Agnes Shanley is senior editor of BioPharm International.

Agnes Shanley

	Public pressure to reduce drug costs has led to a number of proposals to reduce drug prices.  Among the alternatives discussed so far have been 

 price controls and synching prices to those in other global markets. In December 2019, the United States Department of Health and Human Services introduced a Safe Importation Action Plan outlining two pathways for allowing the safe reimportation of lower cost drugs from Canada (1).

	Although these proposals have not yet become law, biopharmaceutical company executives are reacting to regulatory uncertainty by focusing more intensely on reducing operating costs, according to John Boyd, CEO of the Boyd Company, a site selection advisory company. “Operating costs have always been important for life sciences site selection, but they’ve never been as important as they are now, as the industry focuses on price reduction. Many of our pharma clients see site selection as a preferred market-based way to reduce operating costs,” he told 

	Operating costs vary highly among major life sciences sites (Figure 1), and labor costs (Figure 2) make up roughly 60% of those costs, says Boyd. In the US, Austin, TX and Raleigh, NC are currently among the fastest growing metropolitan areas, and both are attracting biopharma investment. So far, the Raleigh-Durham area in North Carolina offers the lowest operating costs of any US location, Boyd says, and boasts the presence of some leading universities such as Duke, University of North Carolina, and North Carolina State. Eli Lilly recently selected Raleigh as the location for a new $474-million, 462-employee facility to manufacture injectable and other diabetes therapies (2). The Austin area, meanwhile, is seeing increased investment in biopharma, due to life sciences developments such as the University of Texas’ Dell Medical Campus and facilities affiliated with nearby Texas A&M.

	Boyd’s latest analysis compared major operating costs in 2019 for a representative 300,000- square-foot biomanufacturing facility employing 300 hourly staffers. Examining costs for 25 US, European, and Asian locations research found that they ranged from $58.7 million in Copenhagen to $13.7 million in Bangalore. In the US, costs ranged from $55.4 million in New York to $37.2 million in Raleigh/Durham, NC.

	“In the US, there has already been a mass exodus of human capital to states that have right-to-work laws,” says Boyd. These laws establish “at will” employment and make membership in labor unions voluntary, reducing union power as well as labor costs for employers (3).  There has also been a trend to “reshore” some operations and bring them back to the US in lower-cost labor states, he says.  “For areas such as Bangalore in India, the initial numbers may be compelling, but investors have found additional hidden costs,” he says, including training and, in the US, boosting corporate participation in federal procurement programs has become a political issue that has both Republican and Democratic party support, he says. Boyd notes that new life science regional hubs may be on the horizon, depending on how new regulations take shape in the US.  Amgen, for example, is building a new 1600-employee facility in Greenwich, RI.  Oher potential areas for future development could include Southern Florida, Phoenix, AZ, Las Vegas, NV, and the Winston-Salem area of North Carolina near Wake Forest University.

	In the meantime, many municipalities are getting the message loud and clear, to hold the line on new corporate taxes, says Boyd. New Jersey, which is the nation’s largest biopharmaceutical and pharmaceutical development and manufacturing center, may offer a cautionary tale.

	The state recently increased corporate and personal income taxes, on top of high property taxes, making it more difficult for companies located in the state to remain competitive and reducing disposable income for working professionals, says Boyd.  Over the past 15 years, he noted in a December 2019 interview (4), higher taxes in the state have resulted in $30 billion in personal income moving to lower cost, more corporate friendly locations. New Jersey officials have also proposed a millionaire’s tax that would impose 10.75% in income tax on individuals earning $1 million per year or more. The proposed regulations could affect 20,000 state residents, many of them business owners, and could decrease investment in the state. New York, California, and Massachusetts already have similar laws in place.

	1. "HHS Announces New Action Plan to Lay Foundation for Safe Importation of Certain Prescription Drugs,” Press Release, July 31, 2019.
	2. North Carolina Biotechnology Center, “Lilly Building $474M Pharma Factory in RTP, Hiring 462 Workers,” Press Release, Feb. 11, 2020.
	3. Vittana, “20 Pros and Cons of Right To Work,” vitanna.org, Feb. 11, 2020.
	4. New Jersey News Network, “Murphy Renews Hope For Millionaires Tax,” newjerseynewsnetwork.com, Feb. 11, 2020.

Articles

As politicians focus on drug cost reduction, biopharmaceutical companies in the US are moving to states with lower taxes, and relocating some facilities that had been offshore.

