API Supply Lines: Examining the Impact of the EU Falsified Medicines Directive and Global GMP Certifications
As the pharmaceutical industry approaches the first anniversary of the July implementation date of the European Union’s (EU) Falsified Medicines Directive, what has been the impact for stakeholders involved in the supply of active pharmaceutical ingredients (APIs) to the EU? How has compliance proceeded and what has been the effect on API supply to the EU? Shannon Bennett, Pharmaceutical Research Analyst, Thomson Reuters, examines the implications.
The European Union (EU) Falsified Medicines Directive (FMD) was implemented in January 2013; the directive mandated that as of July 2, 2013, all active pharmaceutical ingredients (APIs) exported to the EU, for use in the EU, from non-EU countries had to be manufactured under current good manufacturing practice (GMP) standards equivalent to those of the EU. The FMD also requires that all APIs imported into the EU be accompanied by written confirmation (WC) from the regulatory authorities in the originating county stating that the API was manufactured under GMP. As the pharmaceutical industry approaches the first anniversary of the July implementation date of the EU Falsified Medicines Directive, it is important to examine the impact that the FMD has had on stakeholders involved in API supply to the EU and which countries have earned WC to supply APIs into the EU.
Pharmaceutical Research Analyst
GMP equivalence assessments
Under the EU Falsified Medicines Directive, regulatory agencies in non-EU countries (also referred to as third countries) can request to have their GMP standards assessed by the European Commission (EC). If the EC finds a country’s regulatory standards are equivalent to those in the EU, the country will be added to the “white list.” As of May 15, 2014, the regulatory agencies of Australia, Japan, Switzerland, and the US have been approved by the EC as having GMP standards equivalent to those in the EU. These countries, therefore, do not have to provide written confirmation that APIs being exported into EU are manufactured under GMP standards. The equivalence assessment for Brazil is ongoing while Singapore and Israel have been assessed and denied approval for the time being. According to the minutes from the EC Pharmaceutical Committee meeting in March 2014, authorities in Mexico, Argentina, and Malaysia have informed the EC of their intention to request listing.
Approaching the first anniversary of the July implementation date, which is relevant to EU API supplier stakeholders, compliance appears to be going smoothly. Industry concerns regarding shortages caused by the FMD were apparently unfounded although some suppliers reportedly stockpiled API in advance of the implementation date as a cautionary measure.
Moreover, the perceived notion that third countries, which supply the majority of APIs for use in EU medicines, would not be prepared to meet the July 2 implementation date in providing WCs was quickly set straight. India, China, Taiwan, Brazil, and Mexico are among the top 20 API exporters to the EU. The WC aspect of the FMD comes without fees attached, which likely eased the burden, at least financially, for companies supplying APIs to the EU.
Additionally, there is an increasing international focus on GMP and supply-chain integrity. Regulatory agencies, such as Brazil’s Agéncia Nacional de VigilÃ¢ncia SanitÃ¡ria (ANVISA) and Comisión Federal para la Protección contra Riesgos Sanitarios (COFEPRIS) of Mexico, already required GMP standards from their manufacturers and so were prepared to supply certification upon request. As of March 2014, the China Food and Drug Administration provided WCs for 657 APIs (1). According to data captured in Thomson Reuters Newport database, India’s Central Drugs Standard Control Organization (CDSCO) has provided WC for more than 800 APIs from 272 individual company sites. ANVISA, COFEPRIS, and the Taiwan Food and Drug Administration have collectively provided WCs for more than 500 APIs (see Figure 1 for GMP certifications by country).
Figure 1: Written GMP Certifications Provided to the European Union per Country
Source: Thomson Reuters Newport Premium
European Commission, Pharmaceutical Committee, Pharm 644, March 26, 2014.
Facility inspections for GMP compliance are the basis for issuance of WCs. Regulatory authorities in third countries can issue a WC if a facility has had a successful inspection by EU authorities or other agencies, such as the FDA, applying equivalent standards for GMP. The World Health Organization (WHO) GMP and the guideline by the International Conference on Harmonization (ICH) of Technical Requirements for Registration of Pharmaceuticals for Human Use, ICH Q7 Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients, are also considered to be equivalent standards to those in the EU.
The European Medicines Agency (EMA) maintains the Eudra GMDP database, which is populated with information regarding companies that have been inspected for GMP and current good distribution practices by the national competent authorities (NCA) of the 18 EU member states in the Eurozone. The EMA reports the number of inspections for GMP compliance increased in 2013 as a result of the FMD. Inspections of 391 facilities in non-European Economic Area (EEA) countries were performed and six facilities in the EEA, an overall increase of 29 from the previous year (2). The public database also lists companies that have been found to be non-compliant via inspection by a NCA. Comparatively, according to data included in Newport, the FDA inspected facilities of 213 corporate groups with API manufacturing capabilities in 2013. The FDA Safety and Innovation Act, enacted in 2012, allows the FDA to work with foreign regulatory agencies to share information and recognize foreign inspections to increase supply-chain safety. Discussions between the FDA and EMA continue concerning mutual recognition initiatives and collaboration on drug-facility inspections for pharmaceutical quality.
