An in-depth look at QbD and how it can help the industry

By Girish Malhotra, PE
EPCOT International

Quality by Design (QBD) is an acronym we all believe in. It is an integral part of our daily life. We buy products using quality and price as the criterion. QBD is an essential part of business as it improves profitability. Almost every industry builds in quality as part of their product design and manufacturing practice.

However, in the pharmaceutical industry quality has been achieved through “repeated inspections” as the product is produced. This has worked extremely well as we only see quality medicines on the shelves. This “repeated inspection” has an associated cost and we pay for these inspections as part of the overall cost of medicine. It would be helpful to review the roadblocks pharmaceutical companies have to overcome to implement QBD practices.

We need to recognize “what is a pharmaceutical process?” I consider the development of a drug for a disease to be a combination of i) invention of a molecule, ii) testing of the molecule (active ingredient) for its efficacy, iii) production of the active pharmaceutical ingredient (API) and finally iv) combination of API with excipients to produce a dose dispensable product, which could be a tablet, capsule, ointment, or a liquid product. Costs related to drug discovery and trials are necessary and have to be recuperated. They are not part of the discussion.

Since quality is not built into the pharma product design, “repeated inspections” are necessary. The FDA and other regulatory agencies acknowledge that the current manufacturing practices are antiquated. API manufacturing falls short of the practices used in the chemical industry. We have to recognize that pharmaceuticals are nothing but chemicals that just happen to have a disease curing and life extension value. Techniques and formulation methods of API's with excipients has been studied considerably but they are still produced with “quality by analysis” methods.

Regulatory agencies would like pharmaceutical manufacturers to incorporate “QBD” in the manufacture of existing and new products. However, pharma companies face a dilemma and challenge to implement QBD practices as their products are highly regulated. Appropriate regulatory agencies have to be informed of any change in the current manufacturing process and/or quality. Depending on the change, requalification and re-approval might become necessary. This can be an expensive and time-consuming process.

Ethical drug producers have limited time in their patent life. QBD and re-regulatory approval might be un-economical for their existing products. Generic producers have the incentive to incorporate QBD but depending on their end market may or may not see value in QBD. This is illustrated later.

Steps for QBD

Can pharmaceuticals be produced by having a QBD process? The answer is yes. It is necessary to incorporate the following in the development process. Steps might need alteration to suit individual needs of companies. Incorporation of the following might seem difficult at first but once they are practiced every day, they will come easily. QBD has to be a daily mantra and I have lived through such an experience. The long-term benefit is having the best and most cost effective business process. It might even reduce regulatory complexities.

* Incorporate methods and thinking as if “every” drug molecule is going to be commercialized.

* Understand the product's chemistry and kinetics.

* Understand the implementation of the physics and chemistry of the processes, their incorporation, and translation to an economical commercial process.

* Understand how to manipulate the chemistry and kinetics so that the commercial process is producing the lowest cost but highest “QUALITY” product with no rework needed.

* Understand and familiarize yourself with the equipment and the technologies that are available and being used not only in the pharmaceutical industry but also in other industries i.e. “cross-fertilize.” This is important, as many times potent drugs do not require large batches.

* Make sure the “right” caliber expertise is available at your company to develop and implement the above improvements.

Since the collective benefits of the above are not totally understood, most of the time batch processes are an exact replica of the laboratory process. Lack of understanding of the above factors also results in investments that are higher than is necessary. For the same reasons, continuous processes are not considered for the manufacture of pharmaceuticals.

Reasons for lack of QBD

The best way to understand lack of “QBD” is by an illustration. Cost of API and excipients in the total cost of a drug are never discussed. It might be of value to understand these costs and their implications.

To every ethical and/or the generic pharma producer, the cost of API's and excipients are a raw material cost. They are not concerned by the low yields of API's or excipients. API's and excipients are combined to produce a dose and sold at a price that the market will bear rather than what the market demands. Reason for such pricing is “our desire to extend life at any cost.”

