Globalization and its Effects on Regulation of the Pharmaceutical Supply Chain


Globalization in the pharmaceutical world generally is a good thing, except when a manufacturer produces an inferior drug substance or drug product that threatens the safety and well-being of American consumers. Safe, effective drugs are a priority for the U.S. Food and Drug Administration (FDA), which recently tightened its focus on the production of raw materials and the manufacturing of finished drugs available for sale in the United States, no matter where those manufacturers are located in the world.

However, holding all foreign manufacturers accountable for delivering to the same standards enforced for domestic and European drug manufacturers has historically been easier said than done. The concern and reality is that the renewed focus on quality standards puts increasing pressure on Western manufacturers as well, while slowly raising the bar on the foreign manufacturers who really have been beyond the reach of the FDA in many cases. We’re taking baby steps here with foreign manufacturers, when instead we should be taking giant steps.

Standards of admission for imported drugs, the need to identify all unique manufacturing facilities, and the move toward risk-based inspections will all help drive safety and quality throughout the supply chain, but the problem is that they can’t happen fast enough. The inspection goals of the newly enacted GDUFA standards are expected to take a full five years to fully implement. What happens until then?

Already there is a shortage of life-saving drugs, particularly tried and true ones that have been around five, 10 or even 20 years. They may not be as profitable as some of the newer medicines, but they work and their side effects and impact on long-term health are well-documented. Everyone loves a $2.00 generic prescription but what is its real value when it is desperately needed but cannot be obtained? According to the American Society of Health-System Pharmacists website, some 240 drugs are currently in short supply. The list will only grow as manufacturers in the West redirect to more profitable drugs or exit the manufacture of smaller volume products altogether. For them it is a balancing act of conforming to new FDA regulations that increase the cost for these older products which don’t generate enough revenue to justify the costs of increased regulatory scrutiny.

Some manufacturers will walk away completely from producing certain classes of drugs, e.g., cancer drugs that help relatively small numbers of people. Instead they may focus on drugs that help thousands or millions of people with chronic conditions such as heart disease and diabetes.

Still others might see a new business opportunity in addressing current drug shortages. They will have to determine if their business model can withstand the long reviews and financial risks associated with getting new applications approved by the FDA for products on the shortage list. These are long-term investments and typically small volume products. By the time the product gets approved, another approval could be granted or the original manufacturer may get back into the product once they solve their regulatory issues. The end result is that the original business opportunity evaporates. Again, to use the cancer example, manufacturers will also have to evaluate how equipped they are to deliver a cancer treatment, which by its very nature is very toxic and typically manufactured only in small batches.

Determining what drugs will be available tomorrow is difficult to project, even as manufacturers are looking at one drug class at a time and responding, accordingly, in different ways. Potentially moving overseas the manufacturing of drugs in shortage can help address the supply side. But before the real teeth of enhanced regulatory scrutiny are in effect, potentially millions of drugs can enter the country from uninspected facilities that may or may not self-regulate their quality and production. Add to this the fact that GDUFA – which regulates in part the up to 80 percent of active ingredients that are manufactured oversees — is still five years away and you can see there is huge risk of substandard drugs or inferior individual components violating the current good manufacturing process (cGMP).

We know an organization with the breadth and size of the FDA moves more like an ocean liner, not like a nimble catamaran. So it imperative that all of us take appropriate steps together to ensure smooth sailing in the production and delivery of safe, effective drugs that can be made available while appropriate quality controls and regulations are fully implemented. Here are my top three suggestions:

  • Prioritize the applications for products that are in short supply and reduce the review cycle and thus reduce the business risk for new manufacturers.
  • Let’s implore the FDA to do a review of the policies, procedures and standards for older drugs, to see if they could be streamlined and therefore produced more cost-effectively by manufacturers. Obviously, high standards are necessary, but let’s implement what is necessary and insure that proper GMPs are being followed.
  • Prioritize and streamline site transfers so larger manufacturers can partner with smaller ones when it’s not cost effective anymore to produce the product by the larger manufacturer.

We all should consider the ramifications of inexpensive prescriptions, increasing regulatory hurdles, the higher costs of doing business, drug shortages and the potential negative impact of drugs/ingredients supplied from overseas facilities that aren’t inspected. Globalization surely creates its own challenges, but when combined with these issues, it puts all of us at risk at failing to deliver medicines that have the greatest impact on the public health.