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IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech1 Workshop C: Tools for a Successful Outsourcing Program Paul Woitach Managing Partner Pharmaceutical.

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Presentation on theme: "IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech1 Workshop C: Tools for a Successful Outsourcing Program Paul Woitach Managing Partner Pharmaceutical."— Presentation transcript:

1 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech1 Workshop C: Tools for a Successful Outsourcing Program Paul Woitach Managing Partner Pharmaceutical Advisors LLC 316 Wall Street, Research Park Princeton, NJ

2 Workshop Approach Management perspective Not a development planning discussion per se –Assume you know what to do BUT some insights Checklists and tools Tips and suggestions Assuming all can read so will speak to the key points rather than discuss every bullet Geared for first GMP but applicable to all stages and commercial Structured to leverage the experience of CMOs and Sponsors in the workshop –Discussion, Debate & Reconciliation / Group hugs Help you to walk away with a robust package Using term CMO and Vendor interchangeably – can often apply to packaging, analytical etc. IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 2

3 Agenda 1.Case study examples and tools for developing an outsourcing program, whether its a single compound or you need more structure to managing multiple programs 2.Understanding how to find CMOs, contract with them, and maintain leverage and look after your interests in structuring the business and technical relationship 3.How to be a good business client for speed and value 4. Anticipate and handle specific problems with outsourcing 5.Case Studies - Bumps in the road that others have had and what you can learn from them 6.Tips on running programs with a limited internal budget and resources IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 3

4 4 If You Are Just Starting to Outsource… NominationPhIPhIIPhIIINDA/MAAApproval Launch API/DP Enabling Technology & Supply Manufacturer API/DP Technology/Supplies RMAPIDP PhIII Supplies RMAPIDP Launch Planning RMDPDP StabilityAPI PAIn Planning RMAPIDP ICH Stability ICH DP Stability Planning DP Technology API Technology Raw Materials API Activities DP Activities Enabling Evolving API… & Drug Product… Demand

5 Lead Times and Need to Be Prepared If you are starting to outsource manufacture of DS or DP –Lead times can be 3-6 months to ID and secure CMOs for CTM or more Can be longer for commercial –Many factors can add up / compound the issue Screening / ID CMOs true capabilities takes time CDAs can take time 2-4 weeks to prepare a good response to RFP Timing of scheduling site visits and audits depends on working around existing client schedules No two CMOs are exactly alike Sometimes technologies / unit opps are not ubiquitous or all in the same location The CMO you want may not be interested or feel comfortable with your project Negotiations & Contracting iterations Seasonal factors can stretch lead times further IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 5

6 Tools on The Checklist Descriptions and Tips IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech6

7 Tools - Outsourcing Checklist for Success ItemComments Integrated Development Plan Core Enabler – Always changes but think it through before you start to write RFP The Right SOPsCore Enabler some before RFP, others in time for GMP Data PlanCore Enabler - think it through before you write RFP Resources to ManageCore Enabler - before you start to write RFP Process for SelectionCore Enabler – now you have one Know Your RequirementsVaries by project but aim to not change after the RFP Finding CMO CandidatesVaries by Project Selection CriteriaVaries by Project RFP TemplateVaries by Project – now you have one Contracting / Ts & CsBe prepared to integrate your needs with CMOs Quality AgreementBe prepared to integrate your needs with CMOs IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 7

8 1. Integrated Development Plans Youd be amazed at how infrequently we see them! Integrate DS & DP at the very least Tox and clinical timelines and quantities are important for your planning –Create a strawman assumptions if you cant get answers Consider impact on todays and tomorrows needs of –Approval & Investment Strategy –Development Plan beyond IND Factor in Lead times –CMO selection & contracting –Product release across CMOs and report turnaround times –Experimental failures Not Doing it is a huge source of problems –Beware of oversimplified plans / rules of thumb –Make communication across functions happen! Even if its just with yourself! IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 8

9 9 Symptoms of a Planning Gap to be Filled Dangerous Assumptions We Hear… We dont need to think about that because were going to license out in Phase II… Our licensing partner will worry about that… Lets just get GMP material for everything… Were going to use GLP material… Well get a consultant to write the CMC section when the time comes… We need a Quality Manual? But Were virtual… Its too early to be thinking about a Quality Agreement – its just development work…

10 2. The Right SOPs IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 10 Not a thick binder but a few enabling tools –Leverage Contractors Quality System & SOPs –Minimal core internal Policies and SOPs to enable running through contractors Can also invest proactively in your Quality Agreement Template and Roles & Responsibilities Matrix to reduce need for certain SOP detail Important to understand what you need in place before contracting and before GMP activity Its still your product with your responsibilities