Lower Taxes, More Flexibility Crucial to Retaining Pharma Employment

The past few years have seen dramatic growth in cell and gene therapy research and commercialization. As questions of access and cost continue to come up, developers are adding new capacity to help keep up with explosive demand for new therapies. Over the past few months, Kite Pharma and Novartis have both built new facilities in the United States and Europe, while Lonza, WuXi Biologics, and other contract development and manufacturing organizations (CDMOs) have been expanding manufacturing capacity.

	Established ways of gathering, transferring, and storing data and materials for traditional biopharmaceuticals will not work in the evolving supply chain for autologous and allogeneic therapies. For one thing, manufacturing and transport involve many more diverse stakeholders and patient groups than traditional programs, while, for autologous therapies, there is a need to closely coordinate raw material extraction and final product production, and transport to and from collection centers and from manufacturing to clinic. 

	Over the past six months, alliances have started up to streamline data management and access to improve the transmission of data from raw material collection points to manufacturing, and to patients at the point of use. In one such collaboration, the CDMO Lonza, IT company Vineti, and logistics specialist Cryoport are working to optimize logistics for cell and gene therapies. 

	Lonza’s formal collaboration with Vineti had begun in July 2019, to integrate the CDMO’s MES and electronic batch record (EBR) execution solution with Vineti’s supply chain orchestration  platform, designed to connect manufacturers and healthcare providers at point of care, in real time. 

	Vineti, which focuses on supply chain management for cell and gene therapies, has been in business for approximately four years, and grew out of GE Ventures, says cofounder and CEO Amy DuRoss. Back around 2012, a leading biopharmaceutical company with a chimeric antigen receptor T cell (CAR-T) product in Phase III had approached GE to help with unprecedented manufacturing and supply-chain issues. The product, which is now commercially available, was being produced almost entirely manually, says DuRoss, and presented the most complex supply chain and logistics workflow requirements ever seen in the history of biologics. “They were using brute force against the production and delivery of each therapeutic. Once they saw that they were likely to commercialize, they realized that there was no way to scale production and delivery on a manual basis,” she says. 

	For roughly two years, GE Ventures evaluated the challenges involved, and Vineti was set up in 2015 as an independent company to automate those specific supply chain and logistic workflow requirements.  The company uses an enterprise platform developed inhouse, and an integration layer driven by application programming interfaces (APIs).

	With CDMOs, the connection point depends on what the partner wishes to emphasize.  With Lonza, for example, the emphasis is on the MES and EBR system. “Vineti is managing chain of identity and chain of custody externally, and providing data as a feed internally into Lonza’s shop floor,” DuRoss says. 

	The two partners plan a number of other integration efforts that will deepen the capacity for data sharing and integration to improve capacity optimization. “CDMO customers no longer have to handle data integration themselves, since the system will already be built for them to link into,” she says. Cryoport’s Chief Commercial Officer Mark Sawicki discussed its work in cell and gene therapy logistics and supply chain management with Lonza and Vineti with Pharmaceutical Technology.

 What is one of the most challenging aspects of working in cell- and gene-therapy logistics today? 

: The supply chain is far more complex than it is for monoclonal antibodies or small molecules. Regenerative medicines are patient-specific materials. You cannot simply order bulk materials and manufacture lots of product and just push those out to market. In addition, there is a lot of variability in procuring the materials (i.e., you’re typically dealing with severely immunocompromised patients, so scheduling to get them in to pull materials, to transport or manufacture them, can be an issue). In some cases, patients can get sick or there can be weather issues. 

	As a result, scheduling is extremely challenging, especially for autologous materials. It is a bit easier for allogenics, but, at this point, networks for transporting donor materials have not yet been fully vetted. 

	Complicating the picture is the fact that the manufacturing processes associated with autologous therapies are not mature. This means that developers often have to extend instrumentation and processes that have been used for single-patient production to large-scale manufacturing in a commercial manufacturing environment. The interconnectivity and optimization of workflow isn’t there yet. Companies such as Lonza are trying to identify automation competencies to make the process move faster and more smoothly, but, as an industry, we aren’t there yet. 

	Finally, the manufactured materials themselves are extremely fragile and irreplaceable, but they have to be pushed back out under very rigorous timelines and exacting conditions. You don’t have the latitude for deviations because they might destroy the product or even kill the patient. All of these elements create significant complexity that the industry hasn’t had to deal with before.

  What do these challenges mean for CDMO and sponsor data management and IT systems?

