1. Executive Management and Quality Systems Awareness Gordon B. Richman Vice President, EduQuest, Inc. EduQuest Education: Quality Engineering, Science & Technology

2. © 2005 EduQuest, Inc. Presentation Topics Quality Systems – How Your World is Changing Basic Quality System Purposes and Principles Management Responsibility in the U.S. Environment Business Impact – Costs, Benefits, and Challenges Critical Awareness and Recommendations for Success

3. © 2005 EduQuest, Inc. The Changing World of GMP New quality systems based framework for GMP –Not entirely new to FDA (experience with devices) –Completely new to drug and biologics manufacturers FDAs drug (CDER) and biologics (CBER) centers are speaking a whole new language to these industries

4. © 2005 EduQuest, Inc. FDAs New GMP Initiative The next step in FDAs and the industries evolution ProductProcessSystems - 1970s Quality Control Quality Assurance Quality System 1980s - 1990s21 st Century * * 1997 (Medical Devices)

5. © 2005 EduQuest, Inc. FDAs New GMP Initiative Major fundamental shift in FDAs approach –Focus on quality-by-design and the controlled reduction of process and product variability –An enormous change for the pharmaceutical and biologics industries –Eventually will deliver tremendous benefits

6. © 2005 EduQuest, Inc. What Will Change? Process design, process controls, and resource allocations –Based on risk assessment and risk management Long-standing concepts of hazard control FDA has mentioned FMEA and HACCP principles Not well-understood or routinely applied in the drug and biologics industries

7. © 2005 EduQuest, Inc. Important FDA Recognition At the end of the CGMP Initiative the pharmaceutical community has arrived at a cross-road; one path goes toward the desired state and the other maintains the current state. The path towards the desired state is unfamiliar to many while the current state provides the comfort of predictability. The Agency hopes the pharmaceutical community will choose to move towards the desired state.

8. © 2005 EduQuest, Inc. Key Components of FDAs Model Management Responsibilities * Resources * Quality-by-Design and Product Development * Risk Management and Risk Assessment * CAPA (Corrective and Preventive Action) * Change Control The Quality Unit Six-System Inspection Model *

9. © 2005 EduQuest, Inc. Note – What Isnt New FDA is pushing for quality system approaches that have been used for a long time in other industries –For example, the electronics, defense, oil and gas, and telecommunications industries –How the drug and biologics industries compare Acceptable quality/defect levels and PAT

10. © 2005 EduQuest, Inc. Impact on the Industry Will generate a lot of change and growing pains Huge increase in the need for early and very detailed understanding of the process and product formulation GMP requirements will have much more impact on pharmaceutical development – reaching back into R&D more than our previous experience

11. © 2005 EduQuest, Inc. Impact on the Industry This shift is going to take a substantial effort –Ongoing dedication of more resources on the front end of process design and development –Years to realize the benefits on the back end Probably much more time, effort, people, and money than the process validation movement in the 1980s

12. © 2005 EduQuest, Inc. Basic Quality System Concepts Quality has to be caused, not controlled. From Philip Crosby's Reflections on Quality

13. © 2005 EduQuest, Inc. Purposes of a Quality System To provide a defined operational framework –Including appropriate and clearly documented processes and procedures To assure that quality is designed and built in To provide documented, objective evidence of what was done during design/development and manufacture

14. © 2005 EduQuest, Inc. Quality and Compliance Quality and compliance are not the same –Quality done right will result in compliance –Compliance, on the other hand, will not necessarily create or ensure the quality of processes or products Your organization must have both to succeed

15. © 2005 EduQuest, Inc. Quality and Compliance The quality of a product is governed by the quality of the processes used in its manufacture –If you have poor processes and procedures, complying with your quality system will just ensure that you consistently have poor quality

16. © 2005 EduQuest, Inc. Underlying Principles The quality system must be defined, documented, implemented, and consistently followed to be effective and compliant Constant self-critical and self-correcting loop –Process and product knowledge, measurement, control, and continuous improvement

17. © 2005 EduQuest, Inc. Underlying Principles A compliant quality system starts and ends with management (or it simply doesnt exist) –Management will be held legally responsible for the effectiveness or non-effectiveness of the quality system –Every quality system failure can and will be tied back to management

18. © 2005 EduQuest, Inc. Underlying Principles Companies must implement global corrective and preventive actions –Similar changes should be made across all FDA- regulated sites and operations Consistent with a systems-based approach Inconsistent with common industry practices

19. © 2005 EduQuest, Inc. GMP and the U.S. Regulatory Scheme Management responsibility is a very serious matter The U.S. law – Federal Food, Drug, and Cosmetic Act –Strict liability criminal law The law establishes prohibited acts –Including key provisions that relate directly to GMP

20. © 2005 EduQuest, Inc. Prohibited Acts and GMP Under the Food, Drug, and Cosmetic Act, it is illegal to - –Manufacture, ship, deliver for shipment, or receive after shipment an adulterated or misbranded food, drug, device, or cosmetic