Regulatory agencies increasing supply chain oversight
The FMD is another step in moving toward increasing oversight in the drug-supply chain. In the early 1990s, the European Directorate for the Quality of Medicines began issuing certificates of suitability (COS) to manufacturers wanting marketing authorizations for their APIs. A COS is granted following a review of the marketing authorization application and finding that the API is produced according to monographs of the European Pharmacopoeia. Over the past five years, the number of COS’ granted per year to companies in India has exceeded those granted to companies in the US, China, and those in the top five EU countries for API manufacturing (France, Italy, Germany, Spain, and the UK). Newport currently lists 3977 active COS’; of those, 1137 were granted to Indian facilities, following closely behind were companies in the top five EU countries that collectively have 1133 (see Figure 2 for COS comparison by country/year).
Figure 2: Certificates of Suitability (COS) Granted per Year
| Source: Thomson Reuters Newport Premium
Comparatively, in order to sell APIs in the US and South Korea, drug master files (DMFs) detailing processes and facilities used in the manufacture of an API, as well as indicating the registrant’s facilities meet the GMP standards, are required. Interestingly, submission of DMFs in Japan is optional although the amount of DMFs on file in Japan outnumber those in South Korea. The FDA has over 9840 active Type II DMFs on file. Japan has close to 3000 JDMFs and South Korea has just under 1950 KDMFs on file (3).
Of course, in the US, the submission of a US DMF does not necessarily mean that a manufacturer is supplying APIs to the US market. The FDA will only review a US DMF for completeness when it has been referenced in a drug application and the DMF fee has been paid, in accordance with the Generic Drug User Fee Act. Of the 9844 Type II DMFs on file with the FDA, 1881 DMFs are listed as available for reference. Not surprisingly, companies in India have filed the majority of reference listed DMFs (see Figure 3 for US DMFs for reference by country).
Figure 3: Reference Listed US Drug Master Files
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Leveling the playing field
Increasing international awareness, focus, and accountability in supply-chain safety, may be helping to level the field among players in regulated and less regulated markets. Europe was once a leader in generic API manufacturing as the preferred sourcing destination for companies pursuing generic-drug approval in the US following the enactment of the Hatch-Waxman Act in 1984. The introduction of supplementary protection certificates (SPCs) in the 1990s, which extended the market exclusivity period for innovator drugs in the EU and prevented EU companies from developing or manufacturing APIs covered by exclusivities, however, pushed generic-drug companies to source APIs from countries with less stringent intellectual property protection.
Enter the Bolar provision in 2006, which allowed EU API manufacturers to produce research quantities of patented APIs. The provision revived research and development in the EU although it still prohibited manufacture of quantities of API for use in “day one” launch following patent expiry.
In addition to offering fewer regulatory restrictions, sourcing from emerging markets also provided reduced costs in manufacturing. Stakeholders have found the benefits of these less-regulated markets are sometimes accompanied by issues with product quality, speed of delivery, and project management. Further, as labor and energy costs rise and the logistics of transportation and regulatory oversight become more complex, doing business overseas may be losing its appeal. Generic-drug companies and API manufacturers alike are beginning to entertain the idea of reshoring, or bringing their business back to the US and the EU.
The European Generic medicines Association is now requesting the EC’s consideration of a Bolar export provision that would allow EU companies to develop, manufacture, and ship API to countries where the API is not patent- or SPC-protected and/or stockpile APIs for use in generic-drug development for day-one launch in regulated markets. Supporters of the export provision cite a number of benefits, including job creation in the EU, economic growth, healthcare savings as well as high quality EU drug products.
The FMD is part of a larger global movement of increasing importance on GMP and transparency in the drug-supply chain. As the EC continues to assess the regulatory standards of countries interested in supplying the EU with API, regulatory agencies across the world are discussing collaboration and harmonization of GMP standards and inspections. The FDA now has more than 60 agreements with foreign agencies to share information in inspection reports, and the agency recently announced plans with the EMA to increase collaboration for inspecting pharmaceutical operations (4). Regulatory agencies, however, have been doing things their own way for decades and will need to work through some harmonization sticking points in regard to mutually agreeing to terms, standards, and inspection procedures.
1. European Commission, Pharmaceutical Committee, Pharm 644, March 26, 2014, http://ec.europa.eu/health/files/committee/72meeting/pharm644.pdf, accessed May 14, 2014.
2. European Medicines Agency, Annual Report 2013, http://www.ema.europa.eu/docs/en_GB/document_library/Annual_report/2014/04/WC500165986.pdf, accessed May 30, 2014.
3. Thomson Reuters, Newport Premium, http://thomsonreuters.com/newport-premium/
4. H. Sklamberg, “Ensuring Pharmaceutical Quality Through International Engagement,” FDA Voice, http://blogs.fda.gov/fdavoice/index.php/2014/05/ensuring-pharmaceutical-quality-through-international-engagement/, accessed May 21, 2014.