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Strategies for Contamination Control

A contamination control strategy should provide an overview of how contamination and containment practices work together to ensure product quality and patient safety, says Susan J. Schniepp, distinguished fellow at Regulatory Compliance Associates.

 

Q. My colleagues and I have been discussing the new requirement for a contamination control strategy (CCS) contained in the European Union’s 2022 Annex 1 revision. Can you provide some guidance on what should be included in the CCS?

 

A. The concept of contamination/containment control has been around for quite some time. The 2004 FDA Guidance for Industry states, “Any manual or mechanical manipulation of the sterilized drug, components, containers, or closures prior to or during aseptic assembly poses the risk of contamination and thus necessitates careful control” (1).

 

The revised Annex 1 guideline takes things a step further by stating, “A [CCS] should be implemented across the facility in order to define all critical control points and assess the effectiveness of all the controls (design, procedural, technical, and organizational) and monitoring measures employed to manage risks to medicinal product quality and safety. The combined strategy of the CCS should establish robust assurance of contamination prevention” (2).

 

The guideline also states, “The CCS should consider all aspects of contamination control with ongoing and periodic review resulting in updates within the pharmaceutical quality system as appropriate. Changes to the systems in place should be assessed for any impact on the CCS before and after implementation” (2).

 

The Parenteral Drug Association’s (PDA’s) Technical Report states, “The ongoing evolution of contamination control principles that this document addresses is a shift to a holistic approach, where practices are designed to work together to achieve proactive contamination control and are evaluated for their collective effectiveness” (3).

 

What does this all mean to pharmaceutical manufacturers? Let’s start with what we have already in place. All companies should have contamination control elements addressing various aspects of the manufacturing process including but not limited to process design, microbial control, facilities, utilities, raw materials, environmental, personnel training and qualification, equipment qualification, and a robust quality management system.

 

Some of the specific contamination control elements included in these categories would be the existence of bioburden and endotoxin attributes, particulate monitoring, process validations, material and personnel flow, product quarantine practices, smoke studies, media fills, gowning qualification, cleanroom practices, microbial monitoring during production, cleaning validation, extractables/leachables, container closure integrity, etc.

 

The strategy in CCS is how the company ties all these elements together in a holistic approach that is interdependent, multi-disciplinary, and tailored to the operation. This requires the company to be deliberate in risk assessing how changes to any of the elements affects the other elements under the umbrella of the CCS.

 

The overall objective of the CCS is to describe what control elements are in place, why they are effective, and that potential contamination is controlled from the beginning to the end of the manufacturing process.
 

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Pharmaceutical Technology
Vol. 47, No. 6
Page: 42

 

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Elements for a Sustainable Environmental Monitoring Program

Asking why things are done a certain way will help make an accurate assessment of an organization’s EM program, says Susan Schniepp, distinguished fellow at Regulatory Compliance Associates, and Zachary S. Anderson, global market segment lead—Sterility Assurance, Nelson Laboratories.

 

Q: I am evaluating a new contract development and manufacturing organization (CDMO) to manufacture some of our injectable products. Can you advise on some of the elements of their environmental monitoring (EM) program I should review, so I can ascertain its suitability?

 

A: Evaluating the suitability of an environmental monitoring program can be complicated. The evaluator needs to understand the multi-layered elements required for the successful and sustainable management of the EM program. Fundamentally, it is important to be familiar with the regulations that govern the manufacture of injectable products. FDA and the European Medicines Agency (EMA) have regulations that outline these expectations (1,2).

 

What is Contamination Control?

 

The revised Annex 1 guideline introduces the concept of contamination control strategy (CCS) by stating. “A contamination control strategy should be implemented across the facility to define all critical control points and assess the effectiveness of all the controls (design, procedural, technical, and organizational) and monitoring measures employed to manage risks to medicinal product quality and safety. The combined strategy of the CCS should establish robust assurance of contamination prevention” (2).

 

Why Review the Quality System?

 

The guideline also states, “The contamination control strategy should consider ongoing and periodic review resulting in updates within the pharmaceutical quality system as appropriate. Changes to the systems in place should be assessed for any impact on the CCS before and after implementation” (2). The 2004 FDA guidance states, “Any manual or mechanical manipulation of the sterilized drug, components, containers, or closures prior to or during aseptic assembly poses the risk of contamination and thus necessitates careful control” (1).

