Efficient Risk Management

Efficient Risk Management is one of five initiatives established for FDA to address five critical challenges facing the agency.

The risk management initiative encompasses a search for new and better ways to reduce risks to public health. It pledges that FDA will continue to effectively manage product risks throughout their life cycle--from research and development through use/ consumption. Risk management decisions will be supported by rigorous scientific analysis that weighs, when appropriate, not only the risk-to-benefit profile of the product itself, but also the risk versus the benefit associated with Agency actions.

The following is an excerpt describing this initiative from FDA's Strategic Plan:

Introduction
New Drug Development
Manufacturing
Imports
Foods
Objectives

The FDA's mission has become much more complicated. Public health protection now includes addressing unprecedented challenges and threats to the health of the public--ones that are more sophisticated and complex than those of the last century.

The FDA is dealing with new threats in the area of enforcement. Today, sophisticated criminals are increasingly targeting drugs, infant formula, and other FDA-regulated products through well-organized operations. Recently, for example, the FDA has been investigating what appears to be a major operation selling a counterfeit version of a cholesterol-lowering drug. High-cost drugs present tempting targets for counterfeiters like those who put patients at risk by putting ordinary tap water into vials labeled as Procrit, a treatment for severe anemia. The "drug" was contaminated with bacteria. Criminals are increasingly using the anonymity and reach of the Internet to get illegal drugs to potential customers. Earlier this summer, an investigation by the FDA's Office of Criminal Investigations led to the arrest of a man illegally distributing controlled substances through an Internet drug site--and this case represents just one of many similar cases of illegal Web-based pharmaceutical sales that the FDA has tackled and solved.

In addition, rising health care costs have increased the stakes for frauds and kickbacks involving drugs and other medical products. An FDA investigation of sales and kickbacks related to a drug for prostate cancer helped uncover illegal activity that led to fines and payments of more than 350 million dollars. The FDA's regulatory activities involve increasingly complex and rapidly changing production processes for medicines and foods. The FDA is also involved in preventing the spread of emerging infections, such as the recent outbreak of SARS, which are becoming more common as trade and travel have increased. Finally, threats of terrorism involving the food supply and other FDA-regulated products require the agency to consider vulnerabilities to those who would deliberately harm Americans.

At the same time, industry, government, and foundations are now spending unprecedented amounts of money to discover and develop new medical treatments--$100 billion or more this year alone. And yet the number of new product applications submitted for FDA review has declined significantly, and in some cases precipitously. In the pharmaceutical realm, last year the FDA filed 16 priority new drug applications (NDAs), down from a high of 32 in 1997 (but up from only 7 in 2001). Standard NDA submissions are also down, as 87 were filed last year, down from a high of 101 in 1999. Although the FDA is not responsible for the number and kinds of products in the development pipeline, the agency can foster and encourage new product development by ensuring that its review and approval processes are efficient, transparent, and predictable. We need to do more than ever to help make sure that the insights from biomedical science turn into safe and effective medical products more quickly, and at lower cost.

The FDA has identified efficient risk management as the primary way to make the most effective use of agency resources and address these challenges. Efficient risk management requires using the best scientific data, developing quality standards, and using efficient systems and practices that provide clear and consistent decisions and communications for the American public and regulated industry. The FDA has long led the way in the science of risk management, and this ability is more important than ever, given the expanding complexity of the agency's challenges and the need to reduce the health risks facing the public at the lowest possible cost to society.

The principal objective of this strategic action plan is to do as much as possible to improve the health outcomes of the American public. Only by becoming consistently more productive at what the agency does--always working to get the most public health bang for its regulatory buck--can the FDA have any chance of fulfilling its increasingly complex public health mission.

Enforcement: Targeting Limited Resources for Maximum Protection

The number of medical products--drugs and devices--that the FDA regulates now exceeds 150,000--far more than ever before, including more complex products. There are almost 3,000 investigational new drugs under development, with their sponsors in the process of developing the evidence needed for FDA approval. There are more--and more diverse--dietary supplements on the market than ever before, and they are now used by most Americans. Americans also have a much broader range of food choices, including over 6 million food imports this year, with the import numbers growing rapidly. Access to this growing range of products offers opportunities for improving health and improving lives, but it also creates new kinds of vulnerabilities and risks to the public health.

