Angie Drakulich was editorial director of Pharmaceutical Technology.

Angie Drakulich

Last week, the US Food and Drug Administration issued a 

Standards for Securing the Drug Supply Chain-Standardized Numerical Identification for Prescription Drug Packages

  to help protect the pharmaceutical supply chain. 

  The guidance is part of the agency’s efforts to implement Section 913 of the 2007 Food and Drug Administration Amendments Act (FDAAA) and recommends standards industry should use to identify individual packages of prescription drugs. Section 913 requires the Secretary of Health and Human Services to develop standards and identify and validate effective technologies for securing the drug supply chain against counterfeit, diverted, subpotent, substandard, adulterated, misbranded, or expired drugs. The guidance is meant to “facilitate the adoption of a uniform electronic track-and-trace system for prescription drugs to further improve their safety and security,” according to a Jan. 15 FDA release. 

  The draft guidance specifically focuses on standardized numerical identifiers (SNIs) for prescription drug packages, which for most prescription drug packages is a serialized National Drug Code (sNDC). “FDA chose the sNDC because we believe that it serves the needs of the drug supply chain as a means of identifying individual prescription drug packages. That identification can in turn facilitate authentication and tracking and tracing of the prescription drugs,” says the guidance.

 The guidance does not specify a particular means of incorporating an SNI onto the package nor does it specify a location on the package where an SNI should be placed.

  FDA’s new voluntary, two-year pilot program is also meant to help secure the supply chain by promoting the safety of drugs and active pharmaceutical ingredients produced outside the United States. The agency plans to select 100 applicants to participate in its Secure Supply Chain pilot program. Qualified applicants must “maintain control over the drug products from the time of manufacture through entry into the country,” according to an agency release (see the 

“The goal of the pilot is to allow FDA to determine the practicality of developing a secure supply chain program,” says the release. “Such a program would assist the agency in its efforts to prevent the importation of drugs that do not comply with applicable FDA requirements by allowing the agency to focus its resources on foreign-produced drugs that fall outside the program and that may not be compliant.” 

  In related news, the agency opened several offices abroad over the past few months, including in Beijing, Shanghai, Guangzhou, Brussels, Mumbai, and New Delhi.

Comments on the draft guidance should be submitted within 90 days of publication in the 

 to the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852. 

Articles

Last week, the US Food and Drug Administration issued a draft guidance for industry, Standards for Securing the Drug Supply Chain–Standardized Numerical Identification for Prescription Drug Packages, and launched a pilot program to help protect the pharmaceutical supply chain.

FDA Issues Draft Packaging Guidance and Pilot Program to Help Secure Supply Chain

-A December report on healthcare from the Congressional Budget Office (CBO) proposes that an abbreviated regulatory process for follow-on biologics could result in more than $10 billion in savings by the year 2020. 

Spending on biologics exceeded $40 billion in 2007, according to the report, with nearly 75% of that spending put toward brand-name products that may lose patent protection within the next decade. Industry has been pursuing a follow-on pathway for biologics, similar to the abbreviated new drug application for chemical-based drugs, for some time. The CBO report notes that such a pathway, with 12 years of exclusivity given to brand-name biologics, would allow multiple manufacturers of follow-on biologics to enter the market and “put downward pressure on prices and help lower expenditures on biologic products for both the federal government and private purchases of health insurance.” 

Specifically, CBO reports that savings for follow-on biologics within mandatory health programs such as Medicare and Medicaid could reach $8.1 billion between 2010 and 2019. Additional savings would go to the Veterans Health Administration and Department of Defense  in the amount of approximately $1 billion between 2010 and 2019, and to the federal government (based on tax-favored health insurance) in the amount of approximately $1.1 billion over the same period. All told, the CBO report predicts that a regulatory pathway for follow-on biologics could result in a $9.2 billion net effect on the national deficit.

A December report on healthcare from the Congressional Budget Office (CBO) proposes that an abbreviated regulatory process for follow-on biologics could result in more than $10 billion in savings by the year 2020.

