FDA Update on Supply Chain Risks and Opportunities September 24, 2018

Speech | In Person

• Speech by: Anna Abram

Remarks by Anna Abram
Deputy Commissioner for Policy, Planning, Legislation, and Analysis
U.S. Food and Drug Administration
Parenteral Drug Association and Food and Drug Administration
Joint Regulatory Conference, Washington, DC

"FDA Update on Supply Chain Risks and Opportunities."

(Remarks as prepared for Delivery)

Good morning. It’s a pleasure to be with you today.  I’m delighted to bring the greetings and warm wishes of Commissioner Gottlieb to this annual gathering, and to share with you some insights and updates on the vital work we at FDA are undertaking relating to the Drug Supply Chain.

I want to recognize the important work of PDA, and their long partnership with FDA.  As you well know, PDA fulfills an important educational and informational role for the pharmaceutical and biopharmaceutical community.  Through publications, courses, exhibits, conferences, and in many other ways, PDA provides essential resources for making informed decisions about science and regulation.  That is critical to FDA’s science based, public health mission.

The long and successful collaboration between FDA and PDA supports our shared priorities and our efforts to ensure the safety and effectiveness of medical products, protect the public health, and advance the innovation of biomedical products so that we can better understand and meet the needs of patients.

Our partnership is on full display at this annual regulatory conference, which has been co-sponsored by FDA and PDA for nearly three decades.  Though it may not constitute scientific evidence, I think it nevertheless speaks volumes about how successful this collaboration has been.

Innovation

One of the most exciting aspects of this conference is that it offers the opportunity to engage in discussions about some of the latest advances in medical sciences and to explore some of the ways that we are embracing and implementing those advances in our work.

As such, it serves as a marker for our achievements. Equally important, it allows us to take stock of the challenges we face.  Both have changed -- and continue to evolve.  But the changes have a shared source -- the rapidly expanding opportunities and discoveries in medical science.

Thanks to extraordinary developments in science, medicine, and technology, we have an enormous and ever growing potential to transform the prevention, diagnosis, and treatment of many diseases through better and more innovative therapies and approaches. We are better able to address the challenges confronting many patients and harness the promise that advances in science and technology hold for these same patients.

As Dr. Gottlieb has often remarked, we are at a remarkable inflection point in medicine and science, a time in which patients battling deadly diseases may see advances that can alter the trajectory of their lives.  These advances are providing new ways to address human disease at a faster pace than ever before.  But make no mistake, we still have a long way to go.

Our goal at FDA is to ensure that we put in place policies that will support us in fulfilling our public health mandate and our ability to respond to these challenges. We want these policies to be as modern, efficient and transparent as possible.  We want to leverage these scientific and medical advances in every area, from innovation in medical products to improvements in the manufacturing and distribution processes.  And we want to make sure that more patients have access to safe and effective treatments in as timely a manner as possible.

We’ve already seeing enormous accomplishments.  Consider for example, the extraordinary advances in gene therapy, which is increasingly a therapeutic reality for many patients and offers platforms with the potential to treat and cure some of our most intractable diseases.  Today, gene therapies are being studied and applied in many areas, from genetic disorders, to autoimmune diseases, heart disease, cancer and HIV/AIDS.

Last year, FDA approved three separate gene therapy products.  To support this development, last November, FDA announced a comprehensive policy framework for regenerative medicine products, including a draft guidance that describes the expedited programs that may be available to sponsors of regenerative medicine therapies, such as the breakthrough therapy designation, and the regenerative medicine advanced therapy, or RMAT, designation.

We’ve also made enormous strides in the number and types of drugs we’ve approved. Last year, for example, we approved a record number of novel drugs and biologics, biosimilars, and generics; including the first two biosimilars approved for cancer.  What’s especially notable about this? Not only did the overall number of drug approvals increase, but also the number of new drugs never before marketed in the United States, those products known as “novel” drugs, also achieved record levels.