 IT is a huge consideration. We are now working to integrate our individual IT systems so that information flows from one system to the next. The goal is to eliminate the need for manual intervention and reduce the risk of human error. At Cryoport, we have also begun to use artificial intelligence (AI)-based tools to examine product workflow, the risk elements associated with moving material in, manufacturing, and moving product back out. The only way that these AI systems can be effective is by gaining access to large amounts of data, and we’re now able to pull that data through our partnerships. 

  What is required for interconnectivity, and did you develop the AI systems in-house or with a partner?

 Systems must be nimble enough to talk to each other, so that if there is a delay during one phase of the process (e.g., during transportation, manufacturing, or administration) the information can be pushed out through the entire system so that everyone understands the ramifications of what is going on. 

	We hired our own data scientists to develop the AI systems, although Vinetti is working on AI systems of its own. Our use of AI is focusing on all around risk management for materials, and how we can use existing data more effectively to manage risk and improve operations, whether for storage or distribution. By the third quarter of next year, we expect to roll out a new version of our software that will include several of the AI features that we’re working on now.  

 How do you connect to CDMOs and to the clinical side? What elements are needed? 

 We typically connect through electronic data interchange or APIs using either a pull or push, bidirectional, or unidirectional process from conduits that have been designed to transition or share data with clients’ enterprise resource planning systems and portals, as well as Vineti’s IT platform. In some cases, elements of our IT system are being replicated inside a partner’s site. 

	If a Lonza client, for example, wants to schedule distribution of an autologous product, they can go into Lonza’s system, find an interface to our system, and get whatever help they need. Solutions providers such as Vineti are designing systems that are as flexible as possible to enable data to flow more easily between systems.

	Specialized containers and cleaning validation 

 What led Cryoport to develop the customized containers?

: The advanced therapy shipper line is a segregated, specially engineered fleet to support the distribution of clinical and commercial cell and gene products. We rolled it out to get ahead of what we anticipate future FDA regulations to look like, and to focus on what we expect to become most important feature of any shipment and packaging product in this space: traceability. 

	Currently, two third-party foundations, the Foundation for the Accreditation of Cell Therapies and the Standards Coordinating Body for the Alliance for Regenerative Medicine, are putting together recommendations for FDA in conjunction with ISO [International Organization for Standardization] TC 276, which will establish a long-term regulatory framework for the cell and gene space. 

	Our goal is to use the same standards that you would see in a GMP manufacturing environment for the equipment that is used to transport these materials to end users. Some standards are data related (e.g., for data loggers, track and trace, and geo-fencing), but the most important aspect is establishing traceability for equipment performance. 

	We can verify and confirm the historical utilization of every piece of equipment, who used it, and where and for what. That’s one of the most important elements that is being introduced in the program. 

	We’re also introducing a validated cleaning process for the industry that demonstrates a 99.9999% reduction in all contaminants, which brings it as close to product sterilization as possible (since it would be physically impossible to sterilize shippers and tanks out in the field). This will eliminate the risk of cross-contamination.

  What are you expecting in terms of standards (e.g., for good distribution practices for the new therapies)? Are there existing standards, and what are you expecting FDA and the European Medicines Agency to do?

 Existing standards are based around International Safe Transit Association (ISTA) protocols that have been used for the past 30 years. One liability is that these protocols incorporate a tolerance for deviation that is fine for small molecules or many biologics but could potentially render regenerative medicines unuseable.

	With many cell and gene therapies, deviations from prescribed environmental conditions, even those that last for a few milliseconds, half a second, or a second, can destroy product completely. There is no visible way to tell whether the cells are still useable after an upset. You won’t be able to tell if the viability of the cells has gone from 90% to 10% without doing extensive testing.

	This is why full traceability is so important, so that you know how a given piece of packaging will perform each time it leaves or returns to the manufacturing facility. Traceability looks at the risk of cross contamination, at equipment performance, and at the traceability of each shipment and whether it has been subjected to any shocks or condition deviations. 

	These data will eventually be connected to outcomes research. Say, for example, a sample has been shipped at the correct temperature, but affected by shear events along the way. It will eventually be possible to determine whether these incidents had any impact on product efficacy. If a client has dosed 13,000 patients during this time period, they would be able to examine the data and see any patterns that come up. We maintain every bit of data generated by our systems and can currently go back nine years and provide regulators with any information they request.

  Is there currently a bottleneck in the services available for cell and gene therapy development? 

 As more products come to market, there are issues with scale. Some producers haven’t had the bandwidth to keep up with demand, and this has held back their growth. Then there is the issue of viral vector manufacturing capacity and the risk of having a single supplier for the required materials. 