 

How does an FDA Inspection Work?

 

One of the first steps in the assessment would be to evaluate the manufacturer’s CCS based on the expectations outlined in the regulations. Using the CCS as a guide, the assessor can then focus on specific elements of the EM program as well as how the program is embedded into the quality management system (QMS). The following are questions to ask to help in the evaluation:

 

  • QMS: Is the EM program effectively integrated into the QMS, including corrective action and preventive action (CAPA) program that drives to root cause?
  • Technical expertise: Has the company hired experienced personnel and demonstrated maintenance of expertise? What are the ongoing training requirements for personnel in Quality Assurance, the laboratory and on the manufacturing floor? Are gowning requirements for all personnel who enter the manufacturing area documented? Are the re-qualification requirements for gowning clearly defined? Is the out-of-specification procedure understood and followed? Are employees trained on data recording and integrity? Does the program drive the recording of the appropriate level of detail?
  • Process controls. Are process controls for particulates and microbiological organisms robust enough to detect and manage changes in practice or gaps in process (e.g., data lags, emerging issues/environment degradation, product quality shifts, etc.)?

 

There are many more questions that should be asked to ascertain the suitability of an environmental monitoring program than listed above. The optimal way to approach such an evaluation is to become familiar with the regulations, review the company’s CCS program and drill down into specific areas of the program by asking targeted questions. Inevitably, you will encounter variations and “gray-area” interpretations. An astute evaluator will ensure variations are acknowledged (documented) and interpretations are justified in writing. Asking why things are done a certain way will help make an accurate assessment of an organizations EM program and help determine whether it suits your requirements.

 

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Pharmaceutical Technology®
Vol. 48, No. 6
Page: 34

 

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FDA Looks to Industry for Collaboration and Harmonization

Employees from the U.S. Food and Drug Administration (FDA) and Center for Devices and Radiological Health (CDRH) recently announced partnerships with new collaborative communities in the life sciences industry. A primary goal of this initiative is to optimize the success of medical device research and development programs. Another goal is enhancing speed-to-market by avoiding work-in-progress across the medical device industry, which should potentially improve long-term patient outcomes.

 

Further, the collaborative community’s initiative also coincides with the recent announcement the FDA will no longer be a member of the Global Harmonization Working Party (GHWP), whose priorities have influenced many research initiatives. This is a significant change in direction since the agency first joined the group in 2021.

 

What is a Collaborative Community?

 

A life sciences collaborative community includes a mix of both private and public sector colleagues, often including FDA employees. Communities are commonly organized by participants interested in identifying and resolving the most complex problems facing healthcare systems.

 

Additionally, these problems sometimes arise due to a lack of agreement on the best way(s) to address a growing problem in a disease state. Companies that have participated in the FDA approval process work within FDA guidelines and understand FDA regulations are frequently encouraged to engage and participate.

 

Finally, membership or agendas are not decided by FDA for a collective community. It is a sustainable group of individuals who have the ability to exist without FDA’s involvement. One of the new collaborative communities announced by FDA is the AI Initiative of AFDO/RAPS Healthcare Products Collaborative. This collaborative community is a joint venture between the Association of Food and Drug Officials (AFDO) and the Regulatory Affairs Professionals Society (RAPS) established in 2022.

 

Further, this collaborative group “supports idea-sharing, innovation, and action across the global healthcare products community by fostering purpose-driven discussions between regulators, industry, academia, and thought leaders about the most pressing issues facing the industry.”

 

A second new collaborative community announced by FDA is the Infection Management Collaborative Community. This group “aims to accelerate the development, availability, and adoption of safe and effective medical devices to prevent, diagnose, and manage infection; treat sepsis; and support sepsis patients and survivors.”

 

Sepsis cases continue to accelerate globally. The Institute for Health Metrics and Evaluation’s “Global Burden of Disease Study,” released in 2020, attributed 11 million patient fatalities to sepsis in 2017—nearly 20% of total global deaths. Such data indicate the condition is rapidly approaching global crisis levels.

 

Why Leave the GHWP?

 

A primary reason for leaving the GHWP may involve the strategic plan launched by CDRH late last year. The document establishes a four-year timeline for working towards greater international harmonization.