That’s important, because novel drugs represent some of the most innovative therapies for advancing patient care.  Last year, for instance, we approved new treatments for patients with rare diseases such as Batten disease, Chagas disease, and hemophilia A with inhibitors. We also approved new cancer therapies, new antibiotics, and new therapies for patients with multiple sclerosis, Parkinson’s disease, tardive dyskinesia, Duchenne muscular dystrophy, and amyotrophic lateral sclerosis (often called Lou Gehrig’s disease), among many others.

Also notable, more than three quarters of the novel drugs approved were approved in the United States before any other country, and 100 percent were approved within their targeted user fee date for application review, as per the goals of the Prescription Drug User Fee Act.

I also want to highlight that when the agency is developing, reviewing, and evaluating new therapies to meet previously unmet needs, the pathway often involves many new voices.  Innovation today comes in many forms.  It includes scientific research of course, but it may also increasingly embrace the perspectives of patient advocates and patients, and stakeholders in manufacturing, scientific, and medical organizations across the globe.

Competition

Another important aspect of innovation, which is also tied to the role we play is to strike a balance between innovation and competition.  We’ve been working hard to achieve this across the spectrum of pharmaceutical products, from traditional small molecules, to complex products, to biologics. As Dr. Gottlieb has explained it, innovation, driven by competition, improves health care and promotes access by providing products that would otherwise be unavailable, while competition for older and once innovative products promotes access by lowering prices.

While the FDA doesn’t have a direct role in how drugs are priced, it plays a key role in access to drugs because drug companies seeking to market in the United States must meet FDA’s regulatory requirements to gain approval.  These regulatory requirements, in turn, may impact the cost of drug development, including the cost of research. Costs are also associated with the research and development of investigational products that do not make it to the market.

FDA has important responsibilities for balancing innovation and competition through the timely and efficient reviews of generic and biosimilar applications, which can offer consumers access to more affordable medicines once the statutory exclusivities granted by Congress have lapsed.

To the extent that the FDA can ensure that our regulatory requirements are streamlined, predictable, and science-based, we can help reduce the time, uncertainty, and cost of development for branded therapies as well as generic and biosimilar alternatives and ultimately reduce the cost of these endeavors. At the same time, we can help prevent the kinds of anticompetitive forces that can push effective treatments out of patients’ reach and prevent the full benefits of innovation to the public health. By lowering the direct costs of drug product development, as well as the time and risk embedded in these efforts, we also reduce the cost of the capital needed to underwrite new discovery. This, in turn, can translate to lower costs and greater opportunities for patients to afford and get the treatments they need.

As many of you know, last year the Commissioner introduced the Drug Competition Action Plan (also called DCAP), to further encourage competition and help bring greater efficiency and transparency to the process of generic drug review and approval.  But in so doing, it was important that we not sacrifice the scientific rigor underlying our generic drug program. Years of hard work have built the public’s confidence in generic drugs, and we must maintain that confidence.

Since announcing DCAP, we have made significant progress in each of  its three major components: (1) streamlining the generic drug review process to increase efficiency and effectiveness with the ultimate goal of more approvals; (2) supporting the development and enhancing the review of complex generic drug products; and (3) reducing the so-called “gaming” that frustrates and delays generic drug approvals and extends brand monopolies beyond what Congress intended with the Hatch-Waxman Amendments of 1984.

Our work on generics is already bearing fruit. Last year, we approved a record number of new generic drugs, including 80 first generic drugs. In July, we saw the highest number of approval actions in the history of the generic drugs program in a single month, with 126 total approvals (96 final approvals + 30 tentative approvals). And last month, for the first time, we approved several strengths of a generic drug product with a Competitive Generic Therapy designation-- and did so in the first cycle of review.

We’re making similar progress in our efforts to advance a competitive marketplace for biologic drugs.  Many of these play a critical role in the treatment of serious illnesses, including rare genetic disorders, autoimmune diseases, and cancer, and they often offer the only effective or available treatment options. Now a mainstay of modern medicine, they currently account for about a third of new therapies approved by the FDA.   But such promise can come with a high price tag.  That’s why Congress created the Biologics Price Competition and Innovation Act of 2009. It established an abbreviated pathway for approval of certain biological products determined to be biosimilar to or interchangeable with an FDA licensed biological product (a reference product), once any exclusivity periods for the reference product have lapsed.