	Currently, many of the materials required for GMP manufacturing of cell and gene therapies are single sourced, which is extremely risky, and manufacturers are typically smaller providers because this is a niche industry. The 800-pound gorillas aren’t yet supplying reagents and other necessities because there was no market for them five years ago. However, today there is still a pipeline of 1000 clinical products, all of which use GMP starting materials from single, small provider sources. That poses a major risk.

 This is easier to manage for autologous treatments. As you move to allogeneic products, instead of 2000 or 3000, you will be dealing with two or three million, and fleets will move from 1000 to 100,000. There’s only so much existing capacity for liquid nitrogen shippers. This is also true for storage and distribution. For example, how will pharmacies do the visual inspection required when releasing allogeneic product from a liquid nitrogen tank when performing visual inspection can potentially render product unuseable? The industry must resolve many of these questions. 


	Vol. 33, No. 2
	â¨February 2020
	â¨Pages: 37-39

	When referring to this article, please cite it as A. Shanley, "Managing Risk for Cell and Gene Therapies," 

Vein-to-vein programs are focusing on data access and traceability. 

Managing Risk for Cell and Gene Therapy Logistics

As prices for key therapies continue to increase, the pharmaceutical industry faces a public opinion crisis in the United States, with few prospects for improvement (1). According to IQVIA, high costs prevent 70% of the patients who need medicines from filling, or refilling prescriptions (2). People are demanding that the industry define its mission. Is it helping patients or generating profits?  CEOs might argue that they are doing both, but the public and legislators aren’t buying it. 

	US legislators and public interest groups are focusing on price caps and the use of a global index to rein in drug prices, but this approach “has never led to a system that simultaneously incents innovation and promotes widespread affordability,” writes Wayne Winegarden, senior fellow at the Pacific Research Institute in a recent analysis of drug pricing (3). 

	Industry groups such as the Pharmaceutical Research and Manufacturers of America (PhRMA) and BIO have taken a mainly defensive posture, arguing that price controls will kill innovation, without outlining any clear alternatives for reducing prices. 

	Venture capitalists have stepped into the breach, starting off the new year by advancing solutions to the pricing dilemma that consider the industry’s obligation to individual patients, as well as the need to support innovation. January 13, 2020 saw the public introduction of EQRx, an innovator company based in Cambridge, MA. The company was established in late 2019 by investor Alexis Borisey, formerly managing director of Third Rock Ventures, who has led 15 different biopharma companies, five of which have gone public, and biopharma executive Melanie Nallicheri, who was most recently the chief business officer of Foundation Medicine (now part of Roche), and is now EQRx’s president and chief operating officer. 

	EQRx aims to leverage best practices and new targeted approaches and to focus on known biologies to establish an “innovation engine” that will allow successful development to be replicated, faster and more cost effectively, between different classes of drugs (e.g., from oncology to neurological treatments), Nallicheri says. Using this approach would reduce development failure from the industry’s current 90% level to 40–50%, she says, and would allow the company to offer the therapies at drastically reduced prices. 

	Plans call for EQRx to introduce its first product to patients and healthcare providers within the next five years, Nallicheri says, with 10 additional therapies to follow over the next 10 years. The primary focus is most likely to be on oncology treatments, she says, but would broaden over time. “We’re trying to democratize biopharmaceutical innovation, disrupt the status quo and break the mold,” she says.

	On a more theoretical front, January 20, 2020 saw the publication of 

The Great American Drug Deal: A New Prescription for Innovation and Affordable Medicines

, written by PhD virologist Peter Kolchinsky, founding partner and portfolio manager at RA Capital. Addressing issues that affect all stakeholders (i.e., healthcare systems, providers, patients, payers, and developers), the book outlines approaches that could make drugs more accessible while rewarding innovators for persevering with the cost and challenges of drug development. 

	Both Borisey and Kolchinsky have built their careers on evaluating the degree of innovation, and potential impact, of new companies and therapies. Kolchinsky sees the current state of antibiotic and antimicrobial therapies as a warning to industry and the public of what can happen when the incentive to innovate is lost. 

	Although headquartered in Cambridge, EQRx will be a global company operating from more than one site, and is currently pursuing partnerships with contract development and manufacturing organizations and technology vendors, says Nallicheri. Rather than launching biosimilars or generics, its products will be “equivalars,” therapies that target the same disease and systemic problems as existing drugs, but without violating any intellectual property (IP). EQRx's equivilars represent an intermediate route of “pseudo-genericizing” novel drug classes, says Kolchinsky.  Myovant and Obseva are developing fast-followers to Neurocrine’s gonadotropin-releasing hormone (GDRH) antagonists for treating endometriosis, and multiple companies have developed their own versions of CGRP (calcitonin gene-related peptide) inhibitors for migraine and CAR (chimeric antibody receptor) T cell therapies for cancer, he says. 