11 Pre-Outsourcing SOP Gap Analysis IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 11 Area for Policies and/or ProceduresNowSoonLaterApproach Quality Unit ResponsibilitiesSOP Modify existing or create new AuditingSOP Modify existing or create new Batch Disposition Pol/SOP Modify existing or create new Buildings and FacilitiesPol Use contractors SOPs Change Control Pol/SOP Modify existing or create new Complaint Handling X Contractors - Approval of GXP Contractors & Consultants SOP Modify existing or create new Corrective and Preventive Actions Pol Use contractors SOPs Deviations Pol Use contractors SOPs Documentation Creation, Mods & Control SOP Modify existing or create new Use contractors SOPs EquipmentPol Use contractors SOPs Labeling Control XUse contractors SOPs Laboratory ControlSOP Modify existing or create new Use contractors SOPs Management & Employee Quality Responsibilities X Materials Management & Purchasing ControlPol Modify existing or create new Packaging, Labeling, Storage, Shipping and Distribution Pol Use contractors SOPs Production and Process Controls Pol Use contractors SOPs Qualification and Validation Pol Use contractors SOPs Recalls and Product Withdrawals X Records and Records Retention X Returned and Salvaged Goods X SpecificationsSOP Modify existing or create new StabilityPol/SOP Modify existing or create new TrainingSOP Modify existing or create new Leveraging the Contractors SOPs in Your SOPs

12 Pre-Outsourcing SOP Gap Analysis IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech12 Area for Policies and/or ProceduresNowSoonLaterApproach Quality Unit ResponsibilitiesSOP Modify existing or create new AuditingSOP Modify existing or create new Batch Disposition SOP Quality Agreement. Create SOP Buildings and FacilitiesPol Use contractors SOPs Change Control Pol/ SOP Quality Agreement Complaint Handling X Contractors - Approval of GXP Contractors & ConsultantsSOP Modify existing or create new Corrective and Preventive Actions Pol Quality Agreement Deviations Pol Quality Agreement Documentation Creation, Mods & Control SOP Modify existing or create new EquipmentPol Quality Agreement Labeling Control Quality Agreement Laboratory ControlSOP Quality Agreement Management & Employee Quality Responsibilities X Materials Management & Purchasing ControlPol Modify existing or create new Packaging, Labeling, Storage, Shipping and Distribution Pol Quality Agreement Production and Process Controls Pol Quality Agreement Qualification and Validation Pol Quality Agreement Recalls and Product Withdrawals X Records and Records Retention X Returned and Salvaged Goods X SpecificationsSOP Modify existing or create new StabilityPol /SOP Quality Agreement TrainingSOP Quality Agreement X Leveraging Your Quality Agreement

13 3. Data Plan You are not just buying supply, you are buying –Material –Technology & Other IP –Registration Enabling Information Understand data needed for submission, to make decisions and to achieve objectives with future partners or for your commercial objectives –Where will it come from –Who will write what –In what form do you need –Implications for your RFP / Requirements –How will you file and access the info IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 13

14 Often Overlooked Data Consideration Development Reports –Deliverable of detailed development, analytical, and production report –What was tried, results, and evolution of the procedure, linked to notebook records and preliminary reports. –You then have a good record of what works and doesn't work –How the process and analytical procedures evolved into a manufacturing process and quality control test methods –Enable learning / problem solving & QBD for registration IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 14

15 4. Internal Resources -Small Molecule Internal expertise needed: Medchem Process chemistry & API Manufacturing Dosage form Development Dosage form manufacturing Pharm Tox Legal Analytical Quality Packaging CTM logistics TPL Management Sourcing Regulatory Project Management IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 15

16 4. Internal Resources - Biologics Internal expertise needed: Bulk - Cell line development & selection, Fermentation, DSP Dosage form Development Lyophilization Dosage form manufacturing Pharm Tox Legal Analytical Quality Packaging CTM logistics including cold chain TPL Management Sourcing Regulatory Project Management IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 16

17 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech17 Action Plan & Key Indicators of Success Company Needs Resources Timing Program Requirements Project Requirements Internal issues Long list of candidates Short list Finalists and selected CMO Relationship & Project Management Kick-off & Tech Transfer Proactive Management Leverage and Alignment Sourcing & Selection Process Requirements & CMO ID Screening RFP & Selection Negotiation Contracting & Scope IntegratedDevelopmentPlans Clinical & Safety Drug Substance & Drug Product Regulatory and other StrategicContext Boundaries Investment Strategy Strategic Skills Approval & Regulatory 5. Structured Process for Selection

