Biopharmaceutical And Medical Devices: A General Overview (Conclusions)

Drugs Part I

Drugs Part II

Medical Devices 

Intellectual Property, Regulatory Submissions, Commercialization

Thanks for your patience in this detour from the normal posting I do here.  I had only intended this to be a one post response to a comment; the subject matter as I wrote really required me to address a great deal more than I had originally intended.

A few closing thoughts:

Caveat Lector

The first thing to emphasize is that the past four days are an overview, and a high level overview at that.  As with any regulated industry, there are a great many permutations and sub-categories that such a high level review cannot handle.  If you have more interest, I would highly recommend the US FDA website.  There is a plethora of information there.  And like most things, knowing how your government impacts products you use is always a good thing.

Success Rate

Commenter LibertyNews asked if there were statistics around failure rates of products.  That might be a little hard to analyze as companies are likely to not announce discontinuation of such products (especially for early compounds) .  A rubric I learned long ago which might still prove useful as a guide is

For every 1000 compounds identified, one will move to Non-Clinical testing.

For every 100 compounds that enters Non-Clinical testing, one will move to Clinical Trials.

For every 10 compounds that enter Clinical Trials, one will move to Regulatory Submission.

For every 5 compounds that enter Regulatory Submission, one will be approved.

I do not have similar statistics for Medical Devices.  In some ways they can be less complex, but I imagine the ratio is in the same ballpark.

E.g.  Starting a Drug or Medical Device in no way guarantees a final approved Drug or Medical Device.

Timing and Cost

Another relevant question is "How long does it take to do this?" and "What is the cost?"

Timing varies (as with anything), but in 2022 an article stated it took 10-15 years to get a new Biopharmaceutical from concept to regulatory approval.  The same article lists the cost anywhere from $985 Million to $2.4 Billion, depending on company size, product market, etc.  In the past, I have used the number $1.5 Billion, which seems to fit in nicely

For Medical Devices, I found the time frame of 3-7 years (which seems a bit low to me in some cases). In 2010 a cost study in the same article suggested anywhere from $31 Million for a 510(k) cleared device to $94 Million for a FDA approved device.  This article from 2022 give a number of $522 Million for a complex medical device (probably a Class III).  I would say double the higher amount from 2010 to $188 Million for a lower end these days.

E.g. It takes a long time and a lot of money to develop and get a new Drug or Medical Device approved for commercialization.

Why This Matters

So back to a version of the question posed by FOTB (Friend Of This Blog) Leigh about the contraction of Biopharmaceutical/Medical Device Industry.  To be clear, these are only my thoughts on the matter and not really based in anything but my opinion and observations.

I will start with a general observation:  the industry goes through troughs and peaks, like any other industry.  2008/2009 was a trough.  2023 was a trough.  There is a chance that we are entering a peak period in 2024 if the JP Morgan Conference from this year is any indicator:  Investment firms are reportedly ready to offer investments again as they have made a lot of money and are looking to invest again. On the other hand, what I am seeing in the industry news suggests companies are hunkering down for another year of frugality.  Mixed signals at best, to be sure.

Hopefully from the past four posts, I have conveyed some of the processes and challenges of the industry.  It is time constrained, labor intensive, and finance dependent. 

Most companies follow the same initial process:  An idea is proposed which is able to gain traction and attract initial funding.  Throughout the life of the process, initial funding is sought to continue to develop the idea through development.  Most companies are able to reach a Phase 1 trial for Drugs or a Design Validation for Medical Devices.  But the outcomes of those can be uncertain (much more so for drugs) and a poor clinical outcome can spell the end of the program and possibly the company.

Cash management is something that not all firms, especially new firms, are as attendant to as they should be.  It is very exciting to be a start-up company have all the start-up perks that similar technology companies do.  It is much less exciting to work at a cash constrained company with restrictive budgets early in the process, but one is more likely to product making it to the finish line than the other.

For all the products that crash and burn, of course, there is likely no recourse.  Occasionally there may be a salvageable product or data that may indicate another path forward, but largely a failure is a failure.  The money is gone, the time is gone.  For most single product companies with no approved products, there is no recovery from this.  Layoffs and "focus" will follow and perhaps their assets will be purchased or merged with a more successful company, but more often that not, the result is the same:  the product and the company disappear, only to appear in the resumes of those who worked there.  

Even if a product does make it to commercialization, the challenges do not end.  Reader Shepherd introduced me to the concept of the "Cost Floor" for semiconductors, the cost below which a thing cannot be produced.  To my mind this is another version of the Cost of Goods Sold (COGS), which is the cost of a drug or medical device to be manufactured and produced.  Additionally, the company has spent upwards of $2.5 billion to reach this point as well as covering costs for the other products that did not make it and to cover new research for new products.  They (and their investors) expect that money to be made back.  And with the exclusivity periods in place, they have a limited time to do it before generics come into play.

Insurance companies and the government get involved as well, dictating what they are willing to pay (or what they believe the price should be).  This may or may not be reflective of the actual costs.

Generics can be a great boon to the consumer, but it should be born in mind that generics only replicate existing products; they do not produce innovative ones.  They can product 20 replicants of azithromycin or acetaminophen, but they will not be producing the next generation or anti-biotics or pain relievers (and, by law, if it is generic is has to be within a very close range of the original product.  If it varies by more than a narrow percentage or is in any way different than the original form, fit or function, it is a new product).  Also keep in mind that a great deal of the cost of the original product is tied up in Clinical Trials, something which is required by law to be done - and which generic companies will not do.

A second thought to be born in mind is that higher costs subsidize lower costs elsewhere.  For example, companies can offer diphtheria vaccines or AIDS drugs at a much lower cost than they may charge developed countries - but the cost of that manufacture does not go down because the price charged goes down. That cost has to be made up elsewhere. 

