Value vigilance

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Executive summary

This paper examines the changing environment for marketed products, including an analysis of emerging markets, recent divestment discussions, challenges in the current model, and a proposed alternative view of how biopharmaceutical companies can maintain the licenses of their marketed products more cost-effectively and thereby generate greater net returns.

Value vigilance A transformative approach to managing safety, regulatory affairs and benefit-risk management for established products

Matthew McKeever, M.D., FAAP, VP and Global Head, Safety Knowledge & Reporting, QuintilesJames C. Walker, CEO and Founder, Octagon Research Solutions, Inc.

Executive summary 1

Background 3

Market drivers 3

Greater regulatory challenges in emerging markets 3

Divestment discussions 5

Current model: Cost and quality are impacted 5

An integrated approach 5

Integrating services to close gaps and drive efficiency 7

Conclusion 9

References 10

About the authors 11

Table of contents

3 | www.quintiles.com

Background

To respond to the challenges of today’s healthcare environment – including growing regulatory, financial, development and regional pressures – biopharma companies must optimize financial resource allocations. While promising new products are an obvious place to invest, established marketed products cannot be ignored; as products age, the pressures to shrink maintenance costs and grow or maintain revenue continue to increase – all while ensuring regulatory compliance and reducing risk (Figure 1). These dynamics present unique challenges for managing established products and require innovative and cost-effective approaches that help ensure patient safety and compliance while continuing to meet ever-increasing regulatory demands.

Figure 1: Pressures on aging products

Today’s healthcare environment requires innovative and cost-effective approaches that help ensure patient safety and compliance while continuing to meet ever-increasing regulatory demands.

Market drivers

Several factors are driving market dynamics for marketed products:

• Aging biopharma product portfolios

• R&D productivity challenges

• Heightened focus on data, with regulators demanding that companies supply more information and greater data consistency

• Shortened development timelines, which limit the resources for the post-approval work necessary to maintain a product through its lifetime

• Evolving regulations in emerging markets, with both recently realized and expected scrutiny around regulatory documentation

• Increased pricing pressure as governments and payers scale back reimbursement and raise pressures to prove the value of products

• Greater emphasis on risk assessments with evolving regulatory requirements for marketed products, including EU GVP (good pharmacovigilance practices) requirements for ongoing benefit-risk assessments

Greater regulatory challenges in emerging marketsAdded to these elements, emerging markets – which currently account for around one-half of world biopharma sales growth (Figure 2) – also present challenges due to greater regulatory scrutiny and requirements.

Cas

h Fl

ow

Time

Reducedevelopment

costs

Increase level ofpeak profitability

Increase speedof adoption

Decreasedevelopment time

Reduce risk and ensure compliance throughout the lifecycle

Increase durationof franchise

strength

• Maximize revenue

• Minimize costs

• Ensure regulatory compliance

• Reduce risk

Hypothetical product’s profitability today

Pharma company’s objective/goal (increase profitability/decreased costs)

As products age, the pressure to shrink costs and grow revenue continues to increase


9.3% 6.5% 8.8% 8.1%2.9%1.6%0.5%1.9% CAGR2015-20

93438

GlobalRx sales,2015

NorthAmerica

WesternEurope1

Japan Otherdeveloped2

BRIC-MT3

6 10 5117

1618

39 1,183Emerging markets

Emerging markets contribute materially to pharma growth over the next five years.

Pharma sales growth by region, 2015-20, $USD Billions

EasternEurope4

Asia Otheremerging5

Global Rx sales,2020

Figure 2: Emerging markets are driving growth and increasing regulatory requirements

1 Austria, Belgium, Switzerland, Germany, Denmark, Spain, Finland, France, UK, Greece, Italy, Netherlands, Norway, Portugal, and Sweden2 Australia, Hong Kong, New Zealand, Singapore, South Korea, and Israel3 Brazil, Russia, India, China, Mexico, and Turkey4 Belarus, Bulgaria, Czech Republic, Croatia, Estonia, Hungary, Lithuania, Latvia, Moldova, Poland, Romania, Slovakia, Slovenia, Serbia, Ukraine5 Algeria, Angola, Antigua, Argentina, Bahamas, Bahrain, Barbados, Belize, Benin, Bolivia, Botswana, Burkina Faso, Burundi, Cameroon, Cape