18 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 18 Overall Sourcing & Selection Process Table StepActions & Issues 1 Outsourcing Strategy Corporate Requirements Program Requirements 2 Integrated Development Plans ClinicalDrug SubstanceDrug ProductDrug Safety 3 Program & Project Requirements Development considerations Clinical Regulatory & filing strategy Commercial considerations Project requirements Establish selection criteria 4 CMO ID & Initial Screen Long List & Pre-screen / Initial paper screen Reduce to short list 4-10 Request for info (RFI) on areas of interest Detailed Phone screen 5 Request for Proposal (RFP) Candidates for RFP Execute CDA Finalize RFP Possible Site Visits Issue RFP & Quality Agreement Receive Proposals Share desired T&Cs 6 Screen & Selection Assemble and Analyze responses Phone interviewsSummarize Ratings against criteria Narrow down to top 2-3 potential suppliers 7 Final Selection Remote / Paper Quality Audit Site visit Criteria for QA Audit Detailed business evaluation Tech Trans Package Prelim. negotiation 8 Final Negotiations & Contracting Contingency Plans Identify Quality Agreement issues Finalize Workscope Finalize price Confirm Team QA Audi & Sign-off Quality Agreement Sign-Off PO/Final sign off 9 Kick-off Tech Transfer

19 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech Your Requirements – Some Variables Program Specific Considerations Development Strategy Approval Strategy Investment Strategy Tactics Post-IND or Launch To Approval To POC To IND Other Fast Track / Accelerated Standard Staged Invest at-risk early to move faster later Postpone Investment in technology & info Need for material – small or large Need for non-GMP & GMP Lead Times COGS reduction Program AND Project Specific Considerations Technical DifficultyTechnology Needs / IssuesApproach to CMOs Skills internal Skills needed Timing Risk Handling ( potent, energetic, low-dose ) Is technology suitable for use or is more development required? IP - Any freedom to operate issues Need to access or remove IP to succeed? Chance for Multiple projects or one-off Common Technologies Unique technologies Location issues

20 Technical Package and Tech Transfer Drug Substance Technology Raw Material specs & vendors Unit Operations as practiced PD History, if any Batch Manufacturing History Current IPCs at R&D stage, rationale and CPPs Storage requirements for raws, in process and final product Mass Balance as complete as possible EH&S info; Process Risks and Controls – incl waste streams, MSDS Analytical Requirements Dev Reports, Methods protocols, tech trans plans, & validation reports, if ready Proposed specs for API Batch size assumptions – CTM, Reg batch, validation batch, commercial and projected forecast Drug Product API and Excipient grades & suppliers Batch Mfg. History Specs for API and excipients incl micro Excipient functionality EH&S info, risks, incl waste streams, Detailed characterization PD History Report Current IPCs and rationale and CPPs MBR &, ancillary batch docs Storage for raws, wip & final product Dev. Reports, Methods protocols, tech trans plans, & validation reports, if ready Stability information (API, intermediates and final product) Cleaning procedures and tests: operator exposure, disposal etc. Packaging Batch size assumptions – CTM, Reg batch, validation batch, commercial and projected forecast IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech20

21 7. Finding CMO Candidates Quickly Getting Some Material Made…Its just kit & people right? Dont assume one stop shops actually exist –Tech transfer has to happen across scale anyway –DP & DS are different disciplines –Technical specialization needs –Skills & Creativity across disciplines –Service oriented culture –Right business model, business size (to align with you) –Capital structure / health –Location Very few direct capability overlays in comparing CMOs And the golf course issue… Plan on 3-6 months for development and potentially longer for commercial IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 21

22 Tips for Making it Easier Start with your requirements… –For this project and the follow-on…if you are successful Create a Long List –Capabilities & specialties –Capacity –Location –Reputation Information Resources –Your functional team members / consultants –Peers –Industry directories i.e. Contract Pharma –Trade-Shows & Conferences AAPS, Informex, Interphex, Chemspec, CPhI, Contract Pharma, DCAT IQPC, etc. –Create and maintain a living list IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 22

23 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 23 Living List of Potential Vendors is an Asset Document and refresh findings on candidates –Lack of fit today may not apply to the next project –Reduce search time later –Decide what you will share and what stays internal –Compile for various functions i.e. DS & DP etc. –A strategic asset This knowledge often walks out the door when employees or key consultants move on

