FDA proposed a new rule in December 2014 to amend its prescription drug and biological product labeling regulations. The rule applies to the electronic distribution of package inserts (PIs), which are currently provided in paper form with drug packaging for the benefit of healthcare professionals (HCPs) and consumers. The PI contains the latest information about the approved uses of the prescription drug or biological product, as well as information necessary for the safe and effective use of the product. When biopharmaceutical companies market their products in the United States, they will be required to provide the PI in an electronic file and will no longer be allowed to distribute it in paper form with the packages. FDA has proposed an effective date of six months after the publication date of the final rule in the 

 and a compliance date of two years after the date of publication of the final rule to give manufacturers time to comply (1).

	Organizations will need to find a way to fit the proposed change into their strategic labeling initiatives aimed at improving operational efficiencies and profitability, while reducing complex and disjointed processes. As the rule will be applicable only in the US, other regulated and emerging markets will still have paper-based PIs as standard practice.

	As other regulatory agencies continue to implement an evolving set of rules regarding the format and presentation of the package insert, companies will now have a double challenge. In the short term, they need to put systems and processes in place to ensure compliance with emerging and different standards around the world. In the long term, these companies need to make strategic decisions to reduce the complexity and cost of managing their global labeling content. This article discusses ways to alleviate these concerns through solutions that automate and integrate time-consuming, error-prone activities so that organizations are able to improve efficiency, quality, and content consistency across a broad range of products while still ensuring local regulations are met.


	FDA has spent several years developing the proposed ruling, which would be applicable only to pharmaceutical products that are marketed in the US. Under Section 1140 of the 2012 Food and Drug Administration Safety and Innovation Act (FDASIA), legislators called on the Government Accountability Office (GAO) to study the pros and cons of scrapping the paper-based labeling for drug products and, instead, moving to an electronic system (2, 3). The study found both likely benefits and potential downsides to an electronic-based labeling system.

	There are several benefits to the proposed rule. FDA’s initiative to institute electronic labels in the US is aimed at ensuring the most current information is made available to HCPs and patients as quickly as possible. An electronic PI file will include the most up-to-date safety and efficacy information in real-time, which is not always the case with paper PIs, as updates take time to be reviewed, approved, printed, and distributed to the public. The electronic format will reduce the time taken for updates to get to patients and will enhance the accuracy of the labels.

	The existing process of developing a product label is human resource intensive and, therefore, requires extensive reviews and proofreading to ensure that the printed label is error-free. All of these factors significantly add to cost and time, not to mention the possibility of introducing manual errors.

	Several biopharmaceutical companies have expressed interest in distributing labels electronically. These companies think that it’s the right time to transition to an electronic PI from a static, potentially outdated paper version on pharmacy shelves and in the warehouses, to have the most current information electronically through a publicly available repository. In addition, it is estimated that the biopharmaceutical industry will save between $52 million and $164 million annually due to the proposed rule (4). FDA has come under fire, however, from patient safety groups and US legislators, who argue that the agency's attempt to require certain drug-labeling information to be distributed electronically could put patients at risk.

	The proposal does have disadvantages. Consumers, especially the elderly, might not know how to access the drug label online or might not have Internet access. Also, counseling patients might become more difficult for doctors who would no longer have access to printed package inserts (2,3). If patients do get a printed PI from their doctor the first time they are prescribed a medicine, they may continue to go by it even if the label has been updated with new information in electronic format.

	FDA would also need to amend the language that currently requires PIs to be located "on or within" the drug packaging, which would be a significant change. Other forms of patient labeling information, such as medication guides (MedGuides) or promotional labeling, however, are already allowed to be sent electronically (3).

	The proposed rule would apply to manufacturers, applicants, and persons who market prescription drugs that they regard as not subject to section 505 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 355). The rule aims to avoid the vast majority of the potential downsides identified in GAO's report by focusing on prescribing information intended for healthcare professionals.

	In proposing the new rule, FDA is ensuring that the most current PI for prescription drugs will be available and readily accessible to HCPs at the time of clinical decision-making and dispensing. The rule also requires that a product’s immediate container label and outside package include a statement directing healthcare professionals to FDA’s labeling repository to view the electronic version of prescribing information.

	Under the new system, product manufacturers or applicants will be required to update the product labeling at the 

 every time there is a change in the labeling. They would also be required to verify that the accurate, complete, and up-to-date labels are posted on the FDA website. Manufacturers would also be required to set up a 24/7 toll-free number where healthcare professionals could request paper copies of the prescribing information. This would ensure that persons without Internet access could still access prescribing information.


	The proposed rule from FDA has met with considerable criticism (5). Some safety groups, including the Institute for Safe Medication Practices (ISMP), have called the proposal unworkable in its current format. They state that the labeling repository website is not ready to use for locating drug information. The ISMP argue that the system is flawed and could potentially lead to harmful or fatal medication errors.  

	Additionally, another concern noted in many comments to FDA is that the electronic prescribing rule could impact the way in which physicians interact with and treat patients. ISMP noted that physicians frequently reference the printed materials and that change could lead to disruption in their workflow and even delay care during an emergency. Faced with a large amount of interest in the proposed rule, FDA announced on March 9, 2015 that it would extend the comment period for the proposal until May 18, 2015.

	US legislators have also written to FDA expressing concern about the proposed rule, highlighting that the paper inserts are an important tool for pharmacists and HCPs. They expressed concerns that the proposed rule could harm those living in rural areas where Internet access is poor.

Ensuring efficiency and compliance in product labeling


	Biopharmaceutical product labeling is specific in its content, especially with respect to efficacy and safety data and adverse effects. Additionally, the label needs to comply with country-specific regulations governing the product. A product label from an innovator pharmaceutical company, prior to commercialization, is drafted by the pharmaceutical company and is reviewed and approved by the applicable regulatory agencies, based on regulations and guidelines.

	On the other hand, a generic product label is based on the innovator label having already been approved by the regulatory authority. While a generic-drug company’s portfolio may include 300 products, the Reference Listed Drug (RLD) label could be sourced from 20 to 30 different companies, compounding the complexities in referencing and tracking of RLD updates. Labels are an essential part of the marketed product because they provide comprehensive information about the drug. They also represent a significant percentage of the manufacturing cost and commercialization risk.

	Moreover, a product with a wide geographical footprint would require labels in each country/region to comply with local regulatory guidelines. These multiple labels increase the risk of having non-uniform information disbursed globally for the same product. Each label update involves input from multiple stakeholders like regulatory, clinical, legal, quality, and manufacturing personnel. The sheer number of reviews makes data management, version control, and audit trails prerequisites to the labeling process.

	In conjunction with compliance to the requirements of multiple regulatory agencies, there is a constant need to address the challenge of ensuring consistency of content across a broad portfolio of products across multiple regions (6).

