API: The Right Choice

The US Food and Drug Administration (FDA) is ramping up regulatory efforts with funding and reform. Generic drugs are becoming increasingly visible because of their importance in healthcare. How do companies keep up with FDA regulations and ensure that Abbreviated New Drug Applications (ANDAs) get approved?

Cost Control
In the current politico economic climate, prescription medication is especially important to consumers who can save 50 percent or more in drug costs if a generic version of a brand name drug is available to them. Considering that generics account for nearly 70 percent of prescribed medications, and consumption is likely to increase because of its lower cost, it is no surprise that many governments are tightening their regulatory oversight of drug manufacturers.

There is a direct correlation between the percentage of the world population using a product and the amount of regulatory oversight that comes with it. Widespread use of a product necessitates current Good Manufacturing Practices (cGMP) compliance, and careful quality control, especially when a product is developed using ingredients from a number of diverse sources.

The global regulatory landscape has permanently changed since the Heparin fiasco, and drug manufacturers need to be vigilant about cGMP compliance and quality control. This is because the US FDA is increasing its vigilance and scrutiny of drug manufacturing operations in response to mounting evidence of gaping holes in regulatory oversight.

There appears to be a gap between what the FDA deems acceptable in generic drugs and what consumers are now beginning to see as acceptable. Recent articles in mainstream US publications such as Self Magazine and the Wall Street Journal outline the concerns that consumers have had with generic prescriptions, where minute differences have led to major consequences.

In 2006, one patient's 300mg prescription for the antidepressant Bupropion XL, a generic version of Wellbutrin XL, caused side effects. The drug notably worsened depression and various gastrointestinal problems before it was discovered in 2008 that the 300mg pill approval was based on an extrapolation of studies performed solely on the 150mg pill.

This example was reported as recently as June this year. It implies that there are still regulatory gaps that need to be addressed. However, it is apparent that recent legislation has enabled the FDA to begin increasing its ability for regulatory oversight, as evidenced by the openings of FDA bureaus in India, China, Europe, and Central America, with plans to expand to Mexico, South America, and the Middle East. The FDA Globalization Act of 2009, sponsored by Rep John Dingell (Michigan) should be able to provide opportunities for greater reform.

Approaching the Problem
Only four percent of all ANDAs are approved by the FDA in their first go-round. Most of the 96 percent of the unapproved ANDAs fail because of a lack of chemistry documentation related to the Drug Master File (DMF). Considering that it takes an average of 18 to 24 months from submission to approval, it is imperative for drug manufacturers to have reference to a DMF that will be acceptable within one or two review cycles. It can be challenging to perform the necessary research that is needed to stay up-to-date with the FDA's increasingly stringent requirements.

The main difficulty with "meeting" FDA requirements is that, in many cases, it is very much like trying to hit a moving target, which incidentally, is an effective way to move the drug industry steadily towards better drug safety and efficacy.

The main source of the aforementioned lack of chemistry documentation, formally known on paper as "chemistry deficiencies," has been found to be closely associated with the drug manufacturers' source of Active Pharmaceutical Ingredients (API). Some of the more obvious reasons for chemistry deficiencies in ANDAs include:

• Lack of transparency in the manufacturing process to be able to certify that no process patents are infringed;
• Slow response times;
• Not setting proper quality specifications;
• Lacking in an understanding of how to respond to the FDA;
• Changes in manufacturing process;
• Unsecured and unqualified raw material supply chains;
• Non-disclosure of solvents;
• Not identifying toxic impurities.

The API and its source is heavily scrutinized by the FDA because the former is key to a drug's efficacy and in many cases, its overall safety. ANDA submissions can be complex in that there are usually ingredients from multiple entities/sources in a single drug. If one of those entities lacks sufficient documentation, especially the API source, the drug will likely be rejected and the ANDA unapproved.

Therefore, the key to ANDA approval is to assure that the API is developed meticulously, and that all of the development and manufacturing procedures strictly adhere to established cGMP compliance and quality standards. This is so that all documentation is available to the FDA and to other governing bodies when required.

This is a large and time-consuming task for any drug manufacturer. Most API manufacturers are not located near the drug manufacturer's site. This makes it almost impossible to assure cGMP compliance without working through an agent/broker that has qualified regulatory personnel and offices located in the same country as the API manufacturer.