24 8. Criteria – Often Overlooked Capacity / Scale –Stage now vs. later needs and implications Overall Capability –Tech Transfer ( in and out) –Experience updating the CMC sections –Understand ability to source of all raw materials Project Specific Technical Capability –For development, unique technical deliverables and their transportability –Response to RFP and scientific approach Quality –Capabilities / FDA inspections or approvals –Import / export processes of material for CTM & Commercial –Strength of their Vendor Qualification Program Location –Your capacity to manage distance and cultural issues –Internal tech transfer capability across locations. Proprietary technology/tech transfer –Does CMO propose to use proprietary technology and what is impact on royalty rate burden or ability to transfer process or qualify back-up CMO Other –Adequately capitalized –Must be able and willing to produce references IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 24

25 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech RFP Package The Package –Workscope –Technical and Timing Requirements –Terms & Conditions –Quality Agreement The RFP should be structured to –Enable objective and complete comparison of the candidates –Expedite the development of a contract –Help CMO to understand required scope, potential for expansion / change and their risk –Help CMO to understand their risk Avoid taking on a project with more scope that visible Understand potential impediments to meeting timeline Fit with their skills and schedule Both the RFP and CMO response should be complete enough to provide the basis for workscope, pricing and terms

26 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 26 RFP Contents – DP & DS Brief description of your company (optional) Brief description of the product (along with Material Safety Data Sheet and handling instructions) Overall project objectives and timeline Detailed scope for CMOs portion of the project: –Process description with flow chart and bill of materials –In-process and product test methods and target specifications –What will be delivered to CMO and by when –What the CMO is expected to deliver back and when –Desired pricing structure (i.e., fixed price versus time and materials, mass unit price versus batch price, etc.) Requests for information, including: –Financial status of the company and description of pharmaceutical development and commercialization programs, if any. –Confirmation of absence of conflicts of interest –References, inspection history –Manufacturing success rate RFP response instructions (due date for submission of response, name and address of person to whom the responses should be directed, etc.)

27 10. Contracting and Negotiations The contract is critical to the balance of leverage in a relationship. Negotiation is part of relationship management, and should be considered part of the selection process, not a formality –Behavior demonstrated during negotiation of challenging aspects of the contract is a good indication of how the other party will behave during challenging points in the relationship. –Goodwill and trust are critical to productivity of inter- organizational relationships. –Often contentious negotiations are not contained and impact the project team members perceptions of the other party. Anticipate, understand and balance risks on both sides as they change from development to commercial stage activities Integration with Quality Agreement saves time and money and operationalizes the relationship quickly IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 27

28 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 28 Master Services Agreement Concept The future needs of a project cannot be fully anticipated at the outset of a project A Master Services Agreement, provides flexibility –General terms of the relationship between the parties –Scope of Segments of the project(s) can be described, –Can provide a basis for amendments combine refined or new scope and already agreed pricing structures Can be overkill for some one-offs BUT a balanced MSA can be executed rapidly and accelerate things later on

29 Business Checklist for Contracting ItemTips Scope Clear Scope or if an MSA, clear description of whats in a workorder Scope change process Clarity CMO Accountability Project management process / interactions Subcontracting Control of subcontracting Ownership of Materials Ownership of materials and responsibility when held at CMO Handling of data Timing, duration Ownership of IP Clarity Tech Transfer support Support tech transfer to another facility at sponsor sole discretion Exclusivity? For discussion if warranted De-barred personnel None Deliverables Commitment to timing, conformance to spec and not just CofA Rejection Rejection and recourse for missed deliverables Bumping Protect yourself - Prevention of / Mitigation for bumping Title Transfer and when and how title changes Facilities Commitment to provide facilities and capacity to complete obligations Facility change Lead-time on change of facility or right of refusal / first look Legalese Ins., Indemnification, Confidentiality are business decisions, dont abdicate Effect of termination Cost controls and process on effect of termination. Fees on cancellation Conflict resolution Have a process - a 3rd party not always good Permits Responsibility for cost of permits, waste removal etc. IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 29

30 Other Business Agreement Elements Future issues can be avoided by anticipating needs and building them into contract terms Provision for future supply and/or additional projects The right of the client to all IP and know how required to produce the product Rights to process and analytical methods and technology The right of the client to transfer the production technology and qualify other sites to produce the product Pricing to manage risk –Payment obligations that are triggered by acceptance of deliverables (i.e., reports, QA release, etc.) –Fixed pricing on each segment of the project as its scope becomes well defined (i.e., both parties are motivated to complete the work in a timely fashion) –Bonus payments for development and demonstration of specific process yields, which in turn tie to lower unit pricing for product supply Dealing with risk of loss –Ability to negotiate assumption of risk of batch failure increases with process maturity, validation –Typically, fill-Finish and DP CMOs do not add enough value to take on risk of loss of API value IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 30

