Life-sciences manufacturers spend hundreds of millions of dollars to gain regulatory approval for their new therapies and require significant returns just to break even. If one adds to that the strict guidelines manufacturers must follow to ensure quality production for each and every unit, it is apparent why manufacturing consistency is a business imperative.

When internal or external forces challenge production standards, related processes, specifications, or critical documentation, controls must be put in place to ensure that product quality is not compromised. According to the US Food and Drug Administration, "Change control is a complex process. Inadequate change control exposes a company to product liability actions, results in product recalls, causes internal confusion, and is a serious violation of the Quality System regulation" (1).

Best practices, industry standards, and governmental regulation demand that companies ensure adequate control over change management. Change-control systems must ensure consistent procedures and informed decision-making by qualified individuals and ensure traceability back to the justification behind the change process itself.

To stave off any issues associated with production processes and procedures, systematic controls must be in place. Enterprise software systems can provide this level of management and control, improve productivity, reduce production costs, ensure compliance, and reduce risk.

These tightly integrated and comprehensive systems work to evaluate changes as well as manage, track, and record them to ensure product quality. They also provide the necessary level of automated communication to those people who are affected by the change, as well as those responsible for overall product quality.

The types of change that can trigger a change-control incident include:

Although some have, many life-sciences manufacturers have not invested in  a change-control system using enterprise software programs.  Instead, they may be using home-grown solutions, paper-based processes, or reconfiguring existing quality-control systems to serve as an effective change-control mechanism. In most cases, these solutions are inadequate and cannot provide the necessary level of functionality and checks and balances.

Despite the many economic, productivity, and risk-reduction benefits associated with control programs, the vast and complex nature of change-control procedures has caused many companies to struggle with implementing a global change-management system. Many manufacturers instead use a collection of disparate manual systems, spreadsheets, and databases. These disconnected mechanisms can lead to duplicate data and effort, input errors, inconsistencies, and delays.When a change occurs to product specifications, production processes, or associated documentation, a company without a change-control system lacks a centralized system to ensure that adequate measures are undertaken and brought to fruition.

The most common change-control problems facing life-science companies are: 

 Cumbersome processes that disrupt production and delay change-control resolution

 Inconsistent change-control solutions that result in compliance risks

 Inefficient and ineffective mechanisms for managing action items associated with change control 

 Ineffective use of data for trending and reporting to understand how to avoid problems in the future.

Enterprise-level change-control solutions

Enterprise-level software provides change-control solutions that meet these challenges and help organizations avoid risk. These solutions can  help to improve efficiency, increase control, and reduce defects. A cohesive enterprise change-control program integrates with other components of the organization's information-technology infrastructure.  This integration can include the company's existing quality-management systems, enterprise-resource-planning programs, equipment-inventory systems, manufacturing-execution systems, and other systems that retrieve and aggregate master data.

The most effective change-control systems should provide functionality for centralization, automation, and integration. In terms of centralization, a change-control system should:

 Electronically and securely manage all information in a centralized, scalable, and reliable system to eliminate the potential of lost information 

  Provide centralized management of all change-control items on an enterprise quality-management software platform to eliminate redundant systems and decrease production costs

  Enforce consistent and harmonized processes and procedures across the organization to reduce liability and patient risk

  Assign investigations to responsible parties and monitor due dates through interactive dashboards to increase accountability and collaboration. 

In terms of automation, a change-control system should:

  Automate required impact assessments based on the change type, impact, and other criteria to improve the impact-assessment process 

  Automatically notify other departments and sites when problems occur to increase visibility and reduce product impact 

  Automate workflow and fully implement electronic and parallel review and approval processes to improve efficiency and reduce change-control closure time 

  Automate and enforce specific actions to comply with ISO standards  and other industry regulations. 

In terms of integration, a change-control system should:

  Link change controls to corrective and preventive actions (CAPAs) to ensure an effective and closed-loop CAPA process 

  Integrate reporting and escalation to accelerate cycle time and batch release 

  Integrate change-control workflow with document-management systems for enhanced collaboration and productivity. 

Change control in life-sciences organizations is crucial in terms of risk, safety, and business performance. A centralized change-control solution will not only manage a business's entire change-control program effectively, efficiently, and according to industry standards on a global basis,  it will also open up a collaborative and ubiquitous communications channel across the organization. When a change-control incident is initiated, the system will automatically notify all affected parties within the company and beyond to be on the lookout for related issues within their own departments that can disrupt production.

The right enterprise-level solution should provide a central repository for all change-control instances and must be flexible, customizable, and straightforward in administration and use. This approach will lead to change-control processes and procedures that do not slow production, halt workflow, or leave the organization open to liability and business challenges.

