GlaxoSmithKline announced this week that it is recalling some of its asthma drug Ventolin. The reason: its contract manufacturer said that the syrup bottles might have been contaminated with glass particles.
Last fall, in what 60 Minutes described as "the worst pharmaceutical disaster in decades," 48 people died in a meningitis outbreak that was traced back to contaminated production in a compounding pharmacy in Massachusetts. The New York Times reported that the U.S. is suffering from a shortage of injectable drugs caused by quality failures at large manufacturers such as Hospira.
As a result of these and other stories, the quality of our medicines, or more precisely the failure in quality, has gained widespread attention.
Many believe the solution is to increase business investment in capital equipment. Hospira announced last year that it would spend hundreds of millions of dollars on a new state-of-the-art plant and quality and operations specialists. David Gaugh, vice president for the Generic Pharmaceutical Association, said that the perception that injectable drugs are produced in run-down facilities was "absolutely not true" and compared them to well-maintained vintage cars. This focus on technology might appear reasonable; but it is not sufficient.
The only way to guarantee that no defective drugs are ever produced is to never produce any drugs. None of us wants a world without medicine, and thus, we must live with some risk of quality failures in our drug supply chains. Because testing pharmaceuticals for every theoretically-possible contaminant or process deviation is prohibitively expensive if not impossible, drug quality must be built into the product through well-designed production processes, the use of quality ingredients and the consistent adherence to quality control procedures.
Aware of this, regulators long ago established "Good Manufacturing Practices," known as GMPs, in the pharmaceutical industry. Operating in full compliance with these legally-required GMPs greatly reduces the risk of contaminated or misformulated product reaching the market. It seems that many of the plants highlighted in recent reports were not adhering to GMPs.
To address the problem, it is necessary that executives develop a quality-oriented mindset across the entire supply chain. For example, are employees empowered and encouraged to report deviations from GMPs, even if doing so is costly in the short term? Are deviations investigated and corrective actions put in place, even if doing so requires failing to meet promised delivery dates? Absent such an organizational mindset, quality failures will occur even with the best technology.
This soft side of quality management does not come easily. It often takes years of time to embed in a company, and even a longer time to regenerate if the culture has been undermined. Our research (with co-authors) has found that is difficult for companies to prevent a "decay" in GMP adherence even in their own factories.
When production is outsourced, ensuring adherence is more challenging. Recognizing this, the Food and Drug Administration is currently seeking comment on a "Guidance for Industry" document on quality agreements in contract manufacturing. The document focuses on clarifying responsibilities. Most companies engage in some form of certification, facility audits and product inspections with their contract manufacturers. While clear responsibilities and such actions can help to ensure quality at contractors, they do not guarantee consistent day-to-day adherence to good manufacturing practices.
Using FDA inspection data, we (and co-authors) have studied quality risk in the pharmaceutical industry. In one set of studies, we found that plants in a location with a different primary language than the firm's headquarters operate with less GMP compliance than those with no language difference. Regarding outsourcing, we did not find an overall difference in quality risk between company-owned plants and contract manufacturer plants.
However, we did find a higher quality risk for small contract manufacturers and those subject to less regulation. Given this, we were not altogether surprised that these lightly regulated, small compounding companies like NECC were found to operate with high quality risk.
Taken together, our research provides empirical evidence that drug manufacturers are hard-pressed to consistently maintain high quality operations even in their own domestic facilities. This challenge is magnified when production is performed in offshore and outsourced plants. Our study and related studies reinforce the recent call to increase FDA regulatory scrutiny of compounders; this is clearly necessary and will help prevent future tragedies such as the recent meningitis outbreak.
However, regulatory and technical solutions alone are not adequate—an organizational mindset of compliance with GMPs is necessary throughout a drug's supply chain, even if developing and maintaining this mindset is costly in the short-term.
John Gray is assistant professor of operations at the Fisher College of Business at Ohio State University.
Aleda Roth is the Burlington Industries Professor in Supply Chain Management at Clemson University's College of Business and Behavioral Science.
Brian Tomlin is associate professor of business administration at the Tuck School of Business at Dartmouth.