Last year, the agency received some valuable new resources for carrying out its mission to enforce the laws to protect the food and drug supply. This included 800 additional personnel, most of them focused on assuring food safety and food security at border crossings, ports of entry, and analytical laboratories. With these resources, the agency has quintupled the number of food examinations it performs. Even with these additional resources, however, it is more important than ever for the FDA to use the best science and the best new enforcement ideas to carry out its increasingly challenging mission.

The FDA's enforcement strategy consequently focuses on the most efficient way to get the most compliance with the law. There are some key principles in the agency's science-based enforcement strategy:

• Clarity: The FDA must develop and use clear and consistent guidance and communication with regulated firms to promote voluntary compliance with the law. Many businesses are willing to comply with science-based regulations, but in areas as complex as food and medical product manufacturing with technologies that are constantly changing, the FDA has found that assuring a company's understanding of regulatory requirements can substantially improve compliance.
• Science: The FDA must remain vigilant to ensure that its practices reflect and allow for the latest innovations in production, inspection, and enforcement techniques. The FDA's regulations should be no more burdensome than necessary, and should encourage valuable innovation in foods and medical products.
• Leveraging: As the FDA's mission has become broader and more complex, it is increasingly beneficial to work with partners, including other federal and state agencies as well as private oversight organizations, to bring more resources and a more coordinated, powerful approach to enforcement.
• Deterrence: In conjunction with the use of clear, science-based regulatory approaches, the FDA must also take effective action against those who deliberately engage in criminal activities or disregard the FDA's important regulations to promote public safety, including the use of punishments based on the most effective tools available, including enforcement actions and criminal prosecutions that will stand up in court.

New Drug Development: A Need for Greater Productivity

By some estimates, it costs more than $800 million and typically takes well over a decade to develop a new drug; and by all estimates, the cost of developing safe and effective new medical products has increased greatly, more than doubling over the past decade. In addition, improvements in biomedical science have not translated into a better success rate for investigational treatments. The vast majority of the treatments that enter clinical testing don't succeed. According to a recent analysis by researchers at Tufts, of all the new chemical entities that enter clinical testing, only 21.5 percent will achieve final clinical success and FDA marketing approval.¹

So maybe it's not surprising that, on the one hand, there are more new medicines under investigation than ever before, but on the other hand, the number of truly new drugs (new molecular entities) approved by the FDA has been declining, down to 17 last year from a high of 53 in 1996 (see Figure 1). The decline in products approved isn't the result of the FDA rejecting more applications; it is directly related to the decline in the number of new applications coming in to the agency, and it is a worldwide phenomenon.^2,3 There are a lot of reasons to think that this decline is temporary. It takes some time to turn all of the unprecedented public and private R&D investments now taking place into safe and effective treatments for patients.

In particular, much of the growth in biomedical R&D has been devoted to new areas of product development, including genomics, proteomics, imaging and informational technologies, and many other areas. Because many of these new sciences are just beginning to emerge from laboratory and investigational settings, it seems plausible that the large new investments in biomedical R&D may take many years to pay off as an increase in the availability of safe and effective products for patients. This lengthy "translational" process means that it may still require some years and considerable additional costs before such an increase occurs.

However, rising costs of product development may be an important contributor to problems of rising health care costs and problems of timely access to the most effective modern treatments. Steps to reduce the time, cost, and uncertainty of developing new drugs and devices are thus important public health priorities. For example, the Tufts researchers estimate that drug companies can achieve a $200 million reduction in total development costs by reducing clinical phase times by 41 percent, or by increasing clinical success rates from the current 21.5 percent to approximately 31 percent.⁴ Millions of Americans are suffering from diseases that may be curable or at least manageable as a result of technologies in development now. From a public health standpoint, making it simpler and more straightforward to translate all these investments into valuable products can have a substantial positive impact on the health of the nation, and can improve access to needed care as well. Making the process of translating new discoveries into safe and effective treatments more efficient and quick is thus a high priority for the FDA.

Figure 1

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Manufacturing: Need for Greater Efficiency in Producing Safe and Effective Medical Products

Another application of the FDA's principle of efficient risk management is focused on the agency's current standards and guidance to industry on the way medical products are manufactured, known as "Current Good Manufacturing Practices." The CGMP regulations for drugs have not been updated in 25 years. Meanwhile, best practices in manufacturing technologies and methods have undergone significant progress over that time, particularly in other high-tech industries.