 

The FDA has been moving closer toward widely accepted (and recognized) global standards, such as the shift to both ISO 13485 and 21 CFR 820. Harmonizing a complex, cross-functional agency like FDA is a considerable undertaking—therefore, if specific disease states are more significant to the agency than others, leaving the GHWP allows the potential for flexibility.

 

The strategic plan calls for CDRH to evaluate different types of opportunities each fiscal year in order to increase engagement across international harmonization programs. CDRH also is expected to receive additional funding and resources to help accelerate this engagement. These additional resources aim to allow the FDA to expand international harmonization and convergence programs already in progress and achieve these initiatives by FY 2027.

 

Details of the Strategic Plan

 

The second phase of the strategic plan is designed to increase discussions about implementing harmonized policies. Further, this new mechanism may require FDA to develop additional confidentiality agreements to increase the efficiency of research analysis and discussion under confidentiality commitments. CDRH will review the current list of approved regulatory partners and confidentiality protocols in place to align regulatory strategies across international agencies. 

 

Per the strategic plan, FDA was supposed to identify and begin engaging with regulatory authorities by the end of 2023. The primary objective is to create a database of regulatory bodies with whom sharing medical research could be most helpful toward the global harmonization of standards. CDRH has committed to creating this information-sharing mechanism to communicate best practices in medical device evaluation by the end of this year. 

 

The strategic plan details the similarities and differences in CDRH’s regulatory policy and widely accepted IMDRF policies. The plan also tasks the FDA with assessing and evaluating the technical specifications of IMDRF documents that include policies and practices approved by all regulatory authorities in the IMDRF Management Committee.

 

One of the goals of this regulatory process is to increase the understanding of technical descriptions and technical report writing for international regulatory agencies. Such improved knowledge could directly help CDRH with its internal assessment of international harmonization efforts, and the ways in which FDA’s process may differ compared with regulators worldwide.

 

The strategic plan (according to technical specification data) sets specific proposed timelines for CDRH to undertake advances toward global harmonization. The timelines are as follows:

 

  • CDRH will publish an assessment of at least nine IMDRF technical documents by the end of 2025.
  • CDRH will publish an assessment of at least 18 IMDRF technical documents by the end of FY 2026.
  • CDRH will publish an assessment of all remaining IMDRF technical documents by the end of FY 2027

 

The strategic plan continues to elaborate on the life sciences community and the impact non-FDA employees can have on future regulatory approval. These specific stakeholders may have a unique perspective based on their current occupation or the types of therapy a patient receives. Finally, the following audiences are specifically mentioned for providing first-hand experiences that FDA can leverage based on another regulatory authority’s approach to medical therapy: healthcare patients, life sciences manufacturers, conformity assessment bodies, and standards development organizations.

 

Finally, an annual communication plan is proposed to begin this year that includes developing a forum to assess and report on harmonization program efforts in progress. This forum is designed to connect with each of the audiences previously mentioned to help FDA identify opportunities for learning. Furthermore, this forum would be dependent on the level of interest and considerations of other stakeholders, including the life sciences industry specifically. 

 

Summary     

 

The life sciences industry is at a crossroads regarding its ability to quickly learn from clinical inputs. And while artificial intelligence (AI) is prompting an increase in successful patient outcomes, the industry must determine the best approach to improve healthcare data.

 

It remains to be seen how an enhanced approach to collaboration moves through the regulatory process from “qualified to validation.” The flexibility to live inside the regulatory box and think outside the box with AI is critical to success. These outcomes are now being considered earlier in the design stages because the regulatory process can often be unforgiving.

 

Healthcare partners should collaborate together to leverage AI’s utility at the point of care to improve patient care collaboration. While the primary partner for global regulatory research will continue to be the International Medical Device Regulators Forum (IMDRF), collaborative communities will challenge this “qualified to validation” approach. Addressing disease states with the highest mortalities is part of the partnership between IMDRF and other global regulatory bodies.  

 

Case in point: How can AI work towards developing infection management treatment strategies in a sepsis patient as the normal infection-fighting process is dramatically reduced? This is where technology and collaboration can help the current regulatory process evolve. What lessons could FDA learn through AI patient treatment strategies from a global audience? It is a universal disorder that kills many more people than it should.