Choosing an API Source
So what are the options for sourcing an API? To begin with, there are certain factors that should be considered, including the geographic market breakdown of generic API sources. China, India, and Italy currently account for the majority of generic API manufacturers serving the world's estimated US$17 billion market. China produces about 70 percent of the world's generic API, India manufactures about 19 percent, and Italy accounts for about nine percent.

Apart from geography, the criteria for choosing an API source should include:

• A predictable response time;
• Chemistry and manufacturing expertise;
• Reliable quality;
• Compliance assurance;
• Regulatory expertise,
• Intellectual property security;
• Security of supply;
• Language.



Predictable response time is important when responding to an FDA deficiency, in view of the time sensitive aspects of ANDA approvals. Compliance assurance and regulatory expertise are key because they demonstrate one's ability to navigate current FDA policy and one's overall knowledge of the approval process.

API manufacturers generally are not trained to respond accurately and quickly to DMF deficiencies. Intellectual property security and trade secrets are a major issue for most manufacturers. It is difficult for manufacturers to fully disclose their manufacturing processes even in a DMF.

But above all, an API source's track record is the litmus test for trust because a reputable establishment should routinely exceed the quality standards set forth by the FDA, which makes sense financially, ethically and morally. If a drug is manufactured to the highest of universal quality and safety standards, it will likely be safe and effective and is more likely to be approved in its first FDA review cycle.

After establishing the above parameters, there are a number of options available when selecting an API supplier, based on its type of business model that is best suited for one's company goals. A general rule is that the cost to develop and file a DMF costs approximately US$250,000. This cost applies, no matter which option is used.

The first option is to manufacture the API in-house - ie, vertical integration. This option is ideal if resources are available for a completely self-reliant business model where API production is possible, as well as having the necessary equipment and staff in place. It is advantageous to be in full control, with the benefits of lower fixed costs, Intellectual Property (IP) confidentiality, and secure supply chains and logistics.

However, the cost of infrastructure is high and if any capabilities are limited, or problems arise, there is no support. If the infrastructure does not exist or requires extensive renovation or modification to support API manufacture, the amount of time that is required to do so at this stage may jeopardize the entire program.

Another option would be to look for a lower cost manufacturer to be the API supplier. Even with this arrangement, it will still cost US$250,000 per DMF API. Eventually these costs need to be absorbed even if they do not show up in the API. This option is more risky because the quality and safety of the API can be called into question.

Response time can be unpredictable, the quality of the production facilities may be questionable, supply chains and logistics are not secure - issues that can affect the ANDA approval process. In addition, IP confidentiality may not be guaranteed.

Competitive Collaboration
A third option would be to work with a competitor to develop the API. While this is usually a last resort, there may be rare situations where it is the only option available. Here, supply and logistics security and availability may be suitable for both parties, but costs could fluctuate depending on the mutually agreed business plan.

There are obvious competitive conflicts in terms of transparency and confidentiality, especially in regards to each party's facilities and processes. Another potential pitfall can be the long-term security of supply; will the newfound "frenemy" adopt one's goals in their own business plan?



If going with the lowest bidder sounds too risky and going to a competitor is out of the question, another option would be to build a partnership with a company that has expertise in developing and getting APIs FDA approved, in order to develop the drug together. In this way, risk and responsibility are shared, but so is the reward.

A full service product development company with an excellent track record is an ideal partner because there is an assurance that the processes used are free of process patents, and that the quality will meet the FDA and ICH guidelines for quality. The API manufacturer will have to be FDA approved. Although the API may come at a slightly higher cost, the necessary documentation of the quality and processes that are involved in making the drug are available. The information is well organized for the partner and more importantly, forthe FDA.

With a reputable full service provider, the quality materials are guaranteed to be used in all processes, along with strict self-screening procedures that go over and beyond normal quality control practices that are performed at the lower cost manufacturers' facilities. Supply chains are secured, IP remains confidential, and response time is quick. The fast response time is attributed to a full service provider's knowledge base and familiarity with the approval process and current FDA policy.

The dosage form manufacturers' ANDA approvals will come in 9-12 months for most products, because of the full staff support capabilities that provide all required paperwork and support. These support capabilities are especially invaluable when there is any last minute issue or follow-up work that is required for approval.

The reason for a full service provider to consistently aim to exceed FDA standards is simple: It makes sense to do everything possible to ensure that a drug is approved, for both financial and ethical reasons. If a drug is manufactured with the health of the patient in mind, the drug is more likely to be manufactured with the best intentions and in the finest conditions possible.