In the end, change-control systems not managed correctly can severely damage the company's bottom line, put customers at risk, and tarnish the brand. When implemented and managed successfully, however, a change-control program can improve the business, enhance production, and increase product quality.

1. FDA, "FDA Center for Devices and Radiological Health, Medical Device Quality Systems Manual," (FDA, Rockville, MD, Jan. 7, 1997), 

Matthew Kopecky is manager of solutions architecture at 

Articles

Information Technology and Software

Change control in life-sciences organizations is a critical business issue in terms of risk, safety, and performance. The author examines common shortcomings in change control when implementing non-enterprise solutions and the functionality derived from enterprise-level change control.

Enterprise-Level Change Control

 (CBO) released late last month a cost estimate for proposed legislation that would create a regulatory pathway for follow-on biologics. The report analyzes the economic implications of  "The Biologics Price Competition and Innovation Act of 2007" (S. 1695), which was passed by the Senate Health, Education, Labor and Pensions Committee in 2007.

Proposed legislation for follow-on biologics

If approved into law, S. 1695 would establish an abbreviated regulatory procedure for licensing biological drugs by the 

. The measures would apply to so-called "follow-on biologics" or biological products that meet certain requirements and that are highly similar to or interchangeable with products originally licensed to innovator companies under the Public Health Service Act (1).

To allow for marketing approval of follow-on biologics, the bill would allow FDA to consider literature or the agency’s findings about safety and effectiveness related to an innovator’s biological product that had been previously approved by FDA. The applicant for a follow-on biologic would be able to reference certain data in the innovator's original application, and FDA would be allowed to consider this information when reviewing the application for marketing authorization. This approach would allow manufacturers of follow-on biologics to sell a competing version at lower prices by avoiding the costs of research and development incurred by the innovator company, including the costs of clinical trials (1).

Key provisions of S. 1695 include the following:

 Establishing standards for FDA approval of follow-on biologics, including requiring certain clinical trials to be conducted. The bill would grant FDA the discretion to waive specified requirements.

 Allowing FDA to issue guidance documents for manufacturers that identify the criteria that the agency would use to approve biosimilar and interchangeable biological products. The absence of such guidance would not prevent the approval of a follow-on biologic under the bill.

 Permitting FDA to determine that a follow-on biologic is interchangeable with an innovator biological product, subject to the applicant of the follow-on biologic providing certain types of clinicalevidence. FDA would award one year of market exclusivity to the firstinterchangeable follow-on biologic that references a particular innovator drug, subject to certain restrictions.  Market exclusivity in this context prohibits FDA from approving a subsequent interchangeable product during that period.

 Granting innovator biologics 12 years of data exclusivity beginning when the innovator biologic is  first licensed by FDA.  Data exclusivity in this context would prohibit FDA from approving a follow-on biologic that uses the innovator product as its reference product.

 Creating a process to resolve patent disputes through agreement or litigation between the follow-on biologic applicant and the brand-name company (1).

CBO estimates that spending on biologic-based drugs was $40 billion in 2006. During the next 10 years, 75% of the current biologics market would face competition from follow-on biologics if the regulatory pathway for follow-on biologics in the bill were approved. By 2018, roughly $70 billion in national spending on biologics would face competition from follow-on biologics, according to the CBO report (1).

 estimates, global prescription sales of biotechnology drugs increased 12.5% in 2007 to more than $75 billion. The United States is the largest market for biologics and holds 56% of the global market. IMS, however, is cautious about the impact of follow-on biologics.

"Biosimilars, or follow-on biologics produced by companies other than the originator, are expected to have only a modest impact on the market over the next 5â10 years," said the company in a June 2008 press release. "The introduction of biosimilar epoetin alfa in European markets in 2007, for example, has had a negligible impact in the market to date. And biosimilar 'Omnitrope,' introduced in 2006, has captured less than 1% of the somatropic human-growth-hormone market. Yet, they represent a shift in the biotech marketplace that over time will bring emerging competition from biosimilars following the loss of exclusivity of original products," said IMS.

If legislation were approved in the US, the first follow-on biologics would likely enter the market in mid-2012, according to CBO. The first entries are likely to be follow-on biologics for which the European Union have already issued guidance or granted marketing approval. These drugs include biosimilar versions of epoetin alfa and somatropic human growth hormone. The market share of follow-on biologics is projected to be roughly 10% in the first year of competition, and the sales-weighted average market share would increase to approximately 35% by the fourth year of competition, according to the CBO report. CBO expects that competition for most products would not begin until the second half of the 2009â2018 period. Certain types of more complex biologics such as  monoclonal antibodies may obtain marketing approval near the end of the 2009â2018 period, according to CBO (1).

