The Life Sciences Regulatory Climate

Clearing up confusion about quality metrics

In 2015, the FDA produced an original draft of an initiative to create a more objective system of measuring, evaluating, and monitoring both the product and process lifecycle within pharmaceutical manufacturing. Seven years and a few revisions later, confusion remains over exactly how companies should incorporate the FDA Quality Metrics report to measure quality management. The most basic problem deals with the obfuscation of the metrics themselves.

“When it comes to quality metrics there remains no consensus on definitions – for example what constitutes a 'batch'?" posited Gil Roth, president of the Pharma & Biopharma Outsourcing Association (PBOA), a non-profit that works to enhance the regulatory and legislative business interests of CDMOs. “My standard joke for this is that until we all spell ‘harmonization’ the same way, we are not going to make a lot of progress. We need to have a common language.”

The result of this confusion is that even companies that want to comply have difficulty understanding how to. Furthermore, the report’s industry-wide implementation may actually cause more harm than good in terms of operations.

For CMOs and CDMOs that make an expansive range of products, one small slip-up may not be representative of overall operations. For facilities that handle only one product, any problems could ruin the entire operation’s reputation. Roth sees a reputational problem at play: “The FDA has been pushing to create a rating system for all sites, so payers can pressure license holders into revealing their manufacture site ratings. This involves public shaming and splits the goal of what Quality Management Maturity Metrics are supposed to do: incentivizing quality vs. identifying potential quality problems that could lead to shortages. These are issues for the whole value chain, not just CMOs.”

To their credit, the FDA acknowledges that reception of its Quality Metrics could be more positive and has requested feedback from industry stakeholders. In March 2022, the administration established a docket to solicit comments on changes to the reporting program and will accept recommendations until June 7, 2022. Despite its complications, the Quality Metrics Reporting program remains imperative, especially with the heightened sophistication of manufacturing.

Arda Ural, partner and EY Americas industry markets leader health sciences and wellness, acknowledged: “Given the complexity of pharmaceutical businesses – with focus now shifting to biologics, antibodies, and cell and gene therapies—the supply chain cannot afford one misstep, and consequently the product and process quality have become even more important.”

Rather than simply discard the initiative, the administration should continue to collaborate meaningfully with those it affects most directly. The current minimum standard to ensure a manufacturer’s products are of safe and sufficient quality is through compliance with CGMP requirements. Yet CGMP compliance by itself does little to demonstrate whether that company is actively striving to improve its sustainable compliance. Quality metrics can help evaluate supply chain robustness by demonstrating opportunities to improve manufacturing practices. As such, decision makers at contract manufacturing companies would be wise to offer their feedback within the FDA’s designated timeframe to ensure their voices are taken into account concerning future renditions of the initiative.

Drug pricing remains contentious

The issue of drug pricing in the US has always been messy, and the failure to address the issue at the federal level has further complicated matters. As a result, state governments are attempting to independently regulate their jurisdictions. Over the past year, roughly 500 drug pricing bills were introduced by state legislators with the aim of forcing drug price transparency, capping price increases for state payers, and regulating PBMs. For example, West Virginia recently passed a law mandating that rebates and discounts currently offered by biopharmaceutical companies to insurers and other intermediaries will be shared with patients. In 2020, the state’s legislature had passed a bill requiring pharmaceutical drug manufacturers and companies offering health benefit plans to submit pricing information to be posted on the state transparency website.

Anne Pritchett, senior vice president of policy, research and membership at PhRMA, a trade group that lobbies on behalf of pharmaceutical companies, believes such reforms can be beneficial. Speaking on behalf of her organization about its patient-centered agenda, Pritchett said: “There is no doubt that the system needs to work better for patients, and many common-sense reforms are available to policymakers who support helping patients access and afford the medicines they need… We support policies to address market distortions such as 340B reforms and policies like the West Virginia law that requires the rebates and discounts that insurance companies and middlemen receive are shared directly with patients at the pharmacy.”

For Pritchett, such reforms are clear ways to address issues like the high out-of-pocket costs patients see due to the increasing use of deductibles and coinsurance. Yet according to Jason Parish, co-leader of the life sciences industry group at Buchanan Ingersoll & Rooney PC, the consequences of state-level involvement do not mirror these legislators’ intentions: “The result is a complicated patchwork of regulation around the country, and one of the perverse side effects of this is that creating transparency in the system has led to higher prices. The problem of not having federal legislation in place is far bigger than anyone recognizes and has gotten worse throughout the pandemic.”

In addition to leading to purportedly higher prices, many worry that the current regulatory environment is threatening the very ethos of the life sciences industry – its cult of innovation. Speaking of the current policy environment under the Biden administration, Donna LaVoie, president and CEO of LaVoieHealthScience, acknowledged that no real progress has been made on the problem: “The regulation of drug pricing remains an ongoing issue, with many drugs treating rare diseases retailing at prohibitive prices. The trade-off of innovation and drug pricing is a tricky topic and not one that has been resolved.”

James Sapirstein, chairman, president and CEO of First Wave BioPharma, believes that what the general public typically fails to understand about the high price tags associated with the industry is that US companies have a narrow window to monetize their product under patent before restrictions are lifted and generic companies enter the marketplace with alternative formulations. The money gained during this initial period is crucial for gaining capital for new developments. “Although I believe that we should do whatever we can to provide access to drugs for patients that need medications, patenting is very important,” explained Sapirstein. “If a company cannot protect its rights and have the ability to make some kind of money on what it’s developing, there will never be innovation.”

This is a top concern not only for pharma companies but also for certain CDMOs that deal with complex manufacturing processes such as technologies related to drug device combination or complex nanoparticles. While these types of technologies pave the way for future innovative therapeutics that may ultimately help patients, their sophistication impacts the cost of manufacture and thus the cost of goods. “I am concerned the current regulatory environment will make innovation more challenging as it will become increasingly difficult to justify the costs of certain products,” admitted Robert Lee, president of the CDMO division of Lubrizol Life Science, which, for this reason, sticks to technologies he views as scalable and cost-effective.

“Through our partnership with Marley Drug, we sell Zypitamag for just US$1/day and are generating more revenue than if we had insured the product through a PBM. In truth, most pharmaceuticals are inexpensive to make, and it is the insurance that significantly drives up costs.”

Albert Friesen, CEO & Chairman of the Board, Medicure Inc.

Some drug manufacturers have found alternative ways to bring their products to market to lower costs. When Medicure Inc. went to introduce its cardiovascular drug Zypitamag to the market, the company found it challenging to attain insurance coverage given the low pricing of generics. Not wanting to increase the price of the drug in accordance with the desires of PBMs, Medicure Inc. decided instead to sell directly to people who are uninsured or underinsured through a partnership with North Carolina-based pharmacy Marley Drug. “Through our partnership with Marley Drug, we sell Zypitamag for just US$1/day and are generating more revenue than if we had insured the product through a PBM,” commented Albert Friesen, the company’s CEO and chairman of the board. “In truth, most pharmaceuticals are inexpensive to make, and it is the insurance that significantly drives up costs.”

With no clear-cut solution, the problem of drug pricing continues to fester unproductively. The elusive challenge is to find a compromise that allows for an innovative research, development, and manufacturing climate while ensuring patients can afford the medications they need. Looking beyond the cost of innovation, legislators should also pay attention to the earnings made by intermediaries downstream.

Image courtesy of Lubrizol Life Sciences