Emil W. Ciurczak, DoraMaxx Consulting01.26.17
Orphan drugs are not “orphans” for no reason. Much like buying a house that is listed as a fixer-upper, there is not much profit in making these entities; a lot of work may be needed to just break even. The obvious proof of that is, if they were money makers, Pfizer, GSK, or some other Big Pharma house would be selling them already. The cost of developing orphans in the traditional manner makes them prohibitively non-cost-effective. Under the traditional development paradigm (i.e., pre-formulation, formulation, scale-up, etc.), it could take years to produce an acceptable dosage form.
The recipients/patients of the final orphan product almost always fall into two categories. The first is a small percentage of the population suffering from a rare ailment, such that, under the current blockbuster paradigm, Big Pharma cannot afford to develop and produce the product without incurring a loss.
Next there is a large number of potential patients, but with limited ability to pay. This is the unfortunate state of a number of developing countries, normally in Africa, South/Central America, or Asia. A large number of people, living in Equatorial regions, fall prey to numerous tropical diseases (e.g., malaria), parasites, or other common diseases like typhus, polio, and typhoid, which have been controlled in developed countries. The per capita income of these people is such that they cannot afford medicines at a price that would allow a larger pharma company to realize a profit.
The population crunch is a major problem. By that, I refer to the one-two punch of the limited patient population having a rare disease. With so few patients suffering from the rare disease, the ability to recover the costs of goods sold (COGS) and product development is very limited. The long development time and minimal production runs of a limited edition product could potentially cause the product to barely break-even or even a lose money, necessitating either an influx of government or charity monies to continue producing and distributing the product. All steps above require time, and time is money. Both product development and negotiations with government agencies or charities are quite labor-intensive for R&D and/or management personnel.
Additionally, the pool of potential clinical trial patients could be extremely limited by the number of people suffering from a rare disease and, if the treatment is a one-time dose or one series of doses like gene therapy, for example, the patient pool of likely final product customers becomes even smaller when clinical trial patients are removed.
With all the potential difficulties incurred with orphan drugs, there are still many companies engaged in making them. In addition to these forward-thinking smaller companies, many of the big boys are simultaneously outsourcing many of their operations. Of the outsourced functions, clinical trials make the most sense. These require a large number of office staff to do a competent job—QA, statisticians, etc. However, since there are fewer new chemical entities (NCEs) being tested for potential new drug applications (NDAs), the workload often does not justify the overhead of an in-house group, just for clinical trials. A contract research organization (CRO) can sustain the needed staff head-count by performing trials for several pharma companies at once.
Then, there are the other functions of CROs and contract manufacturing organizations (CMOs). Besides merely producing a finished product for a larger client, they are now being utilized to do virtually all phases of drug development, production, analysis, packaging, distribution, and such. As the largest pharma companies outsource more and more functions, the contract companies need to become mini-clones of the parent companies. That means, if the client company embraces PAT, QbD, and continuous manufacturing (CM), they will need to obtain/build the proper hardware, software, and expertise. How does a smaller, less well-funded contract manufacturer manage to obtain the same toys as the innovators? There are a number of ways.
“Find” the money
I covered several possible routes companies can take to find the money to finance facilities in earlier columns. One was to enhance the lab function of your company by, for example, switching from commonly used HPLC to UPLC. The excess throughput/capacity would configure the analytical/QC lab to accept outside samples. The income from the new contract analysis lab may be used to finance newer process equipment and monitors, allowing the contract manufacturer to become capable of performing low impact formulation studies.
By low impact, I mean using CN equipment to perform design of experiments for both clinical formulations and final product. CM equipment and continuous monitoring allows the formulator to use far smaller amounts of raw materials and APIs to develop the dosage form. In addition to saving materials, the time scale from beginning to final dosage form shrinks from weeks to one or two days.
Pool resources
There is also an opportunity for a number of smaller organizations to pool resources and develop a communal plant, either at one of their properties or a neutral site. The details would need to be worked out, as well as proprietary information protected, but, especially for companies making generics, there would be less emphasis on secrecy.
The shared expenses would bring an already less expensive alternative to classic formulation and production to lower levels by assuring that the equipment would only be used as needed, lowering the yearly ownership costs.
Another benefit could be co-education of several members of each firm, rather than having to support a huge staff for each company. Mutual non-disclosure agreements could protect each company’s interests, yet allowing the staffs to work together.