CBO estimates that the passage of S. 1695 would reduce total expenditures on biologics in the US by $200 million between 2009â2013 and by approximately $25 billion between 2009â2018. The $25 billion in savings during 2009â2018 would equal roughly 0.5% of national spending on prescription drugs (valued at wholesale prices) (1).

During the first year of competition, the sales-weighted market average discount on follow-on biologics relative to brand-name innovator drugs would be about 20% and reach 25% in the most competitive markets, according to COB. By the fourth year of competition, the discount would be about 40% (1).

The impact of follow-on biologics would also be significant on federal spending. If the bill were to be enacted, CBO estimates federal spending would be reduced by $52 million during 2009â2013 and by $6.6 billion during 2009â2018. These figures reflect the net effect of increases in federal direct spending and revenues. Direct spending by the federal government would decrease by $46 million during 2009â2013 and by $5.9 billion during 2009â2018. These decreases would come from reductions in direct spending for certain federal health programs (Medicare, Medicaid, the government's share of retirees' health premiums under the Federal Health Benefits program, and the Defense Department's Tricare for Life program). Federal revenues would increase by $6 million during 2009â2013 and by $800 million during 2009â2018, according to CBO estimates. These revenue gains would arise from increases in taxable compensation as a result of lower healthcare costs and lower insurance premiums. CBO estimates that the bill would reduce costs for private health insurance plans and lower insurance premiums for employers by 0.1% by 2018 and would raise taxable wages by $1 billion by 2018 (1).

Enactment of S. 1695 would further require the Secretary of the Treasury to estimate the savings to the federal government and authorize the appropriation of these amounts to the Biologics Product Savings Fund. This fund would pay for activities authorized under the Public Health Service Act. Assuming such appropriations, S. 1695 would increase federal discretionary spending by $40 million during 2009â2013 and by $6.1 billion during 2009â2018 (1).

S. 1695 also would authorize the collection of user fees from applicants for marketing approvals of follow-on biologics during a transitional period that would extend through fiscal year 2012. CBO, however, expects that these fees would cover only a portion of the total costs for FDA to implement and administer the regulatory activities authorized under the bill. Additional funding, therefore, would be required.

The feedback from industry groups on the COB’s cost estimates was largely positive. "

PhRMA [Pharmaceutical Research and Manufacturers of America]

 thinks the cost estimate released by the Congressional Budget Office (CBO) of S. 1695 shows that it is possible to deliver cost savings to patients and the government through introduction of follow-on biologics while maintaining a robust environment that sustains innovation," said Ken Johnson, PhRMA’s senior vice-president, in a press release. PhRMA represents US-based innovator-drug companies.

"The CBO report shows that developing a pathway to review and approve follow-on biologics will result in cost savings to public and private purchasers of biologic products over a 10-year period," said Jim Greenwood, president and CEO of the 

Biotechnology Industry Organization (BIO)

, in a press release. "The report finds that most of the savings will be obtained several years after a follow-on pathway is established, reinforcing the need for Congress to develop and pass a responsible pathway this year that protects patient safety and preserves innovation. We are essentially leaving money on the table the longer we wait to implement a pathway." BIO represents innovator biotechnology-drug companies

Greenwood pointed out that in addition to S. 1695, other proposed legislation comes close to striking the balance between innovation and cost-savings derived from follow-on biologics. These bills include the "Patient Protection and Innovative Biologic Medicines Act of 2007" (H.R. 1965) and the "Pathway for Biosimilars Act" (H.R. 5629).

One area about which industry groups offer mixed opinions is the exclusion of so-called "evergreening" provisions in S. 1695. Evergreening occurs when the brand-name manufacturer amasses patent protection by obtaining separate patents on multiple attributes of a single product, according to the 

. These patents can cover a myriad of issues (e.g., uses, methods of treatment, mechanism of action, packaging, delivery profiles, dosing regimens, dosing range, dosing route, drug combinations, screening methods, chemistry methods, and biological targets). When evergreening, the originator  keeps adding patents to the product, essentially forcing the generic manufacturer to choose between waiting for all the patents to expire and applying for marketing authorization or running the risks of litigation and the associated costs and delays, according to EGA.

