If 2018 was defined by Ayushman Bharat, what will define 2019?
As we wind up one year and gear up for the next, I wonder how CEOs of pharmaceutical companies would rate 2018. If there was one learning from this year that will shape strategy for the next, it should be that investments in quality need to be continuous, consistent and comprehensive.
Unfortunately, this is easier said than done. The pharma industry across the world, but more so in economies such as India, seems to be caught in a vicious circle of driving down costs, yet keeping up with technology. All governments, not just in India, are capping the prices of medical and devices, so margins are slimming rapidly. And quality is the first casualty in a cost-cutting drive.
Which is bad news as current FDA inspection trends, reportedly discussed at the 13th FDA Inspection Summit in October, point to increasing scrutiny. Excerpts of these talks have gone viral on various pharma focussed WhatsApp groups and while experts caution that these are not official statements from the FDA, they do reflect current FDA inspection trends.
Pharma companies in India should note that five new record sets are apparently being requested for inspections: a data integrity compliance plan, an inventory list of cGXP computerised systems along with validations, a list and copies of computer system validation and data-integrity related SOPs along with policies that the site trained their employees on, recent change controls related to validated systems and 18 months of CAPAs involving validated systems or any keyword search with ‘data’. Investigators are asking for USB thumb drives for information instead of paper copies so they can review electronically.
All this will add to the cost of ensuring quality. Industry insiders estimate that quality-related costs in many organisations are already as high as 15-20 per cent of sales revenue. This escalates to 40 per cent in some companies. The vicious cycle, also discussed at the Summit, starts when the company gets into trouble with regulators (483s, Warning Letters, product recalls, etc.) The company hires several employees in quality related functions and expensive consultants to address the shortcomings . The company then spends millions to address the quality concerns flagged by regulators, as well as countless hours to raise their compliance standards. The company gets a ‘clean bill’ from regulators. And all is well for some time. But then the management decides it’s time for a cost-cutting drive as profit margins are thinning and shareholders and promoters want to see returns. After a review of options to cut corners, the management decides that “too much money is being spent on quality,” “we’re doing fine now.” Therefore the management decides to reduce headcount, opts out of infrastructure updates in quality related functions, and pat themselves on the back for the resulting ‘savings’. But at the next inspection, the company gets another 483 and finds itself in a vicious loop, going back to square one. We have quite a few examples of this cycle being played out in India, and while its somewhat comforting to know that its not restricted to India, that doesn’t quite solve the problem.
Companies assumed that hiring consultants who are ex-employees of global regulators would guarantee a clean chit during inspections. Some of these companies replied to observations from the US FDA expressing surprise that their ex-FDA consultants had not found the same problem as the current inspectors. The US FDA declined to accept the reasoning of its own ex-FDA staffers over the current inspectors, citing constant changes in the inspection protocols, and that it provided new training to their employees. So anyone who is ex-FDA ‘was not considered to represent the agency or their current thinking/ regulations.’
Yes, some companies are managing to pull themselves out of this black hole, but it’s a slippery slope. And there are no short cuts. 2019 will be about finding long-term solutions to these niggling issues. Or, finally throwing in the towel and/or diversifying deeper into easier, less regulated and less price controlled portfolios like OTC and nutraceuticals. And to add to the cauldron, we have a general election coming up! So interesting times ahead for sure. Express Pharma wishes all our readers all the best for 2019!