Verde,Central African Rep., Chile, Colombia, Congo (DRC), Congo-Brazzaville, Costa Rica, Cote d’Ivoire, Cuba, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Grenada, Guatemala, Guinea, Guyana, Haiti, Honduras, Iran, Iraq, Jamaica, Jordan, Kenya, Kuwait, Lebanon, Libya, Madagascar, Malawi, Mali, Mauritania, Mauritius, Morocco, Mozambique, Namibia, Nicaragua, Niger, Nigeria, Oman, Panama, Peru, Puerto Rico, Qatar, Rwanda, Saint Lucia, Saint Vincent, Saudi Arabia, Senegal, Seychelles, Sierra Leone, South Africa, Sudan, Suriname, Swaziland, Syria, Tanzania, Togo, Trinidad and Tobago, Tunisia, Uganda, United Arab Emirates, Uruguay, Venezuela, Yemen, Zambia, Zimbabwe

Source: BMI Research 2014; McKinsey analysis www.mckinsey.com/insights/health_systems_and_services/pharmas_next_challenge

This enhanced regulatory scrutiny is also resulting in larger financial penalties related to deficiencies noted in documentation and oversight of marketed products (Figure 3).

Figure 3: Pharmaceutical industry criminal and civil penalties1

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40

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Jul-122011201020092008200720062005200420032002200120000

1000

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3000

4000

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6000

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Number of settlements

Financial penalties ($USD Millions)

Num

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ns)


Divestment discussionsAs a result of these challenges, marketed products have recently been the subject of numerous merger and acquisition (M&A) discussions and “portfolio swaps,” with Merck and Sanofi reportedly taking steps to divest older drugs,2 while GlaxoSmithKline dropped a plan to sell its older drugs business.3

Current model: Cost and quality are impacted

Based on Quintiles’ extensive discussions with clients – from emerging to mid-size and large global biopharma – about how they manage their established products, one identified outcome was that typical approaches to managing safety, regulatory and benefit-risk for marketed products are siloed and inefficient. In the current model, safety, regulatory, benefit-risk management and medical affairs many times operate as separate groups. These disparate functions often have inefficient, manual process handoffs, and use multiple vendors providing related services, resulting in both gaps and redundancies. Each function may have separate processes and technology, with duplicative management oversight and challenges managing relationships between corporate headquarters and local operating companies (Figure 4).

Figure 4: The current model: disparate functions with separate processes and technology

An integrated approach

Against this backdrop, integrated regulatory and safety operational expertise is essential in maintaining marketed products to meet the demands of three converging areas: pharmacovigilance, benefit-risk assessment and regulatory affairs. The challenge is to continue to help ensure patient safety, regulatory compliance and risk reduction while minimizing associated costs, thus maximizing net return on a product or portfolio. Major biopharma players are strategically reconsidering cost-effective ways to manage marketed products, while smaller companies seek the scale and competencies required to bring global products to market. Based on these market dynamics, it is clear that biopharma companies need to change their current processes for how to handle marketed products. Since biopharma companies currently organize safety, regulatory and benefit-risk management as separate groups, the purpose of this paper is to show that a different approach is needed. The recommended solution? Synchronize the safety, regulatory and benefit-risk management siloed functions into one cohesive operating unit to maximize product safety knowledge, and leverage synergies and cost-efficiencies.

SafetyVendor 1

RegulatoryCorporate

SafetyVendor 2

SafetyVendor

3

LocalAffiliates

LocalAffiliates

LocalAffiliates

LocalAffiliates

Benefit-RiskManagement

• Disparate functions

• Inefficient, manual process handoffs

• Multiple vendors providing related services: gaps and overlaps

• Separate processes & technology

• Duplicative management oversight

• Challenges managing relationships between corporate and local operating companies (LOCs)

Integrated regulatory and safety operational expertise is essential in maintaining marketed products to meet the demands of three converging areas: pharmacovigilance, benefit-risk assessment, and regulatory affairs.


To do this effectively, biopharma companies first need to review their expertise in these areas: lifecycle maintenance, gap analysis and remediation, regulatory agency interaction, regulatory strategy development and planning, and labeling and promotional support (Figure 5).

