Regulatory Focus™ > News Articles > Woodcock Proposes Manufacturing 'Scorecard' to Promote Consumer Awareness of Quality

Woodcock Proposes Manufacturing 'Scorecard' to Promote Consumer Awareness of Quality

Posted 05 February 2013 | By Alexander Gaffney, RAC

A new paper published in the journal Clinical Pharmacology & Therapeutics by two of the US Food and Drug Administration's (FDA) top drug regulatory officials argues that the market seems unable or unwilling to demand or accept regulatory quality, which has in turn led to increased shortages of sterile injectable drugs. Also proposed by FDA: a manufacturing scorecard, similar to restaurant scores, that could promote consumer awareness of quality.

The paper, co-authored by Janet Woodcock, director of the Center for Drug Evaluation Research (CDER) and Marta Wosinka, director of economics staff at CDER, comes after mounting drug shortages swept across the US in 2012, particularly in the area of sterile injectable products.

A number of factors were identified by FDA, doctors and Congress as being behind the shortages, including reimbursement rigidity, manufacturing problems and FDA inspection rigor. But an additional set of concerns related to the economics of quality manufacturing have caught the interests of Woodcock and Wosinka.

Consumer Ignorance to Blame for Shortages?

The problem, they say, is that consumers are largely ignorant of potential or actual quality problems, purchasing largely based on price, irrespective of whether one product was manufactured at a world-class facility and its cheaper competitor at a chronically non-compliant one.

"This behavior is likely based on a belief that all marketed products are of equivalent quality," Woodcock and Wosinka wrote. "The resulting lack of reward for quality may encourage manufacturers to keep costs down by, for example, minimizing quality-related investments in areas such as maintenance of production facilities and equipment, quality control testing and oversight, and timely response to early indicators of quality problems."

"Buyers-in this case, hospitals and clinics-consider any given generic products as perfect substitutes, giving manufacturers little room for differentiation," they continued. "Therefore, buyers have not been attuned to differences in the quality of productions. In their minds, the products are of sufficient quality if they are on the market."

Because sterile injectables are inherently more difficult to manufacture since they need to be sterile, a lack of "sustained investment" in a company's manufacturing capabilities and quality operations can lead to systemic quality problems across the sector as companies seek to undercut one another on price-what the authors call a "bad market equilibrium."

Quality Difficult to Quantify, Identify

But even as consumers could stand to benefit from knowledge about whether a drug is compliant with current good manufacturing practices (cGMPs), it's difficult to provide them with an accurate assessment of a company's current conditions. That's because unlike a product given to a healthy individual, sterile injectable drugs are usually given to those who are already quite ill (and often immunocompromised), making it difficult to determine if a product caused a patient to become sick or if it was an unrelated occurrence.

"Few health-care providers consider whether substandard manufacturing could be the source of an adverse event, both because of the general high quality of the US drug supply, in which product defects are quite rare, or because certain adverse events, such as infection, are common in the treated population," Woodcock and Wosinka observed.

Another problem is that drug quality, unlike food quality or the quality of durable goods, is usually difficult to easily determine. Microbial contamination, in particular, can cause serious adverse events but be invisible to the naked eye.

Quality at Root of Majority of Manufacturing Problems, but not all

Which is not to say economic considerations are at the root of all shortage problems, they said. "Sometimes supply disruptions are unanticipated by the manufacturer, as a result of natural disasters or unforeseeable disruptions in the supply of the active pharmaceutical ingredient." These, however, are few in number though sometimes major in effect.

But fully 55% of shortages seen by CDER in 2012 were related to quality issues, while another 20% were related to capacity limitations that are often caused by a lack of investment in operations or aging infrastructure. Nine percent of shortages were caused by discontinuations, which can have their root causes in either of the prior two categories. The remaining 15% of shortages were caused by a combination of increased demand, the loss of a manufacturing site, raw material problems, packaging component issues, and other or unknown problems.

Other economic issues cited by Woodcock and Wasinka include aging facilities too costly to improve, more lucrative production opportunities for a facility, low profit margins that are insufficient to maintain quality, purchasing organizations that include harsh penalties for failing to supply agreed-upon products regardless of quality considerations, reduced demand resulting from the recession, price inelasticity resulting from Medicare reimbursement guidelines (which prevent a product's price from increasing, even in the face of quality problems), high market concentration, highly-specialized facilities required for manufacturing sterile drugs, and low inventory levels held by outside vendors intended to reduce overall costs which increase the severity of supply shocks.

Many of these issues have their root in quality or manufacturing problems, they said.

Potential Solutions

Answers, Woodcock and Wosinka said, will be difficult to come by. Some in Congress have suggested FDA be more lenient and flexible when it finds problems at manufacturing facilities, which would in turn ease shortages by maintaining supplies while the manufacturer works to fix problems. The authors said CDER is already in the practice of doing this, and noted that only the most egregious violations lead to FDA-mandated shutdowns. Many of the current shutdowns were done on a voluntary basis.

But using this discretion too frequently could actually have the opposite of its intended effect: more-and more serious-problems.

"Economic models predict that, in the face of the seeming intertemporal inconsistency created by dual FDA objectives, quality investments would be lower than if the FDA could use preemptive enforcement without regard for disruptions in medically necessary products," Woodcock and Wosinka argue. "This dynamic may further reinforce the economic incentives to minimize quality investments given the nature of competition (based on price, not quality)."

FDA does have at least one option available to it, they said: A manufacturing quality scorecard, similar to how restaurants are now graded using a letter system.

"It would then be up to the marketplace to answer the ultimate question: How much are we willing to pay for quality?" concluded Woodcock and Wosinka.

Read their paper online here.

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