As of today, the FDA has approved 12 products under BPCIA authority, including the first biosimilars for cancer in 2017.   But we need to build this market and address the challenges that biosimilar manufacturers confront.  That’s why in July, we announced our four-part Biosimilars Action Plan to accelerate biosimilar competition, applying many of the same lessons learned from our experience with generic drugs.  We believe this lays the groundwork to achieve a robust program in the coming years.

Ensuring Patient Safety

Does this discussion of innovation seem a little off topic to some of you? Stay with me, because I believe it is a natural segue for the focus of this session; it addresses how we ensure the safety of medical products at a time when the supply chain for these products is changing. As we all recognize, the development of these groundbreaking therapies would mean little if we could not ensure their safety and quality.

It’s essential, as we encourage the development of new and more affordable treatments, that we maintain our strict standards for safety and efficacy.  Patient safety is at the core of FDA’s public health mission; and ensuring reliable patient access to safe and effective medicines requires maintaining a transparent, secure, supply chain for drug distribution and delivery. 

Drug Quality and Security Act

To help reduce the risks of compounded drug products in the U.S., FDA has been working to implement the Drug Quality and Security Act (DQSA) and other provisions of federal law that affect compounding, and to engage in robust oversight efforts to protect the public health by enforcing the law. FDA routinely receives adverse event reports, including illnesses and deaths, that may be associated with compounded drugs. These adverse events may stem from contamination in drugs that need to be sterile because they are entering the bloodstream, the eye, or the spine. They may also be due to drugs that are super potent (toxicity concerns) or subpotent (ineffectiveness concerns), or to other formulation or quality concerns.

Federal law pertaining to compounding reflects that compounded drugs can serve an important role for patients whose medical needs cannot be met by approved drugs, and the provisions help to reduce the risks to patients that these unapproved drugs can present. Oversight of compounded drugs is essential, and FDA strives to strike a balance between preserving access to vital compounded drugs for patients who need them, while at the same time protecting these patients from the risks associated with compounded drugs not made in accordance with applicable quality standards.

Since enactment of DQSA, FDA has conducted hundreds of inspections of compounders, many in response to reports of serious adverse events, product quality problems, or other complaints.  As a result of these inspections, when violations are identified, FDA has taken appropriate action to help protect the American public.

FDA is also pursuing a number of initiatives regarding outsourcing facilities, a category of compounders established by Congress under the DQSA, that supply compounded drugs to hospitals, clinics, and other health care providers.

Another essential piece of the DQSA that FDA and stakeholders have been working collaboratively to implement is the Drug Supply Chain Security Act (or DSCSA). This law, Title II of the DQSA, outlines steps to strengthen the security of our nation’s drug supply chain. It is intended to protect the drug supply from the time finished drug products leave manufacturing facilities, to final delivery to pharmacies or providers’ offices where patients receive the medicines. The DSCSA directs FDA to establish national licensure standards for wholesale distributors and third-party logistics providers and requires these entities to report licensure and other information to FDA annually.

Ensuring a secure drug supply chain for American patients is a high priority. Counterfeit and other illegitimate drugs continue to threaten our supply chain, as the means to produce and distribute them through illegal networks becomes more sophisticated. While the U.S. drug supply chain is among the safest in the world, FDA and industry must continue to refine security methods to confound increasingly sophisticated criminal organizations who seek to profit from the introduction of fake, adulterated, or diverted drugs into the U.S. system.

Implementation of this law requires close collaboration among multiple stakeholders.  Congress was well aware of the challenges in modernizing the drug supply chain, and it’s why they planned for a gradual implementation of the law that would take place over a decade, with full implementation coming in 2023.