Clients take charge
The third way is for larger companies (clients) to simply install CM units at CRO/CMO facilities. For a year or two, Pfizer has been showing their modular CM units. These are analogous to pre-fabricated houses, where the several pieces are fabricated at a central location, tested for functionality, and then transported to a remote site. The remote sites for Pfizer, so far, have been their own properties, not already equipped with such equipment.
The stated purpose was to assure that the products generated at the remote site were nearly identical to the initiator site. This concept could easily be expanded to contract sites too. If the initiator company wishes to have a CMO pick up production, this approach would allow them to duplicate the initially submitted product with minimum revalidation. The other benefit is, when a blockbuster product either approaches or reaches its expiry date, the major company could continue producing it, under its own brand name, but at a greatly reduced price point and still make a profit greater than producing it in their own larger, higher overhead facility.
You might ask why the larger pharma corporations would want potentially competitive CRO/CMOs to exist, much less pay for them to be so modern and cost-effective. There are several truths that they will recognize. First, when then initiator’s patent runs out, some, if not many, generics will absolutely produce the product and compete at a lower price.
Second, insurance companies and, by extension, pharmaceutical companies, are coming under pressure from governmental agencies in multiple countries to lower costs. This will be extremely painful under current production paradigms.
What a cooperation between large pharma, CRO/CMOs, and generics could accomplish would be a so-called “win-win-win” for the larger companies, smaller companies, and the contract companies. How could that work?
So, to summarize, the spread of PAT/QbD/CM capabilities is a win-win-win for large, initiator pharma companies, CRO/CMOs, and generics, and, not to be forgotten, the end user, for which the product was, after all, intended. Of course, similar arguments apply for large companies to follow this blueprint for research, development, and clinical trials.
Emil W. Ciurczak
DoraMaxx Consulting
Emil W. Ciurczak has worked in the pharmaceutical industry since 1970 for companies that include Ciba-Geigy, Sandoz, Berlex, Merck, and Purdue Pharma, where he specialized in performing method development on most types of analytical equipment. In 1983, he introduced NIR spectroscopy to pharmaceutical applications, and is generally credited as one of the first to use process analytical technologies (PAT) in drug manufacturing and development.
The recipients/patients of the final orphan product almost always fall into two categories. The first is a small percentage of the population suffering from a rare ailment, such that, under the current blockbuster paradigm, Big Pharma cannot afford to develop and produce the product without incurring a loss.
Next there is a large number of potential patients, but with limited ability to pay. This is the unfortunate state of a number of developing countries, normally in Africa, South/Central America, or Asia. A large number of people, living in Equatorial regions, fall prey to numerous tropical diseases (e.g., malaria), parasites, or other common diseases like typhus, polio, and typhoid, which have been controlled in developed countries. The per capita income of these people is such that they cannot afford medicines at a price that would allow a larger pharma company to realize a profit.
The population crunch is a major problem. By that, I refer to the one-two punch of the limited patient population having a rare disease. With so few patients suffering from the rare disease, the ability to recover the costs of goods sold (COGS) and product development is very limited. The long development time and minimal production runs of a limited edition product could potentially cause the product to barely break-even or even a lose money, necessitating either an influx of government or charity monies to continue producing and distributing the product. All steps above require time, and time is money. Both product development and negotiations with government agencies or charities are quite labor-intensive for R&D and/or management personnel.
Additionally, the pool of potential clinical trial patients could be extremely limited by the number of people suffering from a rare disease and, if the treatment is a one-time dose or one series of doses like gene therapy, for example, the patient pool of likely final product customers becomes even smaller when clinical trial patients are removed.
With all the potential difficulties incurred with orphan drugs, there are still many companies engaged in making them. In addition to these forward-thinking smaller companies, many of the big boys are simultaneously outsourcing many of their operations. Of the outsourced functions, clinical trials make the most sense. These require a large number of office staff to do a competent job—QA, statisticians, etc. However, since there are fewer new chemical entities (NCEs) being tested for potential new drug applications (NDAs), the workload often does not justify the overhead of an in-house group, just for clinical trials. A contract research organization (CRO) can sustain the needed staff head-count by performing trials for several pharma companies at once.
Then, there are the other functions of CROs and contract manufacturing organizations (CMOs). Besides merely producing a finished product for a larger client, they are now being utilized to do virtually all phases of drug development, production, analysis, packaging, distribution, and such. As the largest pharma companies outsource more and more functions, the contract companies need to become mini-clones of the parent companies. That means, if the client company embraces PAT, QbD, and continuous manufacturing (CM), they will need to obtain/build the proper hardware, software, and expertise. How does a smaller, less well-funded contract manufacturer manage to obtain the same toys as the innovators? There are a number of ways.
