MedImmune's Skibo asks: Is Pharma Cost Cutting Sacrificing Quality?

At the ISPE/FDA conference on cGMP’s in Baltimore last week, Andrew Skibo, EVP of operations and manufacturing at MedImmune, spoke on the topic of “High Quality in a Lean Manufacturing World.”  The pharmaceutical industry’s increasing focus on reducing manufacturing costs, he said, has come at a time when the industry is also seeing a dramatic increase in quality failures.  Biopharmaceuticals, so closely defined by their manufacturing processes and environments, are particularly vulnerable, he said.

Skibo then asked the following questions:

• Have 10 years of focus on reducing costs pushed pharma to a point where quality performance is beginning to suffer?
• Is the industry focused on cost reduction as a narrow, generalized approach in which cost savings initiatives are evaluated solely on day-to-day costs? 
• Is the industry evaluating cost savings in the full context of risk versus value to the enterprise?

He summarized recent compliance problems and recalls, proposed and enacted regulations, and the ongoing outsourcing trends.

At times, he said, industries have gotten the value proposition wrong, he said, pointing to BP Horizon as an example.  The company had cut costs and resources drastically without investing adequately in safety and quality.

“Pharma must ensure that quality is not compromised as manufacturing costs are reduced,” he said, adding that any cost cutting should involve targets that have no or very minimal impact on quality.

Management support and a crossfunctional approach are essential to maintaining quality.  “It is top down, rather than bottom up,” he said, “and it’s not about rules, SOPS and punishments for individual infractions, but about the environment and atmosphere in which we ask our people to work.”

He then discussed MedImmune’s flu vaccine facility and improvement program as a case study.  Before the project was undertaken, he said, process variability was high.  The company decided to make reliable production and operation the key goal, to invest in automation and to reduce the need for intervention.

The team needed to reduce high turnover.  Since the project was undertaken, he said, there has been a 73% reduction in deviations, which went from 589 in 2010 to 159 in 2011.  In addition, he said, yield variance improved by 44%. 

In summary, Skibo said, operations must understand the true cost structure before managers even consider cost-cutting targets.  Initiatives must target specific issues that will not affect quality.  “Don’t issue goals such as ‘save 3% of COGMS’,” he said.  After his presentation, Skibo concluded by emphasizing the importance of this work.  “After all, we are not making sneakers in these plants.”

Agnes Shanley