Follow-on Biologics Pathway May Help National Deficit

With low-cost production and a pool of scientific talent, Asia, specifically China and India, has risen in pharmaceutical outsourcing and ingredient supply over the past several years. High-profile events concering product quality and manufacturing practices for select suppliers, and recent political turmoil in India, however, have placed increased attention on the region. 

(ILLUSTRATION BY M.MCEVOY. IMAGES: JOHN LAMB, ULTRA.F/GETTY IMAGES) 

Key events were the importation of contaminated heparin supplied from a Chinese facility (see sidebar, "Post-Heparin: Baxter Responds") and incidents of melamine in food and pet food products and diethylene glycol in toothpaste from China (1-4). In September 2008, the US Food and Drug Administration issued warning letters and an import alert for products made at two facilities of Ranbaxy Laboratories (Gurgaon, Haryana), one of India's largest pharmaceut ical companies, for deviations in current good manufacturing practices (5). And recent terrorist attacks in Mumbai, India's capital, raised security concerns.  

But before considering these events, it is important to evaluate the fundamentals of pharmaceutical outsourcing to Asia. "Cost has always been a driver of outsourcing decisions," says Mike Keech, director of PricewaterhouseCoopers' (PwC) advisory services group in the pharmaceutical and life-sciences sector. "But in today's market, cost is no longer the primary driver—it's just an additional evaluation point. You have to balance cost with risk and market opportunity. Companies today, for example, are balancing their outsourcing approach by trying to look at technology and intellectual property protection along with development and manufacturing capacity capabilities." 

To more fully understand those issues, PwC assessed 13 Asian countries based on cost, risk, and market opportunity, and released the results of that study in October 2008. China and India ranked as the two most desirable outsourcing candidates among Big Pharma (see Figure 1) (6). Keech points out, however, the buyer has become more sophisticated and how much longer China and India hold their top positions remains to be seen. 

Figure 1. PricewaterhouseCoopers assessed the risk of outsourcing to the above 13 Asian territories based on three core factors. The factors were weighted as follows: Cost (33% total), which includes compensation and wages (15%), infrastructure (8%), tax and regulatory expenses (10%); General risks (37% total), including geopolitical (6%), human capital (10%), economic (7%), legal (8%), and infrastructure (6%); and Market opportunity (30% total), including healthcare needs of current and future population (15%), market size (7%), and market growth rate (8%). (FIGURE IS COURTESY OF PRICEWATERHOUSE COOPERS, 2008.) 

Other Asian countries are gaining a foothold as viable pharmaceutical outsourcing contenders. Korea and Taiwan are just a few steps behind China and India, says Keech, and will soon be followed by Indonesia and Malaysia. Much farther down on the list of ideal outsourcing candidates is Thailand, which "looks interesting from a labor perspective and because of their worldclass set of intellectual property laws," says Keech, but whose "interpretation and enforcement are far from ideal." 

Rather than looking at the cost per unit as a measure for a particular product, companies are now evaluating inbound transportation, custom-clearance issues, and additional testing requirements, explains Keech. As they start to look at this "total land-net cost," he says, "companies may choose an outsourcing partner based on the product's stage in the life cycle and the company's overall goals. Is the company simply striving to reduce costs at the end of a product's patent life, for example, or is it looking for more flexible and modern manufacturing, and perhaps unique competencies?" 

Even though Western companies can still have a 50–60% savings in manufacturing by outsourcing to Asia, the region "is not as attractive as it used to be," says Keech. "One PwC client, for instance, used to go to Asia alone because it was cost-driven, but given safety issues of late, they're looking at all different outsourcing candidates—especially in Eastern Europe—regardless of geography," says Keech. 

A consensus among several pharmaceutical majors is that Asia  will continue to play a part in their research, drug-development and sourcing activities, but as part of larger corporate goals for cost reduction, broadening use of external partners, and globalization. For example, like other pharmaceutical majors, Pfizer (New York) plans to increase its level of outsourcing as it rationalizes its manufacturing network. In its recent quarterly earnings report (ended Sept. 30, 2008), the company says it expects to increase its level of outsourced manufacturing from a current level of roughly 17% of its products on a cost basis to 30% during the next two to three years.  

Figure 2: PricewaterhouseCoopers’ cost ranking of Asianterritories.

