By James Rolston, KPMG
In April, headlines captured an incident in which 15 million doses of COVID-19 vaccine had to be destroyed after a quality issue occurred at a contract manufacturing facility.1 Initial reports indicate there was a cross contamination of ingredients with another vaccine during manufacture. As a result, it was expected there would be an 85% drop in vaccine availability while production issues were resolved.2
Such causes and disruptions in drug supplies are not new. The FDA maintains a list of drug products in shortage, and it found most supply disruptions are caused by quality related issues. In addition, it found a lack of market incentives to invest in older, less profitable drug products to prevent such quality issues.
As a result, the FDA’s Office of Quality Surveillance launched a voluntary program to evaluate manufacturers’ quality management systems to inform decisions on the future development of an FDA rating system characterized as quality management maturity (QMM).
The Importance Of Quality Management Maturity
To understand why the FDA is launching this QMM pilot program and the importance of quality management maturity, we must understand the research done around drug supply shortages. In February 2020, the FDA's Center for Biologics Evaluation and Research (CBER) published an update to the FDA’s report Drug Shortages: Root Causes and Potential Solutions. In the report, a team of economists studied supply shortages of 163 drugs in the agency’s database from 2013 to 2017 and analyzed the list with drug sales data from the IQVIA National Sales Perspective (NSP) database. In the analysis, “They found that of the 163 drugs in shortage, 62 percent went into shortage after supply disruptions occurred that were associated with manufacturing or product quality problems.”
In addition, most of those products were vaccines. The FDA identified three major root causes that contributed to the drug shortages the industry experienced:
- There is a lack of incentives for manufacturers to produce less profitable drugs.
- The market does not recognize and reward manufacturers for “mature quality systems” that focus on continuous improvement and early detection of supply chain issues.
- Logistical and regulatory challenges make it difficult for the market to recover from a disruption.
First, the FDA’s report suggests drug shortages are influenced by the lack of economic incentives for manufacturers to invest in older generic, less profitable drugs. The drugs in shortage were often older, with a median time of nearly 35 years since they were first approved.3 As a result, these older drugs often face competitive pricing, uncertain revenues, and high investment to improve production, with limited potential returns.
In addition, the current practices for contract pricing contribute to the lack of investment in quality, as purchasers will lean toward the lowest contract price for generic drugs. For example, some contracts include “low-price clauses” that allow group purchasing organizations (GPOs) to walk away from a contract if a competitor offers the same product for a lower price. If the industry incentives for older products drive purchasers to the cheapest product, there is little incentive to invest in quality and deliver the drug product without interruption.
The agency suggests that if all key stakeholders better understand the impact drug shortages have on health outcomes and how they can increase the overall cost of care, then the industry can better influence the market away from what is described as “race to the bottom” pricing.
Second, the current market does not recognize nor reward manufacturers for a mature quality system. There is a minimum compliance expectation that manufacturers are to meet, known as current good manufacturing practices (cGMP). There is currently no system to measure and rate the quality management maturity of manufacturing facilities beyond this minimum threshold for compliance. When there is no system to measure the maturity of a manufacturer’s quality management system, purchasers have limited information linking the drug products to the facilities where they are manufactured.3 This lack of information prevents the market from rewarding or penalizing manufacturers based on the performance of their quality management system. As a result, manufacturers are more likely to keep costs down and minimize investments in quality that prevents drug supply disruptions and shortages.
The recommendations and the eventual direction of the market will rely on a maturity model that provides purchasers the ability to grade the maturity of a manufacturer’s quality system along an industry standard scale. The scale would grade manufacturers from low to high maturity. For example, a manufacturer with a new or immature quality system with low repeatable results would rank lower when compared to a well-established manufacturer with a quality system that is measured, managed, and optimized. The agency recommended that “A rating system could be used to inform purchasers, GPOs, and even consumers about the state of, and commitment to, the quality management system maturity of the facility making the drugs they are buying.” In order to establish a mature quality management system, a manufacturer starts with a foundational quality management system that conforms to cGMPs and from that foundation builds a culture of performance and patient focus. That transformation starts by measuring performance, utilizing quality metrics, and controlling processes to ensure a reliable supply of the drugs manufactured at the facility.