 

If the life science community recognizes that AI is friendly to change, information will be shared globally. Consider for a moment disease states such as sepsis, sepsis syndrome, and septic shock—all of which represent different stages of the same condition. Industry stakeholders could bring a unique perspective of leveraging clinical inputs based on their current occupation or the types of therapy a patient receives.

 

About the Author

 

Rod Mell is executive head – Medical Devices at Regulatory Compliance Associates. A Sotera Health company, RCA is recognized within the healthcare industry for regulatory compliance consulting and its life science consultants’ ability to help companies successfully resolve complex life science challenges. Sotera Health Company and its three businesses—Sterigenics, Nordion, and Nelson Labs—is a global provider of mission-critical end-to-end sterilization solutions and lab testing, and advisory services for the healthcare industry.

 

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Quality Considerations for Using AI in Bio/Pharma

In the second episode of the Ask the Expert video series, Susan J. Schneipp, distinguished fellow at Regulatory Compliance Associates, and Siegfried Schmitt, vice-president, Technical, at Parexel, discuss the quality requirements needed when incorporating AI in bio/pharmaceutical development and manufacturing.

 

External link to the Video Page

 

The use of artificial intelligence (AI) is seeing a surge in a variety of industries. But does the regulated nature of bio/pharmaceutical development, manufacturing, and commercialization serve up unique challenges for incorporating AI into processes? According to Siegfried Schmitt, vice-president, Technical, at Parexel, using new technology will most likely require the assistance of experts in that technology. And if you’re contracting a third party for that help, you need to do an assessment of that vendor.

 

“[T]he thing with AI, it being a computer-based technology, there is sometimes the issue of, do you have sufficient or good documentation practices applied? It’s all too easy to play around with computer code and settings and so on, but you do need to have appropriate documentation, and because you’re applying it to process development … It is something that can get inspected, so be ready for an inspection,” Schmitt cautions.

 

Susan J. Schniepp, distinguished fellow at Regulatory Compliance Associates, stresses that a robust quality management system and document control are necessary when adding AI to a process. “I also worry about if there’s the expertise to interpret what the data [are] telling you. You’re going to be collecting a lot more data than you’ve collected before, and data that’s new, and how it impacts your organization. And the data you’re collecting may prompt you to want to make a change in the coding, [but] you need to follow that stream through your quality management system,” Schniepp says.

 

Click the video above to watch Sue and Siegfried answer the question: “My company is researching the possibility of using AI in the formulation of a new product. Are there any quality considerations we should be aware of?”

 

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The Future of Biotech Quality

Experts share insights on what the future may hold regarding biotech quality, regulatory requirements and quality standards for biotechnology industry.

 
Quality StandardThe biotech industry has experienced significant growth in recent years. These complex therapies have evolved, and with this evolution comes new challenges in ensuring the quality of these products and the safety of the patients that use them. Quality regulations, and industry, may have to continually adapt to address these challenges.
 
 
To gain perspective on what the future quality standard holds for biopharmaceuticals and how the industry and regulators will address quality going forward, BioPharm International spoke with Anthony Newcombe with PAREXEL and Susan Schniepp at Regulatory Compliance Associates (RCA).
 

Quality Standards 

 

BioPharm: With the fast development of the biopharmaceutical industry over the past 30 years, how have quality regulations adapted to address the complex nature of biologics?

 

Newcombe: Over the past 50 years, the industry has grown, especially due to advances in areas such as recombinant DNA and hybridoma technology, and more recently gene and cell therapies. As these advancements have occurred, new quality regulations have been developed to address the complex nature of biologics with specific quality requirements associated with viral safety, expression constructs, product characterization, and comparability.

 

Regulatory & Regulation

 

BioPharm: Are there regulatory guidelines in development for ensuring the quality of biologics in the future?

 

Newcombe: There is no indication that the current, published quality guidelines would not ensure the quality of biologics in the future, but it’s likely that regulatory guidance documents will continue to be revised and updated over time to adopt industry best practices and new technologies, for example the draft International Council for Harmonization (ICH) Q12 and the revised EudraLex Annex 1.

 

Biotech Consultants

 

BioPharm: Do Biotech consultants foresee science outpacing quality regulations?