For this illustration, I have assumed the cost of an API that is under patent is $50.00 per kilo. It is also assumed that the combined cost of excipients is $25.00 per kilo. The API to excipient ratio in the tablet is 1 to 9. Based on these assumptions, component cost of API and excipient for a 100-milligram tablet is 0.5 cent and 2.25 cents respectively. It is assumed that the cost to formulate and package is 2 cents per tablet. This brings the total cost of a finished dose to 4.75 cents. If this tablet can be sold at $1.00 per tablet, the cost of API is only 0.5% of the selling price. Since this is a very low percentage of the selling price, there is no incentive for the ethical producer to change/improve their API manufacturing processes. Similarly, cost of excipients is also a low percentage of the selling price.

Now let us assume that the patented drug becomes generic. The generic producer now sells the $1.00 per dose at $0.80 per dose. The price to the consumer has dropped but the cost of API on a percentage basis has gone from 0.5% to 0.625% of the selling price. Even though this is a 25% increase of the API component, it still is a very small portion of the selling price and is considered not worth worrying about.

Now let us consider what happens if Wal-Mart (or other similar seller) enters the fray. At $4.00 for a 30-day supply, per tablet price to the customer is 13.33 cents. The wholesale selling price of the generic single dose might be about 5-6 cents. Now the API and excipient raw materials are about 45-55% of the selling price. Since this is a significant percentage compared to 0.5% (for a patented drug) or 0.625% (for a generic drug), there should be incentive to reduce the raw material costs. Without players like Wal-Mart, there is no incentive for the ethical or the generic producer to improve their costs and implement “QBD.” API producers and excipient producers have an incentive to reduce their costs as they are competing with other producers based on their products being a chemical rather than a drug. Lack of the need to improve costs could be considered a “contrarian view” in a continuous improvement world.

Present manufacturing methods at drug companies are driven by a time constraint as competition might have a similar product. There is no time to optimize the chemistry and engineering as applied to the manufacture of API development, excipients, and their formulation. Once the product starts to go through the regulatory channels, there is no time and change is difficult under the current regulatory environment.

As I have suggested earlier, the drugs under patent have a limited time on the market before generics take over the market, thus ethical drug producers have limited incentive to lower costs of the API and excipients, as they are a minor percentage of their selling price. Generic producers have a higher benefit of “QBD” as they have more time and opportunity to lower costs.

How does one dictate “QBD”? Price control could be an answer. However, that would limit new drug discoveries and infringe on business freedom. Drugs sold in price control countries can drive QBD, but the lower costs may not be passed on to the customers. Regulatory agencies can encourage drug makers to implement “QBD” but that is a slow process under the current laws. Sellers like Wal-Mart are the next closest thing to price controls. They can drive innovation. If innovation and productivity improvement are not a consideration for a company, then they might be thrust on them via “Creative destruction” as suggested by Jacob Schumpeter of Harvard in 1942. Dr. Alan Greenspan defines this very eloquently1. “Creative destruction: A market economy will incessantly revitalize itself from within by scrapping old and failing businesses and re-reallocating resources to newer, more productive ones.”

The best choice is for the drug makers to implement “QBD” themselves. It is also necessary that regulatory re-approval be simplified so that the manufacturers have an incentive to improve. There are simple ways to implement lot of changes that will improve implementation of QBD process, reduce costs, and enhance product quality. They require an excellent understanding of chemistries and their translation to an economic process. A convincing argument about the improvements has to be made to the regulatory agencies and it can be made by show and tell. It may sound daunting but having lived it, it is easy after the first time. Due to escalating drug development and testing costs, pharma companies are looking at how they can reduce costs. We might see a temporary benefit to the pharma stockholders. However, the benefit of “QBD” applied to drug development and manufacturing is permanent and everyone will benefit.

1Greenspan, Alan: The Age of Turbulence. The Penguin Press, New York, page 48.