	“Prices for hepatitis C virus treatments came down precisely because Abbvie launched a second drug and offered payers a discount.  And even in cases where the list prices in a category are going up, the net prices may be going down due to competition among what the public and Congress often dismiss as me-toos,” he says. Kolchinsky points to IQVIA data showing that net prices in general aren't growing even though list prices are increasing, with pharmacy benefit managers (PBMs) just taking a great and greater cut of the difference.  "Whether they are called equivilars, me-too drugs, or fast-followers, having similar drugs compete on price is a proven model that saves society money, although, in the end, nothing will beat the value of all those drugs just going generic," he says.

	There won’t be any patent violation problems, says Nallicheri.  “IP restrictions are narrower than one might think, and there are ways to avoid running afoul of other patents, either with new products or those created via licensing,” she says. 

Leveraging best practices and new technologies 

	EQRx will combine novel approaches that its management team members have worked with, including precision medicine methods that would allow the company to target the patients most likely to benefit from a specific medicine, to match them up to potential therapies and optimize clinical trial results. Additional technologies center around novel ways to use data, she says, as well as approaches to simplifying the overall supply chain. “These approaches have never before been combined with the goal of improving efficiency and establishing a lower unit cost for each individual medicine,” she says. 

	It would be difficult to apply this approach in an established biopharmaceutical company, she says, given the need to mitigate risks at each step in the value chain.  Having a new company and business model will allow EQRx to take a different mindset going into development, she says, although the risks remain significant.

	One way EQRX will reduce these risks is by starting with disease targets that can be readily identified and are reasonably well understood. Target-based drug development was made possible by results from the Human Genome Project, as well as sophisticated modeling of target structures, says Kevin Noonan, partner at McDonnell Boehnen Hulbert & Berghoff LLP and chair of the firm’s Biotechnology & Pharmaceuticals Practice Group. “Modeling provided an 

analogue to traditional methods such as wet chemistry binding assays and high-throughput screening,” he says. 

	But EQRx’s products will undergo the same regulatory scrutiny and have the same relatively short exclusivity periods that conventional drugs have. “Unless there are additional strategies in play, it is hard to see how the proposed competing drugs will be economically viable,” Noonan says.

	Nallicheri anticipates a great deal of competition. “We’re not naïve about the degree of difficulty involved. Making things simpler is very different from saying something is easy,” she says. Risk will still be there, particularly idiosyncratic risk. 

	However, the company sees major opportunities. Despite the number of therapies available, the industry has not even come close to exhausting the possibilities for addressing potential targets for new treatments, says Nallicheri.  “More than 90% of the medicines available today are not curative, and most new therapies only provide marginal survival benefits over existing treatments,” she says, offering huge potential for developing curative products at a much lower price.

	Questions remain about how readily insurance companies might work with a drug developer that has a novel business model.  At this point, Nallicheri is optimistic. “Payers are looking for solutions, and disruptive solutions that are market-based and that create tighter alignment between supply and demand have a much better chance of succeeding than crude, mandated solutions,” she says. “Besides, as an industry, do we really want that kind of approach?” she asks.

	Also arguing for market-based approaches is Peter Kolchinsky, whose new book aims to clarify misunderstandings about innovation and to start discussion and debate about the role that insurance companies and other payers, patients, healthcare systems, and drug developers and manufacturers should play in reducing drug prices.  Kolchinsy believes that innovation should be clearly separated from mere patent extension and that industry funding be limited to the first 10-15 years after a new drug is developed.  “If we don’t sacrifice the excessively long revenue tails some companies have figured out how to append to old drugs, society will simply squash all revenues down with indiscriminate price controls,” he says.

	The patent system was designed to give finite rewards, like a mortgage, for innovation, he says. “If companies exploit the patent system to achieve infinite monopolies, it might be legal, but it’s at odds with the spirit of competitive, free-market economics (i.e., capitalism) and laws can be changed to block such exploitation of the patent system,” he says.  Kolchinsky proposes a mechanism called “contractual genericization” 

	With contractual genericization, all companies that develop a new drug would have to enter into a contract with a government agency (structured along the lines of the US Biomedical Advanced Research and Development Authority [BARDA]) when they file for approval of their drug. This would ensure that the drug becomes inexpensive once the initial patent period has expired. Using this approach, Kolchinsky says, if the company made a legitimate, useful upgrade to the drug after it launched, it could receive a six-month deferral of the contractual genericization date, just as FDA awards companies six more months of patent exclusivity in exchange for running pediatric trials. 