	FDA’s proposed rule will require manufacturers of prescription drugs to ensure that the electronic label is provided to FDA each time its content is changed; this requirement would result in pharmaceutical companies having to manage an overwhelming number of labeling records that are difficult to keep synchronized globally. It therefore becomes even more imperative that pharmaceutical companies make fundamental changes to their operations to adapt to the growing complexity, minimize risk, and improve efficiency of the labeling process, so that label updates are made in real time, globally.


	Labeling as a managed service is an externally managed, fully integrated platform of services, processes, and technology enablers that cover the entire labeling continuum. The service includes expert labeling resources that execute global labeling activities on behalf of a sponsor or generic-drug company; labeling processes that are monitored via key performance indicator metrics (KPIs) on performance, quality, and compliance goals; and preconfigured, ready-to-use technology solutions to support workflow and content management activities. A best practice labeling managed service model has benefits of efficiency, scale, and quality. Clients can use qualified external resources, processes, and integrated technology solutions to accelerate label development, updates, and implementation. Leveraging local and regional labeling knowledge and delivery capabilities aids in scale up. A managed service allows a client to forgo investments for internal resources and technology requiring optimization and customization and to maintain flexibility for scale-up and scale-down to manage costs.


	Successful organizations require a streamlined workflow-management model that includes document management, version control, and standardization/synchronization of processes such as labeling and artwork content across geographies.

	Having a portfolio of products across multiple regions means organizations must comply with the requirements of multiple regulatory agencies. Reliance on people-intensive, paper-based processes results in errors and time-consuming quality control activities. Moreover, each version of the product label requires its own artwork for the final printed label, necessitating another series of manual processes.

	Today, product labeling comprises disparate processes at different locations, based on country-specific preferences. A streamlined workflow management process, along with a document-management system that allows for version control and standardized label and artwork content, makes the task easier and more accurate, because it synchronizes content and versions across geographies. Organizations can outsource core labeling activities globally by partnering with a vendor with a global reach, who will work to assess the individual organization’s unique situation. They can build and implement a tailor-made solution, provide support throughout the product lifecycle, and ensure quality and compliance at a reduced cost (6).


	For biopharmaceutical companies, product labeling is a highly regulated and complex process that is an integral part of their overall quality system. This already complex process is complicated even further with the announcement of the proposed electronic labeling ruling. A product with a wide geographical footprint requires labels in each country or region to comply with the requirements of local regulatory agencies. Requiring electronic labeling increases the risk of having inconsistent information across labels of the same product. Failure to ensure these key requisites of label accuracy and quality can lead to labeling errors that are highly visible and can seriously damage the reputation of an organization.

Changes Proposed to Require Electronic Distribution of Package Inserts

, Jan. 22, 2015, accessed Mar. 23, 2015.	

FDA Proposal Calls for Drug Labeling to be Distributed to Doctors Electronically

," Regulatory Affairs Professional Society (RAPS), Dec. 16, 2014, accessed Mar. 23, 2015.	

Government Report Finds Mixed Opinions on Proposed Drug Labeling Overhaul

," RAPS, July 9, 2013, accessed Mar. 23, 2015.	

Electronic Distribution of Prescribing Information for Human Prescription Drugs, Including Biological Products

, Dec. 18, 2014, accessed Mar. 23, 2015.	

FDA's Electronic Drug Labeling Proposal Comes Under Fire

," RAPS, Mar. 25, 2015, , accessed Apr. 9, 2015.	


	Bindu Narang is director of Scientific Writing and Regulatory Affairs at Sciformix Corporation, 

Pharmaceutical Technology Outsourcing Resources Supplement

 When referring to this article, please cite it as B. Narang, “Implementing FDA’s Electronic Labeling Proposal,” 

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Create an efficient global labeling strategy that is compliant with both electronic and paper-based package-insert requirements.

Implementing FDA’s Electronic Labeling Proposal

Contract manufacturing organizations (CMOs) and contract development and manufacturing organizations (CDMOs) play a key role in the formulation, development, analysis, and manufacture of drugs. Until recently, however, these organizations had little or no formal voice in legislative and regulatory issues that affect the bio/pharmaceutical industry.

	In 2014, the Pharma & Biopharma Outsourcing Association (PBOA), a non-profit trade association, was established to advocate for the contract services market sector before regulatory, governmental, and legislative bodies, and to keep members informed of pressing industry developments. Gil Roth, president of PBOA, shared the organization’s mission and agenda with 

: Why do contract outsourcing firms need a trade association?

: The number one reason is for advocacy; they need a voice with FDA and a voice with Congress. It’s something they really never had collectively. Some of the companies are very large and have strong regulatory affairs departments that have interaction with Washington; but many of these CDMOs just don’t have that degree of maturity when it comes to interacting with Capitol Hill and with FDA. More importantly, there are also areas where you simply can’t get in the door unless you are part of a trade association. That was the genesis for the PBOA.

	When I was reporting on the first Generic Drug User Fee Amendment (GDUFA) in 2013, I noticed that some of the fees were structured in a way that hurt CMOs, and I began asking them ‘did you have any input, any way to amend?’ They said no, they were not invited. One or two of the CMOs asked to be part of the negotiations and were told, ‘No, you don’t have a trade association; we are only negotiating with trade groups.’

	That started the ball rolling for PBOA. I started thinking beyond GDUFA: What other issues exist and what ways can we can help mature the industry and strengthen it by giving it a collective voice both in terms of the regulatory and legislative side, as well as in the general business area?

: Does the organization plan any formal relationships with other industry groups?

: We are already working with the Parenteral Drug Association (PDA) and International Society of Pharmaceutical Engineers (ISPE). PBOA can build out legislative and regulatory advocacy arms, but rebuilding the scientific infrastructure that a group like PDA already would be redundant. PDA is interested in the CDMO perspective in particular, as it has requirements and needs that might differ from in-house pharma when it comes to the scientific and technical side of the business. We had been in conversations with them about building a partnership or interest group. As part of its mission, PDA explicitly avoids the advocacy side of what PBOA is doing. So in a sense, we can be complementary. We can pursue CDMOs’ areas of interest in terms of Congressional and regulatory representation, and we can also help them work with a group like PDA or potentially ISPE to advance some of the scientific and technical areas that they might not be getting addressed at present.

: Has FDA had any response to the establishment of PBOA?

: Response has been very good with FDA. We held a regulatory and legislative workshop in March in Washington, where we had two FDA participants speak, one from the Office of Generic Drugs and one from the Office of Pharma Quality (OPQ), and they both came away very impressed with what we put together. We are trying to let FDA understand what CMOs do and how that might differ as a business model from in-house pharma, in-house bio, and in-house generic businesses, and try to talk with them about how we can work together on regulations and guidance that might be better suited for impacting the CMO space.
	Back in 2013, I mentioned the idea for the PBOA to an FDA policy advisor, and she was just thrilled with the idea because it would establish a single point of contact for the agency when it comes to CMO-related questions. The fragmented nature and historical issues with bringing this industry together do make it somewhat difficult for outside groups to figure out who to contact and how to get a CMO perspective. We want to be that point of contact, and I think we are already reaching that stage with FDA.