31 11. Quality Agreement Clearly articulate technical and regulatory roles and responsibilities Phase appropriate differences Integrated with Terms and Conditions, MSA or Supply Agreement Roles and Responsibilities matrix is more easily read and used by operating personnel than a legalese document IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 31

32 Quality Agreement R&R IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech32 ItemIssues & Responsibilities, Drafting, Review & Approval Org and PersonnelBe aligned on role of Quality Group and training FacilitiesCommitment to compliance, access control, prevention of cross contamination EquipmentQualification, cleaning logs & control Materials & packagingSpec setting, testing, retention, approval of suppliers ProductionDevelopment, review and approval of MBR, BR, specs, deviations, reprocessing / rework, EM, retention, definition and handling of deviations AnalyticalSpecs, methods, sampling, OOS / Investigations, Turnaround time, validation, Right to participate in investigations QCCofA, Product Disposition at various stages Label, Pkg, Ship & StorageLabel text, layout, retention, retest dates, storage conditions, shipping, inspection. Consider if need is more than 5 years and receiving at end of the period. StabilityPlan, reporting and approval Change ControlClarity on process QAComplaints, recalls, MSDS, Auditing, release Audits and InspectionsAccess to facility for Audits Reg InspectionsNotifications, Communications, timing Reg FilingsInitial, annual and ad hoc ExpiryR&R

33 Being a Good Client …and how to anticipate and proactively work to avoid issues IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech33

34 Other Side of the Desk – The CMO Contract manufacturing is a very challenging and often lumpy business –Scarcity of capacity can sometimes drive price more than level of quality It costs real money to generate a proposal CMOs focus on doing what customers ask –Dont expect them to stop you from making mistakes - Its Your Development Plan –Will they stop you from making process changes that affect impurity profiles or bioavailability? Development Stage vs. Commercial Stage CMO needs Differences between US, EU, India and China IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 34

35 Challenges CMOs Face in Serving You CMOs are a service business and you are one of many clients –CMOs can be very service oriented but need to balance your project needs and changes with all those of all other clients –CMOs do not always have resources, capacity and schedule availability to meet all needs exactly when required. CMOs do not have unlimited surge capacity –Ability to add FTEs is limited –Ability to go back when there are significant technical hurdles or unplanned failures may not be immediate Lead times impact on responsiveness may not be their doing –RM not always available when required Flexibility is not always possible –The best CMOs often dont have much flexibility –Clients that keep changing their mind create a ripple effect of cost –Be wary CMOs offering too much flexibility! IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 35

36 Maximizing By Being a Good Client Success enablers are often set before kick-off –Provide Well considered specificity - Cocktail Napkin TIPS Cost Your Money and Time! –Have realistic expectations of timing –Apply adequate internal resources for CMO guidance, oversight and to cover distance & cultural issues –Proactive management & metrics Planning - only certainty is that things will go wrong so plan accordingly –Plan with contracting and scheduling lead times in mind –Build in scheduling lead-times for when problems occur and iterations for to-be-demonstrated technology Execution –On-site involvement early in the relationship and more time on-site up front, less time fixing things later Proactive vs. Reactive In-person builds relationship & personal commitment –Clear project management and information flow BUT do not impede scientist-to-scientist interaction when needed –Strive to be easy to do business with while being clear and firm on your requirements Understand how your changes impact the CMO IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 36

37 Issues Good Clients Can Anticipate & Avoid IssueComments CMO Performance and commitment falls short Dont always assume the CMO is motivated to deliver for you over an alternative Invest time and effort up front in contracting and relationship management Cost and delay of back and forth to get data Don't underestimate the analytical rigor required to complete a filing Plan ahead for site specific and product specific post-run data checklists Cost surprise on follow-on Consider separation of development / CTM to simplify earlier contracts but get ROM quotes based on assumptions CMO has some IP or know-how that is needed in the future Protect your right to all IP and know how required to produce your product Secure rights to process and analytical methods and technology The right to transfer the production technology and qualify other sites to produce the product Need for unplanned technical work on a previously per-batch cost project Consider having that work charged on a transparent time and materials basis with the ability to review and cancel on 30 days notice. IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 37

