IS THE PHARMA SUPPLY-CHAIN A LOST CAUSE?

Hedley ReesManaging ConsultantPharmaFlow Ltd

AGENDA

Why am I so passionate about the Pharma supply chain?

What has been going on in the supply-chain? How did it get into all this trouble? Modernization – the route to salvation? What COULD the future hold?

WHY AM I SO PASSIONATE ABOUT THIS SUBJECT?

My three phases of enlightenment

Life in big Pharma

Life in biotech

Life as an independent

Life in big Pharma

Why did we do it that way? Why is it so difficult to change anything? Why the scepticism of modern improvement methods? What is underneath it all?

Life in biotech

Why are they starting at the wrong end?.…and who’s doing the sourcing strategy? Does anyone knows where all the inventory is?....and what condition it is in? Who is looking after transportation and storage?….what to you mean ‘I am’!? They think I’m in charge of shopping too!….but carry on regardless

Life as an independent

All dressed up and nowhere to go… The Milton Park experience

My glucose buddy My needle free injection buddy

Accepting the inevitable Enlightenment reigns

Generic Supply-Chain- Material Flow -

APISupplier 4

TabletsSupplier 7

Finished Packs

Supplier 9

CTS &Storage

Supplier 11

Investigator Sites

APISupplier 5

CTS &Storage

Supplier 10

Marketing Partners

TabletsSupplier 8

Regional Depots

Starting Material ASupplier 2

Starting Material ASupplier 3

Starting Material BSupplier 4

Starting Material BSupplier 5

Starting Material BSupplier 6

Starting Material ASupplier 1

CTS LabelsSupplier 12

PackagingSupplier 13

BottlesSupplier 14

In-Place

Planned

Pharma starts at the wrong end…

Information, information, information….

II

Oversee process development.

Contract Ops Manuals (COM)

Master Batch Record review.

Pharm OpsMPS model.

Boundary scenariosSupply agreementsRisk Assessments.

Supply Chain

Territory.Market responsibility (Co-

Prom?).Annual rolling fcorecast.

PO’sAnti-counterfeiting.

Trade dress definition.

PartnerChem Ops

Methods developmentMethods Transfer

Review of test results

Analytical

Master Validation Protocols

Batch record reviewMaterial disposition

Shelf life determination

QA

Oversee process development.

Contract Ops Manuals (COM)

Master Batch Record review.

Buy to spec.commercially available

Identity checkRelease testing

CofA’s

Starting Materials

Shelf life starting point.Hold time(s)Stability data

Drug Product

Shelf life/re-test

API

Registered shelf lifeNeed to store buffer inventory for partner

(x months)?

Packaged Product

Store product to GMP

Distribution Centre

Make print-ready artworkGNE/OSI approval

Compatible with packaging contractor

needs

Artwork Origination -Contact UK

Concept artwork

Print ready artwork

Updated monthly schedule (per

supply agreement)

II II II II

Hold starting materials & API

Real time inventoryTransfer order from

Supply Chain

Secure GMP Store

Need material specsSamples required

Flexibility to deal with changes

Packaging Printers - US

Inventory report

Monthly rolling

forecasts

Purchaseorder

Schedulesfor review

Artwork

Samples

Schedules

CofA

CofA

CofA

MBR creation

& approval

MBR creation

& approvalBatch record Batch record

Manufacturing schedule

Batch record

Request to ship

Material disposition status

Request to ship

CofACofA

MBR creation& approval

MBR creation

& approval

Batch record

Invoices

Inventoryreport

WHAT HAS BEEN GOING ON IN THE SUPPLY-CHAIN?

Pharma as it was, and now is…

1970s Vertical integration Local presence in the country market Mainly small molecule

2010s innovator, virtual, biotech, generic/bio-similars, speciality Pharma Biologics Markets and supply locations globalize

The vicious circle of outsourcing

Mass outsourcing

Rapid expansion

of contractor

base

Rise of Virtual

pharma

Drives growth in

contractors

Drive s growth in

Virtual Pharma

Disconnection Innovations cost ‘real’ money

Opportunities for error

Price escalation from lock-in

Control over lead timesTactical, arms length

Dis-integration of the supply chain

PatientsOutsourcing begins in earnest…..

Integrity issues…

Economically motivated adulteration – “Heparin, supplied by Baxter, found to be adulterated, with reports of 574 adverse events and nine patient deaths estimated

J&J/McNeil placed under a ‘Consent Decree’ after numerous recalls associated with supply chain issues.

Novartis shells out hundreds of millions $ in manufacturing issues Shortages in US/EU supply chains result in governments, patient

advocacy and general public searching questions.

Security issues…..

Cargo theft and diversion – “Abbott hit by $4m diagnostics theft in USA” (June 2011)

“Eli Lilly warehouse thieves make off with $76m haul” (March 2011)

Counterfeiting – “Operation Singapore, largest counterfeit operation in EU, where 2 million doses of counterfeit medicine enter UK supply chain in 2006/7”.

“FDA is still concerned that the drug supply is increasingly vulnerable to diversion of legitimate drugs (drugs illegally circulated outside the legal distribution system ie stolen or sold illegally) and concerned about the influx of counterfeit drugs- as both present significant risks to public health”. Rx-360 Newsletter September 28 2011

The fall-out….

Crippling impacts in the areas of patient safety, brand image and reputation, costs of remediation, customer service and investor confidence.

A UNIVERSAL CRY FOR CHANGE!

From regulators, governments, other competent authorities and patient advocacy groups.

What has been the response?