Pfizer, however, emphasizes that adherence to quality standards are a prerequisite for working with any supplier. "The importance of a full and complete evaluation of a potential supplier or contract manufacturer by the pharmaceutical firm cannot be overemphasized," said Natale S. Riccardi, president of Pfizer Global Manufacturing and senior vice-president of Pfizer, in a recent interview with 

(7). "A thorough review of the potential partners' quality systems, including verification that they have control over their own supply chain, must be completed to determine whether they are willing and able to meet the required standards. If they are not, access to the supply chain should be denied until they have demonstrated that the required standards are being applied. Once a supplier is approved for use, ongoing quality oversight is critical to ensure that the standards continue to be met. We have done that and in fact, have not approved suppliers that have not demonstrated sufficient progress."

As a larger percentage of active pharmaceutical ingredients (APIs) is outsourced, there is a resulting need to broaden the supply base and gain the knowledge and understanding of the capabilities of external suppliers. To that end, Pfizer established in 2006 a center of excellence team based in Singapore to work in markets in India and China. This team works in concert with the company's strategy to optimize its internal plant network and in planning transitional inventory coverage as external suppliers are qualified (7). For contract R&D, Pfizer also has relationships with contract research organizations in Asia, including WuXi PharmaTech (Shanghai), Chembiotek (Kolkata, India), and HD Biosciences (Shanghai) (8). 

To strengthen its global API sourcing, AstraZeneca (London) opened a new sourcing center in China in early 2007, which is in addition to another sourcing center in Bangalore, India. These moves are part of other recent investment in Asia. In 2007, the company opened a $15-million process research and development center in Bangalore to complement its drugdiscovery programs there. The company also is investing $100 million for a new translational science research facility in Shanghai. As part of its supply-chain strategy, in November 2008, the company said it is further investing in its facility in Wuxi, China, to support its growth in Asia Pacific, to provide additional packing and formulation capabilities, and to make Wuxi its packing center for Asia Pacific. AstraZeneca established a manufacturing site in Wuxi in 2001 with an initial invesment of $134 millon and made an additional investment of $35 million in 2006. 

Eli Lilly (Indianapolis) is pursuing what it calls its "FIPNet" strategy, which emphasizes the company's role in assembling and managing a network of external partners. This focus is a change from its practice of being what it calls a "FIPCo," or a fully integrated pharmaceutical company that owns everything from idea-generation to sales. 

 "We're testing new collaborations with life-sciences firms in China and India," said John C. Lechleiter, president and CEO of Eli Lilly in a speech in September 2008 (9). "Lilly scientists still design our compounds, for example, but a large number of our chemistry-based molecules are now synthesized by a firm in Shanghai, called ShangPharma. In India, meanwhile, we've handed off some molecules using new risk-sharing deals. We have the right to buy back these molecules ... once our collaborators succeed in establishing proof of concept in the clinic." 

As another example, in October 2008, Lilly agreed to form a drug-development joint venture with the Indian firm Jubilant Organosys (New Delhi), a contract provider of custom research, manufacturing, and drug-discovery services. The joint venture, based in Bangalore, is modeled after Lilly's early-stage development division, Chorus, which provides drug development for Lilly exclusively through external contract companies. The joint venture will focus on preclinical molecules and their development through Phase II clinical testing before returning successful assets to the sponsors for further development.

Figure 3: PricewaterhouseCoopers’ wider risk ranking of Asian countries.  

Industry observers say recent events have not altered pharmaceutical companies' interest in doing business in India. "After the heparin incident, I would say that the comfort level of pharmaceutical companies working with India contract manufacturers increased, not decreased, because of greater transparency in India than in China," says Nailesh Bhatt, managing director of the consulting firm Proximare. He points to the smaller size of India, the benefit of having English as a common language with Western companies, a smaller supplier base, and the increased attention on the supply chain as FDA establishes a presence in the country (see sidebar, "Regulators Grow Global Presence"). "The increased supply-chain robustness is a positive development for Indian CMOs," he says. 