“Find” the money
I covered several possible routes companies can take to find the money to finance facilities in earlier columns. One was to enhance the lab function of your company by, for example, switching from commonly used HPLC to UPLC. The excess throughput/capacity would configure the analytical/QC lab to accept outside samples. The income from the new contract analysis lab may be used to finance newer process equipment and monitors, allowing the contract manufacturer to become capable of performing low impact formulation studies.
By low impact, I mean using CN equipment to perform design of experiments for both clinical formulations and final product. CM equipment and continuous monitoring allows the formulator to use far smaller amounts of raw materials and APIs to develop the dosage form. In addition to saving materials, the time scale from beginning to final dosage form shrinks from weeks to one or two days.
Pool resources
There is also an opportunity for a number of smaller organizations to pool resources and develop a communal plant, either at one of their properties or a neutral site. The details would need to be worked out, as well as proprietary information protected, but, especially for companies making generics, there would be less emphasis on secrecy.
The shared expenses would bring an already less expensive alternative to classic formulation and production to lower levels by assuring that the equipment would only be used as needed, lowering the yearly ownership costs.
Another benefit could be co-education of several members of each firm, rather than having to support a huge staff for each company. Mutual non-disclosure agreements could protect each company’s interests, yet allowing the staffs to work together.
Clients take charge
The third way is for larger companies (clients) to simply install CM units at CRO/CMO facilities. For a year or two, Pfizer has been showing their modular CM units. These are analogous to pre-fabricated houses, where the several pieces are fabricated at a central location, tested for functionality, and then transported to a remote site. The remote sites for Pfizer, so far, have been their own properties, not already equipped with such equipment.
The stated purpose was to assure that the products generated at the remote site were nearly identical to the initiator site. This concept could easily be expanded to contract sites too. If the initiator company wishes to have a CMO pick up production, this approach would allow them to duplicate the initially submitted product with minimum revalidation. The other benefit is, when a blockbuster product either approaches or reaches its expiry date, the major company could continue producing it, under its own brand name, but at a greatly reduced price point and still make a profit greater than producing it in their own larger, higher overhead facility.
You might ask why the larger pharma corporations would want potentially competitive CRO/CMOs to exist, much less pay for them to be so modern and cost-effective. There are several truths that they will recognize. First, when then initiator’s patent runs out, some, if not many, generics will absolutely produce the product and compete at a lower price.
Second, insurance companies and, by extension, pharmaceutical companies, are coming under pressure from governmental agencies in multiple countries to lower costs. This will be extremely painful under current production paradigms.
What a cooperation between large pharma, CRO/CMOs, and generics could accomplish would be a so-called “win-win-win” for the larger companies, smaller companies, and the contract companies. How could that work?
- Using a CMO from the beginning of a product’s lifecycle would, by avoiding the inherent overhead of the larger company, allow the cost of the drug to be more modest, yet allowing the originator to make a well-earned profit.
- This lower cost of production would allow the parent company to produce the product in the country in which it is being sold, allowing the local agency to oversee the facility and ensure a more robust supply chain. Add to that no need for importation inspections and savings on shipping costs, and the prices can be even more competitive.
- As the drug product comes off patent, the CMO with the mirror production lines could be incorporated to continue producing the drug under the initiator’s copyrighted name, but at a cost comparable with generic competition.
- If a generic or non-engaged CRO decides to produce a product coming off patent, the quality of that product could well rival the original, named product.
So, to summarize, the spread of PAT/QbD/CM capabilities is a win-win-win for large, initiator pharma companies, CRO/CMOs, and generics, and, not to be forgotten, the end user, for which the product was, after all, intended. Of course, similar arguments apply for large companies to follow this blueprint for research, development, and clinical trials.
Emil W. Ciurczak
DoraMaxx Consulting
Emil W. Ciurczak has worked in the pharmaceutical industry since 1970 for companies that include Ciba-Geigy, Sandoz, Berlex, Merck, and Purdue Pharma, where he specialized in performing method development on most types of analytical equipment. In 1983, he introduced NIR spectroscopy to pharmaceutical applications, and is generally credited as one of the first to use process analytical technologies (PAT) in drug manufacturing and development.
