Pink Sheet
July 8, 2013
Executive Summary
As the July 2 deadline passes for API manufacturers outside Europe to comply with new GMP certification rules, too few have signed on, risking potential drug shortages there.
With API manufacturers outside Europe failing to comply with EU registration requirements by the July 2 deadline, potential future drug shortages are looming in Europe.
Manufacturers of active pharmaceutical ingredients had until that date to obtain written confirmation from their own local regulatory authorities that they comply with the European Union’s good manufacturing practices requirements, if they wished to continue to export to Europe. The majority of companies in China and India have yet to submit those documents and the EU is doing its best to shore up supply in the mid- to long term.
Since Jan. 2, 2013, all active substances imported into the 28-nation EU bloc must be manufactured in compliance with GMP standards at least equivalent to those of the EU. The EU requirements are reflected in the International Conference for Harmonisation Tripartite Guideline on GMP for APIs (ICH Q7).The new rules – introduced as part of the Falsified Medicines Directive adopted in June 2011 – aim at keeping potentially harmful products that have not been efficiently regulated away from European consumers. The requirement for written documentation took effect six months later, and given that it remains a hurdle few are meeting, generic and brand manufacturers have joined to support short–term waivers of the documentation rules – but even a waiver requires meeting various procedural steps.
The confirmation that manufacturing complies with EU standard must be issued for each manufacturing plant and type of API, though not for each batch or consignment of ingredients. The agency in the exporting country determines how the duration of validity for the confirmation.
Exporting Nations Are Starting To Issue Confirmations
The EU’s Executive Commission says that it has official information from all important active substance exporting countries that they have started issuing the needed written confirmations.
In an effort to help allay worries within the pharmaceutical industry about potential future supply shortages, EU Health Commissioner Tonio Borg visited India and China in April and June to seek the cooperation of the local competent authorities on the issue.
Borg returned to Europe claiming his mission was a success.
India had issued over 110 written confirmations from a total of 190 applications and planned to process all the applications received by its authorities before July 2. Still, these are only the companies that have applied for registration – the potential number that currently export to the EU is more than double that figure.
According to statistics seen by the European Generic medicines Association and disclosed by its Acting Director General Beata Stepaniewska at the EGA’s Annual General Meeting in Athens, Greece June 16, more than 400 Indian sites are actually affected by the new legislation. There are also more than 400 API manufacturing sites in China, the EGA notes, and there the situation is only marginally better: around a tenth have received a written confirmation. China started issuing its confirmations in mid-June.
“Our main concern is that the speed of the process is not sufficient,” Stepaniewska told the EGA meeting in Athens, and that concern is rising now that the original deadline has passed.
Taiwan, South Korea, Israel, Ukraine, South Africa, Singapore and Argentina have also started issuing written confirmations, while Canada, Mexico, Russia, and Turkey are set to start doing so soon.
But with many API exporters in China and India having so far failed to secure written confirmation from their own authorities, the threat of future API shortages in Europe looks real.
Waiver List Includes U.S., Japan
Seemingly as a safety measure, though, the EU commission has created a short-term “get-out clause”, or its own “managed” loophole in the law.
At the specific request of countries outside the EU, the commission could offer a waiver, meaning that API manufacturers in those countries would not need written confirmation from their own authorities.
But there is a process to go through. For a country’s API manufacturers to be considered for the waiver list, the commission must assess the equivalence of GMP rules in the applicant country compared with those in the EU. The applying country must also provide evidence on the regularity of inspections and the effectiveness of enforcement of GMP there. It must also provide proof that it has in place a rapid alert system for non-compliant producers.
The commission has stepped up its waiver analyses and granting activities, with Switzerland, Australia, the U.S. and Japan now “listed” and able to export to the EU without written confirmation. The U.S. joined the list of approved countries with a Commission Decision June 11, but was the last country to do so. It had requested the waiver six months earlier.
Brazil is undergoing assessment, and both Israel and Singapore – countries that had previously been refused a listing – are modifying their statutes so they can be reconsidered. Argentina, Mexico and Malaysia will apply for listing later this year, the commission said.
In advance of the June 19-20 meeting of European Health Ministers, the EGA and the European Federation of Pharmaceutical Industries and Associations, which represents innovator product manufacturers, issued a joint request for the broad use of the waiver, which would permit the importing of active ingredients from countries outside of Europe, provided they that are of good quality, Stepaniewska said.
A final option remains open to EU Member States in the event of a potential API shortage. They would be permitted to import an API from a third country, if accompanied by an EU good manufacturing practice certificate and if a member country has inspected the manufacturing plant. At the time of the EU health ministers’ meeting, Italy, Spain and the U.K. had reported to the commission their intention to use this possibility.
“Obviously, the big crisis is not going to erupt on July 2, because there are still products in stock and certain active substances that were purchased in advance,” said Stepaniewska at the June meeting. Still, the EGA continues to press the issue with EU health authorities, prodding them to recognize potential signals relating to a future shortage, rather than having them take damage limitation exercises when APIs begin to dry up in their countries.