For example, the semiconductor industry also has a very low tolerance for impurities and inaccuracies in production. Through continuous quality improvement, the semiconductor industry achieved enormous improvements in production cost and quality, and these techniques have since been widely adopted in many manufacturing industries.

But continuous quality improvement in manufacturing hasn't been the subject of as much attention in the pharmaceutical industry, even though many experts on manufacturing processes believe that large savings in production costs could be realized while maintaining very high standards for purity and accuracy.

The FDA wants to make sure that its regulations are encouraging such progress. So the FDA's broad-based program is working on developing new guidance based on the latest science of risk management and quality assurance. The new standards are being designed to encourage cost-reducing and precision-enhancing innovation in manufacturing and technology, and to ensure that the FDA uses consistent and up-to-date methods, including inspectors specializing in particular types of production methods.

Chemical and Engineering News reports that, although pharmaceutical laboratories are working aggressively to produce new drugs, "Behind the scenes, the industry is hoping to boost its performance by cutting costs in areas it has basically ignored." Manufacturing had been on the bottom of the list of concerns for 15 years in pharmaceuticals and now it is a frontline issue.⁵

Imports: Need for Safety Oversight to Catch Up to Quantum Growth in Volume of Entries

Over the past decade, the number of FDA-regulated imports has increased dramatically. In the past 5 years alone, the number of import line entries⁶ has nearly doubled, growing from 4.2 million in 1997 to 7.8 million in 2002. Approximately two-thirds of these line entries are foods.

Meanwhile, the FDA's capacity to examine imports physically has not kept pace with the significant growth in the number of imports of FDA-regulated products. The result is that by 2002, the FDA physically examined less than 1.3 percent of all entries offered for import into the United States. The FDA has compensated for the tremendous growth in its regulatory mission by working with international agencies that export FDA-regulated products to the United States to leverage off of their efforts, and by devoting significant new personnel resources to border examinations. To further enhance import security with limited resources, the FDA is implementing new regulations to address threats, improve the agency's ability to target its field resources to imports that present the most significant risks, respond more quickly and effectively if an event involving an FDA-regulated product occurs, and collaborate with other government agencies and regulated firms to increase security and mitigate threats.

The number of line entries is a measure of the number of places from which products are flowing into the United States, and it indicates the relative volume of imported products that are subject to FDA regulation.

Foods: Foodborne Disease Remains a Major Public Health Threat

The annual cost of foodborne illness in the United States each year is estimated to be between $7.7 and $23 billion.⁷ Officials of the Department of Health and Human Services project that the reported incidence of foodborne illness may increase by 10 to 15 percent during the next decade. And changes in production practices, centralized product distribution, environmental conditions, and food consumption patterns could be contributing to the emergence of new microbial threats to health.⁸

The Centers for Disease Control and Prevention (CDC) estimates that foodborne diseases cause about 76 million illnesses, 325,000 hospitalizations, and 5,000 deaths in the United States each year.⁹

Even these figures may be low due to the number of foodborne illnesses that go unreported. Some experts estimate that over 40 million cases of foodborne illness go unreported each year.¹⁰

The FDA is committed to reducing the incidence of foodborne illness by greater use of efficient risk management techniques, such as hazard analysis and critical control point (HACCP) strategies. These efforts are an important part of the agency's strategic plan.

Efficient Risk Management: FDA's Objectives

The agency's approach to efficient risk management requires the use of the most current biomedical, managerial, and economic science, along with improved standards and FDA-industry communications. This strategy will reduce unnecessary regulatory burdens, improve compliance with the law, and achieve greater and faster improvements in public health through safer, more effective, and more affordable medical and food technologies. It includes more efficient development and review processes for a widening variety of drugs, medical devices, biologics, and food additives, while sustaining the FDA's gold standards for safety and effectiveness. It also includes using the best available data and analytic methods to assess risk and to develop the most effective approaches for inspections and other compliance and enforcement activities. The FDA will be pursuing the most cost-effective allocation of its resources to identify food safety hazards and reduce illness and injury of food products. And the agency will work to make imports safer by using a risk-based system to inspections.

The FDA's goal for efficient risk management includes the following four objectives and strategies:

Objective 1 -- Provide timely, high quality, cost-effective process for review of new technologies/premarket submissions.