Lastly, drug supply chains have become longer, more complex, and fragmented over the past two decades. Production has moved overseas, supply chains have become more global, and there has been an increased use of contract manufacturers.4 The complexity of the supply chain can drive efficiency and cost savings in certain industries; however, in the life sciences industry, if there is a lack of resiliency in the drug supply chain, there is a negative impact to the patient. A potential countermeasure would be to increase production capacity and reliability, by either modifying existing facilities or building new facilities. However, the complexity of drug manufacture increases with the need to obtain approvals from multiple regulatory bodies and sources for quality materials and active pharmaceutical ingredients (APIs). In an effort to modernize its regulations, the FDA has been working to implement a modern risk-based quality assessment system and harmonize regulations to reduce extensive regulatory oversight.
Based on the findings in the drug shortages report,5 the FDA made the following recommendations:
- Create a shared understanding of the impact of drug shortages on patients and the contracting practices that may contribute to shortages.
- Develop a rating system to incentivize drug manufacturers to invest in quality management maturity for their facilities.
- Promote sustainable private sector contracts with payers/purchasers to make sure there is a reliable supply of medically important drugs.
What Does A Mature Quality Management Program Look Like To The FDA?
The FDA fully recognizes any solution requires cooperation of manufacturers, regulators, and payors. Maturity models are not new and are used in other industries. However, they require a baseline to identify an appropriate rating system. In an effort to identify useful and objective quality metrics that can be used to rate the quality maturity of these manufacturers, the FDA, under the Office of Quality Surveillance, initiated two voluntary programs to help progress the maturity model, 83 FR 30751 and 83 FR 30748. The Site Visit Program (83 FR 30751) is for manufacturing establishments to present the advantages and challenges associated with implementation and management of a quality metrics program, while the Quality Metrics Feedback Program (83FR 30748) is to engage stakeholders in identifying mutually useful and objective quality metrics.
The FDA is currently evaluating what a mature quality management system looks like. It does recognize that quality metrics are one of the elements that a pharmaceutical manufacturer can use to enhance the reliability and accuracy of its quality management system. Some of the characteristics that demonstrate a mature quality management system include:
- Quality product over time – Ability of a quality system to consistently provide a quality product regardless of desired and undesired changes and the ability to perform over time despite changes in market demand.
- Operational stability – Ability to identify cause of variations and find opportunities for continual improvement.
- Strong quality culture – Ability to demonstrate senior management’s commitment that the product’s impact on the patient drives corporate strategy and decision-making.
Due to the COVID-19 pandemic, there has been increased public awareness of the disruptions in manufacturing and supply chains. As a result, there will be increased focus to address these issues and prevent them before they occur. Any solution will need to include a sustainable quality model that is efficient, agile, and flexible, focused on improving the quality of drugs and their availability. With the FDA’s new initiative around quality management maturity, it is necessary for industry leaders to start reviewing their quality systems and consider what will create a mature quality management system today and in the future.
About the Author:
James Rolston is a life science advisor at KPMG for its Supply Chain & Operations group. He has more than a decade of experience working in both industry and consulting addressing the quality and operational challenges in the pharmaceutical and medical device industries. He holds a degree in chemical engineering and an MBA in healthcare & strategic management from Villanova University, where he serves on the advisory board for the Villanova Chemical Engineering Department.
- Drug Shortages: Root Causes and Potential Solutions, A Report by the Drug Shortages Task Force, Updated February 21, 2020. “Currently, purchasers have only limited information that can be used to assess the state of quality management of any specific facility and have little information linking the drug products they buy with the facilities where they were manufactured.”
- Over the past two decades, the drug supply chain has become longer, more complex, and fragmented as companies have located more production overseas (U.S. Department of Commerce 2011 and Van Den Bos 2009) and increased the use of contract manufacturers (Kuehn 2018).
- Drug Shortages: Root Causes and Potential Solutions, A Report by the Drug Shortages Task Force, Updated February 21, 2020