He also says that the terrorist attacks in Mumbai in late November 2008 are not likely to dissuade pharmaceutical outsourcing. "The new reality of global terrorism shows that any geographic location is not immune to terrorism." In the case of Mumbai, he points out that the attacks were localized in the city and did not occur in surrounding areas outside of Mumbai, where pharmaceutical manufacturing facilities are located, and that manufacturing activities are diffused in various hubs throughout the country such as in New Delhi and Hyderabad. "The immediate effect has been a beefing up of security and consideration of options for business travel."

Figure 4: PricewaterhouseCoopers’ market opportunity ranking of Asian territories. 

Although Asia will play a role in pharmaceutical outsourcing, others point to favorable fundamentals for US and Western European suppliers. "As long as the world's innovative pharmaceutical industry is centered in the West, there will be a need for API development and manufacturing capacity in the West," says Brian Scanlan, vice-president of corporate development at Cambridge Major Laboratories (Germantown, WI), a contract manufacturer of APIs and intermediates. "Our view is that most of the new drugs in development are owned by the small, medium, and virtual pharma companies. The future of these companies resides in one or two molecules in development. The vast majority of them are not going to entrust the future of their company to a company on the other side of the world—it just won't happen. Big Pharma is in a very different scenario. They have the ability to offshore some of their pipeline, but the highest profile, most important new APIs are, by and large, still be entrusted to Western-based companies for development." 

Securing the supply chain: Leaders at work

Over the course of 2008, regulators, including FDA, US legislators, and other standard-setting bodies made changes and proposals to improve pharmaceutical import and product safety. 

The US Pharmacopeia (USP) took immediate action to respond to the heparin contamination by revising its heparin sodium and heparin calcium monographs (Stage 2 of the revisions are scheduled to be published in March 2009). "There's a lot of work going on in USP now, even beyond heparin, to tighten up monographs that might be susceptible to contamination," says USP CEO and 

Executive Vice-President Roger L. Williams. "We're working more on our USP Glycerin monograph, for example, with regard to diethylene glycol, and on FCC monographs for Wheat Gluten and other food ingredients that are susceptible to melamine adulteration. We want to help outsourcers know they are purchasing good materials if it conforms to a 

monograph on their certificate of analysis." 

Last April, US Representatives John Dingell (D-MI), Frank Pallone, Jr. (D-NJ), and Bart Stupak (D-MI) issued a discussion draft of the Food and Drug Administration Globalization Act of 2008 to improve the FDA inspection process (10). Revised in July, the discussion draft proposes that:   

All drug facilities operating within the US or exporting products to the US register with FDA annually (a registration fee would generate resources for inspections)

FDA inspect foreign and domestic facilities every two to four years, provided sufficient information has been given to the agency to assess risk (a manufacturer would not be able introduce a drug or ingredient into the marketplace until an initial facility inspection has been conducted)

Restrictions be placed on the entry of imports that lack safety documentation

Drug establishments implement a quality riskmanagement plan

Manufacturers test and verify drug identity and purity

FDA issue fines for violations of drug-safety requirements; the agency's authority would be extended to recall and detain dangerous drugs as well as to destroy counterfeit or adulterated imports

Electronic pedigrees document a drug's supply chain

Country-of-origin labeling identify the source of APIs and their place of manufacture (11).

Although the Globalization Act is still circulating as a proposal within Congress, FDA Press Officer Christopher C. Kelly says the agency is already tweaking its inspection process to be more global in nature. "We are putting an emphasis on the supply chain during the regular course of our good manufacturing practice inspections and preapproval inspections," he says. "We are looking at sourcing and actively participating in industry conferences and professional forums on the topic as well as attempting to increase our coverage." FDA is opening up several offices abroad and dedicating more inspectors for foreign plants. 

The agency is also improving its system for registration of foreign facilities. The FDA Foreign Facility Registration Verification Project is meant to establish a contract relationship with nongovernmental organizations that have an office overseas that can verify, as trusted FDA agents, the registration data of foreign firms that are shipping to the US. "The process will include visiting the foreign firms, verifying, and documenting the existence of the firms, and confirming the firms manufacture the products that FDA import records indicate the firms export to the US," explains Kelly. The project is expected to include, but not be limited to China, India, and Mexico. 

