Breaking the Rapid Microbiological Method Financial Barrier: A Case Study in Return on Investment and Economic Justification

September 1, 2009

BioPharm International

Volume 22, Issue 9

A case study implementing rapid microbiological methods.

ABSTRACT

The primary reason for the pharmaceutical industry's hesitancy to adopt rapid micobiological methods (RMMs) for environmental monitoring is a lack of understanding of how to assess the cost of implementing such methods. This article explains how to apply a financial cost model to RMMs and presents a case study of three manufacturing facilities of different sizes. For the three facilities evaluated, the year 1 return on investment for implementing an RMM ranged from 183 to 365%, and the payback period ranged from 3.3 to 6.6 months.

The FDA's Process Analytical Technology (PAT) guidance document describes a regulatory framework that encourages the development and implementation of innovative approaches in pharmaceutical development, manufacturing, and quality assurance.1 One of the key opportunities the document offers is the introduction of new analytical technologies intended to measure, control, or predict product quality and performance. The goal is to design and develop well-understood manufacturing processes and facilitate continuous improvement and operational excellence. Many in the industry regard in-line and on-line physical and chemical technologies as the primary enablers in the PAT toolbox. However, alternative microbiology platforms, such as rapid microbiological methods (RMMs), are now being implemented under the PAT umbrella for ensuring that a state of microbial control is maintained during manufacturing. Although a number of firms have already validated RMMs, it is unfortunate that the majority of the pharmaceutical industry continues to show apprehension about embracing RMMs. Concerns regarding the availability of validation strategies and regulatory acceptance have, for the most part, been satisfied through numerous guidance documents2–4 as well as by presentations and papers provided by regulatory authorities.5–7 It is this author's view that the primary reason for the industry's hesitancy to adopt RMMs is a lack of understanding of how to apply financial cost models to economically justify the implementation of these alternative technology platforms. This view is supported by the understanding that manufacturing site heads and production managers want to be convinced that the return on investment (ROI) is sufficient to substantiate the time and expense involved in qualifying and installing RMMs in their facilities.

(Jeff Maloney/Getty images)

There are obvious costs involved with the purchase, qualification, and implementation of RMMs. Depending on the capital expense and the process required to adequately validate a system for its intended use, the costs associated with implementing an RMM can be significant. However, it is important to fully understand all of the financial components that should go into an economic analysis before a decision is made about whether to proceed with a formal qualification program. These components may include the costs associated with the existing method, the costs associated with the initial capital investment of the new method, and the long-term financial benefits (cost savings and avoidances) that the RMM may provide. Dollar amounts for each of these components can then be used to develop a comprehensive economic analysis and business case for introducing the new method.

The three key steps for considering the implementation of an RMM are as follows:

1. Review existing conventional methods and recognize potential technology, quality, and business opportunities for implementing an RMM.

2. Understand the technical and business benefits of RMMs.

3. Develop a business case for RMMs.

Below, we explain these steps, and provide a case study to illustrate them.

REVIEW CONVENTIONAL METHODS AND RECOGNIZE OPPORTUNITIES FOR IMPLEMENTING AN RMM

Manual sampling and resource-intensive operating procedures are responsible for much of the cost associated with conventional, growth-based microbiology methods. In addition, the time to result when turbidity is visually detected (in liquid media) or colony-forming units are enumerated (on agar plates) can be quite long. Furthermore, microorganisms that are stressed, damaged, or in a viable but nonculturable (VBNC) state may or may not replicate when cultured on artificial media. In the event of a positive result or an out-of-specification finding, which could occur anywhere from a few days to more than two weeks after the original sample was analyzed, the opportunity to respond to the excursion in a timely manner has been lost. In addition, the effect of an environmental monitoring (EM) excursion on the manufacturing process could be significant, including holding product, rejecting a batch, or shutting down a manufacturing line. In contrast, obtaining these results faster, or even in real time, through RMM, would allow corrective action to be taken quickly, thus reducing the number of lot rejections and plant shutdown time for EM investigations. For these reasons, companies should explore the use of RMMs that may decrease the overall costs associated with conducting microbiology testing while at the same time continuously improving the manufacturing process, finished product quality, and operational efficiency.