: What involvement will PBOA have in legislative issues?

: The 21st Century Cures Act came together in a big hurry and a lot of what’s in it got into it before the PBOA existed and had much traction on the Congressional side. We did have some conversations about a couple of things that would help CMOs with a few representatives, who hoped to get those into the Cures Act. We didn’t see those items in the final markup. Based on my conversations on Capitol Hill, a lot of people thought certain things were going to get into 21st Century Cures, but they didn’t. It is a very big and very complicated bill; we do hope that as it advances, it is going to help bio/pharma manufacturing overall and, as such, strengthen our sector, but there is nothing specific within it to assist or help our group.

	The second five-year term for GDUFA will be negotiated this fall between FDA and industry interest groups, as they did with GDFUA I back in 2011 and 2012. We are hoping to be part of those negotiations, which will put us alongside the Generic Pharmaceutical Association, the Bulk Pharmaceutical Task Force, and the European Fine Chemicals Group; these were the groups that participated in GDUFA I, and I am assuming they will be part of this second round of negotiations. In the middle of June 2015, PBOA gave a presentation at a public hearing that FDA held for GDUFA reauthorization. We talked about the CMO sector, the importance of our industry, some of the issues that our members have with GDUFA and how it was implemented the first time around, and some of the improvements that we hope to see in the future version.

	I was somewhat gratified that a House appropriations bill was issued a few days ago that included one of the areas of interest for us--which is shared by other industry interest groups--and that’s a waiver or reduction of GDUFA fees for smaller manufacturers, be they generic-drug companies or CMOs. It was just a line in the bill’s report recommending that FDA incorporate some sort of waiver and reduction into GDUFA II, and since that’s one of our points of interest, we are hoping to see that advance when GDUFA gets negotiated for reauthorization.

: What is the PBOA’s position on FDA’s draft guidance, Contract Manufacturing Arrangements for Drugs: Quality Agreements? Is this guidance needed? What changes would the organization like to see?

: A number of our members are happy to see FDA addressing quality agreements. It shows that FDA and its new OPQ have an interest and understanding in the CMO perspective. A senior policy advisor from that office spoke at our workshop in March on compliance trends, and I think she was very gratified to hear from CMOs how they work with clients on quality agreements. A lot of them shared best practices in terms of how they work with clients, how much of the quality agreement is generated from the CMOs side, how much flexibility you can have in terms of changing it given the number of clients that you have, and how you can’t exactly come up with a completely different quality system for every client who comes in the door.

	We also did a survey on the topic of quality agreements to find out about how CMOs work with them, and we shared those findings with FDA. I am not sure there is a consensus on what CMOs want to see in the quality agreement guidance. Both members and nonmembers have asked about whether the PBOA could develop templates for quality agreements that could be adapted for their specific needs. When I talked with FDA about that, they seemed reticent about putting templates into a guidance document, because what tends to happen is that a company will use the template and say, ‘Look, we are compliant!’. FDA’s thinking is that the CMO and the client should be taking the responsibility, making sure they are doing the right thing when it comes the quality, and doing it in the flexible way that shows they understand what their systems are and understand what the client’s demands are.

	To that end, some of the member companies have developed very thought-out, comprehensive quality agreements over the years. They read the guidance and they feel that they would be compliant with what FDA is recommending. They also said that their smaller clients are very happy to see that the CMO has already worked through so much of the process, given that for a lot of contract manufacturers, the small and mid-tier clients are the lifeline of the industry. It helps when the CMO can bring a lot to the table, can hold their hand a little bit and show them ‘This is what we have done with many clients before; this is how this relationship works.’ So at that end, they are happy that there is some guidance in place and some of them are very advanced in what they use for the quality agreement and how much leeway they have with it.
	Seeing common goals

: The organization has a unique structure; members who are competing for the same drug development and manufacturing business. So how do you reach a consensus among business competitors and get them to work together?

: My take is that we have to be able to use the word ‘peers’ sometimes, just as we use ‘competitors.’ They understand that in some of areas there are common goals in terms of how to approach legislative and regulatory goals. What we are here to do is to strengthen the industry overall. It doesn’t benefit anyone to see a lot of smaller CMOs driven out of the market.

	And to some extent, this is where my background is of real benefit. I never worked for a particular CMO. My involvement with the industry was as an editor covering it, before I took on this new role, so there is no perception that I am beholden to any one company. They know I treated them all pretty fairly in my previous role, and they trust me to do that moving forward. They understand that not every topic is going to be a 100% area of interest for them and that you have to compromise over some things. That’s all part of human nature, and part of having a trade association is understanding what somebody else’s goals are and how they don’t necessarily overlap with yours, but the benefits we get out of having this collective voice are more important than the single-driven goals that some of these companies have.

: Your members manufacture innovator drugs, generic drugs, and small molecule and large molecule drugs; how do you manage competing interest in those areas?

: As I said, with every group, you find that not everyone’s interests are 100% aligned. When I was first pitching the association to prospective members at the beginning of 2014, there were conversations about the small molecule vs. large molecule perspectives, the oral solid dosage vs. the injectables, the global multinational companies vs. the ‘mom-and-pop’ CDMO. What I tried to conveyâand what I think members ended up appreciating-was that while there are a lot of differences among them, there are common areas of interest and there was enough of an overlap and enough areas where it benefits them overall as a CMO industry to come together like this.

	Take GDUFA fees: they do not impact all the companies the same way. I went through the self-identified facilities list and searched for each of our member companies, and found that 17 of PBOA’s 18 members do have final dosage form facilities that are subject to GDUFA fees. That doesn’t mean that GDUFA is the main area of interest. Some of those companies also have a generic business of their own. All of them understood the notion that something like generic-drug fees that are levied without your input aren’t always going to be a 100% overlap for them or 100% in their area of interest, but being part of an association not only gets them a seat at the table, it also brings them an outside voice. It brings me telling them, ‘This is what I am hearing in Congress, this is what I am hearing in conversations with various consultants and other industry groups’. Some of these companies are very busy, and they can’t necessarily keep up with everything on their own. So to that end, there are differences, but I think the commonalities are more important and that’s what we are really focused on.

: What are your top initiatives for the next year?

: First and foremost is the GDUFA II reauthorization. The negotiations are supposed to begin this fall. I am thinking that will run into 2016, so let’s count that as part of next year’s initiatives.

	A second initiative is serialization, how CMOs implement it, and how they understand client demands. Recently, FDA delayed its compliance enforcement for pharmacies, in terms of the first stage of serialization and track and trace, but we know at some point, it’s going to come and that the CMOs have to be prepared for it; we want to work with them to help make that transition. That, in fact, is less of a regulatory and legislative issue and more of an industry-facing one. We want to make sure that our members are able the interact on the client side to understand client demands for serialization, not just in the United States, but how they can help implement the regulations and make sure they are compliant and the drugs they are manufacturing are going to be admissible in region after region as the serialization spreads out across the world.

