What Trend in Big Pharma Means To Smaller Industry Players

There’s been a shift lately in the way Big Pharma is doing business.  Traditionally, large pharmaceutical companies would outsource clinical study responsibilities to a wide variety of external vendors, essentially distributing the work across many service providers.  Large CROs routinely performed work for both large and small pharmaceutical companies to keep their top-notch resources utilized to capacity and add to their bottom line.

More recently, economic pressures have moved Big Pharma away from transaction-based, fee for service arrangements with their CROs, and towards strategic alliances with them.  The advantages for sponsor companies are many: shared risk, knowledge transfer, and shorter time to market.  Strategic alliances are arguably as advantageous for the CROs, providing a steady pipeline of work that’s larger in scope and longer in duration than is typical under traditional arrangements.  The industry journals are replete with sage warnings about culture incompatibilities and intellectual property protection, but done correctly, there may be few significant downsides to these strategic alliances.

As is frequently the case, a new advantage for one segment of the industry is a new disadvantage for another.  Small and medium-sized pharmaceutical companies, like their large counterparts, have been feeling the strain of higher costs and smaller staffs.  Adding to these economic pressures, the trend towards alliances among the large players increases competition for top-drawer CRO resources. The reduced availability of these outsourcing options likely means smaller sponsor companies will pay higher prices for services.  It could also mean that at the same time they are paying more, the quality of service and level of commitment they receive may be reduced, as the best and most experienced CRO staff members are dedicated to projects associated with strategic alliances.

Just as Big Pharma has taken a look at the economic environment and has begun forming nontraditional business relationships, small and medium-sized should take stock and make some adjustments, as well.  They should begin looking beyond their traditional outsourcing choices and consider selecting smaller outsourcing partners who may well be in a better position to focus on individual projects and give priority to shorter term engagements.  After all, a project that’s small to a big CRO will be comparatively big to a small CRO.

Effective vendor prequalification has always been important, yet this new environment may elevate its priority.  If small and medium-sized sponsors look to expand their set of outsourcing partners, they will need to increase both the time and resources they currently invest in prequalification activities.  To further ensure that potential new service providers have the ability to deliver quality and timely results, companies may increasingly opt to engage third-party consultants to perform additional prequalification audits or to develop comprehensive in-house vendor qualification programs.

Bottom line:  The trend toward strategic alliances among large companies will change the terrain for many industry players; competition for the services of large, established CROs is likely to increase.   Smaller sponsor companies can compensate by emphasizing vendor prequalification procedures and subsequently contracting with capable, smaller services providers.

Turning GMP Compliance Into Marketing Advantage

Business trends are often subtle, hard to measure, and obscured by layers of data.  Capitalizing on these trends can mean accurately reading the tea leaves and executing everything just right.  It’s risky.  Once in a while, a collection of environmental changes – changes to regulations, to demographics, to economic climate, to technology – converge to form a trend that is unambiguous and hard to ignore.  Responding to such a market trend isn’t risky, it’s necessary.

This is what’s happening in the Dietary Supplement industry today.

(1)   The dietary supplement market is growing.  Despite a global recession, sales of supplements grew steadily during the lean years of 2008 and 2009.  The increase is, ironically, partially attributed to the recession, as millions of consumers seek lower cost healthcare solutions.  By 2015, the number of people over the age of 50 in the US will have grown to 28%, which is expected to translate into still more supplement sales.  According to Global Industry Analysts Inc, supplement sales will reach over 93 billion dollars in the next few years.

(2)   Every dietary supplement company, has been required to comply with cGMP regulations (21 CFR 111) since June 2010.  But you know this.  And you also know that cGMP compliance can be challenging, time-consuming, and expensive.  It requires systemic changes in quality management, affecting everything from high-level company policy to every day operations.  It’s why a lot of companies have implemented the bare minimum, and hope it will take the FDA a long while to appear at their front door. 

(3)   59% of the US population uses online health information resources.  This was one of the results published in early 2011 by the Pew Internet and American Life Project.  This same study concluded that the 3^rd most common online activity is researching health information.  Sites like WebMD, disaboom.com, MedicineNet.com, and Yahoo!Health provide internet users with an increasing number of venues in which to read and share health-related information.  Consumers routinely access the FDA website to learn about product recalls and other quality issues.  Other surveys and sources of internet statistics offer additional proof of what we, consumers ourselves, already know: more than ever, consumers are educating themselves about health, nutrition, and the choices that the marketplace offers them.

(4)   Consumers know about GMP certification and are spreading the word.  Type “Dietary Supplement Forums GMP” into a search engine and it soon becomes apparent that forum participants know about cGMP regulations, prefer products and companies that can prove compliance, and are advising their peers to do the same.  Forum discussions often go beyond simple recommendations.  Information seekers ask about how products are verified.  Forum posts discuss the significance of industry certifications issued by the Natural Product Association and United States Pharmacopeia.  Entrepreneurial forums explain the merits of doing business with GMP-certified contract manufacturers.