UNDERSTAND THE TECHNICAL AND BUSINESS BENEFITS OF RMMS

When selecting an RMM, it is important to understand the technical and business benefits of implementing the new technology for its intended purpose. Technical benefits may include a significantly faster time to result (or even getting results in real-time); greater accuracy, precision, sensitivity, and reproducibility; single-cell detection; enhanced detection of stressed and VBNC organisms; increased sample throughput and automation; continuous sampling; and enhanced data handling and trend analysis. For RMMs that can provide results in real-time, the response time to an adverse trend or excursion can be immediate, which is not possible for conventional growth-based procedures. Implementing RMMs also may provide a company with numerous business benefits, including, but not limited to, reduced time and costs for product release testing; a reduction or elimination of off-line assays, laboratory overhead, resources, and equipment; a lower cost of product sold; decreased resampling, retests, and deviations; reductions in rework, reprocessing, and lot rejections; and a reduction in plant downtime.

DEVELOP A BUSINESS CASE FOR RMMS

Once a review of available RMM technologies has been completed, and when one or more technologies are identified that meet the technical and business benefits for the intended application, a business case for implementing the new method should be developed. This will include the use of financial models that can compare the overall costs associated with the current microbiology method with the costs and savings associated with the purchase, qualification, and implementation of the RMM. The goal is to obtain the necessary economic justification that manufacturing site heads will need to initiate the RMM project. Listed below are examples of the types of operating costs and potential savings that can be incorporated into a financial model.

Potential operating costs associated with a conventional growth-based method:

  • cost of consumables, regents, and supplies

  • total sampling, preparation, testing, data handling, and documentation resource time

  • cost of labor (salary and benefits)

  • media, reagents, and consumables disposal costs

  • laboratory equipment depreciation, calibration, and qualification

  • overhead for laboratory and storage space

  • data management and record retention

  • preventive maintenance and service contracts

Potential investment and operating costs associated with an RMM:

The same as for conventional methods, plus:

  • capital costs during the initial investment

  • technology and software training

  • system qualification and method validation costs

  • regulatory filing costs, if applicable (changes to in-process microbiological methods or methods that are not specified in an NDA or marketing authorization may not require a formal regulatory submission to implement the change)

Potential cost savings and cost avoidances associated with an RMM:

  • reduced testing and finished product release cycle times

  • reduction or elimination of laboratory equipment and overhead

  • lower headcount

  • reduced repeat testing and investigations, lot rejection, reprocessing, and rework because EM excursions can be detected and acted on more quickly

  • reduction in plant downtime

  • increased yields and lower cost of product sold

  • reduced raw material, in-process, and finished goods inventory holdings

Each of the identified operating costs and cost savings should have an associated monetary value that can be added up and entered into an appropriate financial model. Two financial tools that can be used to calculate whether there is a financial advantage for implementing an RMM include the ROI and the payback period models. An overview of each model is provided below.

Return on Investment (ROI)

ROI is the ratio of money gained or lost on an investment relative to the amount of money invested. For RMMs, the cost of performing the conventional method (CM) is compared with the cost (and savings) of using the new method. The information is reported as a percentage and usually represents an annual or annualized rate of return. The ROI is calculated using the following formula:

Payback Period (PP)

The PP is the time required for the return on an investment to "repay" the sum of the original investment. In the context of implementing an RMM, this would be the time (usually in years) required to realize sufficient cost savings to pay for the initial investment of the RMM capital equipment as well as for qualification and implementation activities. The formula used to calculate the PP is the inverse of the ROI formula:

A CASE STUDY IN THE USE OF ROI AND PP CALCULATIONS FOR JUSTIFYING AN RMM

A pharmaceutical company operates three parenteral manufacturing facilities using isolators and conventional cleanrooms. The company is exploring ways to implement an RMM that will provide real-time, in-process monitoring capabilities while realizing significant cost savings. After a review of current microbiology methods, the company identified active air monitoring as its most expensive and time-consuming activity, and identified the BioVigilant IMD-A (Tucson, AZ) as a potential replacement for its existing agar-based air sampling procedure. The company initially assumed that it could realize significant cost savings with this particular RMM because the system eliminates manual sampling and laboratory testing, has no consumables, reagents, media, or supplies, and can run continuously during the entire manufacturing campaign.

The company was also interested in the potential technical benefits of the system, because results are obtained in real-time for both viable and nonviable particles. The company gathered monetary values for each operating cost and cost savings component for use in its ROI and PP calculations, and applied these calculations to the three manufacturing facilities. A brief description of each facility and its EM program for active air samples is provided below, followed by a detailed overview of each financial component.

1. A small fill–finish facility that processes 40,000 active air samples per year. Manufacturing is performed in conventional cleanrooms. This site rejects one $300K product lot per year because of EM excursions on conventional media and shuts down the line to conduct an EM investigation.