	The third area is the FDA’s quality metrics initiative; we have been talking with PDA and ISPE about that. We want to make sure that a CMO perspective is incorporated into that. CMOs manufacture for different clients, and we have to make sure the data disclosure that FDA might want fits with the nondisclosure agreements that these CMOs have with their clients and that it isn’t geared in such a way to inadvertently favor in-house manufacturing versus contract manufacturing. We want to make sure that the CMO perspective is represented in the way quality metrics are ultimately implemented by FDA. This is a very important area because there is lot of benefit that can come from having a quality metrics infrastructure in place, but it is also important to understand the differences in the types of manufacturing facilities that these different businesses have.

 When referring to this article, please cite it as " A Voice of Their Own," 

Contract development and manufacturing organizations join forces to address legislative, regulatory, and business concerns in the Pharma & Biopharma Outsourcing Association.

A Voice of Their Own

Research indicates that contract manufacturing of drug product for developed markets grew 6% annually in 2013 and 2014 to $16.5 billion (1). The contract manufacturing organization (CMO) industry grew at twice the rate of bio/pharmaceutical industry revenues in the developed markets of North America, Europe, and Japan, which grew at approximately 2.5% according to data from IMSHealth (2). As a result, CMOs now account for approximately 33% of the bio/pharmaceutical industry’s cost of goods for drug product.

	Inorganic growth (i.e., acquisition of manufacturing facilities from bio/pharmaceutical companies) accounted for as much as one-third of the CMO industry’s growth. Acquisition of divested facilities from global bio/pharmaceutical companies does not play the role in CMO industry growth that it once did, but it is still an important part of the story in Europe, where the landscape is still dotted with many bio/pharmaceutical manufacturing sites, and Japan, which is still early in the development of its contract manufacturing sector.

	While there are hundreds of companies offering contract manufacturing, only 30 account for more than half of industry revenues, and a small number of CMOs increasingly dominate the industry (see 

). Consolidation is the name of the game for CMOs, with 18 acquisitions of one drug-product CMO by another drug-product CMO in the past three years.

	The big challenge for the CMO industry continues to be captive capacity (i.e., the in-house capacity of bio/pharmaceutical companies). Bio/pharma companies continue to invest heavily in their own facilities thanks to the low cost of capital, generous equity markets, and rich internally generated cash flows. Spending on plant and equipment by the 25 largest bio/pharma companies grew 13% in 2013, and 11% more in 2014 to $19 billion. Because global bio/pharma companies are generating so much cash, the $19 billion represented only 11% of their operating cash flow, meaning they had plenty left to fund acquisitions, partnerships, dividends, and share buy-backs.

	More worrisome for CMOs, potentially, is the evidence that their traditional best customers are also investing more in in-house capability. Thanks to low capital costs and their own commercial success, mid-size and small commercial companies have the resources to invest in their own facilities and are showing an increased willingness to do so (see 

	The news that Biogen-Idec is acquiring the manufacturing assets of Eisai in Research Triangle Park, NC, is a powerful example of this trend. Biogen-Idec has long pursued a model of manufacturing its API in-house while depending on CMOs for its drug product manufacture. Several years ago, the company leased part of the Eisai facility to manufacture its first solid-dose products, and it has now taken over the entire facility, including the injectables manufacturing areas. While the Eisai site will manufacture only a small portion of Biogen-Idec’s total requirements, the move represents a momentous change in strategy and one that CMOs must view with concern.

	Another notable development in this regard has been the conversion of contract manufacturing capacity into captive capacity. This conversion has occurred either through acquisitions of companies and facilities (e.g., the acquisition of Pharmalucence by Sun Pharmaceutical Industries) or simply by a company no longer offering its excess capacity in the contract market. The lost capacity has been marginal to the overall CMO industry thus far, but larger acquisitions, such as Pfizer’s acquisition of Hospira, could be more disruptive.

	The increasing investment in captive capacity suggests that CMOs may not be able to depend on a growing propensity to outsource to fuel their growth. Global bio/pharma companies outsource approximately one-third of drug product manufacture (1), and with the heavy investment in new facilities, that is not likely to grow significantly.

	Small commercial companies, the segment that uses CMOs the most, already outsource 80% of their manufacturing requirements, so there just isn’t much room to grow there.

	The burgeoning drug development pipeline would seem to promise more opportunities in coming years. The number of new drug application (NDA) approvals jumped 15% in 2014 and appears poised to continue climbing (see 

). But this too must be viewed cautiously. Many of the newly approved drugs have orphan or breakthrough designations and are targeted at small patient populations, which translates into small volumes for CMOs. While the high prices of these drugs suggest they could deliver higher margins, the small volumes won’t “move the needle” for larger CMOs looking for growth.

	The other note of caution when evaluating the pipeline has been the pushback from payers over the growing cost of the new drugs. Drug prices are a strain on healthcare budgets worldwide, and it is more difficult to get new drugs accepted into formularies, a key step for reimbursement. At his March 2015 DCAT presentation, Graham Lewis of IMSHealth warned that European budgets for drugs will hardly grow in coming years and acceptance of new drugs will only come at the expense of other drugs, either by dropped coverage or lower prices (2).


	While CMOs will get some lift from the rising tide of new drug approvals, that won’t be enough to fuel the expectations of many of their investors. CMOs will have to depend on capturing more value per product or finding new markets to grow at acceptable rates.

	CMOs are capturing more value per product by offering enhanced drug-delivery technologies and by offering more links in the supply chain in an integrated service offering. Enhanced delivery technologies can include proprietary devices and formulation technologies, or deep knowhow that can be applied to unique client problems. Companies like Catalent, LTS Lohmann Therapie Systems, and 3M Drug Delivery Systems are examples of CMOs pursing the enhanced delivery strategy.

	Companies pursuing the integrated services model seek to facilitate drug development and commercialization for clients by enabling them to work with a single vendor for activities that normally require multiple specialized vendors. The major examples are combining API and drug product manufacture, or offering formulation development and clinical supplies manufacture to complement commercial manufacture. Many CMOs offer some variation of this model, but the highest profile examples include Patheon, Siegfried, and AMRI.


	Generic drugs could be a growth area for CMOs, especially in North America, where CMOs have traditionally been circumspect about the low margins that most generics require. CMOs with semisolid capabilities have benefitted from strong generic drug demand, as skyrocketing prices have pushed more companies into dermatology products. Generic-drug companies have also turned more to injectables CMOs to help overcome drug shortages and address concerns relating to offshore suppliers. The development of so-called super generics (i.e., generic APIs in higher-value delivery forms) has also been a boon to CMOs with niche dosage forms like inhalation and transdermal technologies.