 

Schniepp (RCA): I think science has already outpaced quality regulations. An example is the applicability of pharmacopeial methods for product testing. Many monographs utilize traditional high-performance liquid chromatography (HPLC) for testing.

 

Companies have migrated to ultra-high-pressure liquid chromatography (UHPLC) and other sophisticated methodology, thereby rendering compendial monographs obsolete. By the time updates are made to the pharmacopeias to capture the current technological advancements, more sophisticated equipment and methodologies are being introduced.

 

The industry seems to be moving toward a continuous monitoring where results regarding product quality can be achieved in real-time. The current processes used to update procedures, systems, and filings may not be able to keep pace with the rapid introduction of technological advances. I don’t think this is new.

 

Science has always outpaced quality regulations. When dissolution testing was introduced, it took a while for that technology to be widely accepted. I think this phenomenon is more of an issue today than in the past because science innovations are occurring at a much more rapid pace and affecting all aspects of the drug product lifecycle than 20 years ago. This rapid advancement of technology makes it harder for the quality regulation to catch up.

 

Newcombe: Quality regulations ensure that biopharmaceuticals are safe and effective, and in my opinion, are generally not driven by the pace of scientific advances. However, new quality regulations are likely to be required to keep up with the development of new advanced therapies, including gene and cell therapy and tissue engineering.

 

Some of these are autologous products using a patient’s own blood components and personalized medicines can present additional manufacturing, compliance, and regulatory challenges.

 

Quality Control 

 

BioPharm: How do you see the role of the quality control (QC) unit changing versus the current quality standard?

 

Newcombe: I would not anticipate any significant changes to the role of the QC unit in the coming years. QC laboratories currently undertaking release testing for approved biologics using validated methods are unlikely to change their existing role significantly. There may also be a general reluctance to implement new analytical technologies used for testing of approved products due to potential regulatory impact with a continued reliance on established analytical methods.

 

Schniepp (RCA): I think the quality unit will evolve to be a more hands-on review of the product attributes. The quality unit will need to be equal partners with manufacturing to be able to release product quickly and solve deviations and investigations in a timelier manner than we are experiencing today. Complete investigations will still need to be performed. They will just need to be done quicker depending on the nature of the product.

 

Traditionally, the quality unit has reviewed the results of the manufacturing process after the work has been completed and the batch has been packaged. To keep pace with the new quality standard of products being developed by biopharma, the quality unit may need to be releasing product, performing investigations, and initiating changes in real time. This requires agile and flexible processes and systems that can keep pace with advancements.

 

The quality professional of the future may need to have a solid basis in science to be able to meet the demands of manufacturing. They will need to be able to quickly ascertain how a proposed change or deviation could affect the functionality and quality of a product, which will require an intimate understanding of the manufacturing and science associated with the product. To keep pace with the future, quality must be imbedded in the process and not just as the final approver for product release.

 

Biotech Manufacturing

 

BioPharm: What quality control challenges do you see developing for biopharmaceutical manufacturing

 

Schniepp (RCA): Quality control to me is the testing that is associated with determining if the product meets critical parameters throughout the manufacturing process and at release. The question is: Do we have the correct equipment, tests, and sensitivity to accurately assess the quality of products being developed today, and how will we deal with these intricacies as we advance more and more toward personalized medicines?

 

This concept should extend beyond the product testing and be assessed for the environmental support testing as well. Determining the proper tests and environmental controls as the industry moves forward will require new and novel thinking.

 

Newcombe: Recent data integrity requirements and guidelines have had an impact on data management within QC laboratories. This may present challenges for some organizations associated with the collection, processing, reviewing, and reporting of data and ensuring the accuracy and consistency of analytical results. The access and management of data stored on electronic systems within the QC laboratory is also likely to present continued challenges.

 

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BioPharm International
Vol. 31, No. 7
Pages: 16-20

 

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Remediation Costs of Non-Compliance

remediation costs

The main regulatory standard for ensuring pharmaceutical quality is 21 Code of Federal Regulations (CFR) Parts 210 and 211, collectively referred to as the current good manufacturing practice (CGMPs) regulation for human pharmaceuticals. It’s not only the CGMP regulations that matter; the approaches biopharmaceutical companies take to interpret and embrace these regulations are of equal, if not more, importance. The remediation costs associated with CGMP non-compliance can be staggering to say the least.

