By Louis Garguilo, Chief Editor, Outsourced Pharma
It’s like a scene from a Brothers Grimm folk tale. One late afternoon at an industry conference, a cross section of biopharmaceutical leaders gather in a room to take a hard look into a large mirror. It reflects that they — not their suppliers or service providers, as was assumed — are culpable for, and thus can control, many of the product reliability problems in their supply chains.
According to Marla Phillips, co-chair of PharmaLink Conference and director at Xavier Health, “It was a sudden and profound paradigm shift.” The gathering is a culmination of months of investigation into these questions:
Why isn’t the drug product supply more reliable, and why can’t we assure greater consistency in product quality for patients?
Attendees from companies such as Boston Scientific, Cook, Eli Lilly, General Mills, J&J, Kroger, Merck, Meridian Bioscience, P&G, and Shire know the data is conclusive; in fact, the data is culled directly from the manufacturers themselves.
“I remember the meeting clearly,” says Phillips. “The silence when we said, ‘Your own data is showing you are causing the lack of reliability in your products.’ Then you heard comments like, ‘Oh my gosh, it really is.’”
Perhaps some comments said under breath were a bit more colorful.
David Lowndes, senior vice president of supply chain management for Shire, was there. For him, what we’ll document in this article boils down to this: “The industry should achieve the same results in safety, quality, and availability from a fully outsourced supply chain as from a vertically integrated one. Patients, practitioners, and regulators expect nothing less.”
INTEGRITY OF SUPPLY INITIATIVE AND GOOD SUPPLY PRACTICES (GSPs)
“Fixing the supply chain” is a topic where seemingly the amount written about it is inversely proportional to the amount actually done to improve it.
However, what is coming out of the FDA/ Xavier PharmaLink Conference, specifically the discussion about a set of GSPs regarding the Integrity of Supply Initiative, is substantial and important. The data mentioned above was derived via rigorous research and methodology, including detailed cause-and-effect matrixes, Pareto analysis, failure-mode models, and scientific surveying techniques.
The GSPs, being drafted as this article is written, could become recognized by the FDA and regulatory bodies as defining practices for biopharma, food, and medical device companies. For suppliers and outsourcing service providers, this process should usher in improved client relationships and performance. For patients, it means a safer and more reliable drug supply.
The GSPs address three categories determined by the data as the drivers for change. First is Supply Chain Development and Management. There is a need for more rigorous supplier selection processes. Currently, even when implemented, they don’t get followed. Manufacturers then spend years managing unqualified suppliers that shouldn’t be in the supply chain to begin with.
The second is Product and Process Knowledge and Development. The assumption at the outset of the Integrity of Supply Initiative was that suppliers lack reliability and quality. Instead, it was discovered manufacturers don’t understand their own specifications or processes well enough to predict the impact of material variances on final products.
As the title suggests for the third category, Driving Ideal Behavior, manufacturers exhibit negative traits vis-à-vis their supplier networks. One-sided supplier-manufacturer relationships need to change to the “partnerships” often talked about but not practiced. The Initiative recognizes suppliers play an integral role in the success of the final product and bring applied expertise throughout the supply chain. It also stresses manufacturers need strong internal alignment of goals and measurements before engaging suppliers.
CATALYSTS: FDASIA, AND AN OIL SHOCK?
Xavier Health hosts two annual conferences: PharmaLink for biopharma and MedCon for medical device. Discussions at both identified the need for the Integrity of Supply Initiative. Lowndes of Shire sits on the governing board. “The overall initial driver and why I got personally interested was because of FDASIA [Food and Drug Administration Safety and Innovation Act of 2012]. Embarrassingly for our industry, the FDA has legislated for us to pay more attention to our own supply chains,” he says.
He adds, “It was important when the FDA came out with a clear message regarding what they saw as the issues, and their desire to work with us. I think back to the PharmaLink conference when we talked about why FDASIA was being put in place, specifically Title 7 for the safety and quality of supply and Title 10 for drug shortages.”
Both Lowndes and Phillips bring up another seminal scene that unfolded during a 2014 meeting of Initiative leaders. Norman McLennan, VP of supply chain at Sasol Petroleum International (U.K.), presented on his industry’s best practices for working with suppliers.
“He brought the whole upside-down nature of the way we look at our suppliers to light,” Lowndes explains. “Here’s oil and gas saying they treat their suppliers as if they are dependent upon them and need to look after them. Meanwhile, we often behave as though the opposite is true, as if they should be glad to have us as customers even while we are dependent on their performances to meet the profound needs of our patients.”
READY FOR A NEW ATTITUDE… AND MODEL?
Lowndes presides over a fully outsourced supply chain for some Shire products. PharmaLink was a vehicle to interface with the FDA and fellow biopharma companies, and a way to share best practices. He also wants to change the entire supplier-manufacturer business model.
