The Shrinking Black Box – Mehryar Behizad, Pirus Consulting

Over the past thirty years several trends have emerged in the healthcare industry, relating on the one hand, to the advancing technology and the shape of the innovating organisations and on the other, the related Regulatory and Quality Management landscape governing the pathway of these inventions to market. This article is an attempt at reviewing the regulatory and quality management trend and a projection on how these trends affect the innovators.

The Innovation Component

Traditionally prior to the early 1980s innovation was either the forte of the universities, through their publications, or through what the then monolithic large pharmaceutical companies invented and developed in house. The drug industry itself was almost the exclusive forte of small molecule chemists. In the early 1980’s however several key changes came into effect. The most important of these was the rise of biotechnology.

After the Thalidomide debacle in the late 1950’s and early 1960s the regulations governing pharmaceuticals in the USA tightened considerably. These regulations related to clinical trials and pre-clinical safety and subsequently to manufacturing in the form of GMP. This initial tightening of regulations, soon emulated around the world, meant that the efficiency of the pipelines in large pharmaceutical companies was lowered significantly. The arrival of biopharmaceuticals in the 1980’s, at least initially, only served to decrease this efficiency even further. This was chiefly due to the more complex nature of these technologies.

The rise of biopharmaceuticals went through rapid innovation, but this innovation was largely in the universities. Large pharmaceutical companies were simply not equipped to deal with the technologies required for innovation and biopharmaceutical industrial development. This task fell to entrepreneurial academics who were encouraged (both in the USA and the UK) to form companies initially nurtured in the universities, a trend that has continued to today and has become an industry in its own right.

The juxtaposition of these two trends and the need for large pharmaceutical companies to increase the efficiency of their pipelines meant that innovation increasingly became the forte of small companies growing out of universities while development, manufacture and commercialisation became the forte of large pharmaceutical companies. This trend continues to this day and with the re-location of AZ and location of Precision Medicine Catapult HQ in Cambridge, chiefly to utilise this innovation pool, it is likely to expand in the UK.

The nature of the medicinal products themselves changed considerably in this period. Whereas at the beginning of this era Active Pharmaceutical Ingredients (API’s) were exclusively New Chemical Entities (NCE’s) by the end of this era close to 50% of API’s are biopharmaceuticals. Latterly this has moved to Advanced tissue therapies and gene therapies which form the trends for the future. Also in this mix, is the rise of personalised medicine and the increasing move towards orphan indications, again an area in which small innovative companies derived from academic institutions, have excelled.

Another key feature of innovations in small company settings is that they are multidisciplinary and often have extended to medical devices which are finding ever more innovative uses both as combination devices and as more effective sensors and IVD’s.

The Regulatory Component

The traditional route for pharmaceutical development was the development of NCE’s with well-trodden synthetic chemistry paths at the core of the technology for which the regulatory bodies had a well-established pool of expertise. This technology had well established means of control in respect to development and manufacture and the cost/benefit landscape was fully understood by the regulators.

The rise, first, of biotechnology and then of ever newer technologies in therapeutic applications has compelled the regulators to encounter newer and increasingly multidisciplinary technologies. Within the regulatory authorities it is an impossible task to keep up with the variety of available technologies which exist today in the healthcare sector. Nonetheless, public safety dictates that the regulatory bodies ensure that the products they authorise for marketing are safe. This gave rise in the early 1990s to the philosophy of “the process is the product”. This was a key strategy by which the regulators could extend their reach to gain an understanding of processes from an earlier stage in the product life cycle. A second related concept, given that by now biopharmaceuticals had joined the mainstream, was the concept of “Well Characterised Biologic”. Both of these developments extended the reach of regulators into the early process development of products. Previously the regulatory considerations started only at scale up and validation for a given product manufacture.