 

CGMPs place emphasis on product quality and compliance with the regulations. So how do companies embrace, and even embody, quality and compliance with CGMPs? One way minimize remediation costs is to operate under a quality culture.  

 

Quality Culture

 

A company should have a pharmaceutical quality system as described in FDA Guidance for Industry, Q10 Pharmaceutical Quality System. A quality culture is created when managers believe a company has a duty to create a mutually beneficial relationship between itself, its employees, and its customers.

 

Culture is the shared beliefs, values, attitudes, and behavior patterns that characterize a family, a community, or an organization. A healthy organizational culture is rooted in the understanding that quality is good for the company and its customers. Thus, its existence is a driving force behind how employees act and behave regardless of level, title, or decision-making authority.

 

FDA Form 483

 

In defining a set of Six Sigma values for a corporate culture, the core principles should include integrity, customer focus, and people. This type of quality culture begins with company leaders who believe in the necessity of serving customers in order for their organizations to succeed. Six Sigma is a widely accepted methodology to help reduce remediation costs. 

 

FDA conducts several types of inspections to help protect consumers from unsafe products: pre-approval inspection, routine inspections of a registered facility, and “for-cause” inspections. After FDA completes an inspection, company management may receive an FDA Form 483 when an investigator(s) has observed any conditions that, in their judgment, may constitute violations of the Food Drug and Cosmetic (FD&C) Act, related acts, and applicable sections of 21 CFR 210 and 211.

 

FDA Warning Letter

 

Observations are made when, in the FDA investigator’s judgment, conditions or practices observed would indicate that product has been adulterated or is being prepared, packed, or held under conditions whereby it may become adulterated or rendered injurious to health.

 

FDA Form 483 notifies the company’s management of objectionable conditions. Companies respond to the 483 in writing with their corrective action plan and implement schedule. The 483 is closed when the company receives their establishment inspection report (EIR). Unfortunately, there are companies that either do not follow through on their commitments or they do so too slowly. If circumstances merit, FDA can choose to escalate the potential for remediation costs by serving the company with a warning letter.

 

CAPA

 

Typically, FDA gives individuals and companies an opportunity to take voluntary and prompt corrective action before the agency initiates an enforcement action. The primary goal of a CAPA system is to introduce new procedure(s) that address requirements for the corrective actions that return an organization to compliance. Additionally, a FDA warning letter is the principal means of notifying regulated companies of violations and corrective actions needed.

 

The following factors are often used to determine whether to issue a warning letter: 

 

  • The firm’s compliance history (e.g., a history of serious violations, past remediation costs or repeated failure to prevent the recurrence of violations)
  • The nature of the violation (e.g., a violation that the firm was aware of [was evident or discovered] but failed to correct
  • The product risk and the impact of the violations on such risk
  • The overall adequacy of the firm’s corrective action and whether the corrective action addresses the specific violations. Remediation costs also may include related violations, related products or facilities, and contains provisions for monitoring and review to ensure effectiveness and prevent recurrence
  • Whether documentation of the corrective action was provided to enable the agency to undertake an informed evaluation
  • Whether the timeframe for the corrective action is appropriate and whether actual progress has been made in accordance with the timeframe.

 

Consent Decree

 

When a company repeatedly violates cGMP requirements, FDA can force it, through legal channels, to make specific changes. Under this severe form of escalation by FDA, the objective is no longer a discussion about responses to 483s or warning letter observations, it’s about a forced company make-over. This process, known as consent decree, exposes all broken systems within a company.

 

FDA does not care about any efforts and expenses undertaken by the company to redesign and implement a robust quality management system; a common element of a consent decree is demonstrating sustainability. A company under consent decree who doesn’t demonstrate sustainability can lose future revenue in different ways. One way, which is particularly difficult to quantitate, is the price of “lost innovation”. The company is redirecting revenue into compliance, oversight, and remediation instead of reinvesting it into research and development of new products. 

 

Consent Decree Definition

 

As previously mentioned, Sustainability is one of the primary drivers for defining an organization’s capacity to know when it is veering off course. The consent decree definition of the program is critical to making the correct decisions, taking appropriate actions, and maintaining a state of control without future external intervention.

