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Drugmakers Bond On Supply Safety

Rx-360, a consortium of pharmaceutical companies and their suppliers, hopes to foster shared audits

by Rick Mullin
June 22, 2009 | A version of this story appeared in Volume 87, Issue 25

Credit: SAFC
The consolidation of audits is a cost-savings strategy that can also expand quality oversight.
Credit: SAFC
The consolidation of audits is a cost-savings strategy that can also expand quality oversight.

Patient safety has always been a top concern of pharmaceutical manufacturers and the government agencies that regulate them. The ability of producers and regulators to ensure drug safety, however, has been stretched to the breaking point in recent years.

The death of 81 people in the U.S. last year from adulterated heparin is a stark reminder of the Food & Drug Administration’s inability to vouch for the safety of all of the drug ingredients imported from producers in regions where the agency’s oversight is limited and local quality standards are lacking. The threat of poorly manufactured materials, counterfeits, and what FDA has dubbed economically motivated adulteration of drugs has the agency and the manufacturers it oversees scrambling to fortify safeguards.

The focus in industry is on improving the efficiency of manufacturing plant audits, the number of which has grown exponentially with the steady rise in outsourced manufacturing. A new industry initiative, Rx-360, is attempting to coordinate the efforts of drug companies and their suppliers by establishing a framework for shared audits and a clearinghouse for information on drug safety and quality.

Martin Van Trieste, vice president of quality at Amgen and interim director of the group, says the intricacy of the global drug supply chain is just one factor that makes the effort daunting. Rx-360 is also contending with an industry culture that is counter-collaborative. “Our industry is so based on intellectual property that everyone is afraid to share,” Van Trieste says.

Pressure to improve supply-chain monitoring is mounting, however, and suppliers are increasingly willing to surmount these obstacles. “Everyone has been working over the last few years to improve the security of the supply chain because of rampant counterfeiting,” says Gerald Migliaccio, a quality vice president at Pfizer. “The criminal adulteration on top of the counterfeiting—that got everyone to really start talking about it.”

Van Trieste says the discussion turned to action at meetings on supply-chain security sponsored by FDA and the Parenteral Drug Association last year. Baxter Healthcare was coming under scrutiny for marketing Chinese-made heparin adulterated with oversulfated chondroitin sulfate. A group of drug-company quality, supply-chain, and procurement managers discussed how all of their supply chains are vulnerable to intentional product tampering.

“We are designed to monitor Good Manufacturing Practices, not to capture unethical people,” Van Trieste says. “None of us could solve this kind of problem on our own.”

Rx-360 was incorporated as a nonprofit consortium and held a launch meeting earlier this month in Washington, D.C. Van Trieste outlined an agenda that includes implementing auditing standards, training auditors, and establishing the means to share data. Rx-360 will also fund the development of new screening technologies to detect adulteration, according to Van Trieste, who emphasized that Rx-360 will first seek to employ available techniques developed by other industries.

One of the first connections that Rx-360’s advisory committee made was with Fair Factories Clearinghouse (FFC), a consortium that supports collaborative auditing and information sharing on factory safety in the apparel industry. Initiated by the shoe manufacturer Reebok in the wake of Asian sweatshop scandals in the late 1990s, the group faced many of the challenges that the drugmakers have identified in getting their consortium started, says Marianne Voss, FFC’s executive director.

“There was also a strong sense that sharing information on conditions in factories and what FFC members are doing is a competitive issue,” Voss says. “We wanted to understand if there was a possible violation in our developing a platform to share information as a nonprofit organization.”

Voss says the Department of Justice (DOJ) determined that sharing information through FFC’s database does not constitute an antitrust violation, as long as FFC has equal and open membership with optional rather than mandatory information sharing. DOJ also stipulated that FFC members can act unilaterally only on information in the database, and that the organization cannot rate supplier factories as good or bad.

Van Trieste says Rx-360 is studying the use of three types of audits: sponsored audits, where individual members perform audits using their own or Rx-360’s criteria and contribute the results to a shared database; Rx-360-led audits, where several members coordinate a third-party audit that employs the consortium’s standards; and subscription audits, in which members access auditing information in the database and pay a credit to the companies that did the audit.

One benefit of Rx-360 will be cost savings, Van Trieste says. An audit that would cost a single company $7,000–$10,000 could cost $800–$2,000 per participant as part of a shared program. The consortium will also foster more comprehensive oversight of the drug supply chain, he says, helping to head off criminals who know that counterfeiting prescription drugs can earn them orders of magnitude more than making knock-off Gucci purses or dealing in crack cocaine.

Quality auditing and supply-chain management firms agree that the drug industry has much to gain from collaborating on quality and safety. They also note that drugmakers can look to other government and industry efforts for guidance. Gerard Pearce, executive vice president of SQA Services, an auditing firm, points to the Restriction of Hazardous Substances Directive, a European Union initiative that restricts six hazardous substances from electronics products, as an example of manufacturers successfully accounting for their entire supply chains.

“Electronics manufacturers in Europe need to trace pieces of their products back to the chemical element at the point of origin,” he says. “It can be done. The pharmaceutical industry needs to recognize that a lot of other regulated industries have overcome these kinds of challenges.”

Drugmakers are learning this lesson, Van Trieste says, and they are learning to share. He relates that Amgen, recognizing last year that a shortage of the chromatography solvent acetonitrile posed a counterfeiting threat, developed a means of analyzing the chemical’s purity. The company decided that its method would be of use to the drug industry at large and posted it on the Rx-360 website.

Vel Dhinagaravel, chief executive officer of Beroe, a developer of supply-chain security strategies, says the drug industry has made a lot of headway in sharing information with contractors over the past 10 years. During that time, he notes, pharmaceutical chemical production has shifted significantly to outside suppliers. Now that the outsourced supply is moving from the U.S. and Europe to Asia, drug companies are likely to make the progress needed in communicating with each other for Rx-360 to work.

Although FDA does not formally endorse organizations such as Rx-360, it encourages collaboration and has long permitted third-party audits. “Given what we have observed globally in recent years, there is a compelling need for new approaches by industry worldwide to prevent risks to the consumer,” says Richard Friedman, director of the division of manufacturing and product quality at FDA’s Center for Drug Evaluation & Research. “So we tend to be optimistic of the benefit of such collaboration when it balances competing interests to the benefit of greater quality assurance.”

Van Trieste told the meeting attendees in Washington that Rx-360 would be viable with 50 members, including major drug companies, generic drugmakers, biotech firms, and their suppliers. About 150 people attended. Van Trieste says he had originally planned for 35.

In an electronic audience poll, 100% of attendees agreed such a consortium is needed and said they would discuss joining the group with their managers. Of the attendees, 90% said they view the Rx-360-led auditing model as viable, 81% view the subscription auditing model as viable, and 67% view the sponsored model as viable.

“At this point I have not signed anything,” Pfizer’s Migliaccio says. He says he is waiting to learn the final details of Rx-360’s auditing agenda. “But I am committed to the concept of collaboration to ensure we have a secure supply chain,” he adds.

Tom Biel, vice president for quality and regulatory affairs at SAFC, the fine chemicals division of Sigma-Aldrich, says his firm may work with Rx-360. Biel, who attended the meeting, says participation would be an extension of Sigma-Aldrich’s Enhanced Quality Profile program, which performs in-depth quality audits on key products. A standardized format for auditing, such as Rx-360 is proposing, he says, has the potential to cut days from the auditing process.

“We have to look at alternatives,” 
Biel says. “We can’t keep doing this by 


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