Outsourcing: Cost versus Benefit

Does outsourcing manufacturing to nations with evolving GMP’s make economic sense? As FDA, USP and other organizations continue to study the heparin case, we promise to keep you informed.

By Emil Ciurczak, Contributing Editor

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There have been a number of tragic episodes in recent months, related to products being imported from countries noted for outsourcing. The major reason for outsourcing is financial. There is extreme pressure on pharmaceutical manufacturers to lower costs or, at least, slow the increases of retail prices. The quickest way to slow cost increases is to perform a number of manufacturing functions in countries where overhead is lower.

If we wish to have a material or product manufactured for substantially less than here in the US of A, then the cost must be low enough to make up for shipping times and costs while still showing a profit.  The basic equipment and chemicals manufactured in a lower cost-of-living country make up some of the difference, but the major cost in any project is labor. In order to have an extremely low labor expense, one must work with a developing country, such as China.

The ambient culture in such cases is that of lower education, sanitary conditions, and experience with “US/European-type” working conditions. Such conditions were common in the US and Europe in the late nineteenth and early twentieth century’s. They predated labor unions, the five-day work week, safety issues (OSHA), decent wages, health benefits, job training, overtime pay, vacations, and the like.  In addition to the conditions of the workers, the products were not always safe.

Science had not advanced, nor was there legal pressure to perform product safety (of efficacy) testing. US and European candy manufacturers, for instance, commonly used metal salts to impart colors to candy for children (even their own).

It was only the use of ethylene glycol as a medium for a sulfa drug (causing many deaths) that caused Congress to act. Since there was no precedent on “goodness of product,” the first Pure Food and Drug Act of 19062 (the Wiley Act) was enacted, addressed product safety: “That is shall be unlawful for Columbia any article of food or drug which is adulterated or misbranded, within the meaning of this Act; and any person who shall violate any of the provisions of this section shall be guilty of a misdemeanor, and for each offense shall, upon conviction thereof, be fined not to exceed five hundred dollars or shall be sentenced to one year's imprisonment, or both such fine and imprisonment, in the discretion of the court, and for each subsequent offense and conviction thereof shall be fined not less than one thousand dollars or sentenced to one year's imprisonment, or both such fine and imprisonment, in the discretion of the court.”

“In case of drugs: First. If, when a drug is sold under or by a name recognized in the United States Pharmacopoeia or National Formulary, it differs from the standard of strength, quality, or purity, as determined by the test laid down in the United States Pharmacopoeia or National Formulary official at the time of investigation: Provided, That no drug defined in the United States Pharmacopoeia or National Formulary shall be deemed to be adulterated under this provision if the standard of strength, quality, or purity be plainly stated upon the bottle, box, or other container thereof although the standard may differ from that determined by the test laid down in the United States Pharmacopoeia or National Formulary. Second. If its strength or purity falls below the professed standard or quality under which it is sold.”

The Drug Efficacy Study Implementation (DESI) was a program begun by the Food and Drug Administration (FDA) in the 1960s after the requirement that all drugs be efficacious as well as safe. The DESI program was intended to classify all pre-1962 drugs that were already on the market as either effective, ineffective, or needing further study. The DESI program was a consequence of the Kefauver-Harris Drug Control Act. The U.S. Kefauver-Harris Amendment or Drug Efficacy Amendment of 1962 was a response to the Thalidomide tragedy, in which thousands of children were born with birth defects as a result of their mothers taking thalidomide for morning sickness during pregnancy.

In fact, “food supplements” may still make claims without actually “making claims” on things like diet plans. As far as safety of products, US and European manufacturers learned slowly and needed legislative prodding to reform. It was only a few years ago that FD&C Red #2 was banned as a colorant, followed quickly by a number of commonly used chemical colorants. Chloroform was used as a solvent and sweetener in pediatric cough medicines and children’s fluoroscopes were common in shoe stores to allow children’s shoes to be fitted “properly.”[3]

Matters were even more complicated with toxic chemicals and (now) controlled substances. Calomel, a mercury salt, was dispensed for headaches and other ailments through the 1950s and Paregoric, an opium-based drug, was sold for the use on children’s gums during teething. Clearly, the country’s safety record didn’t become perfect with the passage of a bill in 1906! The Delaney Amendment was a provision in the later US Food, Drug, and Cosmetic Act (1958). It stated that “no food additive shall be deemed safe after it is found to induce cancer when ingested by human beings or animals, at any dose level. [Bold and italics are Author’s.]

Such an additive therefore must not be used.” It seemed that every week a number of “generally regarded as safe” or GRAS substances were found via methods such as the Ames test5-8 to be carcinogenic or mutagenic. The “novelty” wore off once the industry made such testing routine and fewer and fewer substances were allowed to be made for consumption. Later, the “any level” part was moderated by reality. It was determined that virtually any chemical could induce tumors if the dose was high enough. If it was determined that the level was much lower than “trigger” levels and exposure material was for limited duration (not chronic dosing), exceptions, on a risk/value determination were made.

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