	“An invention is meant to become inexpensive in the long run. That’s why patents expire. Contractual genericization is just a fall-back for those cases when things don’t play out the way they were meant to because of the complexities of drug development, regulation, and the patent system,” says Kolchinsky. 

	“When I’m funding the development of a new drug, I don’t count on revenues 20 years after approval. I have to discount anything that’s that far away and, because my discount rate is high (i.e., 8–12%), factors that are more than 10-15 years away are essentially irrelevant to my decision. So if you tell me ‘my company’s drug will become very inexpensive after 15 years on the market’, that won’t prevent me from investing in its development. I wasn’t counting on those revenues anyway,” he says. 

	“It’s now time to guide Congress to reaffirm the pro-innovation price control we’ve long had: drugs going generic. That keeps big companies hunting for new drugs to launch to replace their aging ones, which keeps them engaged with small companies, partnering and acquiring them. If big companies are allowed to just kick back and harvest extended revenues from old drugs, they may lose their eagerness to fund innovation, and that’s no good for patients,” he says. 


	Kolchinsky is critical of insurance companies and the role that they have played in creating the drug pricing and access problem. “The drugs that cost hundreds of thousands of dollars are needed by fewer patients than those that cost less. So we should not focus on one drug’s cost and assume that drugs are unaffordable to insurance companies,” he says. “Curing a patient of Hepatitis C for $80,000 is way cheaper than treating patients in hospitals with surgeries and transplants as they gradually die from their infection. So we mustn’t look at the price of any one drug in isolation from all the costs they avert. We spend tens of billions on vaccines each year that spare us much more pain and cost,” Kolchinsky says.  

	Having drugs go generic is in society’s best interests, he says. “If we don’t ensure that high drug costs are a finite mortgage instead of an infinite rent, then Congress will be right to regulate those rents down,” he says.

Public Opinion: Can Pharma Chart a New Course?”

Improving Market Efficiencies Will Promote Greater Drug Affordability

,” Pacific Research Institute, January 2020. 

While the US public and law makers push for price controls, pharma’s venture capitalists have other ideas for balancing innovation and affordability.


Drug Prices: Revisiting the Social Contract

The philosopher George Santayana once wrote, “Those who fail to learn from the past are condemned to repeat it.” This is clearly seen in the way that some pharmaceutical manufacturers approach root cause analysis (RCA) and corrective action and preventive action (CAPA).

	Both RCA and CAPA are closely intertwined. For example, tracking and trending complaints allows companies to identify recurring problems that may not be caught during inspections on the manufacturing floor, says Kim Jackson, product manager at MasterControl, a vendor of quality management and CAPA software. It also allows them to determine the true severity of specific problems or failure modes, she says. Furthermore, CAPA effectiveness checks ensure that RCA investigations are sufficiently robust, says pharma quality consultant Ajay Pazhayattil.

	Both concepts are crucial for establishing continuous improvement and a true culture of quality, and achieving the goals established by International Council for Harmonization (ICH) Q 12. “Efforts always pay off because they prevent supply disruptions and resulting revenue loss,” says Pazhayattil. Addressing them incorrectly, however, can lead to product quality failures as well as noncompliance with current good manufacturing practices (CGMPs). In some cases, particularly for over-the-counter (OTC) drugs, the problems highlighted in warning letters had already been pointed out previously in FDA Form 483s (1), suggesting a need for more senior management involvement and greater investment in CGMP compliance. Inspectors pointed to inadequate validation and conformance to written procedures, as well as deficient RCA and CAPA. In some cases, root causes for batch or product testing failures were either insufficiently investigated or not probed at all (2,3).

	Experts see a number of reasons for this situation, including the need for a more rigorous approach to risk assessment and a better understanding of the cost of poor quality. “If we as an industry could step up and own the cost of poor quality, if we could measure it, we’d be horrified at how much we pay, not just for failing to solve issues but for repeatedly solving the same ones,” says Nuala Calnan, principal of the consulting firm BioPharm Excel and professor at the Technical University of Dublin. “The number of personhours and CAPAs that arise from these investigations is eyewatering. We don’t add them all up and have a trackable number (i.e., ‘that’s how much it cost us not to get to root cause and to keep on failing’),” she says.