FDA is hard at work at implementating DQSA—the Agency has released several guidances for industry on a range of topics as FDA works to further secure our Nation’s drug supply chain. FDA values the feedback we have received from stakeholders and is informing FDA’s DQSA guidances.
Ensuring safe, quality medical products requires accountability throughout the supply chain. At FDA, we are committed to protecting consumers from exposure to drugs that may be counterfeit, stolen, contaminated, or otherwise harmful. And we do so at every point in the supply chain.

These efforts are particularly important as we continue to combat the opioid crisis gripping our nation.

Full implementation of the DSCSA will create a secure pharmaceutical supply chain, and help protect patients from receiving an illegitimate product.  Patients can be confident that the prescription medicines they get are coming from authentic sources.  They deserve this peace of mind.  

Access to Medically Necessary Drugs

I want to mention a related issue concerning drug supply that has a direct relationship to drug quality, and thus a major impact on patient care.  And that’s drug shortages.

Shortages of life-saving medicines have a significant impact on patient treatment options, requiring practitioners to make difficult decisions that can compromise care. I’m talking about things such as rationing supplies or using less desirable, but more readily available, alternative therapies. Although the number of new drug shortages has decreased significantly since 2011, we continue to see critical shortage concerns and are working hard to prevent and mitigate them.

By law, manufacturers of specific drugs must notify the FDA of certain disruptions so that we can take actions to help avert impending shortages or lessen their impact. Unfortunately, we’re still not getting enough information to help ensure all medically necessary drugs remain available.

To address these challenges, in July we announced the formation of a new Drug Shortages Task Force, including senior leaders from the FDA; the Centers for Medicare and Medicaid Services, (CMS); the Department of Veterans Affairs; the Department of Defense; and the Assistant Secretary for Preparedness and Response’s office. This Task Force will explore the reasons behind drug shortages and consider possible solutions. In addition to evaluating the FDA’s current authorities, the Task Force will evaluate the reimbursement policies of CMS and other payors that could be making it difficult for companies to manufacture certain drugs profitably. The FDA is also exploring ways to receive more timely information about potential supply disruptions. Earlier this month, we announced a public meeting in November and opened a docket to engage the public and stakeholders to provide an opportunity for everyone with an interest in addressing drug shortages to come to the table.

There’s a direct link between shortage and quality issues. The cause of many drug shortages are quality or manufacturing related, such as particulates, sterility concerns, or business related decisions related to manufacturing lines or facilities. Indeed, many shortages of life-saving drugs could be prevented by more proactive behavior on the part of manufacturers. Anticipation, foresight and communication are keys to preventing and reducing the impact of shortages. When a manufacturer has a contingency plan in place and provides the FDA with advance notification before production is halted or put on hold, shortages can be more easily mitigated. Without such efforts, shortages are more likely to occur and could take longer to ameliorate.  So our efforts to work closely and starting early dialogue with manufacturers on medical product quality and manufacturing should also have a positive impact on reducing shortages.

The Challenges of Globalization

To this point, I’ve spoken a good deal about quality and access issues involving the domestic supply chain for medical products.  But one of the biggest challenges we face in terms of safety and quality of medical products comes from overseas. The rise of global markets has had implications for our nation’s health and economy, as well as the safety and security of the medical products we use.  With the emergence of new markets, supply chains have become ever more complex, and the challenges we at FDA face in meeting our responsibilities to ensure the safety and efficacy of the drugs and medical devices patients in this country use have significantly grown.

As Dr. Gottlieb commented earlier this year, “a supply chain is only as strong as its weakest link.  Every link in that chain must be secure and reliable.” Unfortunately, this was affirmed in 2008, with the widespread Heparin contamination. But today, those risks are present at every step in our global supply chain networks – from manufacturing to packaging to distribution.

That’s why we must continue to work to strengthen the integrity of supply chains as products move through the system.  We’ve seen a number of important legislative changes over the last several years, which we are continuing to implement and strengthen today.

In the wake of the heparin contamination incident, Congress passed the 2012 FDASIA amendments, which provided FDA with new, more modern authorities to address the evolution from relatively simple supply chains to the more complex, global supply chains of the 21st Century.  These authorities increased our ability to prevent shortages, deter importation of violative drugs at the border, promote breakthrough drug submissions, and require enhanced oversight of manufacturing quality and supply chain safety.