 

Sustainability embraces the core quality culture values and expected behaviors of integrity, empowerment, and accountability.  A consent decree mandates a series of annual inspections performed by a third-party to monitor sustainability. FDA recommends companies hire external experts and invest time and money to inspect and certify compliance, often for many years.

 

Operating under a consent decree is a dire situation for the company and one where there is no certain predictability of the outcome. To understand the full magnitude of a consent decree’s impact, one needs to take into consideration the many and various modes in which the negative consequences can be realized (see Figure 1).  

 

costs
Figure 1: Overview of different repercussions
to and reverberations from a pharma company
operating under consent decree. (Image courtesy of author)

 

Remediation Costs of Non-Compliance

 

This discussion focuses on three ways to look at the costs of non-compliance:

 

  • Quantifiable costs
  • Difficult-to-quantify costs
  • Invisible costs with hidden impacts

 

Quantifiable Costs

 

Quantifiable costs are those that can have a value assigned to them with a reasonable degree of accuracy. Quantifiable costs are usually more obvious, but they manifest in several ways as shown in Figure 1.

 

A major requisite term of a consent decree is for the company to retain, at its own expense, an independent third-party for ongoing certification and oversight of the implementation of agreed to corrective action. Another requirement may be a commitment to have every released batch certified to be CGMP. 

 

At Will Employment

 

At Will Employment is defined as an indefinite period of time of employment that may be terminated either by employer or employee. It is not uncommon that firing an employee or/and replacement of multiple employees is a step associated with a consent decree. The training and retraining costs can often be difficult to quantify in the short term until compliance improves. This company action is meant to set the tone internally that the non-compliant way of doing business will no longer be tolerated. 

 

FDA Violation Penalties

 

FDA can levy significant violation penalties in the form of fines for not meeting action dates. Examples include $15,000 per day for missed dates, royalty payments up to 24.6% per product not revalidated on time, and costs for FDA inspections. Furthermore, the US Treasury can garnish profit from sales through fines. Such was the case for Wyeth, who agreed to a consent decree regarding its Marietta, PA and Pearl River, NY facilities. FDA inspections of these facilities found several GMP deviations that eventually resulted in warning letters.

 

One of the largest drug safety settlements occurred when generic-drug manufacturer, Ranbaxy USA Inc., a subsidiary of Indian generic-pharmaceutical manufacturer Ranbaxy Laboratories Limited, pleaded guilty to felony charges relating to the manufacture and distribution of certain adulterated drugs made at two of Ranbaxy’s manufacturing facilities in India (3). Ranbaxy paid a criminal fine and forfeiture totaling $150 million and settled civil claims under the False Claims Act and related state laws for $350 million.

 

Civil Monetary Penalties Law

 

Entering into consent decree can also expose a company to civil penalties. Depending on the circumstances, shareholders, patients, and sometimes even company employees may be able to sue for damages.

 

One such law suit arose from an unsuccessful effort by Baxter International to fix problems with its Colleague Infusion Pump. Westmoreland County Employee Retirement System (Westmoreland) alleged that Baxter’s directors and officers breached their fiduciary duties by “consciously disregarding their responsibility to bring Baxter into compliance with the 2006 consent decree and related health and safety laws”. 

 

FDA Recall

 

The Baxter breach was alleged to have caused the organization to lose more than $550 million after FDA mandated a recall of the Colleague Infusion Pumps. Baxter invested time and money trying to fix the pumps, but the manufacturing problems persisted over time.

 

FDA invoked its power under the original consent decree by ordering Baxter to recall and destroy all Colleague Infusion Pumps then in use in the US. This is where invisible costs with hidden impacts turn into the customer reimbursement for the value of the recalled device. Invisible costs also included Baxter being required to assist in finding replacement devices for those customers impacted.  The company’s stock price fell by more than 4% after the announcement and the company later recorded a pre-tax charge of $588 million to account for the estimated costs of the recall. 

 

Drug Shortage

 

When a drug manufacturer subject to enforcement action is the sole supplier of an important medicine, drug shortages become a concern. Short-term solutions may include doctors substituting medications that may have lesser efficacy. Pharmaceutical companies with potential manufacturing capability may be incentivized by FDA to manufacture identical or equivalent drug products; however, medium-to-long lead times can delay product availability. When supplies dwindle, patients must pay higher prices for the same drug. 