Dingell plans to introduce a bill ref lecting the revised discussion draft in the House Energy and Commerce Committee early this year (12). Some industry groups are voicing concerns on certain aspects of the proposed legislation. 

The International Pharmaceutical Excipients Council (IPEC), for example, plans to submit written comments to the committee about the Act's proposals. Although IPEC is supportive of the fact that the Act, if passed, would put more pressure on what a user needs to do to qualify its suppliers, the organization is concerned about the bill's call for a nofee registration of excipient plants. 

 "There should be a fee for them just like there is for API  facilities," says David R. Schoneker, who ended his term as chairman of IPEC–Americas on Jan. 1. Schoneker is also a member of 

's editorial advisory board. "If you have a registration process that only involves an Internet form and a registration number, well, the bad guys can do that too. Some may try to tout the fact that they have an FDA registration number as if they've been FDA-approved. A reasonable fee is necessary, and pharmaceutical companies should only be allowed to use excipients from registered excipient suppliers." 

A second concern for IPEC is the Act's provision requiring FDA to inspect every facility, including excipient facilities before the facility is allowed to offer material to the marketplace. "FDA could never have enough resources to inspect all facilities which manufacture or distribute excipients. This is where third-party certification comes into play," explains Schoneker. "We think there should be inspections of excipient companies prior to using excipient suppliers. However, this can't be done by FDA alone. A combination of FDA inspection (to judge risk) and third-party certification would make sense. It's the only way to get more audit information in the hands of the users." 

There is also speculation that the Obama administration will increase regulations. The new administration may help to "establish a level playing field for what the expectations are, for what is really required for a pharmaceutical user to use an excipient or ingredient from a particular supplier," says Schoneker. "It also may bring more standardization and more accountability." 

The revised discussion draft of the FDA Globalization Act discusses country-of-origin labeling for APIs and website listing of all drug components (including excipients). A bill proposed by Senator Sherrod Brown (D-OH) in October would amend the Federal Food, Drug, and Cosmetic Act to require country-oforigin labeling for active and inactive ingredients, or excipients (13). IPEC's position is that country-of-origin labeling will not improve safety or consumer choice. "There are many good manufacturing plants in China and India that we shouldn't be afraid of, and likewise there can be bad suppliers in the US," says Schoneker. "The key issue is who you buy from, not where you buy from; country-of-origin labeling will not help with this issue." 

 President George W. Bush established the Interagency Working Group for Import Safety which led to the Action Plan for Import Safety in November 2007 (14). FDA is part of the working group that finalized the plan, which calls for increased collaboration and coordination with countries and companies that export products into the US. In addition to signing two memoranda of agreement with China in late 2007 to protect food and drug imports (15), the US Department of Health and Human Services (HHS) established two programs in July 2008 tied directly to securing the pharmaceutical supply chain: joint inspections with the European Union and Australian regulators, and the use of third-party certification (16). 

The joint-inspection program began in Fall 2008 as a pilot project and focuses on API manufacturing facilities. The certification program is also a pilot project, currently focusing on how best to evaluate third-party certification programs for the food industry. Depending on its success, thirdparty certification may be tested and implemented with drug suppliers as well (16). 

Also, the International Conference on Harmonization Guideline Q10 

was adopted in June 2008. It specifies that manufacturers include outsourcing activities within their quality systems and verify the other party's quality systems before engaging in outsourcing (17). 

The US Pharmacopeia (USP) already has a certification program for APIs and excipients coming into the US. And along these lines, FDA is developing a draft guidance on good importer practices (14). In addition, the agency is working on a pharmaceutical ingredient quality assurance guidance. 

Following criticism of FDA's information technology (IT) systems for drug-establishment registration, FDA has made improvements. (FDA had not inspected the Chinese Changzhou SPL facility, the alleged site of Baxter International's heparin contamination, due to a database error.) FDA's Kelly says in addition to efforts to better identify drug firms, including firms named in applications, progress includes:  

After a year of increased attention on the pharmaceutical supply chain in Asia, what will be the region's short- and long-term role? This article contains bonus online-exclusive material.