The implementation mechanisms for this extended reach have two elements, both of which exist elsewhere in the healthcare product world in the medical devices sector. This sector has been used to the use of multidisciplinary development of products. It already uses established risk models, is driven by ISO standards which incorporate both Quality Management (in the form of ISO9001) and Risk assessment standards (In the form of ISO 14971 and related standards). Each medical device has to have a well-established design dossier whereby all through its development risk is formally assessed at key design stages for the product. The manufacturing is then managed by adhering to ISO9000 principles which ensures manufacture and risk reduction in a controlled manner, in effect, an appropriate form of GMP.

Of course the pharmaceutical industry has been established along different lines, namely, it is used to working with “guidelines” instead of “standards”. This notwithstanding, ICH Q9 (the risk management guideline) and ICH Q10 (Quality in Pharmaceuticals guideline) are in principle identical to ISO14971 the standard for risk assessment and ISO9001 the Quality management standard respectively. The only real proviso is that “Product realisation” (a key concept in ISO9001) is often more complicated in the bio/pharmaceuticals field than in medical devices field and therefore the implementation of ICH Q10 by necessity more convoluted than what is described in ISO9001. That said, the inclusion of this approach in bio/pharmaceutical development means that the architecture of Common Technical Document that has emerged for bio/pharmaceuticals looks very much like the Technical Dossier used in the medical devices field.

Concurrently, because of the technological developments, the regulatory landscape in the medical devices industry has also undergone an evolutionary change. Devices are increasingly employed to deliver more innovative treatments and the number of “combination devices” has risen dramatically. The increasing need for more rigorous development, verification and validation in this sector gave rise to a more prescriptive derivative of ISO9001, namely, ISO13485. Meanwhile according to the latest version of this standard (ISO 13485: 2015, due to be released in December this year) the Technical Dossier is being extended to include more clinical use information, thus making it look even more similar to a CTD architecture.

The regulatory developments for bio/pharmaceuticals described above brings us to around 10 years ago. Regulators increasingly realised that their knowledge of potential adverse effects of biopharmaceutical impurities was limited.

An example of this is the Tegenero episode, which arose in 2006, where a supposedly highly targeted biopharmaceutical with no preclinical history of toxicity gave rise to a severe inflammatory cycle in healthy volunteers at its First In Man (FIM) trials.

One of the key lessons that came from this episode was the need for researchers to ask the question: “what do we know about our product?” before approaching regulators. This question can only be answered if the quality and traceability of research done within the innovator organisation is robust so that clear interpretations can be made. The enquiry that followed the Tegenero episode did show many weaknesses in the early development phase which had led to wrong pre-clinical and clinical assumptions.

The Tegenero and other similar episodes confirmed to the regulators that they can never hope to have as much in-house knowledge of upcoming technologies as the innovators and developers of the technologies. This increased the imperative for further extension of the quality requirements and the regulatory process into the development phase of both pharmaceuticals and biopharmaceuticals and one of the consequences was the development of ICH 8 (Good Development Practice). This guideline enhances the reach of the regulators further into the area of development of the therapeutic products and therefore in parity with the medical devices regulatory pathways in terms of quality and risk assessment requirements open to regulatory scrutiny.

Simultaneously, the treatment of rare diseases has increasingly become a mainstream regulatory consideration. Previously, this area was the preserve of “Hospital Specials”. These were modified formulations, mostly of existing API’s, used to treat novel indications based on acute clinical need. Increasing globalisation and the information age, as well as inter regional regulatory co-operation, means that the size of the market for orphan drugs can be more easily determined and regulatory regions are willing to accept each other’s marketing authorisations to get products to market to fulfil clinical need in a shorter time. This however, does not mean that the quality and regulatory scrutiny on these products is any less rigorous. In fact quite the opposite. Because the pathway to market is shorter there is an even greater need for the quality and traceability of the supporting research to be higher.

In addition to the above there is now an increasing emphasis on QbD (Quality by Design). This means that increasingly regulatory expectation is that quality management and regulatory principles are applied to medicinal/healthcare products as early as possible.

What does this mean for the Innovators in SME’S?

The impact of this trend on the innovators will be felt in several areas.