According to Lowndes, the current model was created by “Big Pharma moving late life cycle products out of their plants to make space and harvest as much residual value as possible. The process is frequently led by a part of a procurement organization. CMOs get negotiated down to small margins for large quantities.”
Unfortunately, this leads to a need to standardize production and relationships to drive efficiency. It might have worked in the past with high-volume products, but with the increasing demand for specialty and rare-disease products, more flexibility and agility are required. “In the current model suppliers can’t respond to specific needs driven by our products,” says Lowndes. “They may have 40 other customers and can’t customize for everybody. We’ve created a model that has CMOs trying to make one-size–fitsall offerings to meet demand and stay profitable.”
The status quo is supported by “specs wide enough to drive a bus through.” Lowndes says manufacturers must provide a better understanding of how higher variability on processes and material impacts products. “As it turned out from the surveys and investigation of the Integrity of Supply Initiative,” he says, “we often don’t even share what we are using the material for. This is one reason why we get product variability. We own the specs; it’s not the supplier’s fault.”
SHIRE’S APPLIED SOLUTIONS
Lowndes says the three categories for the GSPs — product and process knowledge and development, supply chain development and management, and driving ideal behaviors — are “pretty logical when you look at them. You want to say, ‘It’s common sense!’” But common sense, it appears, in large part, is not practiced. At Shire, some of what will come out in the GSPs is already in place. Lowndes believes the foundation for a new model is greater product and process knowledge and development — shared between sponsor and manufacturer.
“Shire’s batch failure rate [for an outsourced small molecule supply chain] has gone down from 2 percent to 0.35 percent in a few years. My understanding is that for small molecule products 0.5 percent [in a vertically integrated supply chain] is about best practice,” he says.
Shire shares a knowledge management system with its biggest partners. There’s an overnight exchange of data and trending to proactively address potential issues at the manufacturing site, including such things as operator variability.
“We can identify the probability we will fail batches and the drivers for any excessive predictive failure rates,” he says. “That helps us and the supplier. When failure happens in the old model, it’s just an economic argument about who is accountable.”
Shire adheres to its stringent supplier selection criteria. (Although Lowndes says the ultimate benchmark is simple: “If the FDA walks in there, will they be happy?”) Supplier development is also important. “Issues in the industry creep up as technology and standards evolve,” he says. “We work with suppliers to ensure we keep pace.” For example, Shire recognized that difficulties in hiring and retaining skilled employees were causing production problems at a supplier. Shire sent its HR team to help the supplier with its HR systems, and instituted programs for attracting, retaining, and training staff.
Lowndes says he’s most proud of bringing together Shire’s supply chain partners for its biggest products the same way as if it were an internal supply chain. “We review everything from quality to product strategy and goals. We look at product performance amongst various sites and help each other with challenges.”
Last year Shire conducted a business continuity exercise assuming a part of the supply chain had gone down. Suppliers strategized on how they would cooperate to address the situation so that patients would not be impacted by a shortage.
And for a supply chain, it’s the well-being of patients that counts most. “We’ve actually taken patients to our CMOs to share our motivation with all their employees,” says Lowndes. “In the current transactional model, Big Pharma is more apt to take their procurement group to the supplier.”
LAST CHAPTER NOT WRITTEN
The endings in Brothers Grimm folk tales don’t always turn out well. The Integrity of Supply Initiative is currently developing GSPs to increase the reliability and quality of drug supplies. GSPs will be tied to return on investment and take real-world business realities into account, according to Phillips of Xavier Health. They’ll need to; adoption is not a foregone conclusion. As with any initiative raised to the level of best practices and potentially regulatory considerations, there will be tough negotiating over nuances in meaning. For example, while Lowndes is looking for a new industry model to facilitate flexibility and customization at suppliers, Phillips and others seem inclined to put the onus on the manufacturers for broader industry “harmonization” of parameters and specifications. Maybe a nuance, maybe a mountain.
The best practices themselves could prove controversial. An idea flowing from the aforementioned oil and gas industry is one of having a methodology for suppliers to rate manufacturers (not the other way around). Says Phillips: “If industry is really interested in improving product reliability, and know they are part of the problem, then suppliers should rate manufacturers so they can assess how they are doing.” She quickly adds, by the way, there are ways to ensure the anonymity of the suppliers.
Timing is on the side of adoption. The need for change has become apparent to patients, their doctors, and healthcare organizations. Big Pharma and med device companies appear ready to face their shortcomings and are looking for solutions. The suppliers, certainly not without issues on their side as well, are caught in the middle of an untenable situation. The U.S. Congress has responded by passing FDASIA, and the FDA has come to the table to assist. Add the simple fact that outsourced supply chains, despite current issues, are on the rise.
Phillips says nobody involved in the Initiative will be satisfied with generating a set of GSPs. “These have to be adopted industrywide,” she says. “We’ll engage the manufacturers and trade associations to review and endorse the documents, and work with the FDA to have GSPs included in risk assessment of manufacturers and their suppliers. We’ll give the industry every reason to adopt these measures.”