• Reduce avoidable delays and costs in product approvals through clear expectations and effective communication of standards to sponsors by: 1) analyzing root causes of multiple review cycles and establishing steps to prevent additional cycles when possible and 2) developing additional agency guidances on innovative and crosscutting product development where development pathways are particularly difficult or unclear.
• Initiate the development of a continuous improvement/quality systems approach to the approval process throughout premarket review of new applications.
• Direct agency research programs and develop standards to effectively handle emerging technologies, especially in areas of pharmacogenomics, gene therapy, and combination devices. The objective is more efficient and rapid translation of new scientific developments and breakthroughs into safe and effective medical products.

Objective 2 -- Provide high quality, cost-effective oversight of industry manufacturing, processing and distribution to reduce risk.

• Apply the most current scientific knowledge about risk management and quality assurance to the FDA's requirements, including Current Good Manufacturing Practice (CGMP) inspection, compliance, and enforcement activities.
• Develop new inspection approaches to more effectively utilize new and existing resources.
• Implement an efficient, risk-based system to promote the wide availability of safe FDA-regulated imports by increasing the standards and improving the practices of source countries and at points of entry into U.S. commerce, improving detection of noncompliant products, and developing standards and procedures to maximize the cost-effectiveness of agency oversight.

Objective 3 -- Assure the safety of the U.S. food and cosmetics supply to protect consumers at the least cost for the public.

• Develop and use new scientific knowledge and use public health systems to quickly and accurately identify food safety hazards so that disease risks can be properly managed.
• Identify appropriate prevention standards and apply appropriate preventive controls and inspection and monitoring systems to assure food safety for all Americans.
• Measure results regarding health outcomes to verify that foodborne illness and injury is being reduced.
• Consider risk information in deciding how to manage food imports, whether by: 1) working with foreign countries and manufacturers to improve compliance with safe manufacturing abroad as an alternative to detailed inspections at the border, 2) using better information on imports to focus border checks of final products that present significant potential risks, or 3) collaborating with domestic producers to improve checks on the safety of the ingredients they use.

Objective 4 -- Develop methodological strategies and analyses to evaluate options, identify the most effective and efficient risk management strategies, and optimize regulatory decision-making.

• Develop and evaluate strategies using scientific data to optimize premarket and postmarket regulatory decisions.
• Develop timely, first-rate integrated risk assessment and economic analysis to identify efficient risk management options for policy makers.

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Footnotes

¹J.A. DiMasi, R.W. Hansen, H.G. Grabowski, The Price of Innovation: New Estimates of Drug Development Costs, Journal of Health Economics, 835 (2003) 1-35
²CMR International, “Trends in Submissions and Authorisations” in R&D Briefing No. 35, The Impact of the Changing Regulatory Environment on Review Times, October 2002
³EMEA Expects No Rise in 2004 Filings, SCRIP No. 2827, February 26th 2003
⁴Tufts CSDD quantifies savings from boosting new drug R & D efficiency, Tufts Center for the Study of Drug Development IMPACT Report, Vol 4, No 5, September/October 2002.
⁵Rick Mullin, Catching Up With Reengineering, Business, Chemical and Engineering News, June 2, 2003, Vol 81, No. 22 pp 16-18.
⁶The number of line entries is used as an indicator of relative volume of FDA-regulated imported products. Sources of data include U.S. Census (1986-1993), U.S. Customs (1994-1996), and FDA OASIS (1997-2002).
⁷Food and Drug Administration, Centers for Disease Control and Prevention, Food Safety Inspection USDA Food Safety Inspection Service, “Status Report: Food Safety Objectives Healthy People 2000.” Accessed at http://vm.cfsan.fda.gov/~mow/hp2kintr.htmlon June 20, 2003.
⁸Donna U. Vogt, “Food Safety Issues in the 106th Congress,” Congressional Research Service Issue Brief, November 7, 2000. Accessed at http://www.ncseonline.org/NLE/CRSreports/Agriculture/ag-38.cfmon June 20, 2003.
⁹Paul S. Mead et al., “Food-Related Illness and Death in the United States,” Emerging Infectious Diseases 5 (5): September-October 1999. Accessed at http://www.cdc.gov/ncidod/eid/vol5no5/mead.htmon June 20, 2003.
¹⁰Donna U. Vogt, “Food Safety Issues in the 106th Congress,” Congressional Research Service Issue Brief, November 7, 2000. Accessed at http://www.ncseonline.org/NLE/CRSreports/Agriculture/ag-38.cfmon June 20, 2003.

Complete FDA Strategic Plan