For those innovators with inventions in complex multidisciplinary or new therapy areas and those in the orphan indications market the regulatory expectation on data quality is particularly important.

In the orphan drugs field regulatory and quality expectations are high because the intention of the regulators to fast track the regulatory process does not equate to lax scrutiny of submissions.

This translates into two aspects which are particularly relevant for consideration and implementation by the small and medium sized companies.

Firstly that they have to pay attention to the Quality and Traceability of their research and proof of concept studies so that by the time there is a regulatory filing there is an internally consistent, clear set of data relating to all research and development aspects for the invention and development. This effort would not only make the regulatory review process more efficient, it would also mean that the patients get the benefit more quickly and the commercial benefits to the inventor would be realised more readily allowing them to pursue further inventions and development. This is particularly important for companies that grow out of academic institutions because there is a perception that targeted research and development often has a different culture to blue sky research. In truth, however, making efforts to make any research and development program traceable is good practice. This traceability will also help product and IP definition simpler to the benefit of the institution.

Secondly, using Quality by Design principles can avoid many practical, technical, scale up and regulatory obstacles in the product life cycle. Quite apart from the benefits of commercialised inventions, for academic institutions related to SME’s, this type of exercise should form a module of best practice of which the students who wish to have a career in the medical and healthcare products industry should be fully aware.

Additionally with the increasing complexity of inventions and the blurring in the distinction between medical devices and bio/pharmaceuticals the above principles are even more important because, in addition to the above, a methodical approach to control of the research and design processes would help product definition which then determines regulatory pathway to market.

The perception in many SME’s in the healthcare sector is that the regulatory and compliance burden is costly. It is true that there is a cost to compliance, however the cost of non-compliance is considerably higher. To give a tangible measure of this process, a recent study published by Ponemon institute, carried out on a wide range of different sized organisations in the healthcare sector shows that the cost of compliance is around $220 per employee, whereas the cost of non-compliance is close to $820 per employee, close to 4 times more.

In short, the regulatory trend towards greater scrutiny earlier and earlier in the product lifecycle is likely to continue. Even in the absence of any enforcement by the regulators, the expectation of high quality traceable data in the early development phase of the product lifecycle is increasingly becoming the norm.

In this landscape the SME’s, particularly from academic institutions, have rightly become the engine of innovation. Equally, the large pharmaceutical and medical device companies have become the means for commercialisation and marketing of many of these innovations but in return they demand ever more efficient pipelines. For SME’s to take full advantage of this environment, either on their own or in collaboration with large companies, attention to quality and regulatory considerations starting in early development is key.

Practical Steps

The above trend is here to stay, from a regulatory and quality standpoint, the size of the R&D black box in the healthcare product innovation sector is shrinking. So what are the practical steps a SME or other innovator can take to protect itself and enhance data quality and path to market?

Below are a few points which should be given early consideration by SME’s and other innovators:

1. Establish a regular review process to identify original ideas for patenting/commercial exploitation

2. Once identified carry out all supporting and peripheral experimentation as part of pre-planned blocks of work to clarify specific points in support of the invention

3. Write targeted reports regularly to address discrete blocks of work

4. Maintain traceability between reports and raw data at all times

5. Establish peer review processes for experimental plans and associated reports

6. Review blocks of supporting work and refine as necessary

7. Give early consideration to defining a product based on your invention

8. Use the product definition to define the regulatory pathway

9. Do reality checks in relation to your intended product with the existing expertise outside your organisation.

Don’t miss the opportunity to deepen this topic at our Life Science Leadership Series: Strategies and Funding of Clinical Trials on 24 September at Chesterford Research Park where Mehryar will present on ‘Ensuring a solid foundation: Early scientific and pre-clinical data packages’.

LSLS A4 advert_Landscape_24 September 2015

Tegenero – NIH report:

Ponemon Institute Link:


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The One Nucleus blog is written by individuals and is not necessarily a reflection of the views held by One Nucleus.
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