38 Issues Good Clients Can Anticipate & Avoid IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech38 IssueComments Delays in finalizing deliverables Consider Payment obligations that are triggered by acceptance of deliverables (i.e., reports, QA release, etc.) Fixed pricing on each segment of the project as its scope becomes well defined (i.e., both parties are motivated to complete the work in a timely fashion) Your time or cost constraints will be hard for CMO to meet Consider bonus payments for development and demonstration of specific process yields, which in turn tie to lower unit pricing for product supply Stalemate on issues such as responsibility for failed batch Include terms which delineate the obligations of the parties in terms of communication and interactions, including arbitration Cost increases when you feel theres no scope-creep Risk of surprise should decrease as project progresses A step past which cost increases can not be passed on except for unforeseen and unavoidable technical issues is not unreasonable Deviation and investigation report charges Should not constitute a scope change Clarify up front in Quality Agreement or contract

39 Issues Good Clients Can Anticipate & Avoid IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech39 Bumping or Failure If CMO is fairly busy, the opportunity cost of their capacity is high. Want to avoid ability to bump and then use best efforts to catch-up later and not be penalized Penalty fees in general are a common practice and not unreasonable to include Can trade-off some termination fee for equitable penalties for non- delivery based on things that they should to anticipate or control Bumping or Failure – if it DOES Happen Consider the Pragmatic approach to the reality Usually advisable to avoid forcing payment of fees from a CMO Identify a win-win which maximizes the outcome and gain back time Typically faster to recoup at contractor than to start over elsewhere Have the contractor provide raw materials for another batch Have contractor bump someone else in order to slot your work ahead If CMO actions resulted in failure, CMO could redo at their cost If results in significant timeline impact and work at a different CMO, consider RM at CMOs expense or finished material for cost of materials alone without a processing fee

40 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 40 Metrics & Managing Keep metrics simple Understand how your demands change as you progress –Consider impact on the CMO Put in the effort to be a good client Its Your program – you need to lead the CMO Get on-site early –Less investment needed avoiding vs. solving

41 Tips for Outsourcing with Limited Internal Budget …And Tips to Help the Timeline IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech41

42 Keys to Managing to a Lean Budget Have the right expertise on YOUR side of the desk –Knowledgeable internal resources Invest in being prepared –Specificity & minimize scope change, rework, risk ID Be proactive –Get on-site early Convert fixed costs to variable where possible –Right level of functional team members –Complement your internal expertise –Requires hard-to-find mix of hands-on AND strategic –Need experience with outsourcing and current knowledge of CMO performance –Seek to minimize your coordination costs of all the resources IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 42

43 FTE Effort Examples FunctionEffortComments Medchem.25 Process Chem & Mfg Higher during ID & Selection Form Dev. & Mfg Higher during ID & Selection Pharm - Tox Peaks during on-sites and documents LegalVariesCan limit with good operational contracts Analytical Methods, data QualityVariesAudits, release PackagingVariesSpecial situations or efficient use of packaging vendors CTM logistics or TPLVariesDepends on trial or Supply Chain complexity SourcingVariesSpecial situations RegulatoryVariesStrategy, documents ( Operational) Project Management<.1-.15(Better team, less PM needed) IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 43

44 FTE Effort Examples FunctionEffortComments Cell lineVaries Fermentation Peaks during documentation DSP Peaks during documentation LyophilizationVaries Form Dev. & Mfg Higher during ID & Selection Pharm - Tox Peaks during on-sites and documents LegalVariesCan limit with good operational contracts Analytical Methods, data QualityVariesAudits, release PackagingVariesCold Chain, Special situations or efficient use of packaging vendors ( DP) CTM logistics or TPLVariesDepends on trial or Supply Chain complexity SourcingVariesSpecial situations RegulatoryVariesStrategy, documents ( Operational) Project Management<.1-.15(Better team, less PM needed) IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 44

45 Driving Down Internal FTEs Leverage FTEs –Make sure theres operational regulatory experience in the functional team members, not just technical –Can put PM responsibility into one of the functions until there is critical mass / portfolio need Supply is ongoing so CMC or CTM logistics can make sense –Better the quality and the better integrated team, the less specialized PM you need Build and maintain internal tools –Templates –Vendor database IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 45

46 Hub and Spoke Can surround a limited internal core team / individual with internal functional experts Can serve as Advisors in the background or use the ring of Advisors to each run all the various functions Can have external Project Management Advisor as well IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech46 Internal Core Team / PM APIDPToxAnaRAPKGCTMSource

47 Drive Down Total Resource Use Resource APIDPToxAnaRAPkg CTM LogSrcPMLog API DP Tox Ana RA Pkg CTM Log Source PM Logisti cs Can reduce overall and individual FTEs with the right cross–functional experience to take on informed, broader roles in adjacent functions PM effort can also be led by one of the functional team members Can enable success efficiently with an almost completely virtual internal team IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech47

