Shannon Bennett of Thomson Reuters takes a look at the API supply aspect of the Falsified Medicines Directive
Europe was once a powerhouse generic API supplier but the introduction of Supplementary Protection Certificates in the early 1990s to extend market exclusivity for innovator drugs prevented EU companies from developing or manufacturing APIs covered by exclusivities. This effectively forced generics companies to seek alternate sources of APIs in countries which offered less stringent IP protection, as well as lower manufacturing costs and increased capacity.
An estimated 50-70% of APIs consumed in the EU are now imported from India and China. Sourcing APIs from Far Eastern and other non-EU manufacturers has proved successful for many generics companies over the past 20 years. However this trend is not without concerns in regard to quality.
The European Commission (EC) hopes to address these concerns through the implementation of the Falsified Medicines Directive (FMD). This stipulates 2 July 2013 as the date from which all API imported into Europe from non-EU countries, also known as 'third countries', must be manufactured under GMP standards equivalent to those in EU.
The FMD outlines three options for API importation to the EU. Under the first, each API shipment is to be accompanied by a written confirmation issued by the competent regulatory authority of the 'third country' stating that the plant manufacturing the API operates under GMP standards equivalent to those in the EU.
Under the second option, the third country requests to be listed by the EC as a country with a regulatory system for GMP inspection equivalent to the EU. This request will then be assessed by the EC. A positive outcome will gain that country inclusion on the so-called 'white list'.
Under the third option, which is considered an exception, the written confirmation can be waived by an individual EU member state to ensure the availability of medicinal products a member state has inspected the specific plant.
A survey by the Heads of Medicines Agency (HMA) tallied the number of foreign API manufacturing sites supplying to the EU. India, China, the US and Japan have the highest numbers. In order to certify that APIs are produced according to the monographs of the European Pharmacopoeia, companies often file certificates of suitability (CoS). According to Thomson Reuters Newport System, the number of valid CoS granted to Indian and Chinese companies has grown over the past 12 years and currently outnumber those granted to companies in the top five EU countries (Figure 1).
Figure 1 - Valid CoS granted 2000-2012
The responsibility and requirements for providing written confirmation has sparked some alarm in regard to the ability of countries like India and China to adhere to the rules for API importing laid out in option one of the FMD. The World Heath Organisation (WHO) GMP and the International Conference on Harmonisation (ICH) of Technical Requirements for Registration of Pharmaceuticals for Human Use, ICH Q7, are considered to be equivalent standards to those in the EU.
China has announced that it will issue written confirmation for APIs from manufacturing sites that are under the supervision of its own FDA. In India, the Central Drugs Standards Control Organisation (CDSCO) will issue written confirmation based on valid Certificate of Pharmaceutical Product, as per WHO GMP guidelines, US FDA or EDQM or TGA inspection certificates. If a company does not have prior inspections or certificates, the CDSCO will conduct an inspection.
The written confirmation can be issued based on the results of inspections conducted in the past by EU authorities or other authorities applying equivalent standards for GMP, including details about which authority inspected the site. However, written confirmation is still required if a manufacturing site has been recently inspected by the EDQM as this process is independent of the inspection activities. The period of validity for the written confirmation is established by the issuing authority of the non-EU country.
Thomson Reuters has, for a number of years, assessed the capabilities and experience of API manufacturing groups according to a proprietary scheme based on objective regulatory data. Groups are ranked ranging from 'established' (those that are well versed in supplying highly regulated markets) to 'local' (those capable of supplying only their domestic market or unregulated countries). The largest number capable of supplying highly regulated markets are located in the US, followed by the top five EU countries (France, Germany, Italy, Spain and the UK) India, China, then Japan (Figure 2).
The White List
Although Europe has previously collaborated with the US and Australia on international GMP inspection programs, for the purposes of the FMD these countries were also required to request and be assessed for inclusion on the white list.
As of early June, Switzerland, Australia and Japan had all won rulings from the EC that API manufacturing there meets EU standards; therefore APIs from those countries will not require certifications. The US was scheduled to undergo assessment in mid-May. Brazil has requested equivalence assessment and requests for listing by Singapore and Israel have been initially refused, though authorities in these countries have stated that they will issue written confirmations.
Figure 2 - Number of 'established' & 'less established' groups capable of supplying APIs to the EU
Accountability & industry concerns
At this point it seems the EC has little responsibility in ensuring compliance with the directive. The FMD places accountability with the companies or agents importing APIs from non-EU countries and the authorities of the exporting countries.
The written confirmation will accompany the imported APIs. It will not be sent to an EU regulatory agency. Rather, the importer will be responsible for keeping records and ensuring that each API and subsequent shipments of it are accompanied by the written confirmation upon import. The written confirmation is issued for a manufacturing plant and for an API manufactured at that site. If an importer finds the quality out of specifications according to the written confirmation, these findings should be sent to the EMA.
The EMA maintains the EudraGDMP database, which contains information submitted by national competent authorities (NCAs) regarding companies that have been inspected for GMP and GDP. The database is meant to be used as a resource for supply chain participants to check information about their suppliers.
The EC member states encompass 18 NCAs that are authorised to inspect facilities for GMP compliance. The updated system includes a new module, which is not publicly available, that was developed to make better use of inspection resources by sharing information among EU regulatory bodies and avoiding redundant inspections.
The UK's Medicines & Healthcare Products Regulatory Agency (MHRA) inspected 643 total sites in 2011, 493 in the UK and 150 in other countries. The survey conducted by HMA revealed that an estimated 300 API manufacturing sites will need to be inspected by July 2013 in order to avoid drug shortages in the EU. However, there is only enough money to fund around 10% of the inspections needed.
In an effort to thwart the shortages expected as a result of the implementation of the FMD, some companies are stockpiling APIs ahead of 2 July to safeguard their supplies. It is difficult to predict where shortages could arise, though high volume, low margin products, such as amoxicillin, acetaminophen and metformin, could be vulnerable as these APIs are mainly manufactured outside of the EU.
In the longer term, changes in the EU pharmaceuticals industry could once again arise due to the effects of legislation. We have already seen foreign acquisitions of EU API units, though there are conflicting views as to whether there is enough capacity in Europe to bring in new manufacture very rapidly.
Once the industry has had time to evaluate the after-effects of the directive, it is possible that more formulated product manufacture could move out of EU and into India and other markets. This would bypass the new regulations and, as we have seen historically with API supply, could be a more cost-effective route. However, with more small volume, specialised and niche products coming off patent, it is possible that EU manufacturers could expand their capabilities and capacity to supply more of their own API for finished dose manufacture.
Pharmaceutical Research Analyst
Tel: +1 207 871 9700
From Online Issue: June 2013