	Generics will be more problematic for European CMOs, where branded generics (i.e., generics that carry a brand name but lack the value-added qualities of super-generics) have been a staple of the CMO industry. Thanks to budgetary management efforts among European payers-primarily governments-commodity generics are replacing branded generics on formularies, which is likely to impact CMO revenues negatively. For instance, in its annual report for 2014, Siegfried revealed that the loss of a tender by a major client had reduced its drug product revenues by nearly 20% (3).

	New geographic markets also present some opportunities for CMO growth. Contract manufacturing for the domestic market is growing but still relatively immature in Japan. The number of dedicated Japanese CMOs of significant size is still low and includes Nipro Pharma, Bushu Pharmaceuticals, and CMIC. More North American and European CMOs are setting up sales offices in Japan but only two, Catalent and Aenova, actually own manufacturing operations.

	Emerging markets also represent an untapped opportunity for CMOs. Demand for bio/pharmaceuticals is growing faster than in North America and Europe and global bio/pharma companies are targeting emerging markets for growth. Most of the largest markets have local content laws or policies that encourage local manufacturing and/or packaging, but for global companies having a local manufacturing facility is generally not cost effective. There are few true CMOs in most of those countries, so the principal alternative to facility ownership has been to use local pharmaceutical companies, which usually lack the infrastructure to support contract relationships. While market entry would not be without risk, there appear to be opportunities for CMOs in some of these countries (e.g., by acquiring an underutilized facility from a global bio/pharma company and converting it to contract operations).


	In the past few years, the drug product CMO industry has emerged from being a collection of poorly run, mom-and-pop businesses to a real force in the bio/pharmaceutical industry. As noted above, the industry accounts for a growing share of industry value-added and, thanks to the formation of its own trade association (the Pharmaceutical and Biopharmaceutical Outsourcing Association [PBOA]), it now has a seat at the table at FDA when major initiatives such as the extension of the Generic Drug User Fee Amendments (GDUFA) are being negotiated (see 

	The CMO industry has benefitted from the macroeconomic environment, which has provided inexpensive capital for expansion. The more aggressive CMOs have used that funding to make acquisitions and consolidate the industry to the point where a relative handful of companies dominate the industry. While the consolidation process is not over, the number of attractive and available acquisition targets in traditional markets is shrinking rapidly, and industry executives will need to develop more creative strategies to drive growth. Those strategies will require thinking that is more global and long-range in its perspective.

	While the CMO industry will always accommodate small niche players, it is the large muscular CMOs that will be able to work most effectively with the global bio/pharmaceutical companies, much as it has been the largest clinical CROs that have built the strategic relationships for clinical research. The large clinical CROs have set an example, by being able to operate on a truly global basis and by being able to incorporate the latest technology to accelerate drug development while reducing costs. The large CMOs would do well to study their example.


	1. PharmSource, Contract Dose Manufacturing Industry by the Numbers, 2015 Edition, July 2015.
	2. G. Lewis “Succeeding in Pharma’s increasingly polarised but virtually connected world,” IMSHealth, March 2015.
	3. Siegfried Group, Annual Report, 2014. 

 When referring to this article, please cite it as J. Miller, "What’s Next for the CMO Industry?," 

Cover Story

What if the expanding pipeline isn’t enough to fuel CMO growth?

What’s Next for the CMO Industry?

Driven by competitive pressures and using models pioneered in other industries, pharmaceutical
	companies are extending collaboration efforts well beyond their walls. Competitive pressures and the move to value-based medicine are changing the nature of partnership and collaboration in the pharmaceutical industry.  Like other industries, pharma is moving to more of an “open innovation” model.  

	The idea of open innovation involves using both internal and external ideas to help solve specific problems or meet unmet needs.  The term was coined in 2003 by Henry Chesebrough, a professor at the University of California who had worked in Silicon Valley and saw a need to close the gap between academia and business, at least in the realm of new ideas.  

	Pharma outsourcing has opened up the traditionally closed world of pharma innovation. When the trend began, pharmaceutical companies would typically outsource specific projects on a transactional basis; today, more are creating strategic partnerships with their contract research, development and manufacturing organization (CRO, and CDMO/CMO) partners, sharing sensitive data, and even financial risks and rewards.

	Pharma companies are now more attuned to potential sources of innovation. “Over the past 10-12 years, a lot of the most interesting new ‘disruptive’ technology has been coming from startups,” says Christopher Kulp, executive vice-president of Richman Chemical, Inc., which focuses on small-molecule chemistry and on getting new technologies from innovator companies or academia ready for licensing and/or transfer to larger, partner companies.“Small startups are now preeminent on big pharma’s radar, and some receive preliminary feedback on their IP from big pharma licensing teams,” he says.  “This didn’t happen 15-20 years ago when new product development predominantly occurred in-house.”

	Companies like Richman serve to bridge the gap between Big Pharma and innovators whose ideas aren’t quite ready for prime time. “There are lots of opportunities to waste time on technology that isn’t going to go anywhere if it is not evaluated properly,” Kulp says.  In addition, pharmaceutical manufacturers are sharing more innovation and collaborating more in niche areas (see Sidebar).

	Big Pharma is moving to a “hub” model for R&D, with companies that include Johnson & Johnson, Eli Lilly, Pfizer, AstraZeneca, and Sanofi basing research centers in specific areas, such as Cambridge, MA, close to university, industry collaborators, and contract partners. Recently, a study by Deloitte Consulting suggested that open innovation in biopharma could strengthen new drug pipelines (1).  Studying 281 biopharma companies between 1998 and 2012, the research found that drugs sourced via open innovation could have a three-fold higher likelihood of success than those generated traditionally.

	Deloitte’s study shows an evolution in the open innovation model, from the traditional approach of outsourcing with a university, research institute, or CRO, to licensing.  Newer models include the innovation hubs, as well as leading edge partnerships as the transSMART Foundation, the Structural Genomic Consortium, and Asia Cancer Research Group.

	In 2014, Deloitte researchers found, of the 12 largest biopharma companies, 54% sourced new drugs via open innovation, 83% of that figure via outsourcing or licensing. Forty-six percent sourced drugs the traditional way (1).  

	Matthew Hudes, managing principal at Deloitte’s biotech consulting division, shared perspectives on the pharmaceutical industry’s new open innovation model with 

: Why is pharma changing its models and mindset for innovation?
	

: We’ve seen this coming for some time, with the patent cliff and some recent high-profile failures in pharma’s development pipeline. About six years ago, we saw an increased outreach to external sources of innovation. What is remarkable about this is not that it is going on, or even the extent to which it is going on, but the diversity of ways in which this outreach is taking place.  

	It’s a big experiment, and we don’t know which model will prevail in the future, but it is rare to see such a diversity of business models. Science is diverse, but not, typically, the business models behind it.