48 Other Sources of Cost Reduction or Speed A detailed well constructed RFP –Have the tech transfer package ready to go Realistic expectations and requirements –Take rework and risk out Compress Contracting Time and Get Started –Do good pre-screen Get Ts & Cs and Quality Agreements across the table early Legal and purchasing review – especially with larger sponsors and CMOs is a bottleneck –Can break up workscope to start under a PO Ask the CMO –They can contribute ideas Production –Can reduce # of batches i.e. no demo batch if comfortable with the technology and tox risks Submissions –Sponsors routinely underestimate the analytical rigor and effort required for a filing – plan ahead IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 48

49 For Discussion … One stop shops Global outsourcing Centralized analytical Taking on risk IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 49

50 Bumps in the Road Others Have Had… …and what you can learn from them IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech50

51 Case 1 What they DidWhat happenedPrevention Sponsor with a project outside of their manufacturing know-how needed development from a US based CMO Worried about getting started quickly, sponsor signaled early in negotiations that the CMO was their first choicefor the project Sponsor took CMO recommendations without critical review and would defer to CMO rather than their consultants CMO was opportunistic on scope and pricing CMO made unilateral development decisions and forced a sub-optimal process which hurt yield be gave better throughput for the CMO. Some decisions led to a batch failure Once sponsor involved a consultant, the CMO would take direction only from the sponsor, despite sponsor directives to the contrary, creating mixed messages Treat CMO like a valued team member but dont confuse with partnership and manage negotiations Adequately resource technical project oversight If a consultant, make sure internal lines of communication are clear Do not expect CMO to make technical decisions that are 100% aligned with sponsors best interest IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 51

52 Case 2 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech52 What they DidWhat happenedPrevention Quality Agreement not specific enough on aspects such as Changes to raw material suppliers Process changes Sponsor saw changes in impurity profile that took significant resources and time to ID the root cause (new RM supplier) Sponsor saw changed metabolic conditions ( low DO2) and RM changes which altered fermentation. Took many weeks to solve and address In each the CMO was operating within its agreement Proactively ensure Quality Agreement is specific enough to address the uncertainties OK to use CMOs Quality Agreement, as long as all that you need is inserted

53 Case 3 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech53 What they DidWhat happenedPrevention Cash constrained and needing to show progress, Sponsor felt they could not afford to pay a CMO with development capabilities to take their cell culture process from literature and make it CMO ready Sponsor felt they could not afford the time for an academic lab to do so either Selected an emerging, low- cost CMO with limited development resources Resulted in timeline delays, failures and iterations Additional cost of having a fermentation consultant coach the CMO staff through follow-on iterations Do the work up front to have your process ready for the type of CMO you have selected

54 Summary and KSFs Not rocket science but not easy either 1.A little planning & structure – its NOT bureaucracy, its your friend 2.Honest understanding and documentation of yourself and your Requirements 3.The right internal expertise in the right amounts at the right time. Does not mean big infrastructure 4.Structured and forward looking RFPs & Contracting 5.Be a good client and anticipate understand what can go wrong. Many more things can be prevented than actually are! IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 54

55 Supplemental Information Development Decision Variables and Trade-Offs to Consider as You Plan Your Outsourcing IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech55

56 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 56 Development Strategy Alternatives -Different Approaches to Managing Risk AlternativesDevelopment Implications When Developing to Efficacy in Man Work to Get into man Worry less about restarts Delay process optimization, scale up tasks Consider minimizing early formulation development efforts Minimize analytical method validation Design stability programs on a cost per pull point basis to allow discontinuation and cost recovery When Developing to Commercial Launch Work to Deliver the First Pill Sold Minimize restarts Dont delay process optimization Dont delay dosage form optimization Be more willing to incur process development & validation cost earlier if efforts reduce risk long term May accelerate scale-up & move to commercial vendor earlier if efficacy risks are reduced

57 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 57 Outsourcing Implications of Development Strategy Alternatives AlternativesImplications To Registration Consideration of Commercial Supply Different development vendors vs. scale-up vs. commercial? Process data for scale-up Rate of investment in technology knowledge vs. scale-up Final process definition Knowledge transfer Ability of vendor to develop a process that will be transferred to other vendors Raw material strategies To POC / Human Efficacy Data Potentially less need for investment in process data Ability of vendor to develop a process that will be transferred to other vendors Ability of vendor to tech transfer Some need for analytical validation and stability indicating methods Other Varying need for analytical characterization, technology development Potentially less need for investment in process data