While industry and regulators have made major strides forward in the area of supply chain safety since enactment of FDASIA, the dynamic environment of the global supply chain requires us to be ever vigilant.  We have seen recent recalls due to impurities, potency, and microbiological contamination that remind us that significant quality and safety problems can and still do arise.

Unknown suppliers are also a major risk in the supply chain. When investigating a drug’s quality defects, FDA has discovered that some manufacturers, including  compounders, were unaware of the identity of the API manufacturer because the API moved through multiple intermediaries who ultimately obscured the name of the original manufacturer.  And we have also found that when API manufacturers change their process, they can generate new or higher levels of impurities that pose an undetected safety risk due to insufficient change controls in their quality system. These cases remind us that qualification and oversight of ingredient suppliers and contractor manufacturers is a lifecycle responsibility.  It requires strong partnerships and quality agreements with provisions such as audits and prompt notifications of any major changes.

Mutual Recognition Agreement 

Before I close I’ll also mention an important partnership, the amended Pharmaceutical Annex to the 1998 U.S./EU Mutual Recognition Agreement. I know that others at this meeting will talk in some detail about this ground-breaking achievement attained with the cooperation of our European counterparts, but I wanted to note it because it is an example of the culmination of successful collaboration leading to international recognition efforts.

When Congress passed FDASIA, it gave FDA explicit authority to enter into agreements with foreign governments to recognize their pharmaceutical manufacturing facility inspections, once we determine that the relevant regulatory authority has the capability of conducting adequate inspections.  It also addressed certain confidentiality concerns attendant to information exchange that had been a serious hurdle – even when trying to collaborate with the EU to contain risks from a public health emergency. Two years after that, we launched the U.S.-EU Mutual Reliance Initiative, a strategic collaboration to evaluate whether we could rely on each other’s surveillance inspections reports for drug facilities within our own territories.

Initially, our inspection history revealed that FDA inspected drug facilities in the EU countries more than any other country. But the landscape in this area has continued to change. Between 2011 and 2017, there was a 70 percent increase in registered drug facilities in China; for India, the number was 65 percent. Through negotiations, the U.S. and EU worked to amend the Pharmaceutical Annex to the Mutual Recognition Agreement in a way that would allow each regulatory authority to have greater oversight in higher risk areas.  The amended Annex has been operational since November 1st of last year.

This means that the EU and FDA will use inspection reports and other related information obtained during drug manufacturing facility inspections, whether conducted by an EU inspectorate or by the FDA, to help determine whether a facility is manufacturing high quality drugs.

Then, if necessary, the FDA or EU can require further inspections or take other action to protect the public. The benefits of the Mutual Recognition Agreement include greater efficiencies, minimizing duplication, and reallocating resources to areas of higher risk.

While the U.S. drug supply chain is among the safest in the world, we must remember that developments out of our control can affect that situation in unanticipated ways.  In short, complacency is not an option. 

Conclusion

At the FDA, we’re challenging ourselves to make sure that we have the best approach to evaluating products that enter the U.S. supply chain. We’re working to develop frameworks that are modern and efficient, so that we’re making the best use of our own resources, facilitating innovation, and meeting the needs of patients as we fulfill our vital public health mission.

I hope over the course of the next two days, you will have the opportunity to learn about Quality Systems, Risk Management, Supplier Qualification, Innovative Manufacturing, modernizing Aseptic Processing facilities and other critical topics.  I encourage you to talk to your industry and FDA colleagues and benefit from the real-life industry case studies that will be presented, while discussing how lessons learned can be used to improve manufacturing reliability, quality assurance, shortage prevention and disaster recovery efforts.

Remember, the information you bring to and take away from this conference will enhance our collective efforts to sustain robust and safe supply chains and in doing so, put patients first.

In closing, I want to thank you for your shared commitment to patients, and I hope you have a productive conference.