: I think about it as having two main dimensions: control and source (external vs. internal). If you put those two factors together, you get a broad spectrum of what is going on.

	In one type of model, large companies are lifting out assets and people from an academic setting and moving them to a place where they can focus on a specific project, and giving them everything they need and access to all their resources, on an exclusive basis. The project is treated like a major product extension, and companies that are taking this approach are having terrific results.  They have been picking up intellectual property (IP) that has been, if not languishing in, then bumping up against the limits of what can be achieved in an academic setting.

	Another model takes a ‘hands-off’ approach, in which large pharma invests in an innovation center, in a place where there are many resources and where they are interested in launching companies. They don’t own or contribute to the IP, and don’t even have first right of refusal. Through proximity, they get an early, inside look at what these innovations are, but use a community approach. This way, they can invite competitors into that space for collaboration as well.

	There’s another set of approaches that I would call pure open innovation, which involves the sponsorship and identification of a problem posed to a community.  (For an example in the area of repurposed drugs, see p. 47). Anyone can respond to it.  There are variations on that theme.  For instance, who gets to own the discovery that eventually comes out of the effort:  Is it the company who sponsors the effort, or is the prize shared among those who solve the problem?

	We’re seeing the industry collaborate on some major infrastructure challenges, such as how to get drugs to market more quickly, and dealing with questions such as enrolling investigators, or developing technical standards to get clinical trials to happen more efficiently.

: What roles are risk sharing and value-based healthcare playing in shaping innovation?

: That is part of what is driving this whole movement. It opens up possibilities that have not yet been realized but are being explored, such as enhancing the role of the patient. For example, in clinical trials, patients could not only participate but have a voice in deciding what treatments should do for them as patients. This goes back to focus, not on insurers or providers, but on taking a patient-centered approach and looking for creative solutions to the inefficiencies of our healthcare system.

: Are there still some concerns in pharma about opening up too much and losing control?  

: We hosted a roundtable of biopharma executives recently and asked: How do you trade off control to get better results?  One executive said that the best approach was to take the right approach to innovation, on the inside, first, and then do it outside the four walls.  Within some of the larger biopharma companies today, there is a push to reward innovative and risk-taking behavior, and to single out those types of efforts. We are seeing the rise of scientific executives and others in biopharma focusing not only on risk management, but on how best to take advantage of risk and build opportunities around it.

	In our industry, one of the biggest risks is upside risk.  It’s not only about a drug failing, but about preparing for success. Look at the onset of therapies that didn’t exist a few years ago--in immunotherapy, for example, or precision medicine--and what is needed to be prepared for the future.

: Is the industry still paranoid about the idea of sharing IP in collaborations?  

: Actually, biopharma has done a pretty good job around IP.  If you look at biopharma, biotech, and pharma coming together, they have done groundbreaking work with creative licensing deals, considering such questions as ‘What happens if something is successful but not part of strategy?’ and giving companies the ability to take back programs. In fact, the amount of creativity in the biopharma IP world is unparalleled.

	Areas where additional opportunity exists include the interface between academic institutes, where much of the innovation is happening, and at commercial organizations, whether small biotech, small, or large biopharma, to effectively access academic IP.
	Many academic programs are being funded by government programs, such as the National Institutes of Health, or other regional activities. Today, more people in academia are waking up to the fact that the IP that their professors develop won’t have any impact on human health unless they make it easy for that IP to move from academic to commercial settings. Some enlightened academic leaders have realized that they shouldn’t attempt to extract every ounce of gain from every deal for the university. They see how it would benefit the entire region around the university to have biopharma-related jobs, and realize what a great institutional value it is to participate in that type of ecosystem.

	What are the elements of a thriving ecosystem?  Strong science, but that science needs to get beyond the four walls of academia into the setting where it can get developed and eventually get to patients. Free flow capability needs to exist--not cash, but IP that can make a difference to a patient who needs it.

: Your report mentions leading-edge models of collaboration outside the US.  What tools do these types of groups use, and how do functional groups interact?

: Successful models share the following themes:  

	Openness to learning how to do things from outside biopharm and even life sciences--Some innovation centers are being operated by people from the financial services, consumer products, or software industry.


	Open innovation can be spurred by industry groups. The electronics industry already had a good model: Sematech, the consortium for semiconductor manufacturers. Launched in 1986, originally for US manufacturers as a way to help them compete in a market dominated by Asian companies, the group became private in 1996 and is now a global organization focused on improving materials and processes.

	For years, observers in the pharmaceutical industry, notably Prabir Basu, former head of The National Institute for Pharmaceutical Technology and Education (NIPTE), have called for the establishment of a group like Sematech in pharma. It may not yet exist, but there has been much more sharing of ideas and best practices in niche areas, by groups such as the International Foundation for Process Analytical Chemistry (IFPAC) and the American Institute of Chemical Engineers (AIChE) for process analytical technology (PAT) and pharmaceutical quality by design (QbD).  

	One example of an open innovation consortium is Portable Continuous Miniature and Modular (PCMM), devoted to increasing the use of continuous manufacturing in pharma. Initially involving GEA Process Engineering, G-Con Manufacturing, and Pfizer, the group has extended membership to other pharmaceutical companies and launched pilot programs. 


	Consulting services are also being geared more to the small startup and the academic. “We like to get involved at the earliest stages in order to add the most value,” says Christopher Kulp. executive vice-president of Richman Chemical, Inc. In the engineering and consulting (E&C) space, Klyo Collaborative was established to offer companies the kind of attention that big E&C companies, focused on billable hours, cannot typically afford. “We can start with a very young bio facility,” says cofounder Barry Holtz, a biotech veteran who established G-Con and Caliber Biotherapeutics, and handled tech transfer for the new pandemic flu vaccine manufacturing plant in Texas.  The result is an ability to help companies grow as their ideas take off.  “Very few companies offer a full palette of services, from early to mid-cap biotech,” Holtz says.

Executing an Open Model for Biotech Innovation, Executive Summary

 When referring to this article, please cite it as A. Shanley, "Opening Up Pharma Innovation," 

Pharmaceutical Technology Outsourcing Resources Supplement 

Driven by competitive pressures and using models pioneered in other industries, pharmaceutical companies are extending collaboration efforts well beyond their walls.

Opening Up Pharma Innovation

Ignoring a contract partner’s ability to handle highly potent APIs (HPAPIs) safely may have serious consequences. Drug owners and contract service providers alike must understand the complexities and liabilities involved in working with HPAPIs.

	Highly active or potent pharmaceutical ingredients (HPAPIs) comprise different compounds, but share one deadly characteristic: the potential to inhibit production of specific enzymes and cause cancer, mutations, development effects, or sickness, at very low doses, in those exposed to them.

	Currently, there are no specific occupational health, safety, and environmental protection regulations covering HPAPIs. In the United States, the Occupational Health and Safety Administration (OSHA), the National Institute for Occupational Safety and Health (NIOSH), and the US Environmental Protection Agency (EPA) have limited specific requirements for potent compound handling in healthcare and manufacturing settings.

