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Q. Are US FDA guidelines stringent ?

A.

While cutting-edge scientists and slick marketing teams enjoy huge budgets in the pharmaceutical industry, manufacturing has always been the poor relation.

But executives have realized they must pay more attention to production as more companies have run into serious problems with US regulators about the condition of their factories. Now the Food and Drug Administration is planning to overhaul its rules on manufacturing standards to give it greater chance of detecting problems. This new regulatory spotlight on manufacturing is adding to drug companies' headaches, which include the loss of patent protection for many important drugs and political pressure to reduce prices.

"This has become the FDA's crusade", says CJ Sylvester, an analyst in New York. "There has been an increase in inspections and they want more".

Companies tripped up by manufacturing problems include Schering-Plough, which was fined $ 500 million this year after the FDA found quality violations at several plants. Eli Lilly could face delays to product launches over the next 2 years if it does not quickly resolve issues raised by inspections of its Indianapolis plant. And Johnson & Johnson has been accused of falsified records of manufacturing problems at its Puerto Rico facility.

"The FDA has always been a very tough agency", said Franz Humer, Roche's chairman. "Clearly they have become much more stringent in the last few years on manufacturing". For its part, the FDA is coy about whether it has clamped down. Individual factory inspections have fallen from 4,300 in 1980 to 1,600 last year. But the problems the industry has faced results partly from a more pro-active regulatory approach. Once the FDA might have inspected a particular product line to identify problems. Now it is looking into manufacturing systems across the product range. Inspectors comb through central systems, such as the computer network or quality control documentation, in search of lapses in standards. They also interview employees to check how much training they have received. The new FDA rules, to be developed over the next few years, will allow the agency to conduct inspections that concentrate on areas of potential risk.

A new computer system for monitoring manufacturing issues, which has been used in a pilot project, is about to be rolled out across the country. "We believe this is going to give us a bigger bang for our buck", said Michael Rogers, director of the FDA's field investigations unit.

The agency also pledged to adopt a more predictable and consistent approach. The industry has long complained that rules can vary between regions and some guidelines are vague. The new rules will also encourage companies to introduce more automated production systems with sensors to monitor quality.

But many observers say the companies themselves are to blame following a prolonged period of under-investment. Research shows that companies such as Schering Plough and Eli Lilly invested considerably less than the industry average in capital expenditure which in pharmaceuticals means spending on manufacturing during the mid-1990s. "The companies that have announced manufacturing problems have all seen capital expenditure as a percentage of sales decline substantially", says Duncan Moore. The spate of mergers in the industry might also have played a role. Some analysts think the constant deal activity distracted executives from such basic issues as manufacturing standards.

Authors: Christopher Bowe and Geoff Dyer
Source: The Business Standard