Figure 5: Regulatory affairs functions to support marketed products

Companies with marketed products also can benefit from this differentiated approach to global competence, infrastructure and expertise in safety and benefit-risk management.

Useful characteristics for vendors seeking to meet these needs include a presence across ICH (International Conference on Harmonization) regions, “follow the sun” (or 24-hour, seven-day-a-week) service coverage, fluency in multiple languages, and experience across a broad range of therapeutic areas.

An ideal global delivery model involves a cost-effective mix of:

• The right people, with expertise where it is needed, including a global footprint, deep experience across major therapeutic areas and geographies, and exceptional regulatory knowledge and insight.

• Optimized and synchronized processes, focused on operational excellence and synergies, such as: integrated, optimized processes across the scope of services; streamlined standardized operating procedures (SOPs), and templates; and a scalable solution to manage entire portfolios.

• An integrated technology suite, underpinned by data and analytics capabilities, providing: transparency to operational metrics; enhanced signal detection and insight generation; the ability to view product information globally; and improved management of and interactions with affiliates and internal stakeholders. This can provide optimized data for improved compliance and reduced risk.

RegulatoryStrategy &

DevelopmentPlan

Labeling +Promotional

Support

LifecycleMaintenance

Common Technical Document (CTD)Marketing Authorization Application (MAA)

New Drug Application (NDA)

GapAnalysis &

Remediation

AgencyInteraction

The recommended solution is to combine the safety, regulatory and benefit-risk management siloed functions into one cohesive operating unit to maximize product safety knowledge, and leverage synergies and cost-efficiencies.


Integrating services to close gaps and drive efficiencyThis global, comprehensive, fully integrated model to enable “value vigilance” combines pharmacovigilance, benefit-risk management and regulatory expertise (Figure 6). The model enables companies to take a proactive approach to:

• Navigating an evolving regulatory environment and global compliance issues

• Identifying, managing and mitigating product risks

• Optimizing and integrating global processes

• Improving operational efficiencies to reduce costs

• Maintaining profitability later in the marketed product’s lifecycle

• Containing technology and maintenance costs

• Managing and staffing a complex global network

Figure 6: Improving the value equation for currently marketed products

This transformative approach allows customers to maximize investments and enhance productivity. Potential economic benefits accrue from allowing customers to transition from in-house (with most or all related in-house services, non-integrated processes and technology, and majority of staff in high-cost countries), or multiple vendor outsourcing (with services outsourced by function across separate vendors using non-integrated or even incompatible technology) to one biopharmaceutical services provider.

Advantages of the one provider outsourcing model include integrated and synchronized safety, regulatory, benefit-risk management services delivered via globally integrated processes using a unified technology platform designed to interface with in-house customer legacy systems. This can yield savings due to the:

Integrated Technology& Analytics Platform

Integrated MarketedProduct Maintenance

Pharmacovigilance

Regulato

ry

Management

AggregateReporting

Benefit-Risk

SignalDetection

QM

S

Cas

eP

roce

ssin

g

Literat

ure

Search

Monitoring

Assessm

ent

Stra

tegy

& In

tera

ctio

n

Global

Labe

ling

MaintenanceMitigation

Safety & Medical Information

Global Regulatory Requirements

Comparative Effectiveness & Patient Use

Descriptive Predictive Prescriptive Insights

Product Knowledge and Services Platform

Providing insights into your products and activities across the globe.

• Regulatory Labeling

• Submissions

• Product Optimization

• Benefit-Risk Management


• Optimized geographic delivery model (right cost, right region)

• Optimized employee grade level mix (right people, right activities)

• Operational efficiency (process improvement, technology automations)

• Reduced overheads

• Functional integration process efficiencies (reduced “whitespace”)

• Reduced vendor oversight/management costs

• Reduced technology development and maintenance costs

This integrated model simplifies and streamlines the complex tasks of regulatory and safety management. The centralized platform drives global harmonization, collaboration and compliance, enabling teams to be managed, to communicate, and ultimately to operate and deliver more efficiently and effectively.