	But there has also been a lack of good RCA training at many pharmaceutical manufacturers. In October 2019, the International Society for Pharmaceutical Engineers (ISPE) and the Parenteral Drug Association (PDA) launched their joint Quality Culture guidance series with a module devoted to best practices for RCA (4), in an attempt to address this problem. Its goal is to help shift the industry’s focus from compliance to prevention. “Pharma companies typically cover fundamentals (e.g., how to use tools such as Five Whys and Ishikawa fishbone diagrams), but teaching people how to use tools and templates isn’t training them to look at the underlying science behind RCA decision making and why it is so important,” says Calnan, who is also coleader of ISPE’s quality culture initiative and one of the authors of the new RCA module.

	Advanced training in the techniques and critical thinking required for investigators, and application of proven RCA tools such as mapping, brainstorming, cause-and-effect, and Five Whys are crucial to improving the state of RCA in the industry, says Pazhayattil. “It’s important not to get stuck on using the same methodology each time, since different problems will call for different solutions,” suggests Marzena Ingram, a senior pharma quality manager who comments as an industry professional rather than on behalf of her company.

	Impeding a better approach to RCA at many companies is an ingrained focus on regulatory compliance and being inspection-ready. “Many quality departments must focus on feeding the compliance system rather than considering quality as a broader responsibility. Often, we’re being driven to close out investigations within 30 days because compliance metrics tell us we need to do that, so we’re not addressing root cause,” says Calnan. In some cases, companies may over-respond to smaller quality problems by launching too many full-scale RCA investigations, says Jackson. “When a company goes into full alert, all-hands-on-deck mode for every issue that arises, not only does time get wasted, but employees become jaded and less likely to do due diligence when a real issue presents itself,” she says. “Taking a risk-based approach to escalations and root cause investigations saves efforts for issues that truly pose a risk to patient health and safety,” she says. Jackson suggests that each quality event be investigated first at a lower level to determine the most likely cause, and then evaluated for risk, says Jackson.

	Another fatal flaw in many RCA programs is that the approaches typically address only part of the problem, the symptoms of the problem, or its direct cause, rather than the fundamental reason why it happened. For example, operator error, which is often cited as the reason for quality problems, usually shows that the system of controls in place for the process and product has failed, rather than any single individual, Calnan says.  In other cases, the reason behind the direct cause for one batch’s failure (e.g., a product or labeling mix-up) may be solved without considering the series of events that caused the mix-up to occur in the first place.  In all these cases, companies wind up cutting and pasting the same solutions to each new problem, whether or not they have worked in the past. “Because the root cause hasn’t been addressed, the problems will recur,” Calnan says.

	Success with RCA requires rooting out any potential sources of bias, says Pazhayattil. “It is human nature to pre-empt causes of failures, but theoretical assumptions should never bias an investigator,” he says. For example, an investigator may unconsciously or consciously, focus on the area that he or she is more familiar with (e.g., process engineering or analytical methods). “Generating sound supporting proof is critical to confirming root causes and developing a science- and data-driven investigation method,” he says.

	“Coming into an investigation with a biased opinion, even if you are fairly sure you’re right, is a surefire way to miss the opportunity to investigate with an open mind,” says Ingram. “No ideas are bad ideas, so it’s best for teams to brainstorm, throw all possibilities up on the board and then rule out, systematically and with proper justification,” she says.

	Calnan also sees an overemphasis on consensus-building as impeding the effectiveness of pharma risk management and RCA. With group efforts such as failure modes and effects analysis (FMEA), which require teams to agree on a numerical value to assign to each specific risk, there may be a failure to invite diversity of opinion or different perspectives.

	“Consensus [can become] the enemy of good critical thinking and risk management,” she says. When teams are analyzing a quality problem, Calnan suggests that one or more members play devil’s advocate and ask for data or other evidence to support any hypotheses. “In some cases, companies may be pushing for agreement way too soon, before they’ve spent enough time or applied any real rigor to identifying the real issues that are causing the problem,” she says.

	“There is very little in pharma’s processes that gets us back out there, onto the lab or manufacturing floor, to shake down the cursory one liner that was given as the reason for the problem. As a result, companies often solve for the wrong problem. When they haven’t even identified the right problem, how can they get to its root cause?” Calnan asks.

	Another obstacle to improvement is the fact that the industry doesn’t typically view failures as an opportunity for learning, says Calnan. “All too often, we have to classify failures, include them in an investigation report, and apply a CAPA to them to move them off our desks so that we can get to the next round of firefighting,” she says.

