09.08.14
Hedley Rees, consultant, CP editorial board advisor, and author of “Supply Chain Management in the Drug Industry: Delivering Patient Value for Pharmaceuticals and Biologics,” is now working on a project with the gene-based therapy company, Oxford BioMedica (UK) Limited which would apply advanced supply chain principles to the manufacture and distribution of these products. The project received £7.7 million in funding from the UK Government’s Advanced Manufacturing Supply Chain Initiative (AMSCI), which was established to help existing UK supply chains grow and achieve world-class standards.
Over the next two years, Oxford and its consortium partners will develop serum-free, non-adherent manufacturing techniques and expand its manufacturing facility in Oxford to include a third production suite and a fill and finish operation. The overall project cost is estimated at £9.2 million and is expected to take two years to complete. An important part of this project will be developing novel approaches to supply chain management.
Contract Pharma: Tell us a bit about this project.
Hedley Rees: What we’re doing is working with an emerging biopharma company, in collaboration with the Heart of England NHS Foundation Trust and Cranfield University, on a prototype of a “patient-centric supply chain,” trying to understand pharma supply chain needs from the patient’s perspective. We’ve been meeting with physicians, exploring systems and procedures with a future view of supply chains that will include such things as gene therapy, an emerging area with lots of potential. The biopharma company will start building and integrating a fill/finish plant in Oxford later this year.
CP: What is the ultimate vision for supply chain management?
HR: What we need to do is to turn the traditional pharmaceutical development model (Figure 1) on its head, so that we start off with the patient and physician needs first, then build the supply chain strategically to suit (Figure 2). To date, no pharma company has come to grips with the need for development people to connect with other functions and understand their true needs. As a result, the industry is R&D-centric, and remains isolated from the rest of the business and the supply chain. This needs to change, and pharma needs to integrate QbD into the supply chain. Using the old way, in which materials and facilities are determined by development scientists, a lot of damage can be done before the drug gets beyond the lab. Drugs get locked into supply chains that won’t work, optimally, in the real world.
CP: From what you have seen, has recent European and U.S. pharma supply chain legislation had any impact on the way that pharmaceutical companies are managing their supply chains?
HR: Europe’s law (Falsified Medicines Directive) has led to the requirement for safety features on products that are targets for counterfeiting. Companies are working on serialization and authentication, but the timetable for that has moved out a number of times, recently pushed back to mid 2018. There seems to be a lack of ownership, leading to questions of who is actually going to make it happen. We have GS-1 providing the standards and databases. We have big concentrated distributor networks, which don’t really see any significant economic benefit to track and trace. Then there are the hospital and community pharmacies which potentially have to bear the cost and disruption in hardware and software systems. Then, finally, there are the pharma companies, which are extremely varied in size. No one is pulling it all together. It’s a fragmented business, with many small companies and it’s a large and complex undertaking for them. It’s one thing for the government to pass laws and change regulations. It’s another thing for real change to take place.
CP: How about things in the U.S.?
HR: The same situation exists in the U.S., where there is now a timetable for track and trace following enactment of the Drug Supply Chain Security Act (DSCSA). The question is how pharma manufacturers, wholesalers, distributors and pharmacies will fund the whole effort. The implementation timetable for this is longer than the EU’s, but there is general reluctance to take on extra cost.
CP: Have drug manufacturers gotten better at checking and ensuring supplier compliance and product quality?
HR: Good companies have been doing it anyway, and it is questionable whether the “not so good” companies have the wherewithal to make the necessary cultural changes required. One of the big changes with European regulations is that third country manufacturers must be certified that they work to EU standards in order to export to the EU. This is likely to drive more work back onshore, and we expect to have more work going to mainland Europe and U.S. manufacturers and suppliers. Pharma companies are seeing that some of the perceived savings of outsourcing overseas are countered by logistics and quality complexity, so that offshoring can often wind up costing them more.
