The Paperless Chase: Regulatory Bane or Productivity Boon?

After years of prodding from the pharmaceutical industry, the U.S. Food and Drug Administration (FDA) published its final rule on 21 CFR Part 11, covering electronic documents and signatures, on March 20, 1997. Instead of marking that date as the beginning of its liberation from Babylonian information technologies, the pharmaceutical industry increasingly views Part 11 as another regulation, another hurdle, another $100 million headache.

"FDA came up with 21 CFR Part 11 in response to industry's request for regulatory guidance on how to use electronic documents and signatures," notes Tom Moran, vice president of the pharmaceutical practice of NCS Technologies (Piscataway, N.J.). "Pharmaceutical companies provided a great deal of input as the regulations were written and implemented. Before long, companies had forgotten the potential business advantages to compliance and focused instead on penalty avoidance. Only recently has the pharmaceutical industry rediscovered the business case for Part 11."

With mergers, generics and patent expirations pressuring pharmaceutical manufacturers to become more efficient, Part 11 compliance needs to become part of that success formula.

"Complying with Part 11 sooner, rather than later, allows managers to concentrate on operational efficiency that much sooner, and in a compliant manner," Moran says. "It would be great if companies viewed Part 11 not as a headache, but as an opportunity. Sure there's an implementation cost, but it is more than balanced by the benefits of automated processes, integrated systems, and the storage and sharing of electronic documents. Costs of implementing Part 11 are minimal compared with the cost of a violation, so it makes business sense to protect yourself. "

Part 11's obvious benefits are reduced paperwork and less reliance on manual information tracking--what used to be referred to as the "paperless" office. In fact, no industry has gone completely paperless, but some have reaped huge efficiencies by conducting important transactions electronically.

"We have saved more than $1 billion by changing our own business into an e-business and eliminating paperwork," says Doug Souza, vice president of process manufacturing at Oracle Corp. (Redwood Shores, Calif.). "Not having to handle paperwork has allowed us to dedicate human resources to more critical tasks. Today, we're able to access purchase orders, expense reports and HR transactions from anywhere in the world in a secure, auditable environment."

According to David Wilson, an information technology (IT) consultant and principal with Audit Solution (Kent, England), companies should not implement Part 11 just to make the FDA happy. "They should do it because it makes good business sense," he says. "Pharmaceutical companies spend 10 years and hundreds of millions of dollars pushing a drug through development. In the end, all they really have is data. And it had better be good data. If you can't trust your development and clinical data, you're in deep trouble anyway.

"So keeping FDA happy isn't the objective," Wilson adds. "The objective is quality."

Sanjay Mathur, chief technology officer at trustERA Inc. (Cupertino, Calif.), notes that although the pharmaceutical industry is already over-burdened with regulations, companies need to view Part 11 as an opportunity to streamline and renovate their processes, institute world-class security and data integrity and demonstrate to both FDA and their customers that their data is free of misrepresentation, alteration or tampering. "Paperless documentation can shave months off the time it takes to reach the NDA [new drug application] stage," Mathur says. "This idea of trustworthiness is usually associated with financial industries, but it should apply to every business, especially one that is so concerned with improving quality of life."

Kate Townsend, vice president for regulatory compliance and validation at Taratec Development Corp. (Bridgewater, N.J.), puts it most succinctly: "We view Part 11 as an opportunity to improve business operations."

It's become too easy to criticize pharmaceuticals' Part 11 deficiencies by pointing out other industries' successes with highly secure paperless transactions. In defense of pharma, one could point out that other businesses operate in a relatively unregulated environment, implementing new information technologies at their own pace and in response to nothing but pressing business needs. On the other hand, pharmaceuticals' status as a pillar of our healthcare system suggests that its needs for security and data integrity should be without peer.

In telecommunications and banking, if data doesn't pass from one point to another in a secure, reliable fashion, the company might not be able to bill for service or even conduct critical transactions.

"That's an immediate pain point," says NCS Technologies' Moran. "Although pharmaceuticals are much more highly regulated than other industries, an analogous pain point doesn't really exist."

Nevertheless, observing other industries can be instructive. For example, Audit Solution helped a multi-national firm implement a Windows 2000 network into the English court system, which with 40,000 users at more than 400 sites requires very high standards for security, electronic signatures and document control.

"The entire project was done perfectly from day-one," says Wilson, adding that "installing the same system in a pharmaceutical company would not have been so easy."