	Industry groups in the United States and Europe have developed health risk-based approaches for setting occupational exposure limits (OELs) in such areas as cleaning validation, by setting permitted or acceptable daily exposure limits (PDEs or ADEs), to address carryover of any residual HPAPI. The result has been the International Society for Pharmaceutical Engineers’ (ISPE) Risk Mapp baseline guidance, and the European Medicines Agency’s (EMA) guidance for preventing cross-contamination.

	Drug manufacturers are developing more potent drugs, and despite the lack of specific environmental and safety regulations, HPAPIs have become fertile ground for contract manufacturing and contract development and manufacturing organizations (CMOs and CDMOs), which have been actively building up capacity over the past few years. Experts warn, however, that a systematic and scientific approach is needed. Simply having containment equipment and basic procedures will not be enough to ensure safety.

	Typically, large pharmaceutical companies have the industrial hygienists and occupational toxicologists on staff to evaluate the potential risks of any new HPAPI, and to conduct the necessary safety assessments. Smaller companies and CDMOs/CMOs may not have those experts on staff. Teams that visit potential contract partners may be so focused on cGMPs and product specs that they overlook questions of worker safety and environmental risk from exposure to HPAPIs.

	In addition, CDMOs/CMOs may not have done a sufficiently thorough assessment to determine whether they can handle a potent new drug safely. Failure to vet potential partners thoroughly can lead to regulatory problems with OSHA and potential legal liability.

	SafeBridge Consultants, based in Mountain View, CA, established a third-party certification program 15 years ago, which assesses a manufacturer’s HPAPI handling and manufacturing program readiness. The program focuses on four areas: management systems, evaluating hazards and risks, assessing engineering controls, and analyzing training and standard operating procedures (SOPs). The process also reviews such tools as OELs, industrial hygiene sampling, and analytical work. In addition, it scrutinizes containment and controls, and assesses potential environmental impact. The company has already certified a number of pharma CDMOs (see Sidebar).

	SafeBridge Consultants’ roots go back to Syntex Corp., which helped establish the “control banding” approach that is used in industrial hygiene to determine the potential risk of exposure to new APIs for which no exposure data exist. Pharmaceutical Technology spoke with SafeBridge Consultants’ founder and CEO John Farris and cofounder, vice-president and principal toxicologist Allan Ader, to discuss best practices for sponsors and CMOs alike.

: Why did you decide to go into business?

					AMRI
					Baxter Oncology
					Corden Pharma
					DSM
					Excella Pharma, Germany
					Novasep France
					SAFC
					ScinoPharm, Taiwan

: With the rise of contract manufacturing in pharma, we saw the need to come up with a metric that could evaluate companies’ capabilities to conduct potent compound operations safely to minimize exposure. We had developed a tool while at Syntex to look at the industrial hygiene of our internal facilities around the world. We modified that to come up with a measurement tool for potent-drug safety that would work for any contractor and that anyone could use. It’s a weighted 60-plus criteria exercise that has been proven to be effective and objective in evaluating capabilities.

	A CMO can use certification to show clients that they are competent in HPAPI manufacturing and handling. We also offer a ‘gap assessment’ or qualitative approach that can allow companies to measure their own performance using the same criteria.

: How do companies apply for certification?

: We start with a precertification review, where we send a person to take a walk through the plant, look at procedures and give the company a candid idea of whether or not they have a chance of passing. If they pass the first hurdle, we send two professionals out to do a two-day review (up to three days for companies outside of the United States).

	We don’t certify new facilities because they haven’t had enough significant run time. They won’t have the data that we ask for to support the certification, and they haven’t proven that they can work consistently within industry best practices.

: There are two key points: toxicology evaluations of hazards and materials you will handle, then the industrial hygiene studies measuring impact on workers, and the air and surface monitoring studies to show that you are containing materials and maintaining safe levels. In addition you need to show that you repeat studies to prove that you are doing this accurately and consistently with industry best practices.

: For the US and Europe, certification lasts for two years. During the off year, the company must do a self-assessment and share results with us. For companies in Asia, recertification is required every year.

: Do you think that pharmaceutical companies are lax in their handling of potent compounds?

: They want to do things right but they don’t know how involved it can be. Historically, Big Pharma has struggled with potent drug safety, and, despite its efforts, over the years it has had incidents of exposure to workers. Now, these are the companies with significant resources in toxicology and industrial hygiene that are applying their skills to prevent this. If Big Pharma has trouble, imagine what a small CMO or innovator company faces.

: You have to be able to recognize, evaluate, and control the hazard. These are the three basic principles of industrial hygiene and toxicology. CMOs or smaller companies may have some, but not all, bases covered. For instance, they might do a good job of hazard evaluation, but not air monitoring. Sometimes the gaps boil down to cost issues. If you’re thinking of building isolators for all your process steps, that will involve significant cost, and some might try another option that, in the end, won’t be sufficient protection for that particular compound. The evaluation by toxicologists and developing acceptable limits or appropriate occupational health categories, or bands, is key. Sometimes, that step gets missed.

: Another problem is that, when smaller companies do invest in expensive and high-tech controls like isolators, some of them then figure that the job is done and they’re good to go. They fail to recognize the fact that, if you don’t measure performance, you can’t guarantee safety.

	With HPAPIs, you can’t tell there’s a problem just by looking. You need to measure performance. Safe levels for some of these drugs are down in the range of nanograms per cubic meter of air, 1000 times below what you can see in air at a minimum for some of these compounds.

	You can’t tell whether the isolator is leaking unless you have a catastrophic failure. It you don’t measure its performance, you won’t know if you might have a slow and potentially continuous leak and exposure. You might also pass things out of the isolator that have particulates on them and can cause exposure, and have ‘drag out’ of a room or isolator into a clean area. You won’t know if you don’t measure.

: Because OSHA does not offer specific guidance on HPAPIs, could companies have exposure problems and could workers be affected without knowing it?

: OSHA and NIOSH have published guidance on hazardous drugs, but it is intended for the healthcare industry, not for manufacturing and R&D. OSHA will get involved if an employee gets sick, and will investigate the facility. OSHA has come in and cited companies, but it’s always after the fact. There are both acute and chronic hazards. OSHA gets involved mainly in acute incidents, when workers develop a rash or symptoms from acute high exposures, or reproductive health issues.

: What are the top issues and questions that companies fail to consider when they are dealing with potent ingredients, both sponsors and CMOS?

: Generally, there are three problem areas. They don’t have toxicology support, and if they have the toxicology support they don’t have an understanding of the pharmaceutical substance’s unique potencies and toxicities.

	They haven’t run adequate industrial hygiene studies prior to startup (conducting surrogate studies on containment equipment before actual production begins), during initial production batches, and then, periodically after startup, to verify the performance of control systems.