CP: Do you think the U.S. would ever require certification, as Europe does?
HR: It’s hard to tell. The FDA Safety and Innovation Act (FDASIA) has provided much better oversight of imports into the U.S. and FDA has taken a proactive approach in setting up offices in the local markets such as China. There is also an amazing amount of collaboration taking place between FDA, EMA, MHRA, which can only have a beneficial effect on quality.
CP: Are pharma and biopharma companies, in general, getting better at sharing information with their service providers?
HR: No matter how you look at it, an outsourcing relationship is different from a situation where you do the work in-house. Good companies are getting better, but the whole structure of the industry isn’t helpful in synchronizing sponsor and service provider quality processes and systems. The more multi-stage supply chains you have—pharma has many of them—that involve handovers to third parties, the more difficulty you have ensuring good communication. It’s difficult to maintain quality levels if you haven’t gotten a strategic relationship with your service providers in which you share quality systems and information. Most companies haven’t done that. No matter what companies may say, in the pharma industry today, outsourcing is still largely tactical. It has a long way to go before it can be called truly strategic. That won’t happen until we drive more integrated systems. Pharma is still at 3-Sigma quality level in its manufacturing processes.
CP: But we’re hearing more about “preferred suppliers” and companies adopting partnership models.
HR: They may be getting closer but are they true partnerships? Besides, there has to be a balanced approach. 15-20 years ago there was a push to partnership sourcing. Companies concentrated their business on one supplier, but then they often became locked in. Over time, this approach was discredited because companies couldn’t get the benefits they’d expected and couldn’t drive down costs. With strategic partnerships you have to look at the supply base and ensure that you have a balance of power. Partnerships get to a difficult point where you have to justify work and share business information. Unless you do that, you’re not getting a true partnership at all.
CP: So what is wrong with pharma’s supply chain management practices?
HR: The biggest issue of all is that when drugs are developed, supply chains are built from a technical perspective. By the time anyone thinks of the supply chain for the new drug, the damage has already been done and costs are locked in. Unless we understand what is required using design for manufacturing methods (also known as pharmaceutical quality by design (QbD), this change in mindset can’t happen, and you’ll never get to a simple and effective supply chain, integrated and based on what the market needs.
Over the next two years, Oxford and its consortium partners will develop serum-free, non-adherent manufacturing techniques and expand its manufacturing facility in Oxford to include a third production suite and a fill and finish operation. The overall project cost is estimated at £9.2 million and is expected to take two years to complete. An important part of this project will be developing novel approaches to supply chain management.
Contract Pharma: Tell us a bit about this project.
Hedley Rees: What we’re doing is working with an emerging biopharma company, in collaboration with the Heart of England NHS Foundation Trust and Cranfield University, on a prototype of a “patient-centric supply chain,” trying to understand pharma supply chain needs from the patient’s perspective. We’ve been meeting with physicians, exploring systems and procedures with a future view of supply chains that will include such things as gene therapy, an emerging area with lots of potential. The biopharma company will start building and integrating a fill/finish plant in Oxford later this year.
CP: What is the ultimate vision for supply chain management?
HR: What we need to do is to turn the traditional pharmaceutical development model (Figure 1) on its head, so that we start off with the patient and physician needs first, then build the supply chain strategically to suit (Figure 2). To date, no pharma company has come to grips with the need for development people to connect with other functions and understand their true needs. As a result, the industry is R&D-centric, and remains isolated from the rest of the business and the supply chain. This needs to change, and pharma needs to integrate QbD into the supply chain. Using the old way, in which materials and facilities are determined by development scientists, a lot of damage can be done before the drug gets beyond the lab. Drugs get locked into supply chains that won’t work, optimally, in the real world.
CP: From what you have seen, has recent European and U.S. pharma supply chain legislation had any impact on the way that pharmaceutical companies are managing their supply chains?
