Investment in quality management can reduce defects and recalls, FDA says

Companies that invest in quality management initiatives can incur lower costs related to defects, waste, and recalls compared to those that do not make such investments, according to a white paper published by the US Food and Drug Administration’s (FDA) Office of Pharmaceutical Quality (OPQ) on Tuesday.

Additionally, FDA stated that investing in quality management can lead to public health benefits, such as improved supply chain reliability and a reduction in drug shortages.

The white paper outlines the potential economic return on investment for companies that focus on quality management initiatives. It explains how these investments can enhance efficiency and lower costs. Additionally, the paper discusses the public health benefits associated with these initiatives.

The paper describes four different levels of investment in quality management initiatives, including minimal investment, suboptimal investment, optimal investment, and overinvestment in quality management.

A cost curve is used to model the relationship between total costs and the level of investment in quality management initiatives. The paper notes that “as investments increase (up to an optimal level), total costs decrease. These decreases are mediated by savings from increased efficiency and decreased waste. Beyond the optimal level, total costs begin to increase.”

Companies that invest little in quality management initiatives may face various costs related to inconsistent product quality and inefficient workflows. These costs can arise from high error rates, excessive rework, delayed lead times, and prolonged cycle times. Additionally, such companies might need to replace products, deal with high employee turnover, and address a large number of customer complaints.

Companies that provide a suboptimal investment may start to see some improved efficiencies. “For companies in the early stages of this journey, investments could include management strategies such as fostering a culture of quality. Quality culture improvements, which can include practices such as advanced preventive maintenance, enhanced employee training, and mature management of supplier quality, have been linked to higher performance,” FDA wrote.

The white paper stated that even manufacturers that provide a suboptimal investment in quality can reap returns. “Even with a suboptimal investment in quality management initiatives, companies can gain returns on investment through decreased costs and increased performance.”

Manufacturers that provide an optimal investment in quality management will see their total costs continue to decrease, while profits continue to increase.

Yet companies that overinvest in quality management initiatives start to see diminishing returns. The paper states that “in this hypothetical scenario, investments no longer generate sufficient increases in efficiency and savings. Optimal output and revenue begin to stagnate, total costs increase, and profits decrease.”

Investments in quality management initiatives can also yield returns for public health. The paper analyzed the vision and mission statements of the top 50 health and pharmaceutical companies and found that all of these companies used language that emphasized public health.

The paper notes that “mature quality management practices can increase companies’ stability and reliability, which can ultimately contribute to a reliable supply of medications that improve patients’ lives and strengthen the health care system.”

The paper highlights that the movement toward advanced quality management practices is gaining momentum in pharmaceutical manufacturing. Various international organizations, such as the International Society for Pharmaceutical Engineering (ISPE) and the Parenteral Drug Association (PDA), along with universities like the University of St. Gallen and consultants such as McKinsey & Company, have initiated programs aimed at measuring and promoting these mature quality management practices. Simultaneously, FDA is also encouraging pharmaceutical manufacturers to adopt these practices.

FDA has long promoted investment in robust quality management systems and has been developing a QMM program since 2019 when an interagency task force proposed the development of a measurement and rating system to measure quality, which would be based on objective indicators to tackle the root cause and potential solutions for drug shortages. (RELATED: FDA Task Force Recommends Rating System for Drug Manufacturing Quality, Regulatory Focus 29 October 2019; FDA proposes to rate pharmaceutical manufacturing facilities, Regulatory Focus 7 April 2022)

In April 2025, FDA announced that it is continuing its voluntary quality management maturity (QMM) prototype program for selected companies.

FDA

Investment in quality management can reduce defects and recalls, FDA says

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