generic pharma. 

होजायेगा(Ho Jaye ga) or 着什么急呀! (zháo shénme jí ya!) loosely translated what’s the hurryattitude must be shed. Quality must be delivered today as tomorrow never comes. If for any reason quality demanded by the customer is not respected and delivered, business in the long term will suffer. In this effort, it is possible that many egos may have to be shelved as lives are stake. Onus to correct perception of questionable quality, perceived or actual, is on the generic pharma companies.

Again, bottom line, the current negativity is an opportunity to harness and rein in the quality horse. Some costs may be there but done right they should be minimal or none and will be offset and will add to the bottom line. Long-term survival of generic pharma depends on quality and undeniably it must be their highest priority. First time quality should be the goal. It is well known that to re-work the product to achieve quality can cost as much as 40% (2, 3)that simply translates to lower profits. 

Presented is my perspective/perception which is based on the current landscape. There is no vested interest of any for-profit or non-profit entity. In addition, this is also not a solicitation or a recommendation but a suggestion that companies must overcome the prevailing negativity by using talent that can and does think out of the box and can resolve issues. Talent that can “walk the talk” rather than “talk the walk” is needed.

Acknowledgement and Capabilities:

Generics must acknowledge their quality issues internally and must take the bull by horns to fix the current negativity. Companies that are excelling need not worry but will have to stay the course and continuously improve. There will be internal denials and challenges that could be hard to swallow. That is to be expected. Change is needed. If anyone thinks that it is difficult and expensive to achieve quality, that notion needs to be challenged. They need to be asked “would they risk to take the medicines produced by their own company?”   

Chemists and chemical engineers are taught to produce quality the first time. It seems that somewhere between the university doors and plant floors, they faltered and have accepted and/or succumbed to the prevailing practices. I am not sure how they have lost their mojo. Doing right is cheap and fixing the wrong is costly and in pharma wrong can cost lives, an unacceptable occurrence. Again, lack of first-time quality is expensive (2, 3)

Frugality and creativity are the cornerstone of India’s ingenuity as exemplified by its extremely low-cost mission to Mars. Similar attributes are true for China. My question is why these traits are not being applied to pharma. 

What is needed for quality drugs? 

Most pharma plants operate are at about TWO Sigma level (3, 4), a significant opportunity to improve. This might not hold true for every company but based on publicly available information, fragmented manufacturing could be the root cause of poor quality. 

Even though drug manufacturing is understood, it is good to re-visit the process. Every produced drug is a two-step process. An active pharmaceutical ingredient (API) is formulated with inert excipients to produce a dispensable dose. Method of API manufacture is dependent on the chemistry and volume needed. Since APIs are toxins that kill the disease-causing bacteria they are used in minute quantities. Thus, small quantities of API are needed to meet the needs as exemplified by the fact ONE kilo of API will produce ONE million tablets of one milligram @ 100% conversion. Table 1 is an illustration of API needed and tablets produced per year for 50 million patients. Needed API could be produced at a single plant but formulation most likely would be done at more than one plant.

Patients
milligrams
#/yr.
API, Kilo/year
Tablets/yr.
 50,000,000 
1
365
    18,250 
  18,250,000,000 
 50,000,000 
10
365
  182,500 
  18,250,000,000 
Table 1: Theoretical API and Formulation needs 

If I were to produce the needed API (Table 1 Illustration) for 50 million patients it will produced at a single plant. Multiple lines at the same site or multiple sites would be needed for formulation. In today’s landscape multiple plants will produce it. Multiple plants or lines would be need for formulations. it is imperative that the product quality meet established specifications and follow cGMP. 

Table 2 (5 ,6, 7) is an illustration for some named drugs. Potential of products being perfectly same is unlikely but it is necessary that they meet the accepted specifications. 