	Trending to pinpoint sources of variability

	Trending should be done regularly, as suggested by FDA’s revised process validation guidance, to find where sources of variation and potential risk and failure are developing, she says. Market complaints, stability data trends, and multivariate analysis of critical process parameters and critical quality attributes are all sources of data for continuous quality improvement, says Pazhayattil.

	In addition to evaluating risk for individual events, monitoring should be put in place to help identify recurring trends that should be investigated, says Richards. If an issue is recurring, or multiple events point to the same recurring cause, the recurrence can be investigated, and a risk assessment performed on the trend. Based on that, a company could continue to monitor, setting a threshold of acceptance, or initiate a full root cause investigation and CAPA, she says.

	When a full root cause investigation is warranted, having a standard methodology can help streamline the analysis, she says. For example, the use of Five Whys provides structure to the investigation and can help contain its scope while ensuring thoroughness.

	Staffing cross-functional teams offers an opportunity to ensure that the right skill sets are available for RCA. “I am seeing more such teams in action today, but many of them still take an ‘us vs. them’ approach,” says Calnan. This often comes out most clearly in the interpretation of such phrases as ‘the quality department is responsible for closing out the investigation.’  While not meant as an excuse to pass the buck, this phrase often results in quality executives having to develop solutions without enough input and insight from the team, including insights from those much closer to the problem,” says Calnan.

	“The belief that the responsibility to assess and address root cause is ‘someone else’s problem’ is a typical pitfall in pharma RCA programs,” says Ingram. “All departments, even those that may not have direct involvement, should play a role in identifying, analyzing, and effectively solving the problem,” she says.

	Training and knowledge management can also be an obstacle in some companies, where subject matter experts (SMEs) are almost empowered not to share knowledge. “SMEs need to see themselves as knowledge stewards and trainers for the next generation, and essential to creating a learning organization,” says Calnan.

	Beyond training and procedures, pharma’s quality metrics themselves must change if RCA and quality programs are to improve, Calnan says.  She points to a need for leading (rather than lagging) metrics that are aligned with overall patient and business priorities. One example, she says, would be measuring the ratio of preventive actions to corrective actions within CAPA systems, and setting a target to move performance to the next level.

	In addition, Calnan says, recurring deviations need to be correctly coded and accounted for. Currently, most companies don’t code errors in a transparent way that would make it easy to see when they recur. “They’re looking for the exact same error to happen on the exact same line or process, rather than asking whether there are common root causes and coding those causes appropriately,” she says. For example, an organization can have one problem in a lab and another on the manufacturing floor that may seem very different yet share the same root causes.

	A number of technologies are available that promise to improve the way pharma handles RCA and to make the process easier. More powerful data analytics approaches are already being used to allow data to be drawn from disparate databases to be used for risk analysis and RCA, says Calnan. “Technology can also be leveraged to gather failure modes and occurrence data to better inform risk assessments, preventing unnecessary RCA activities when a simple mitigation would suffice,” says Jackson.

	Machine learning and artificial intelligence (AI) tools (e.g., predictive modeling for equipment maintenance, manufacturing process control, and real-time release) are also emerging, says Pazhayattil, who is currently working on research into AI in pharmaceutical manufacturing with CalSouthern. However, it will be a long time before these technologies are found routinely on every pharmaceutical manufacturing plant floor, says Calnan. 

	Although modern equipment (e.g., filling equipment that incorporates automation and isolators) can help improve overall operations, Calnan believes that it is not essential to preventing failures. In addition, she says, doing RCA correctly needn’t be expensive. “As an industry, we need to get on with real training. People need to understand the science behind failure, and to understand the differences as well as the connections between risk and failure,” she says.

	1. ECA GMP, “A Look at FDA’s Warning Letters Over the Last Months,” 

, Nov. 1, 2019.
	2. FDA, “FDA Warning Letter to Torrent Pharmaceuticals,” fda.gov, Oct. 8, 2019.
	3. FDA, “FDA Warning Letter to Lupin Ltd.,” 

, Sept. 10, 2019.
	4. ISPE, “ISPE and PDA Guide to Improving Quality Culture, Module 1: Root Cause Analysis,” ISPE.org, Oct. 7, 2019.   


	Vol. 33, No. 1
	January 2020
	Pages: 39-41

	When referring to this article, please cite it as A. Shanley, “Getting to the Root of Quality Problems” 

Focusing on symptoms instead of root causes locks teams into a corrective, rather than preventive, mindset. 

Author | Agnes Shanley

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