API imports in the EU: gauging the FMD’s impact

pharmafile | December 9, 2013 | Feature | Manufacturing and Production, Medical Communications, Research and Development, Sales and Marketing |  API, EMA, FMD, Taylor, manufacturing, supply chain 

The deaths of dozens of patients as a result of the contaminated heparin incident in 2008 casts a long shadow over pharma to this day but – seven years on – new EU regulations are trying to ensure the tragedy will not be repeated. 

The heparin scandal was arguably one of the key drivers for the eventual passage in 2011 of the Falsified Medicines Directive (FMD), which is seeking to protect the medicines supply chain from infiltration by from counterfeit products, illicit substances and adulterated active pharmaceutical ingredients (APIs).

Back in 2008, pharma companies – including Baxter and B. Braun Medical – were forced to recall products containing heparin that was contaminated with over-sulphated chondroitin sulphate (OSCS).

The China-sourced API caused serious allergic reactions and the deaths of dozens of patients in the US, and tainted supplies were also found in 11 other countries, including France, Germany and Italy.

After an investigation, it emerged that the heparin had been laced with cheaper OSCS to boost its apparent protein content and fool quality control labs in one of the most notorious cases of economically-motivated adulteration to hit the pharma industry to date.

The heparin case and others – such as a Nigerian incident in 2008 involving teething syrup made with a contaminated excipient which killed 84 children – generated a huge amount of attention and highlighted the vulnerabilities caused by the globalisation of the pharma ingredients sector.

Thousands of low-cost suppliers from emerging markets such as Asia have entered the API marketplace in recent years, undercutting EU suppliers thanks to lower production costs and – some claim – less robust adherence to quality standards.

All told, it is estimated that around 70% of all APIs consumed in Europe are imported, with 60% of those imports coming from India and China, and the EC has estimated that there are 15,000 to 20,000 API suppliers selling products into the EU. 

For years, EU legislation has not required mandatory inspections to ensure that APIs meet Good Manufacturing Practice (GMP) standards for APIs, with pharmaceutical manufacturers having the responsibility to ensure that all raw materials used in its products meet quality criteria. 

With confidence shaken in this largely self-regulatory model, the EU pushed for tighter regulations on APIs as a key pillar of the FMD, which also introduces legislation on other aspects of supply chain security such as safety features on packaging, Good Distribution Practices (GDP) and internet sales of medicines.

Written confirmation

With regard to APIs, the FMD mandates that as of 2 July, 2013, all active substances produced outside the European Economic Area (EEA) have to be accompanied by a ‘written confirmation’ from the competent authority of the exporting country that the shipment has been made at a plant that adheres to EU GMP standards and facility control.

The written assurance must include a statement that the plant is GMP-compliant and subject to regular and strict controls – including inspections. Medicines using API without a confirmation cannot be marketed in the EU. 

In addition, the national competent authority in an exporting country must keep authorities in the EU importing country abreast of any non-compliance issues with an API facility in a timely manner, a measure designed to serve as an early warning system for emerging problems.

Overall, the new requirements are designed to reinforce the need for pharma manufacturers to ensure that the APIs used in their products come from registered suppliers that are subject to adequate regulatory insight.  

That means that responsibility to verify compliance remains with the EU Marketing Authorisation Holder (MAH), which should audit the supplier themselves or via a third party. The EU stopped short of mandating universal facility inspections, suggesting that with so many facilities it would be unfeasible given current regulatory capacity.

The only exception to the written confirmation requirement is a ‘white list’ of countries that have been able to convince the commission that their oversight of APIs is equivalent to those of the EU. At the moment this includes the US, Japan, Switzerland and Australia. 

Other countries which have applied for equivalency status include Israel, Singapore, Brazil and New Zealand, with discussions ongoing, according to the EC website.

In a recent update, the EC said that the applications from Singapore and Israel had been declined “pending changes in their GMPs to adequately address APIs that are exported rather than manufactured into drug product in domestically. 

Shortages: no news is good news?

Ahead of the 2 July deadline, there were concerns that suppliers of APIs would fail to secure written confirmations from their national regulatory authority, with the result that some APIs may no longer be usable in the EU.

Delays in getting key supplier countries such as the US onto the equivalency list – which some have attributed to fear of legal liability if problems emerged with an API batch – made the industry jittery.

The EMA even issued guidance to help countries deal with any cases where API shipments lack the correct documentation for a ‘short interim period’ while the new rules are being implemented. The guideline suggests importers will be able to receive shipments provided they can explain why no written confirmation is present and they provide additional details such as the current available stock level of the API and a risk assessment. 

The UK’s Medical and Healthcare products Regulatory Agency (MHRA) suggested in August, however, that the new rules may make the sourcing of APIs from some countries more difficult, but three months after the introduction of the written confirmation deadline there does not appear to have been any immediate impact.

The European Commission has said it is unaware of any medicine shortages being caused by interruptions in API supply. Meanwhile, the European Federation of Pharmaceutical Industries & Associations (EFPIA) also says it has no evidence of shortages, although it points out that the new regulations may have to bed in for six months or more before any impact is felt.

There is also some direct evidence to suggest that the shortage fears were unfounded, particularly as China and India have both said they will comply with the rules. For instance, India’s Central Drugs Standard Control Organization – part of the Ministry of Health and Family Welfare – has been publishing details of written confirmations on its website and is continually updating the list with new documents, with the tally standing at around 250 at the time of writing.