21. © 2005 EduQuest, Inc. Adulterated Drugs and Devices A drug or device not produced in compliance with GMP –So failure to comply with any of the GMP requirements makes the product adulterated and illegal by definition under U.S. law –Even if there is no evidence of an integrity problem

22. © 2005 EduQuest, Inc. FDAs GMP Requirements The GMP regulations establish mandatory, minimum requirements –Compliance is not an option or a matter of choice –Complying with GMP is the lowest acceptable quality standard

23. © 2005 EduQuest, Inc. Management Responsibility The cornerstone of quality systems and FDAs approach –Management cannot delegate its responsibility or just designate someone else to be on the hook –The old ways of corporate management (thats Qualitys job) are not going to work anymore

24. © 2005 EduQuest, Inc. Management Responsibility Remember – this is a strict liability law –Ignorance has never been a valid excuse Going forward, ignorance and/or a lack of direct involvement will absolutely guarantee failure –No matter how good your Quality organization is

25. © 2005 EduQuest, Inc. FDA Recognizes Costs and Benefits [I]mplementing an effective quality system in a manufacturing organization will require significant costs in time and resources. However, the long- term benefits of implementing a quality system will outweigh the costs.

26. © 2005 EduQuest, Inc. Significant Benefits in the Long Run Better science, efficiency, predictability, and control –Real business benefits (in cost, time, and efforts) –Less waste, rejection of materials, and re-work –Improved process control and yields –Problem avoidance through knowledge –Greater ability to identify and correct root causes

27. © 2005 EduQuest, Inc. Significant Benefits in the Long Run Improved ability to understand and implement changes with less FDA oversight and pre-approval Faster and more predictable FDA review, analysis, and approval of new products and CMC changes Fewer pre-approval and shorter GMP inspections

28. © 2005 EduQuest, Inc. Big Challenges Ahead The basis for achieving all of the benefits will require a substantial change in the industrys business model –Process understanding and development to a degree that are far beyond the current way of working –Shifting from a process focus to a systems focus Seeing all problems as quality system failures

29. © 2005 EduQuest, Inc. Big Challenges Ahead Major challenge to overcome the current business model and speed-to-market pressures –Investing much more time and scientific effort up front to be quicker on the back end of the product life cycle – process transfer from R&D to manufacturing, submission to FDA, and throughout the commercial life of the product

30. © 2005 EduQuest, Inc. Recommendations for Success The drug and biologics GMP regulations have not changed –Quality system approach is only reflected in guidance FDA may revise the GMP regulations eventually –Dont wait for that to happen before moving forward –The quality system train has already left the station

31. © 2005 EduQuest, Inc. Philip Crosby's Reflections on Quality It is erroneous to think that quality is intangible, and therefore unmeasurable. It is precisely measurable by the oldest and most respected of means – cold, hard cash. The price of nonconformance in manufacturing is more than your pretax profit.

32. © 2005 EduQuest, Inc. Critical Awareness and Acceptance New approach will require a significant culture change –Going far beyond new policies, procedures, manuals, standards, and training –Truly affecting day-to-day operations and behavior –A culture of resistance to change will not succeed

33. © 2005 EduQuest, Inc. Critical Awareness and Acceptance Need to understand the seriousness and potential consequences to the company and to individuals –Throughout the entire company –Every person in the organization needs to know the rules of the game

34. © 2005 EduQuest, Inc. Critical Awareness and Acceptance Changing the common mindset about quality issues –Cannot just be resolved by the Quality organization –Should be viewed as corporate governance problems –Will need the full and active involvement of the entire organization to be successful

35. © 2005 EduQuest, Inc. Critical Awareness and Acceptance Management will need to demonstrate that the company really gets it and is serious about its commitments –Needs to be done through actions and not just words –Cannot demonstrate it to FDA without clearly and consistently demonstrating it internally

36. © 2005 EduQuest, Inc. Common Traps and Failures The management reality gap– failure to recognize significant gaps between senior management perception of compliance issues and the reality of the operations on the ground –Often coincides with a corporate culture that does not support or encourage the reporting of negative information up through the chain of command

37. © 2005 EduQuest, Inc. Common Traps and Failures The no observation – no problem rationale –Management is not willing to correct a problem until and unless FDA cites it in a 483 observation –Sends a clear message that defects and poor quality are acceptable as long as FDA doesnt detect them

38. © 2005 EduQuest, Inc. Common Traps and Failures A companys view of risk should never include what is commonly called regulatory risk –The risk of detection of a problem by FDA –The potential consequences of being caught FDA expects risk analyses to be documented, so those documents are in-scope during inspections

39. © 2005 EduQuest, Inc. Recommendations for Success Focus first on sound logic and good scientific practices –This is what the regulators are usually looking for Companies fail because they continue to apply poor practices that cannot be justified or defended Do it right, and compliance will follow

40. © 2005 EduQuest, Inc. Questions?