 

One illustration of this scenario is the FDA consent decree with Genzyme regarding repeated manufacturing issues at the company’s Allston, MA facility. The consent decree included an up-front disgorgement of past profits of $175 million and the requirement to move fill/finish operations out of the Allston plant by a specific date.  Had Genzyme not met those deadlines, FDA could have required the company to disgorge 18.5% of revenue for the affected products. 

 

Difficult-to-Quantify Costs

 

Other financial ramifications from consent decrees may be difficult to quantify. For example, some employees may lose their confidence in the commitment or ability of the company’s CEO and other executives to manage the situation.

 

Employee Attrition

 

Employee attrition is expected, but if the exodus includes long-tenured employees the company may be drained of valuable knowledge and talent. The longer the situation exists, the more difficult it becomes to retain the best employees.

 

Reputation Damage

 

A company under a consent decree is subject to reputation damage, which can be accentuated by the ease of publicly available negative media coverage about how the company operated. Negative media coverage can result in public fear. In the Ranbaxy case, an import ban had been in place for 30 drugs manufactured at two of its Indian manufacturing plants resulting from alleged data falsification.  This type of information can result in public concerns that medicines could be adulterated.

 

Batch Release

 

Lost revenue due to the company’s inability to sell product can also be an issue. Companies under consent decree experience long delays in releasing product due to the intensive oversight required, when a batch fails release testing, and when a product is recalled. The cost for the logistics of product recall and destruction can be high, especially if the API is expensive or has a long lead time.

 

Group Purchasing Organizations

 

Another potential cost is the inability to sell a product. Group purchasing organizations (GPOs) use the power of collective purchasing to buy pharmaceuticals at discounts. An underlying premise is continuity of supply; if a pharmaceutical manufacturer is unable to deliver the product contracted, the GPO must obtain replacement product from the open market, often at a higher price. GPOs wary of a potential inability of the company to supply its products may consider other sources.

 

In one of the largest settlements to date, Ranbaxy pled guilty to felony charges.  The charges were manufacturing and distributing adulterated drugs made at the Indian manufacturing sites. The criminal fine and forfeiture totaled $150 million and another $350 million in remediation costs to settle civil claims under the False Claims Act.

 

Invisible Costs and Hidden Impacts

 

If the remediation costs to bring a facility under consent decree into CGMP compliance is determined to exceed the company’s financial ability or it makes no financial sense to continue operations, the company’s management may decide to close the facility. Shuttering a facility, can have devastating impact on the local community, particularly in rural areas where the manufacturer is a primary employer. The community’s tax base will also suffer.

 

The company can lose its competitive edge because its busy focusing inside rather than externally. This can be a competitive advantage to your closest competition looking for a way in which to leverage your situation for their benefit.  The potential opens for the company to become alienated and therefore lose rank compared to its direct competitors.

 

A company can also be denied approval of new drug while non-compliance exists (4).  Because of its consent decree, approval of two new drugs by Eli Lilly was delayed. This was the result of CGMP issues being found during pre-approval inspection in the fall of 2001, which was six years after its consent decree.

 

Conclusion

 

The collective cost of remediation of non-compliance far exceeds the remediation cost to remain in compliance. The number of consent decrees issued per year has remained consistent during the past decade. However, companies have found it difficult to extricate themselves from the agreements.

 

As a result, the number of companies under consent decrees at any given time has increased. Generally, it takes many years for a company to demonstrate that it is in full compliance. Only one company that has received a decree in the past 10 years has met all requirements and had the decree lifted.

 

Considering the fines and the payments to the third-party consultants, the remediation costs associated with a consent decree can become very high and have a significant effect on a company’s profit. It is estimated that the costs incurred by Warner-Lambert for a consent decree–in terms of product terminations, delays in approvals, and bringing facilities and systems into compliance–was nearly $1 billion. The Warner Lambert fine was only $10 million, a small percentage of the total cost. Schering-Plough’s initial fine was $500 million. Abbott Laboratories has spent almost $1 billion resulting from a consent decree issued, including a fine of approximately $100 million.

 

About the Article

 

 

Pharmaceutical Technology
Vol. 41, No. 11
Pages: 54–57

 

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