Most of the confirmations cover multiple APIs made at the same plant, so the number of individual APIs covered by the confirmations is well into four figures. Some concerns still remain about the speed with which the authorities in India and China can process applications, and also the fact that around 30-45 facilities in China are not registered with the State Food and Drug Administration (SFDA) and will be unable to secure confirmations until they do so.

It is worth noting that EMA guidance also provides EU member states with some leeway to activate contingency clauses to remove the risk of shortages on a temporary basis.

To that end, the MHRA proposed in June to allow APIs to be imported without written confirmations in cases where there is a risk to public health due to a shortage, provided the importer meets certain criteria including having passed a GMP audit within the last three years.

One unresolved issue is that transposition of the FMD into member state law has been delayed from the scheduled date of 2 January, 2013. The UK, for example, finally implemented its national statutory instrument – including the need for written confirmations – on 20 August, several months late.

Several other member states were similarly tardy in transposing the regulation, so as yet it has been hard to gauge exactly how they are interpreting the FMD’s position on API imports.

Some appear to be leaving the matter entirely up to the pharma manufacturer, while others – such as Spain – have said customs will verify compliance of API shipments at their borders. The MHRA has said it will not inspect at borders but will instead “control at inspection of manufacturers and – where there is a risk trigger – at inspection of active substance importers and distributors”.

One consequence of the threat of API shortages has been that EU-based pharma manufacturers have signed contingency agreements with secondary suppliers based in the EU, the US and other GMP-equivalent regions, according to the European Fine Chemicals Group (EFCG) – which represents many of the EU’s API manufacturers.

Other regulations

Meanwhile, the introduction of the FMD has had knock-on effects, with other elements of the EU’s API regulations updated to tighten up procedures. 

In January, the commission launched a consultation process on GMP for medicinal products, with specific attention focussed on APIs, and the following month published a draft guideline on the principles GDP for Active Substances.

The pertinent area of the GMP revisions is an updated version of Chapter 5 of the EU GMP Guide on Production, which adds some important quality control requirements for APIs, including the need to explicitly document data such as the origin, manufacturing process and supply chain of starting materials, along with a formal assessment and verification of the traceability of APIs. 

The update also introduces a risk-based approach to control of APIs and other starting materials, which should be bought directly from the manufacturer with a quality agreement in place where possible. It provides guidance on testing, prevention of cross-contamination, and what to do in the event of a product shortage, amongst other things.

Meanwhile, the GDP guidelines cover aspects such as the quality systems required by distributors, including personnel qualification and training levels, as well as other elements such as documentation and record-keeping, premises and equipment and procedures for the receipt, storage and delivery of APIs.

FMD: not tough enough?

Some industry groups believe that the new regulations imposed by the FMD do not go far enough to protect Europe’s citizens from exposure to potentially substandard or adulterated APIs. For example, the EFCG has been pushing for global harmonisation of the rules and regulations covering the manufacturing of APIs for years, predicated on mandatory inspections of all API producers by regulators.

EFCG is part of the European Chemical Industry Council (CEFIC) and alongside sister group the Active Pharmaceutical Ingredients Committee (APIC) put out a white paper earlier this year laying out their concerns about the FMD, as well as taking issue with EC figures on the scale of the inspection task.

The two organisations believe the process is still too dependent on the pharma industry self-regulating the supply chain and remains vulnerable to corrupt practices. They would like to see mandatory inspections funded by a system of user fees, similar to the recently implemented Generic Drug User Fee Act (GDUFA) in the US.

Failing that, pooling the resources of countries with equivalent GMP oversight processes – territories such as the US, Australia and Japan – via mutual recognition agreements (MRAs) could be another way to stretch scarce regulatory resources.

The FMD also contains potential loopholes, for example the importation of semi-finished products or mixtures of APIs and excipients which currently lie outside the scope of the directive, according to the white paper.

Crude or ‘moist’ pre-APIs are also exempt, although the EC maintains that in these instances it is the responsibility of the medicines manufacturer as the gatekeeper of quality to test that batches are in line with specifications.

The white paper points out that in the case of the 2008 heparin scandal the OSCS contaminant was unable to be identified with the battery of tests in use at that time. The trade associations also dispute the 15,000 to 20,000 facility estimate proffered by the commission, pointing to a document published by the Heads of Medicines Agencies (HMA) group that suggests the actual number is considerably lower. 

The HMA’s survey of the top 18 exporting third countries – plus South Africa and Ukraine – found that all told there were just 1,500 facilities serving the EU market, which together account for an estimated 97% of all third country API manufacturing sites that ship to Europe.

With that number of facilities, it should be feasible for regulators to inspect all API plants importing into Europe, particularly if established MRA programmes – such as the joint FDA-EMA inspection scheme which launched in January 2012 after a successful pilot – can be expanded, according to the EFCG.

“The implementation of mandatory inspections, ideally via an MRA approach, is a relatively small price to pay to guarantee the quality of API meets the EU standard, irrespective of its global source, for the benefit of the health of the EU citizen and of the EU API manufacturing industry,” says the white paper.

Some observers have suggested that the new regulations could have even more dramatic consequences on Europe’s pharma sector in the longer term.

For example, Reuters published a report earlier this year noting that the requirements could encourage the production of formulated pharmaceutical products outside the EU, bypassing API import rules.

It also suggests that the regulations could provide a boost to EU API manufacturers, particularly those with the technological expertise to make small volume, specialised and niche products that have come off patent or are about to do so.

Phil Taylor