EFPIA Director General Richard Bergström voiced optimism at the EGA meeting – the first time ever that representatives from the two associations appeared jointly at one of their meetings – that the paperwork relating to the waivers and confirmations would eventually be sorted out.
Bergström noted that the Chinese FDA was trying to speed up the written confirmation process and said that because China is a more centralized country in the way it runs its pharmaceutical sector than India, this bodes well for the API supply issue.
A Confused Law
Bergström took the opportunity to strongly criticize the new rules on APIs.
EFPIA in principle supports the need to tighten up the supply chain and root out rogue API manufacturers. But it has concerns both about the rules’ content and its implementation. “This legislation is illogical in many ways,” Bergström said.
For example, despite the written confirmation process, the EU could still send GMP inspectors to a third country. In fact, the report from the health minister meeting said: “It is worth underlining that the European Medicines Agency is proactively coordinating the cooperation of Member State authorities as regards inspections of manufacturing plants in third countries, with a particular focus on priority plants and substances.”
Bergström said that, on the one hand, the EU was preparing to accept “self-certification” from third countries, but on the other it obviously did not have adequate faith in this process. “If you are going to trust the local authorities, then why would you send inspectors?” he asked.
If China and India do not accelerate the pace of the written confirmation process, they will leave the door wide open to other API manufacturing countries to take larger chunks of the EU market, those that have been granted block waivers and those who themselves have the capability to move faster on the registration front. Loss of earnings due to lost exports to Europe could mean the Chinese and Indian API sector may consolidate quickly.
And while large API exporters such as China and India are still not up to the pace on the registration front, things are looking similarly untidy in the EU.
A report from the health ministers’ meeting on June 19 noted that 20 infringement proceedings had already been launched against EU member states that had failed to notify the commission about national measures put in place to comply with the January 2 Falsified Medicines Directive deadline. Since then, nine Member States have filed notification about their measures and the commission is currently analyzing them.
Green Theme
There is also another potential threat looming on the horizon for API manufacturers abroad.
Currently under consideration in Brussels are moves to send inspectors to investigate environmental issues around the manufacturing process.
“We currently send GMP inspectors to work within the building and as for what happens outside, we don’t really care,” Bergström noted. The potential introduction of environmental concerns will likely erode the cost advantages brought by sloppy practices.
“Maybe they will then start to invest in their factories,” Bergström added.
Executive Summary
As the July 2 deadline passes for API manufacturers outside Europe to comply with new GMP certification rules, too few have signed on, risking potential drug shortages there.
With API manufacturers outside Europe failing to comply with EU registration requirements by the July 2 deadline, potential future drug shortages are looming in Europe.
Manufacturers of active pharmaceutical ingredients had until that date to obtain written confirmation from their own local regulatory authorities that they comply with the European Union’s good manufacturing practices requirements, if they wished to continue to export to Europe. The majority of companies in China and India have yet to submit those documents and the EU is doing its best to shore up supply in the mid- to long term.
Since Jan. 2, 2013, all active substances imported into the 28-nation EU bloc must be manufactured in compliance with GMP standards at least equivalent to those of the EU. The EU requirements are reflected in the International Conference for Harmonisation Tripartite Guideline on GMP for APIs (ICH Q7).The new rules – introduced as part of the Falsified Medicines Directive adopted in June 2011 – aim at keeping potentially harmful products that have not been efficiently regulated away from European consumers. The requirement for written documentation took effect six months later, and given that it remains a hurdle few are meeting, generic and brand manufacturers have joined to support short–term waivers of the documentation rules – but even a waiver requires meeting various procedural steps.
The confirmation that manufacturing complies with EU standard must be issued for each manufacturing plant and type of API, though not for each batch or consignment of ingredients. The agency in the exporting country determines how the duration of validity for the confirmation.
Exporting Nations Are Starting To Issue Confirmations
The EU’s Executive Commission says that it has official information from all important active substance exporting countries that they have started issuing the needed written confirmations.
In an effort to help allay worries within the pharmaceutical industry about potential future supply shortages, EU Health Commissioner Tonio Borg visited India and China in April and June to seek the cooperation of the local competent authorities on the issue.
Borg returned to Europe claiming his mission was a success.
India had issued over 110 written confirmations from a total of 190 applications and planned to process all the applications received by its authorities before July 2. Still, these are only the companies that have applied for registration – the potential number that currently export to the EU is more than double that figure.
According to statistics seen by the European Generic medicines Association and disclosed by its Acting Director General Beata Stepaniewska at the EGA’s Annual General Meeting in Athens, Greece June 16, more than 400 Indian sites are actually affected by the new legislation. There are also more than 400 API manufacturing sites in China, the EGA notes, and there the situation is only marginally better: around a tenth have received a written confirmation. China started issuing its confirmations in mid-June.
