FDA quality focus will definitely mean winners and losers, report says

The FDA intends to change the way it handles plant inspections, using metrics to suggest which plants may be having issues and making more frequent trips to those that appear at risk. While those companies committed to quality may be rewarded for their efforts, a new report warns that those that are already struggling with quality can expect to be more under the thumb of regulators. Those on tight margins may find it more than they can handle.

The report from PwC Health Research Institute points out that the FDA has been ramping up its inspections and penalties for some years. It points out that in 2010 through 2012, the agency cited data integrity violations in warnings 5 times; from 2013 through 2015, that number jumped to 24.

In the meantime, the FDA has changed its entire inspection process, under the mandate by Janet Woodcock, director of the FDA's Center for Drug Evaluation and Research (CDER), that it needs to be focused on quality. It established new metrics and will actually give plants grades that will help it figure out which ones need closer attention to help producers prevent the kinds of manufacturing problems that lead to drug recalls and often drug shortages that can interrupt or prevent care and often lead to higher drug prices.

The Office of Pharmaceutical Quality was formed, and the once-disparate oversight for generic versus branded drugs, and preapproval versus postapproval, have been combined. Now, teams of experts will follow drugs through their life cycle, a process that should be more consistent for the agency and so for drugmakers. The agency is also working more closely with agencies like the European Medicines Agency, Health Canada and others to share info to keep better tabs on companies in far-flung places.

The implications are clear, PwC suggests. Companies are going to have to invest more in manufacturing quality, in maintaining the data that will be needed by the agency to evaluate it and expect the FDA to respond more quickly to potential problems. Companies are already seeing that a problem at one site may lead to follow-up inspections at other facilities. And problems can lead to production interruptions that not only take investments to fix but can deeply affect product sales.

Mylan ($MYL) received a warning letter last year for three plants in India that it had acquired from Strides Arcolab and which had to recall a number of injected cancer drugs because of manufacturing problems. Dr. Reddy's Laboratories ($RDY) also recently received a warning letter for three plants. Other companies have had the FDA look at different plants making the same drug.

And many drugmakers have had production issues hurt financials. In 2013, Sanofi ($SNY) saw its Q3 financials crater because of regulatory issues at a vaccine plant in Canada. Because of the interruption, vaccine sales were off 7.2%, contributing to an overall slide in revenues. Novartis ($NVS) remade its entire consumer health unit after plant problems led to massive recalls that stripped retailers' shelves of its products for months and cut deeply into earnings.

While the new approach sounds like nothing but a cost item for drugmakers, the FDA has promised rewards for those that put quality first, PwC points out: "FDA has said it might allow companies with exemplary quality metrics to fast-track some manufacturing changes after a drug is approved, which could accelerate market access and reduce backlogs. Inspections will become more uniform, though potentially more difficult as specialized inspectors, already familiar with the product and armed in advance with data, can hone in on problems more easily."

- read the report