	The third, and biggest problem, is that they often don’t know what they can and can’t handle. They need to assess the capability of their equipment and facility. That is very closely related to the industrial hygiene data that they need to gather. Some companies do industrial hygiene studies with only two samples. That cannot adequately assess health risk. Studies must be scientifically supportable and use statistics in order to determine systems capability and verify performance.

: You need to understand what you can and can’t handle and why, and be able to articulate that to customers. This also gives you a focus for improvement. If you want to handle the ultra-potent materials, but you know you don’t have adequate controls in place, you can then budget and plan to improve those areas so that you can grow your business.

: Who should go to evaluate a CMO that’s working with HPAPIs?

: Typically, pharma companies send the quality people or the formulation or process chemists who are transferring the process over to the CMO. They’re looking at timing, whether the CMO can produce to the specs that they’re trying to achieve, whether they can perform this specific reaction, or make this particular formulation as they did inhouse. They’re focused on timing and the bottom line.

	Then, way down at the bottom of the list of specs, is the question of whether or not they can handle HPAPIs.

: Only Big Pharma companies typically send environmental health and safety professionals out to review third parties.

: Usually, the industrial hygienist is the key person, since he or she will do the exposure assessment.

: What issues are posed by new compounds?

: We’re one of the innovators, with several other companies back in the late 1980s, of the occupational-health categorization system, or control banding, where we group compounds based on toxicity and potency. We use this approach when there isn’t a lot of data and you can’t determine OELs quantitatively. Many companies use those numbers alone. But we have linked them to best handling practice, which is important. It’s really a hand and glove, with the hand being toxicity evaluation and assessment, and the glove, the handling practice and work-environment descriptors that will allow you to make the compound safely.

: How does this fit in with cleaning validation?

: This is where the quality and occupational health aspects merge, because they both should employ some level of quantitative risk assessment. Historically, in cleaning validation, you can have carryover to the next product. Previously, you could establish a cleaning limit based on arbitrary cutoffs, such as 10 ppm, or 1/10,000 of LD-50, or half the lethal dose in rats.

	These arbitrary approaches don’t use the most current risk assessment approaches to determine what is safe and what isn’t. ISPE’s Risk Mapp and EMA guidelines provide acceptable daily exposure to identify a safe amount and acceptable limit that you can administer by any route as an acceptable carryover limit. A company can use them to establish cleaning limits for equipment that comes in contact with product.

	Hazard assessment established for setting an OEL are based on inhalation by workers. Risk assessments for cleaning validation limits, however, are for patients taking the next drug and might include children or sensitive subgroups. You can’t take an OEL and multiply it by 10 to come up with a permitted daily exposure (PDE) or acceptable daily exposure (ADE). There is still some resistance to applying PDE and ADE to cleaning validation, but, in December this will be required in Europe. We don’t look at this in great detail during a certification assessment, but we do look for health- and science-based limits.

 When referring to this article, please cite it as A. Shanley, " Handling HPAPIs: Do Your CMOs Have the Right Stuff?," 

Handling HPAPIs: Do Your CMOs Have the Right Stuff?

After a long wait for the new elemental impurities guidelines from the United States Pharmacopeial Convention (USP) and International Conference on Harmonization (ICH), the bio/pharma industry must now look ahead to implementation. Representatives of contract testing laboratories shared observations on the industry’s approach to the new guidelines, insights and advice on implementing risk assessment, and strategies for new testing programs for elemental impurities with the editors of Pharmaceutical Technology.

	Discussion participants are Michelle Cree, principal scientist, strategy and business manager–elemental analysis, Catalent Pharma; Thomas Devadder, team leader, QC AAS/ICP/Particles/TGA - Laboratory Services, SGS Life Science Services, Mike Murphy, elemental impurity analysis expert, Intertek Pharmaceutical Services; Nikki Schopp, team leader, analytical laboratory services, SGS Life Science Services; Terry Schuck, manager pharmaceutical raw materials, method establishment and development, Eurofins Lancaster Laboratories.

: How are drug companies responding to the requirements of the new elemental impurities guidelines and the pending deadlines? Is there a sense of urgency?
	

: Many of the pharmaceutical companies we work with have been proactive in seeking validated methodology for their products rather than wait for the official implementation deadline. I believe there will be an increased sense of urgency going forward as companies getting started in the process have much to do to prepare for full implementation of the USP or ICH guidances. The risk assessment process must be performed for excipients, active ingredients, and finished products and will involve development and validation of final methods. Each step of the process may take longer to complete than anticipated.

: There was a sense of urgency in the past two to three years to get validated methods in place. In the past year, many companies have put this type of development/validation work on hold. This is most likely due to the changes in specifications and the uncertainty of who is responsible for the testing. Some clients already have validated methods that would now be considered outdated in relation to the specifications that are currently published.

: Pharmaceutical companies are reacting very differently to the new elemental impurities guidelines. Responses range from ‘we’ll look at this when capacity is available’ to ‘this should have been done yesterday!’. The pressure will increase in accordance with the range of their product portfolios and the number of ingredients in a particular finished-drug product. Collecting data from suppliers and testing for elemental impurities can be a challenging task.

: Many drug companies have been seeking help understanding the new guidelines and how the changes will impact the release of their products. Since the testing techniques described in 

 <233> ‘Elemental Impurities--Procedures’ require expensive instrumentation that requires trained analysts to maintain and operate, most drug companies are evaluating service providers with the capacity and experience to manage their projects.

: It appears that some companies are following the changes closely and have established teams to work on risk assessments and control strategy, recognizing the complexity of the guidelines. Others have taken a more reserved approach, preferring to wait for further harmonization between the ICH Q3D

 <232> ‘Elemental Impurities--Limits’. USP has harmonized permissible daily exposure limits with ICH in the second supplement to USP 38-National Formulary 33 and has encouraged early adoption in General Notice 5.60.30, official April 1, 2015.

: Do drug companies have sufficient knowledge about the new guidelines and deadlines? What are some common misconceptions?

: Not in all cases. A common misconception is that 

 <233> is a testing method and can be used as a direct replacement for

 <233> is a performance-based general chapter, which outlines the testing approach and defines verification requirements and specifications. 

 <232> needs to be used in conjunction with 

After a long wait for the new elemental impurities guidelines, the bio/pharma industry must now look ahead to implementation and take action.

Pharmaceutical Technology-08-01-2015

Implementing FDA’s Electronic Labeling Proposal

A Voice of Their Own

What’s Next for the CMO Industry?

Opening Up Pharma Innovation

Handling HPAPIs: Do Your CMOs Have the Right Stuff?

Moving On to Implementation for Elemental Impurities Testing

Multiple Partners, One Supply Chain

Industry Viewpoints: Can Sterile Manufacturing Turn the Ship Around?

Recovering the Value of Repurposed Drugs

Serialization: Are You Prepared? Why This Time is Different