CDMOs: New Administration, New Frontier

Uncertainty about the White House’s agenda has impacted pharma and the contract manufacturing organization (CMO)/contract development and manufacturing organization (CDMO) sector. There’s been some progress in the past few months, including the appointment of FDA Commissioner Scott Gottlieb, MD, but there remains a great deal to be worked out.

In the near term, one of the most critical areas to be resolved is the FDA Reauthorization Act (FDARA), which reauthorizes four major FDA user fee packages: the Prescription Drug User Fee Act (PDUFA), the Generic Drug User Fee Amendments (GDUFA), the Biosimilar User Fee Act (BsUFA), and the Medical Device User Fee Amendments (MDUFA). The new packages will kick in on Oct. 1, 2017 (when the federal government’s FY2018 begins), and without timely approval of FDARA, FDA will be compelled to issue intent-to-furlough notices this summer to staff who are paid with user-fee funds. That would cause drug approval timelines to skyrocket for both innovator and generic drugs, and potentially hazardous facilities to go uninspected.

On July 12, 2017, the House of Representatives approved FDARA (HR 2430) by voice vote; the bill was finalized in pre-conference with the relevant Senate committee, so this version should be the same one that the Senate will vote on. It retains the negotiated agreements between FDA and industry, while adding amendments intended to prioritize the review of generic drugs where they can help drive down drug prices. FDARA also includes stricter accountability and reporting of FDA’s use of user fee funds.

The Pharma & Biopharma Outsourcing Association (PBOA) was deeply involved in the negotiations with industry and FDA for GDUFA II, and subsequently worked with Congress to explain some of the changes to the program, how they’re intended to increase patient access to affordable generic medicines, and how the new fee structure is fairer to various industry stakeholders. PBOA also worked through the amendment process to ensure that additions to FDARA wouldn’t harm the CMO/CDMO sector.

That doesn’t mean everyone’s happy with FDARA. The White House has issued statements and an FY18 budget that runs counter to the negotiated agreements, zeroing out the federal funding that is part of each UFA program and increasing the user fee totals to offset that cut. The day HR 2430 was passed, the White House’s Office of Management and Budget (OMB) issued a statement that included the following: “The Administration urges the Congress to provide for 100% user fee funding within the reauthorized programs. In an era of renewed fiscal restraint, industries that benefit directly from FDA’s work should pay for it” (1).

Congress has turned down the White House’s request, retaining the existing UFA budget models. This should provide a degree of predictability for the user fee-paying sector.

However, if FDARA isn’t passed by Congress and signed into law by the President by August, it’ll be a bad sign for FDA, the pharma sector, and patients. 
 

Supply chain worries

FDARA isn’t the only worrisome deadline the industry faces. Under the Drug Supply Chain Security Act (DSCSA), the federal law mandating FDA secure the drug supply chain, drug manufacturers and packagers had a deadline of Nov. 27, 2017 to make sure that all packages are marked with a product identifier, serial number, lot number, and expiration date.

This has proved to be an immensely complex project (actually, a series of immensely complex projects). PBOA’s Serialization Working Group held numerous meetings to discuss the CMO sector’s readiness for that deadline, exchanging best practices and sharing other aspects of implementation. The lack of standardization, especially for data exchange, can put CMOs in an especially tough position, where they must accommodate the platforms of their various customers.

In recent months, PBOA has met with FDA to discuss the CMO/CDMO sector’s readiness for that deadline, both in concert with other industry groups and in a one-on-one setting. In previous years, the agency had heard from a few individual CMOs, but most of their perspective came from other trade groups that represent the customer-client side of the equation. This necessarily led to an incomplete picture of the pharma manufacturing supply chain, and FDA seemed glad to talk directly with CMOs about the pending DSCSA deadline.

At the end of June 2017, FDA announced that it will use enforcement discretion for 12 months following that November 27 date. Effectively, the agency will not cite manufacturers that are not ready to introduce serialized products into the marketplace. This gives CMOs and their customers some breathing room, but CMOs should be reminded that 12 months is not a lot of time when it comes to implementing a serialization solution.

Quality metrics and CMOs

Nothing has brought PBOA and its member companies to the table with its industry peers as FDA’s Quality Metrics initiative has. Since the agency’s first draft guidance for quality metrics was introduced, PBOA’s Quality Technical Group has worked with a cross-industry consortium-including Pharmaceutical Research and Manufacturers of America (PhRMA), Biotechnology Innovation Organization (BIO), Association for Accessible Medicines (AAM), Bulk Pharma Task Force (BPTF), International Society for Pharmaceutical Engineering (ISPE), and the Parenteral Drug Association (PDA)-to push FDA to clarify the many ambiguities (and occasional contradictions) contained in that document and its successor.

Both iterations of FDA’s draft guidance would have placed CMO/CDMOs in a position where they would be responsible for reporting data that are either confidential or outside of their purview (such as data from their customers’ other contract service providers). Reporting timelines that differ from those of Annual Product Reviews (APRs) would create new workflow and staffing requirements for CMOs. Other aspects of the program could also penalize CMOs, or incentivize them to avoid certain types of products for fear of getting a “bad score”.

PBOA worked to convey to FDA that the quality metrics compliance burden would be immense for both in-house and outsourced manufacturing processes, and that the agency had yet to make a strong case for the benefits that would accrue from the program. Docket submissions and industry presentations have carried that message.

The White House issued an Executive Order calling for federal agencies to repeal two regulations for every one that they introduce (2). That order also called for the incremental cost of new regulations to be zero (when offset by repeal of other regulations). While those are somewhat basic goals, it’s clear that quality metrics would carry a massive cost to industry to implement, and needs to be put on the back-burner.

Drug pricing, immigration, tax reform, and other topics could impact CMO/CDMOs. In some respects, the industry is still in a wait-and-see mode regarding the administration, Congress, and FDA, but as an industry, we’re more involved now than we’ve ever been.

References

1. Statement Of Administration Policy, H.R. 2430-FDA Reauthorization Act of 2017. Executive Office of the President, Office Of Management And Budget, Washington, DC, July 12, 2017.
2. The White House, Reducing Regulation and Controlling Regulatory Costs, Federal Register, Feb. 3, 2017.

Article Details

Pharmaceutical Technology
Vol. 41, No. 8
August 2017
Pages:48-49

Citation

When referring to this article, please cite it as G. Roth, "CDMOs: New Administration, New Frontier," Pharmaceutical Technology 41 (8) 2017.