58 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 58 Outsourcing Implications of Approval Strategy Alternatives AlternativesImplications Fast-Track / Accelerated Consideration of Commercial Supply Process data for scale-up Rate of investment in technology knowledge vs. scale-up Final process Knowledge transfer Limited tech-transfers Concurrent activities More at-risk investment Higher API cost in clinic Earlier attention to formulation Supply more critical Additional internal management Plan for analytical bottleneck Potential for pre NDA process validation Earlier planning for commercial supplier & materials Standard Approval Increased ability to postpone investment in technology

59 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 59 Outsourcing Implications of Investment Strategy Alternatives AlternativesImplications Invest-at-Risk to ensure commercializable technology Increased initial cash burn rate Increases initial in-house demand for vendor management May need to repeat analytical tasks if API salt form or formulation, or DS/DP mfg process changes Plan DS synthesis to enable targeted changes without effecting entire synthesis – choose earlier what to lock down Develop DS & DP suitable for exposure in humans to efficacy Delay investment in technology and information until efficacy data available Reduces initial cash burn rate Reduces initial in-house demand for vendor management May allow non-robust processes to be used for Phase III CTM mfg but may delay registration Increase risk of DS/DP process changes and hence attributes during or after efficacy trials Increases risk of need for clinical bridging studies should DP attributes change during clinical development Invest in InventoryAbility to campaign Ability to realize batch-size cost benefits earlier Ability to do multiple sourcing earlier

60 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 60 Outsourcing Implications of Development Plan Alternatives AlternativesImplications Need for small quantity quickly Requires suitable technology in place to deliver multi-kg Documentation less regulated but still critical Wider variety of facility choices May increase eventual need for tech transfer non-GMP material can be used for animal safety studies and drug development work. Key issue is whether or not it makes sense to prepare non-GMP material after initial lot. Need for large quantity quickly Increases opportunity/need to ID Phase III/commercial vendor early Increases importance for early vendor compliance assessment Increases importance of early vendor commercial assessment Need for non- GMP or GMP Can significantly increase speed and reduce cost of API mfg if non-GMP material can be used for toxicology and formulation development May increase risk of impurity profile changing between toxicology and CTM batches leading to bridging tox need

61 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 61 Outsourcing Implications of the Level of Technology Difficulty AlternativesImplications SimpleInternal skills still needed Analytical skills required same as complex Wider choice of vendors & scale Shorter timeline Lower cost ComplexVariety of technical internal skills needed Potentially more limited choice of vendors or for multiple vendors Longer timelines Greater effort needed to manage impurity profile for CTM material. Challenge of scale up increases, increasing time & technology risk Increased need for process safety management Compounded if BOTH DS & DP have difficult technology DevelopedVendor choice more purely technology / hardware & work processes driven Faster mfg process development timeline UndevelopedVendor choice depends on development AND technology capability Implications for Safety and Clinical results Slower mfg process development timeline

62 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 62 Outsourcing Implications of Unique Technology Needs AlternativesImplications High Potency / Exposure Management More limited vendor choices More costly API If volume is low, single vendor for development & commercial High Chemical Reactivity i.e. Exo-Endothermic, High Pressure Hydrogenation Processes Is new technology required? More limited vendor choices More costly API Greater scale up challenges Biologics Expression systems IP Scale & yield Product by process (hard to characterize equivalence) Need for multiple dosage forms Timing of formulation work Timing of / flexibility in salt selection Early experimentation Increased risk of need to show bioequivalence through additional PK, bridging tox or clinical studies Novel Drug substance Technology/Issues – i.e. Not Scalable Early design of experiments Vendor capabilities Need for new chemistry / route ID capability Novel Physical Pharmacy/Dosage Form Issues Timing of formulation work Flexibility in salt selection Tox & clinical plan GRAS issues with regulatory agencies Other Different development & commercial vendors / more tech transfers? Need for and control of new IP to solve development problems

63 IQPC 12th Contract Manufacturing for Pharmaceuticals & Biotech 63 Leverage with Vendors AlternativesImplications Multiple ProjectsAbility of vendor to learn common platform and enable speed Potential convergent synthesis of APIs Location of facilities Other functions to consolidate at vendor (analytical development, sourcing, process safety mgmt.) Contracting and quality system costs Overall leverage potential and >15-20 FTEs per year Allows priorities to be set within context of more than one project Ability for speed over data generation or visa versa Risk for approval may be reduced on follow-on projects Vendor changes Risk of overtax vendors technical capability & sub-optimization Level of investment in internal resources More efficient use of internal resources Ability to manage Knowledge transfer Cost & time Still must do technology audit for each vendor


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