"Even greater savings would be available if Congress simply applied to biologics the HatchâWaxman standards that are currently used to approve generics for chemical compounds, " said Mark Merritt, president and CEO of the 

Pharmaceutical Care Management Association (PCMA)

. PCMA is the national association representing America’s pharmacy benefit managers. "It would be helpful if some provisions in the bill-such as 'evergreening'-which unnecessarily delay the entry of biogenerics were reconsidered. CBO acknowledges that the ‘evergreening’ issue will present significant problems beyond the 10-year scoring window."

PhRMA, however, says the term evergreening was not appropriate for describing the activities of innovator-drug companies. "Regrettably, critics use the term 'evergreening' to mischaracterize and minimize the important and essential work that innovative pharmaceutical research and biotechnology companies do to continually improve their products and to create better second- and subsequent-generation versions," said Johnson.

1.	Congressional Budget Office (CBO, "Congressional Budget Office Cost Estimate: S. 1695 Biologics Price Competition and Innovation Act of 2007," (CBO, Washington, DC, Jun. 25, 2008),

www.cbo.gov/ftpdocs/94xx/doc9496/s1695.pdf

Global Feature

A recent US government study shows that follow-on biologics are likely to have a favorable economic impact if proposed legislation authorizing a regulatory pathway in the US is approved.

The Economics of Follow-on Biologics

In last month's column, I argued that the contract manufacturing business model was badly outdated. Most contract manufacturing organizations (CMOs) seem to be following strategies based on pharmaceutical industry conditions that no longer exist, including assumptions that unit volumes will grow, retail drug prices will rise, and major pharma companies will stop investing in manufacturing capacity and embrace outsourcing.  

The CMO business model is still based on selling capacity, but manufacturing capacity is really an undifferentiated commodity. The industry is facing an 

 problem. CMOs are building new capacity, Indian and Chinese companies are entering the market, and new companies are coming into the industry by buying Big Pharma's old facilities. In the absence of other differentiating elements, overcapacity drives down prices. 

CMOs need to find new business models and strategies that reflect these new realities. These realities include Big Pharma's growing emphasis on reducing costs and making costs more flexible, and the globalization of the industry from both the end-user market and sourcing perspectives. New strategies need to better differentiate CMOs from one another to cut down on price competition. This will pave the way for multiple models targeting different customer groups and needs.  

One emerging model likely to predominate in the industry will be the integrated-service offering provider, or the so-called contract development and manufacturing organization (CDMO). These organizations are especially suited to small and mid-size bio/pharmaceutical companies, which have more willingly embraced outsourcing of their value chain than the major companies. CDMOs provide a complete suite of services related to the physical product, from early process development to commercial manufacture. In addition to offering first-class technical expertise, these companies claim the ability to move products through development and commercialization quickly and cost-effectively. We are already seeing a number of companies emerge that are explicitly pursuing this strategy. 

For CMOs targeting major pharmaceutical companies, manufacturing and supply-chain management excellence will be the hallmark of the emerging strategies. Those CMOs will seek to bring manufacturing practice to a level still unknown in pharmaceuticals but common in most of the industrial economy. They will focus on reducing manufacturing costs through continuous-improvement activities and optimizing plant utilization.

"Manufacturing excellence" CMOs will also learn how to manufacture in a "just-in-time" environment, rather than insisting that clients lock in schedules three to six months in advance. Major pharmaceutical companies no longer want to carry large inventories of raw materials and finished products.  

Operating global plant networks will also be characteristic of these CMOs. The ability to run efficient operations in countries such as India and China will be critical if they are to support the efforts of major pharmaceutical companies to expand their sales in those countries. That's partly a matter of cost—they need to produce at a lower cost to be competitive in those markets, which don't necessarily require expensive regulatory standards. It's also a matter of access—many of those countries have 

 barriers to imports that make market access difficult unless you are located there.  

In the end, relatively few CMOs may be able to attain this level of manufacturing excellence. Even as I write, there are several major CMOs operating under warning letters and others that publicly admit to being unable to meet delivery schedules. Further, only a handful of CMOs may be able to make this global shift. Some Indian and Chinese companies are already well along this path, but only a few Western companies have established assets in the emerging markets. 

However, the "manufacturing excellence" business model will be the real game changer for the CMO industry. Its strategy offers major pharmaceutical companies the ability to revamp their business models by addressing costs and globalization without sacrificing supply security. CMOs that can deliver it will be the big winners in the contract-manufacturing stakes. 

 is president of PharmSource Information Services, Inc., and publisher of 

Outsourcing

Global manufacturing excellence will be a game changer for CMOs that can achieve it.

PTSM: Pharmaceutical Technology Sourcing and Management-07-09-2008

Enterprise-Level Change Control

The Economics of Follow-on Biologics

Toward a New Model for Contract Manufacturing