HR: Europe’s law (Falsified Medicines Directive) has led to the requirement for safety features on products that are targets for counterfeiting. Companies are working on serialization and authentication, but the timetable for that has moved out a number of times, recently pushed back to mid 2018. There seems to be a lack of ownership, leading to questions of who is actually going to make it happen. We have GS-1 providing the standards and databases. We have big concentrated distributor networks, which don’t really see any significant economic benefit to track and trace. Then there are the hospital and community pharmacies which potentially have to bear the cost and disruption in hardware and software systems. Then, finally, there are the pharma companies, which are extremely varied in size. No one is pulling it all together. It’s a fragmented business, with many small companies and it’s a large and complex undertaking for them. It’s one thing for the government to pass laws and change regulations. It’s another thing for real change to take place.
CP: How about things in the U.S.?
HR: The same situation exists in the U.S., where there is now a timetable for track and trace following enactment of the Drug Supply Chain Security Act (DSCSA). The question is how pharma manufacturers, wholesalers, distributors and pharmacies will fund the whole effort. The implementation timetable for this is longer than the EU’s, but there is general reluctance to take on extra cost.
CP: Have drug manufacturers gotten better at checking and ensuring supplier compliance and product quality?
HR: Good companies have been doing it anyway, and it is questionable whether the “not so good” companies have the wherewithal to make the necessary cultural changes required. One of the big changes with European regulations is that third country manufacturers must be certified that they work to EU standards in order to export to the EU. This is likely to drive more work back onshore, and we expect to have more work going to mainland Europe and U.S. manufacturers and suppliers. Pharma companies are seeing that some of the perceived savings of outsourcing overseas are countered by logistics and quality complexity, so that offshoring can often wind up costing them more.
CP: Do you think the U.S. would ever require certification, as Europe does?
HR: It’s hard to tell. The FDA Safety and Innovation Act (FDASIA) has provided much better oversight of imports into the U.S. and FDA has taken a proactive approach in setting up offices in the local markets such as China. There is also an amazing amount of collaboration taking place between FDA, EMA, MHRA, which can only have a beneficial effect on quality.
CP: Are pharma and biopharma companies, in general, getting better at sharing information with their service providers?
HR: No matter how you look at it, an outsourcing relationship is different from a situation where you do the work in-house. Good companies are getting better, but the whole structure of the industry isn’t helpful in synchronizing sponsor and service provider quality processes and systems. The more multi-stage supply chains you have—pharma has many of them—that involve handovers to third parties, the more difficulty you have ensuring good communication. It’s difficult to maintain quality levels if you haven’t gotten a strategic relationship with your service providers in which you share quality systems and information. Most companies haven’t done that. No matter what companies may say, in the pharma industry today, outsourcing is still largely tactical. It has a long way to go before it can be called truly strategic. That won’t happen until we drive more integrated systems. Pharma is still at 3-Sigma quality level in its manufacturing processes.
CP: But we’re hearing more about “preferred suppliers” and companies adopting partnership models.
HR: They may be getting closer but are they true partnerships? Besides, there has to be a balanced approach. 15-20 years ago there was a push to partnership sourcing. Companies concentrated their business on one supplier, but then they often became locked in. Over time, this approach was discredited because companies couldn’t get the benefits they’d expected and couldn’t drive down costs. With strategic partnerships you have to look at the supply base and ensure that you have a balance of power. Partnerships get to a difficult point where you have to justify work and share business information. Unless you do that, you’re not getting a true partnership at all.
CP: So what is wrong with pharma’s supply chain management practices?
HR: The biggest issue of all is that when drugs are developed, supply chains are built from a technical perspective. By the time anyone thinks of the supply chain for the new drug, the damage has already been done and costs are locked in. Unless we understand what is required using design for manufacturing methods (also known as pharmaceutical quality by design (QbD), this change in mindset can’t happen, and you’ll never get to a simple and effective supply chain, integrated and based on what the market needs.