“Our main concern is that the speed of the process is not sufficient,” Stepaniewska told the EGA meeting in Athens, and that concern is rising now that the original deadline has passed.
Taiwan, South Korea, Israel, Ukraine, South Africa, Singapore and Argentina have also started issuing written confirmations, while Canada, Mexico, Russia, and Turkey are set to start doing so soon.
But with many API exporters in China and India having so far failed to secure written confirmation from their own authorities, the threat of future API shortages in Europe looks real.
Waiver List Includes U.S., Japan
Seemingly as a safety measure, though, the EU commission has created a short-term “get-out clause”, or its own “managed” loophole in the law.
At the specific request of countries outside the EU, the commission could offer a waiver, meaning that API manufacturers in those countries would not need written confirmation from their own authorities.
But there is a process to go through. For a country’s API manufacturers to be considered for the waiver list, the commission must assess the equivalence of GMP rules in the applicant country compared with those in the EU. The applying country must also provide evidence on the regularity of inspections and the effectiveness of enforcement of GMP there. It must also provide proof that it has in place a rapid alert system for non-compliant producers.
The commission has stepped up its waiver analyses and granting activities, with Switzerland, Australia, the U.S. and Japan now “listed” and able to export to the EU without written confirmation. The U.S. joined the list of approved countries with a Commission Decision June 11, but was the last country to do so. It had requested the waiver six months earlier.
Brazil is undergoing assessment, and both Israel and Singapore – countries that had previously been refused a listing – are modifying their statutes so they can be reconsidered. Argentina, Mexico and Malaysia will apply for listing later this year, the commission said.
In advance of the June 19-20 meeting of European Health Ministers, the EGA and the European Federation of Pharmaceutical Industries and Associations, which represents innovator product manufacturers, issued a joint request for the broad use of the waiver, which would permit the importing of active ingredients from countries outside of Europe, provided they that are of good quality, Stepaniewska said.
A final option remains open to EU Member States in the event of a potential API shortage. They would be permitted to import an API from a third country, if accompanied by an EU good manufacturing practice certificate and if a member country has inspected the manufacturing plant. At the time of the EU health ministers’ meeting, Italy, Spain and the U.K. had reported to the commission their intention to use this possibility.
“Obviously, the big crisis is not going to erupt on July 2, because there are still products in stock and certain active substances that were purchased in advance,” said Stepaniewska at the June meeting. Still, the EGA continues to press the issue with EU health authorities, prodding them to recognize potential signals relating to a future shortage, rather than having them take damage limitation exercises when APIs begin to dry up in their countries.
EFPIA Director General Richard Bergström voiced optimism at the EGA meeting – the first time ever that representatives from the two associations appeared jointly at one of their meetings – that the paperwork relating to the waivers and confirmations would eventually be sorted out.
Bergström noted that the Chinese FDA was trying to speed up the written confirmation process and said that because China is a more centralized country in the way it runs its pharmaceutical sector than India, this bodes well for the API supply issue.
A Confused Law
Bergström took the opportunity to strongly criticize the new rules on APIs.
EFPIA in principle supports the need to tighten up the supply chain and root out rogue API manufacturers. But it has concerns both about the rules’ content and its implementation. “This legislation is illogical in many ways,” Bergström said.
For example, despite the written confirmation process, the EU could still send GMP inspectors to a third country. In fact, the report from the health minister meeting said: “It is worth underlining that the European Medicines Agency is proactively coordinating the cooperation of Member State authorities as regards inspections of manufacturing plants in third countries, with a particular focus on priority plants and substances.”
Bergström said that, on the one hand, the EU was preparing to accept “self-certification” from third countries, but on the other it obviously did not have adequate faith in this process. “If you are going to trust the local authorities, then why would you send inspectors?” he asked.
If China and India do not accelerate the pace of the written confirmation process, they will leave the door wide open to other API manufacturing countries to take larger chunks of the EU market, those that have been granted block waivers and those who themselves have the capability to move faster on the registration front. Loss of earnings due to lost exports to Europe could mean the Chinese and Indian API sector may consolidate quickly.
And while large API exporters such as China and India are still not up to the pace on the registration front, things are looking similarly untidy in the EU.
A report from the health ministers’ meeting on June 19 noted that 20 infringement proceedings had already been launched against EU member states that had failed to notify the commission about national measures put in place to comply with the January 2 Falsified Medicines Directive deadline. Since then, nine Member States have filed notification about their measures and the commission is currently analyzing them.
Green Theme
There is also another potential threat looming on the horizon for API manufacturers abroad.
Currently under consideration in Brussels are moves to send inspectors to investigate environmental issues around the manufacturing process.
“We currently send GMP inspectors to work within the building and as for what happens outside, we don’t really care,” Bergström noted. The potential introduction of environmental concerns will likely erode the cost advantages brought by sloppy practices.
“Maybe they will then start to invest in their factories,” Bergström added.