Drug
Number of API Sites
Number of FDF Sites
Ciprofloxacin
22
536
Atorvastatin Calcium
44
865
Omeprazole
87
768
Modafinil
29
70
Metformin HCl
77
752
Metoprolol
41
338
Table 2: Number of sites for APIs and Formulations

Since most APIs are manufactured and formulated at many plants (Table 2), based on my experiences and I am sure of others, ensuing processes have significant cost variations. Due to lack of economies of scale most of the processes are not optimum. Global API demand of ciprofloxacin, omeprazole, modafinil, metoprolol can be fulfilled from a single plant. FDF facilities for these products could be lot fewer than the current number. API and FDF plants for atorvastatin and metformin can be significantly lower the current numbers. 

If a company is producing many products in the same equipment, cGMP issues can result. Short production runs test operating personnel’s metal. This can happen across the board for generic drugs. Combination of above can result in two sigma quality. Due to nature of the processes and method of execution, quality in current manufacturing methods is most likely tested in rather than built in, an expensive process (3,4). These processes also can be a leading cause of quality infractions. Companies who rely on “after the fact quality” aka “quality by analysis/aggravation” rather than QbD, could apply fundamental of process design which every designer of a chemical process is expected practice. They could explore methods to have command of their processes (8, 9). Internal resistance is very possible. Regulations also intervene to make such improvements.  

Another alternate to retain quality is through consolidation and taking advantage of economies of scale. Processes will be optimized. Quality will be consistent. Such processes will have significantly higher profitability than the current processes. Every chemist and chemical engineer knows and understands these fundamentals. It just behooves me why they don’t practice what they have learnt. Is it the corporate culture? As said earlier regulators do not facilitate process improvements either. 

Generic companies like any other profitable company have to continuously do self-evaluations of their operating and business practices and strategies. However, it seems not much has happened (10,11). Increasing 483s and recent issues e.g. valsartan are telling us that quality issues are persisting and things need to change.

USFDA due to repeated generic pharma quality issues could succumb to political and social pressure and could take significantly drastic stand of stopping import of these drugs. That would an unhealthy situation for the generic pharma and US populous. Health of Generic Pharma like any human patient is in their own hands. They can fool the doctor (FDA) some of the time but eventually when reality hits home, results can be pugnacious and difficult to handle. By ignoring quality generic pharma is playing with its own existence. Thus, it is in the interest of generics to stay on top of their quality game. 

Girish Malhotra, PE

EPCOT International 

  1. Eban, Katherine: Bottle of Lies, Harper Collins Publishers, May 14, 2019 
  2. Cost Of Quality: Not Only Failure Costs https://www.isixsigma.com/implementation/financial-analysis/cost-quality-not-only-failure-costs/
  3. Hussain, A. S.: Pharmaceutical 6-Sigma Quality by Design, The 28thAnnual Midwest Biopharmaceutical Statistical Workshop, Ball State University, Muncie, IN, May 23-25, 2005, Page 20, Accessed May 19, 2019
  4. Shanley, Agnes: Will the Pharmaceutical Industry Ever Get to Six Sigma? Pharmaceutical Technology, July 2017
  5. Malhotra, Girish: Impact of Regulations, Manufacturing and Pharmaceutical Supply Chain (PBMs) on Drug Shortages and Affordability Part 2, Profitability through Simplicity, April 3, 2019
  6. Berndt, Ernest R., Conti, Rena M. and Murphy, Stephen J: The Generic User Fee Amendments: An Economic Perspective, NBER Working Paper 23642, August 2017
  7. PharmaCompasshttps://www.pharmacompass.com 
  8. Malhotra, Girish:  Chemical Process Simplification: Improving Productivity and Sustainability John Wiley & Sons, February 2011
  9. Malhotra, Girish: Chapter 4 “Simplified Process Development and Commercialization” in  Quality by Design-Putting Theory into Practice co-published by Parenteral Drug Association and DHI Publishing© February 2011
  10. Malhotra, Girish: US FDA citations to Ranbaxy are an excellent opportunity, Profitability through Simplicity, September 17, 2008
  11. Malhotra, Girish: What do the Ranbaxy Citations Teach US? Profitability through Simplicity, February 4, 2014