2. A medium-size fill–finish facility that processes 70,000 active air samples per year. Manufacturing is performed in isolators. The site rejects one $1M product lot per year because of EM excursions on conventional media and shuts down the line to conduct an EM investigation.

3. A large fill–finish facility that processes 100,000 active air samples per year. Manufacturing is performed in conventional cleanrooms and the process is personnel intensive, resulting in the rejection of three $500K product lots per year because of EM excursions on conventional media. This site also shuts down a line three times per year to conduct EM investigations.

Financial components for operating costs, cost savings, and investments

For each of the three facilities, all of the financial components that needed to go into the ROI and PP models were identified and tabulated. Annual operating costs for both the conventional method and RMM are provided in Table 1. The first year operating costs for the RMM are 10 to 15 times lower than the operating costs for the conventional method because of the significantly greater amount of labor required for the conventional method. In the second and subsequent years, the difference in operating costs is slightly reduced because maintenance and service contracts will be required for the RMM. However, the overall operating costs for the RMM are still 5 to 8 times lower than the operating costs for the conventional method.

Table 1. Annual operating costs (in US dollars) for conducting environmental monitoring using a conventional method (CM) and a rapid microbial method (IMD-A) for three parenteral manufacturing facilities of different sizes

Table 2 outlines the annual cost savings when using the RMM instead of the conventional method for environmental monitoring. By reducing lot rejections and plant downtime resulting from EM excursions, annual savings amount to $740,000, $3.5 million, and $3.4 million for facilities 1, 2, and 3, respectively.

Table 2. Annual cost savings (in US dollars) resulting from the use of the IMD-A for environmental monitoring (EM)

The annual RMM investment costs are detailed in Table 3. In the first year of implementation, the majority of these costs include capital equipment purchases and qualification, and range from $1.4 million to $4.4 million for the three facilities. In the second and subsequent years, the total cost is $5,000 for each facility, and this represents additional annual training for new operators.

Table 3. Investment costs (in US dollars) for a rapid microbiological method, Biovigilant IMD-A.

Return on Investment and Payback Period Calculations

Using the formulas provided above, the company calculated the ROI and the cost savings for each of the three facilities for the first year, the second year, and subsequent years, and the total ROI and cost savings for five years. The payback period PP was also calculated. A summary of the results is provided in Table 4. As shown in the table, the first year ROI ranges from 183 to 365%, and the five-year ROI ranges from 867 to 1778%. The payback period ranges from 3.3 to 6.6 months.

Table 4. Return on investment (ROI) and payback period (PP) calculations for the rapid microbiological method.

SUMMARY

The ROI and PP data generated for each facility in the case study above clearly demonstrates sufficient economic justification for initiating a qualification and implementation plan using the chosen RMM as an alternative to conventional active air sampling. In addition, the payback period is relatively short because of substantial cost savings during the first year of implementation. From a business perspective, the use of this RMM would directly improve the company's bottom line and should satisfy the financial expectations of site management. Furthermore, the models presented in this manuscript may be used to develop an economic assessment of any RMM implementation proposal. A robust financial assessment, coupled with a comprehensive validation plan, is the key to a successful RMM implementation strategy and the continuous improvement of manufacturing processes and efficiencies.

Michael J. Miller, PhD, is the president of Microbiology Consultants, LLC, Tampa, FL, 585.281.6078, mjm@microbiologyconsultants.com

REFERENCES

1. US Food and Drug Administration. Guidance for industry: PAT–A framework for innovative pharmaceutical development, manufacturing, and quality assurance. Rockville, MD; 2004 Sept.

2. PDA. Technical Report 33. Evaluation, validation and implementation of new microbiological testing methods. Bethesda, MD: Parenteral Drug Association.

3. United States Pharmacopeia 32–National Formulary 27. General Information Chapter <1223>. Validation of alternative microbiological methods. 2009. Rockville, MD: US Pharmacopeial Convention,

4. European Pharmacopoeia 6.4. Informational chapter 5.1.6. Alternative methods for control of microbiological quality. 2009. Strasbourg, France: European Directorate for the Quality of Medicines (EDQM).

5. Uratani B. Connecting science and regulation. 2007 PDA 2nd annual global conference on pharmaceutical microbiology. 2007 Oct 31: Bethesda, MD.

6. Hargreaves P. Revised EU GMP Annex 1. 2008 PDA/EMEA Joint Conference. 2008 Feb 20; Budapest, Hungary.

7. Hussong D, Mello R. Alternative microbiology methods and pharmaceutical quality control. Am Pharm Rev. 2006;9:62–9.