Feb. 28-Apr. 14, 2000. Third-party auditors warn Schering-Plough (SP) of problems with product quality, including lack of quality control (QC) and high staff turnover.
Dec. 20, 2000. SP's stock price reaches a high of $60 per share.Jan. 19, 2001. FDA completes an in-depth inspection of SP production facilities, identifying significant, repeated, and widespread QC violations dating to 1998. Several production lines are shut down and the Clarinex (desloratidine) launch is delayed.
Feb. 15, 2001. SP announces FDA warnings and plans to increase quality staffing 30 percent by the end of 2001. Its stock trades at a low of $38.20 per share.
Mar. 1, 2001. Public Citizen urges FDA to consider criminal charges against SP, alleging the possibility that SP was aware of QC problems while shipping defective inhalers (59 million units were recalled in the previous 15 months).
Aug. 13, 2001. SP adds 500 people to its QC and production division to address FDA-identified deficiencies.
Dec. 24, 2001. Clarinex receives FDA approval-a delay of almost 12 months because of SP's need to resolve manufacturing and quality issues. The overlap of patents between Clarinex and Claritin (loratidine) is ultimately cut in half, significantly affecting transition plans.
May 17, 2002. SP signs a consent decree with FDA, pays a $500 million fine, and agrees to stop manufacturing 73 products and to operate under tighter scrutiny through 2005. Its stock trades at $24.75 per share.
October 2002. News of the impending precipitous drop in Claritin sales and the largely ineffective switchover to Clarinex drives SP's stock price down to $18 per share.
Nov. 13, 2002. Schering-Plough CEO announces plan to retire.
SP's troubles serve as a cautionary tale for the industry. A quality-control department under fire can do immense damage to a company's reputation and shareholder value-and may even affect patient health if substandard products reach the market, new products are delayed, or products become unavailable. Such a department, if understaffed or poorly directed, can bring an entire pharma company to its knees.
Although manufacturing design and production procedures have a sizable bearing on consistent product quality, the single most important factor in maintaining consistentency is the staff. Many companies have faced FDA scrutiny for quality issues in recent years, but others consistently maintain exceptional reputations with few or no major observations or "483" warning letters. Understanding what those companies are doing right is critical to staying on the leading edge of product quality and avoiding the pitfalls of sub-par performance.
Although staffing decisions vary from company to company based on product complexity and diversity, executives can learn a great deal by studying QC department staffing parameters and tactics used by other top companies. Through in-depth interviews with executives at eight of the top ten pharma companies and leading medical device manufacturers, Best Practices uncovered cutting-edge strategies of successful quality departments. They include:
Current good manufacturing practices (GMPs) and FDA-approved processes are constantly changing, often resulting in regulations that lose clarity as they become more complex. Executives must carefully evaluate the company's mechanisms for staying ahead of regulatory changes, continuously review QC vulnerabilities compared with known or plausible deficiencies, and develop action plans to root out deviations. Therefore, the first step in properly staffing a QC organization involves arming employees with the knowledge they need to anticipate changes in the dynamic landscape, then reallocate roles and responsibilities to address the elements that have the greatest potential to compromise product quality.
Such systems must incorporate both internal and external perspectives to ensure maximum compliance. Internally, most companies rely on intranet postings and annual corporate quality meetings to disseminate best practices. A robust system to share best practices between manufacturing sites ensures replication of the most efficient and effective QC tactics and reduces variability-a key source of quality deficiencies.
Savvy companies also strive to identify and disseminate information about weak areas so that sites can check their own operations for similar deficiencies. Such companies have a culture that encourages employees to quickly identify and resolve QC problems across the board-rather than bury them to avoid putting a site "on report."
It's also important to extend the QC division's scope beyond a company's own facilities. Successful QC functionaries collect information about manufacturing problems at other pharma companies. Key sources for such data are FDA releases (including inspection results, warning letters, or consent decrees),
F-D-C Reports publications (especially the Gold Sheet, which details QC reports for the pharma, biotech, and device industries), conference proceedings, and trade group interactions. (See "Suit the Action to the Information.")
Staffing Levels Most high-performing companies tend to have a sizable contingent of QC personnel at corporate headquarters. That group consolidates many of the audit and oversight tasks, ensures consistency of practices from location to location, disseminates information gathered from external sources, and manages continuous improvement. Studies show that companies that maintain a top-notch
QC system year after year generally have most of their quality-control personnel at headquarters. (See "How They Stack Up," page 62.)
Highly profitable companies with good quality-control reputations generally have one QC person for every four manufacturing personnel. Although staffing is a predominant cost driver of quality control, companies with only one QC person for every six or more manufacturing personnel must seriously evaluate their operation to ensure that they cover all pertinent QC roles and responsibilities.
Another indicator of appropriate quality-control staffing is the ratio between the number of products produced at a facility and the number of QC personnel assigned there. Research shows that companies with good quality reputations generally produce fewer than two products (based on formulations) per quality department full-time equivalent (FTE) employees. One top company reported 500 site quality FTEs and a production of 300 different product formulations at its facilities, yielding an effective ratio of 1.7: 1. Again, staffing levels can be highly dependent on product complexity (large versus small molecule) and diversity (wide versus narrow range of products). To properly evaluate staffing levels, companies should make a detailed comparison of similarly tasked facilities or product lines.