…EU implements Falsified Medicines Directive. …EMA consults on dramatic tightening of GDP/GMP …FDA pens “Pathway to Global Safety and Quality”. …US Congressional Committees investigate. …President Obama wades in on drug shortages. …US Pharmacopeia consults on new Chapter < 1083 >. …PEW Charitable Trust writes report “After Heparin”. …GS1 Global Traceability Standard for Healthcare …FDA Safety and Innovation Act, Title VII

HOW DID IT GET INTO ALL THIS TROUBLE?

The patent ‘starting pistol’

The starting pistol initiates behaviours aimed at reducing financial impact of failures and preparing for a race to approval

Bang!!!

The find it, file it, flog it approach….

Eureka!Is it safe?

…seems to be Is it

active?

…seems to be

Let’s get into the clinic – FAST!

…better make some for tox studies then….

Enter the patent fairy…

Bye bye my baby

Better make a batch for pre-clinical

then

Hope she realises I’ll

be watching her…

Making enough for pre-clinical

Analytical Methods

Supply chain

thinking?

Typical issues emerging…Scarce/bespoke materials specified.Limited sourcing options (starting materials and API)Inappropriate dosage forms.Contractors with insufficient capacity or capability.Poor process yields.Weak compliance with technical agreements.

Analytical Methods not adequate.Shipping/storage conditions not adequately defined.Incorrect value declarations to customs.Poor contractor relationships.Channel management not considered.…the list goes on, and on, and…..Severe disconnection between sponsor

company and it’s supply chain ‘partners’ due to supply chain neglect.

MODERNIZATION – THE ROUTE TO SALVATION?

The 21st Century Initiative

Pharmaceutical cGMP’s for the 21st Century – A Risk-Based Approach:

Started 2002 and reported late 2004 Desired state:

“A maximally efficient, agile, flexible pharmaceutical manufacturing sector without extensive regulatory oversight.”

Dr. Janet Woodcock, the U.S. Food and Drug Administration's Deputy Commissioner for Operations

Quality by Design (ICH Q8) and PAT

QbD Concepts Quality should be built in by design Focus on product knowledge and process understanding Establishment of design space

Provide opportunities for flexible regulatory approaches Risk-based regulatory decisions Real-time quality control and less release testing Process improvement within design space without further

review Reduction in post-approval submissions

PAT tools facilitates introduction of QbD

History of industrial improvement

Industrial Engineering Total Quality Management (TQM) World Class Manufacturing (WCM) Theory of Constraints (ToC) Lean and 6 sigma Toyota Production System (TPS) Systems Thinking It’s all INDUSTRIAL ENGINEERING!

Lean background

NUMMI study, Womack & Jones “The Machine That Changed the World”

Based on Toyota Production System (TPS) Reduce time between getting order and money in

Respect for people Continuous improvement

Five principles Many parallels with TQM, WCM, TOC, etc. Relate to modernization

Five Principles of Lean

1. Specify value from the standpoint of the end customer by product family.

2. Identify all the steps in the value stream for each product family, eliminating whenever possible those steps that do not create value.

3. Make the value-creating steps occur in tight sequence so that the product will flow smoothly toward the customer.

4. As flow is introduced, let customers pull value from the next upstream activity.

5. As value is specified, value streams are identified, wasted steps are removed, and flow and pull are introduced, continue until a state of perfection is reached in which value is created with no waste.

Process Village v Value Stream

Traditional functional layout– solid dose

Key points:Large batchesProduce to forecastHigh in-process inventoryDefects are hidden

Value stream alignment – solid dose

Key points:Schedule pacemaker only.Set rate at TAKT (Production rate required to match rate of consumption in the market place.Pull from the pacemaker (Kanbans and supermarkets)Solve production problems (A3 Management)Take out variation (SPC).Reduce defect rates on incoming materials.Use Single Minute Exchange of Dies (SMED) to reduce cycle time

WHAT COULD THE FUTURE HOLD?

Overview of a development process

SafetyEfficacyQuality

Principles of Prototyping• Design prototype based on full stakeholder involvement, including

marketing, manufacturing, procurement, key suppliers• Allocate overall management responsibility for the programme• Discovery research stays with prototype testing - iterative• Focus on manufacturability of compounds using predictive methods• Build a deep understanding of material and process capability• Institutionalise risk management into development programmes• Build an outline of the end-to-end supply chain

Principles of Commercial Supply

SafetyEfficacyQuality

GMP/GDP mind-set from the start: Good Supply-chain Practice - GSPChange emphasis from validation to process understanding/capabilityPlace responsibility for defective work on the producers not the quality functionRe-define the role of ‘quality’ into improvement activitiesDeploy PATBecome ‘business process’ oriented and quality systems awareInstitutionalise risk management into supply chain

Some radical concluding thoughts

Turn the development process on its head – put patient-use first Don’t award patents for molecules until they are working prototypes Supply chain for clinic and the market should be under one

responsibility - with strong SCM competencies Teach SCM principles at University to our chemists, pharmacists etc. The IND/CTA CMC review process should require a higher level of

understanding of the compound and it’s manufacturability

More radical concluding thoughts

Companies intent on making a financial exit before commercialization should prove the supply chain foundation is sound

Big Pharma should demand supply chain integrity from the companies they do licensing deals with

Regulations won’t solve the issues, and in EU they are likely to make matters worse.

Big Pharma CEO’s must step up to the plate and make change happen – learn from Toyota’s handling of the ‘fo0t pedal’ incident (scientists eventually found no defects in Toyota vehicles and put it down to driver error)

Questions? If there are any further questions, you can get to me in a number of

ways:T: +44(0)1656 667710M: +44(0)7718 884816E: h.rees@pharmaflowltd.co.ukW: http://www.pharmaflowltd.co.uk

LinkedIn:http://www.linkedin.com/profile/view?id=2432076&trk=tab_pro

Book:Supply Chain Management in the Drug Industry: Delivering Patient Value for Pharmaceuticals and Biologics