Services are enabled by an integrated safety and regulatory technology platform, which allows customers to transfer delivery accountability without losing control. Real-time metrics provide transparency to the service provider’s operational delivery performance, allowing customers to access data in easy-to-use, standardized reports, offering clear visibility to their products.

Sample client metrics might include: the percentage of employees current on standardized operating procedures (SOP) training; percentage of on-time deliverables; share of submissions accepted by regulators; time against baseline for key tasks; audit or inspection findings; safety case reporting volume; and the number of active safety signals followed.

An optimized transition process can help ensure continuity and compliance at all stages, including:

Planning and setup

• Transition grid by product

• Service task matrix, listing all tasks/activities associated with a service and indication of responsible party

• Detailed product transition and resourcing plan, detailing when products will be transitioned and when staff is available for resourcing needs

• A transition governance team and regular meetings

Knowledge transfer

• Transition grid by product, generating a master timeline of what products are transitioned when

• Service task matrix, used to create training and other onboarding materials as well as transition handover checklists

• Resources, driving the timing of waves within the master timeline

Execution

• Transition grid by product, updated weekly by the transition team to show change in status of services

• Continued transition governance oversight until steady state is achieved

Advantages of the one provider outsourcing model include integrated safety, regulatory, benefit-risk management services delivered via globally integrated processes using a unified technology platform designed to interface with in-house customer legacy systems.


Conclusion

There is scope for biopharma companies to outsource the “end-to-end” management of marketed products. This can result in lower costs, greater visibility and better decision-making. This approach can help capture both quality and efficiency benefits from a fully integrated regulatory and safety services offering, thus delivering real value to customers. Deliverables are provided with minimal oversight/input, allowing the customer to refocus existing resources.


References

1. Reproduced with permission under the terms and conditions of a Creative Commons License. Almashat, S. and Wolfe, S. Pharmaceutical Industry Criminal and Civil Penalties: An Update. September 27, 2012. Accessed at: http://www.citizen.org/documents/2073.pdf

2. Merck, Sanofi, Glaxo Take Steps to Shed Older Drugs, Jeanne Whalen and Dana Cimilluca, The Wall Street Journal, June 3, 2014.

3. GlaxoSmithKline drops plan to sell off older drugs business, Ben Hirschler, Reuters, December 4, 2014.


Matthew McKeever, M.D., FAAPVP and Global Head, Safety Knowledge & Reporting, QuintilesMatthew McKeever has been with Quintiles since October 2000. He graduated from Cornell University Medical College in New York and completed residency in pediatrics at Northwestern University affiliate Children’s Memorial Hospital in Chicago, Ill. Dr. McKeever practiced academic primary care pediatrics at the Children’s National Medical Center during which time he held the appointment of assistant professor of pediatrics at the George Washington School of Medicine.

Dr. McKeever has extensive experience in late-phase studies including large disease and product surveillance registries and phase IV trials, and in clinical development phases II-IIIb in the areas of cardiovascular, central nervous system and respiratory as both a medical advisor and later in his role of global head for internal medicine. He also has experience in the phase I development area having led the Quintiles Phase I Research Unit at Guy’s Hospital in London from 2010 through 2013. He is board certified in pediatrics, and a Fellow of the American Academy of Pediatrics.

James C. WalkerCEO and Founder, Octagon Research Solutions, Inc.James C. Walker is the founder of Octagon Research Solutions, Inc. and has been working in the pharmaceutical industry for 20 years. Prior to founding Octagon, he worked as the senior manager of worldwide regulatory affairs for the Schering-Plough Corporation (“Schering”). While at Schering, he was responsible for clinical and pre-clinical in the antihistamine, central nervous system and critical care therapeutic areas.

Prior to joining Schering, Mr. Walker worked across multiple therapeutic areas in the regulatory affairs/clinical and clinical quality assurance department at the R.W. Johnson Pharmaceutical Research Institute (PRI). Mr. Walker has extensive experience in and knowledge of all phases of clinical research and both FDA and European regulations. He is skilled at process improvement and providing insight across multiple disciplines within drug development.

Mr. Walker holds a bachelor’s degree in biological sciences from Villanova University, a master’s degree in environmental sciences from Rutgers University, and an a master’s of business administration from Duke University.

About the authors

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Value vigilance