To summarize (1) through (4): you have to put the effort into becoming cGMP compliant whether you want to or not. The market for dietary supplements is increasing, and your potential consumers are looking online for health and nutrition information. Dietary supplement forums advise consumers to look for industry certifications and other internet sources link cGMP compliance to product quality. There’s a clear conclusion we can draw from these aligning trends:  cGMP compliance can be used as a powerful product differentiator and marketing message.

Though cGMP compliance is the law, many dietary supplement companies are struggling to catch up. They hope that an FDA inspection is years away and they can use that time to implement their compliance plans. These companies are missing an opportunity; they’re viewing cGMP compliance solely as a regulatory obligation, and ignoring the marketing possibilities it presents. Simultaneously, they have created a window of opportunity that other industry players can exploit to their benefit. Indeed, the first advantage to GMP certification that the Natural Products Association lists on its website is “gain marketing advantage by demonstrating the quality of products.”

Some companies caught this wave early. Enzymatic Therapy, Inc., a very large North American dietary supplement manufacturer and distributor, is one example. The Marketing Director at Enzymatic told online publication Nerac Insights that her company had eagerly awaited the cGMPs and believe they will weed out low-quality operations. She added that cGMPs offer a unique marketing advantage – that before, it had been difficult to prove superior quality since everyone claimed high quality based on their own standards. With this philosophy, it’s no wonder that Enzymatic touts GMP compliance and the industry certifications it earned at the top of its home page.

Companies that are cGMP compliant and have industry certifications to show it are at a distinct advantage. They can post certification credentials on their website and display seals on their product labels. They can use online newsletters and other internet forums to educate their customers, spread the word, and contribute to the growing perception that GMP-compliance is an essential element of quality.

If you want to take advantage of this marketing opportunity, please call us. We’d be happy to provide you with regulatory compliance consulting and assistance, information about industry certification, Standard Operating Procedures, or anything else you need on your road to cGMP compliance.

Notes To File (NTFs): Remedy or Enemy

People sat up straighter.  Some audience members leaned forward in their chairs.   The unmistakable sounds of pencil on paper could be heard as attendees hurried to scribble down a message they wanted to make sure they brought home.

These were the scenes at both the 2011 ExL Pharma and the ACRP conferences, when Leslie Ball of the FDA warned attendees that NTFs are a red flag to FDA inspectors.  Of course, NTFs can be appropriately used, whether to clarify seeming anomalies, for example, or to indicate the location of a document.  However, NTFs are increasingly becoming overused, even abused.  Too frequently, clinical research personnel view them as remedies for all manner of things gone wrong during the study, negating anyone’s responsibilities to actually fix the problems.  Ironically, rather than assuage FDA concerns about non-compliances, NTFs have begun to point to them.  Indeed, a recent Warning Letter stated that a sponsor’s method for securing compliance, by generating numerous NTFs to explain deviations, was not adequate.

Dr. Ball explained that the FDA encourages a proactive approach to reporting significant non-compliances, and that an NTF may be helpful in documenting the correction of a deficiency while a study is ongoing.  To that end, and to the extent that NTFs are used, it is important that they not only describe what happened, but why it happened, what was done to fix the situation, and what has changed to prevent future occurrences.

Example of a poorly written NTF:  “Urinalysis report for Patient #3 missing from Visit 6 records.”

This NTF does nothing more than record the deficiency.

Another example of a poorly written NFT:  “Jane Smith, our new study coordinator, began her assignment on 04/05/2010.  That same day, Patient #3 came in for his 6^th visit.  Though all other records were filed by Ms. Smith, the urinalysis report is missing.  Ms. Smith has been diligent about her documentation duties, and this missing report does not represent a trend.”

While this NTF offers some assurance that the oversight was anomalous, since this was Ms. Smith’s first day, it implies that perhaps she was thrown into the deep end of the pool without sufficient training or supervision.  The NTF does not indicate that steps were taken to rectify the situation.

Example of well written NTF:  “Urinalysis report for Patient #3 missing from Visit 6 records.  Upon discovering the oversight, a duplicate copy of the report was obtained from the lab, reviewed by the PI, and included in the record.  All other patient records filed by Jane Smith, the CRC, were filed correctly; this oversight was anomalous and does not represent a trend.  Ms. Smith has been trained in her duties, as her Training Records reflect.  To further assist Ms. Smith and other staff members in verifying that all required records are included in subject records, our CRC developed a QC check list for our SOP governing the maintenance of essential study records.”

The FDA is pushing for earlier detection and correction of non-compliances, so it’s no coincidence that this example NTF reads like a mini CAPA plan.  As NTFs are increasingly used to document that problems were caught, fixed, and prevented, they may well begin to lose their red flag status.

Before an FDA inspection, companies would be well advised to conduct an in-house or third party records audit to determine whether their NTFs are indeed remedies, or actually enemies.