Evaluating the Pieces of the Pharma Supply Chain

-A newly released study from the US Food and Drug Administration demonstrates that the printed information retail pharmacies provide to patients regarding medication use and risk of their prescriptions is not easy to read or understand. Even though 94% of consumers receive consumer medication information (CMI), only 75% of that information met the minimum “usefulness” requirement, said the authors of the 

Expert and Consumer Evaluation of Consumer Medication Information

In 1996, Congress requested that 95% of all new prescriptions be accompanied by useful CMI by 2006. The study does reveal some improvements since a similar study was conducted in 2001. The earlier report found that 89% of patients received CMI but only 50% of that information met the minimum usefulness criteria.

“The current voluntary system has failed to provide consumers with the quality information they need in order to use medicines effectively and safely,” said Janet Woodcock, MD, director of FDA’s Center for Drug Evaluation and Research, in a Dec. 16 FDA press release. 

CMI is supposed to include the drug’s name and uses, how to monitor for improvement in the condition being treated, contraindications, symptoms of adverse reactions and what to do, and certain general information.

To improve the situation, the FDA Risk Communication Advisory Committee is holding a public meeting in early 2009 to discuss the study’s findings. An agency 

  is also available for public comment and feedback.

A newly released study from the US Food and Drug Administration demonstrates that the printed information retail pharmacies provide to patients regarding medication use and risk of their prescriptions is not easy to read or understand.

Prescription Information Needs to be More Useful

A US Food and Drug Administration guidance issued Tuesday, Dec. 16, 2008, provides new recommendations to applicants who wish to designate proposed products as orally disintegrating tablets (ODTs). The industry guidance, 

, applies to manufacturers of new and generic products and is based on the April 2007 draft guidance of the same name.

According to the guidance, disintegration times of ODTs can range from a few seconds to more than a minute, but most have 

 disintegration times of approximately 30 seconds or less. FDA is therefore recommending that, “ODTs be considered solid oral preparations that disintegrate rapidly in the oral cavity, with an 

 disintegration time of approximately 30 seconds or less.”

The guidance goes on to say that tablets that take longer than 30 seconds to disintegrate or are dosed with liquids should be more appropriately labeled “chewable or oral tablets.” Another parameter in the guidance states that the weight of the ODT should not exceed 500 mg.

A US Food and Drug Administration guidance issued Tuesday provides new recommendations to applicants who wish to designate proposed products as orally disintegrating tablets (ODTs).

Guidance for Orally Disintegrating Tablets Issued

Brussels (Dec. 10)-The European Commission (EC) issued proposals last week to improve Europe’s pharmaceutical market and patient safety. 

 One proposal would allow the industry to publish nonpromotional information on the Internet or in health-related publications regarding the drug-product’s ingredients, uses, and effects, according to a Dec. 10 statement on the EC website. “At present, not all Europeans have access to such information, partly because standards differ from country to country,” says the statement.

 The proposal would move toward harmonizing practices for providing patients with drug-product information among European Union member states. National authorities would monitor the posted information to ensure it does not violate Europe’s ban on prescription advertising. 

 Another proposal would require mandatory safety features such as serial codes and seals on packages to protect against counterfeiting. This issue is especially important given that seizers of counterfeit medicines at the EU borders increased 280% between 2005 and 2007, according to the EC website.

 Two additional legislative proposals would strengthen the EU’s system for monitoring drugs to ensure their safety. Specific measures, according to the EC website, would include:

Maintaining the current split of competences between EU member states and the European Medicines Agency, while making clear the respective roles and responsibilities and minimizing duplication of effort

Strengthening the rules on transparency relating to pharmacovigilance data, assessment and decision-making, and involving stakeholders in the processes including reporting

Establishing clear standards (‘Good Vigilance Practices - GVP’) for the conduct of pharmacovigilance by both industry and regulators

Freeing up resources by rationalizing and simplifying the reporting of suspected adverse drug reactions, making the best use of current information technology, and matching the reporting requirements with the level of knowledge about the safety of a specific product.

Additional measures now under discussion, according to the release, relate to making pricing- and reimbursement-decisions more transparent, boosting research, and increasing cooperation with the United States, Japan, and Canada.

The European Commission issued proposals last week to improve Europe's pharmaceutical market and patient safety.