So in a real sense, the cost comes down to cost of the research, cost of the product, cost of the clinical trials, and cost of manufacturing.  But these are not nameless costs:  they are facilities and equipment and people and supplies, both directly involved in the process and indirectly involved in the company (we have not touched on it, but all of the normal business functions - finance, accounting, non-manufacturing purchasing, janitorial service, administrative - have to exist as they do with any company).

The Biopharmaceutical/Medical Device Industry falls into what almost every politician defines as a "good (insert country of choice) job":  generally the pay is good, there are benefits, and involves manufacturing and technical development. It can employ both the highly educated and the high school graduate.  It produces products which genuinely improve human lives.  Likely everyone reading this article knows of a friend or family member whose life was saved or quality of life improved by a Drug or Medical Device.  To counter that, the industry is expensive, time consuming, and more often generates failures than successes.

Is there a model that perhaps prevents this trough/peak outcome?  Hard to say.  Remove the profit motive, and the flow of innovative products may not completely shut down but it will decrease significantly.  Initiate severe enough price controls and companies will shut down production or begin to find ways to accept more risk to cut costs even more (which can look like offshoring).  

Like most things, I suppose, there is no "answer".  There is merely trying to find and address the balance between patients, companies, investors that fund the advancements, and governments that regulate the products and protect patients - while continuing to enable innovative solutions to be discovered.

Biopharmaceuticals And Medical Devices: A General Overview IV (Intellectual Property, Regulatory Submissions, Commercialization)

Drugs Part I

Drugs Part II

Medical Devices 

Today I would like to review some processes which are across both Drugs and Medical Devices. These processes happen across multiple portions of the processes.

Intellectual Property

(Note: I  am not a lawyer.  This is not legal advice.  These are observations based on my experiences in the industry.)

The key to the entire biopharmaceutical is intellectual property (IP):  without the sole right to a particular compound or device, there is little incentive to develop it due to costs and time. 

Timing of the filing of the patent (in the U.S.) is critical.  There needs to be enough information to clearly differentiate the compound or idea from all others.  But U.S. patents run for 20 years:  do it too early and you will lose market time due to overall time lengths of development (more on that tomorrow); do it too late and the risk is that another company or individual will be first to file the patent.

As part of this process, when a compound or concept is believed to be viable, a patent search is conducted to make sure that the thing has not already been patented.  These are searches are critical and are not as bullet proof as you might think.  Sometimes development work happens and it is discovered that a patent already exists for the compound, costing time and money (and sometimes, the jobs of the people that missed it).

Once the patent is secured, IP becomes a tightly guarded secret.  Access is limited.  There are annual trainings to remind all employees about the importance of it.  Does industrial espionage happen?  Possibly, although you do not hear a lot about it.  You are more likely to read about patent infringement, where one company believes another company has used part or all of its patent (of note, this is most often with large corporations and highly profitable products.  No-one, for example, is fighting over the antacid market.).

Another way IP is used is to purchase the right to use parts of a patent.  This can help where certain things like particular device attributes are already developed by another company or where there is already an existing cell line or cell scaffold; why reinvent the wheel?  For these items there is usually an up front payment, a series of milestone payments based on advancing through the development process, and then a percentage of any profits.

Regulatory Submissions

Ultimately, the purpose of all of the development and clinical trials/clinical validation is to have an approved product. To do this, one must get the approval of the appropriate regulatory body.  For the U.S., it is the Food and Drug Administration (FDA).

To be clear, no company shows up at the end of the process and says "Here is our submission!  Approve away!"  Interactions with the FDA - often referred to in the industry as "the Agency" - start very early in the process.

The FDA encourages this sort of interaction.  It serves the primary purpose of protecting human health (by preventing bad ideas or products from moving forward) and moving products to market in an expeditious fashion (by providing guidance).

While one cannot just ring up the FDA for an ask, there are definitely defined touch points.  One has to get an identification number for the Drug or Medical Device, which will start the process.  To allow the product into clinical testing, one files an Investigational New Drug Application (IND) or Investigational Device Exemption (IDE).  After each phase of the clinical trial, the FDA is usually consulted (So called "End of Phase X" meetings).  Other interaction may occur due to need or due to specialized programs where the FDA encourages interactions to speed up the process, such as Breakthrough Therapies or Breakthrough Devices.

But hopefully, after all the work is done, a final approval submission can be made.

The submission packages, of course, are standardized (for Drugs, they are now globally standardized).  For a New Drug, one files a New Drug Application (NDA).  For a New Biologics, one files a Biologics License Application (BLA).  For a generic Drug, one files an Abbreviated New Drug Application (ANDA).  For a New Medical Device for which there is no previously existing similar device ("Predicate Device"), one files a Pre-Market Approval.  For a New Medical Device for which there is a previously existing similar device, one files a 510(k).

A short description is that everything about the Drug or Medical Device is put into the submission characteristics, mechanism of action, supporting studies,  proposed use, manufacturing process, raw materials, testing, Non-Clinical Study Data, Human Clinical Study Data, proposed documentation to be provided to the Physician and Patient, labeling and all commercial materials.  These are now submitted through a portal at the FDA; at one time these were submitted physically.  It is within my memory of copying, binding, and sealing up multiple banker's boxes of submission to be sent to the FDA (I am likely the last generation that did this).

The FDA will review the submission.  There will be questions and comments.  There may be hearings.  There may be direct interaction with the FDA. At the end of it, there are two outcomes:  an approval (either with or without modifications from the original submission), or a Complete Response Letter, which is a rejection of the application with specific items that need to be addressed (up to and including an additional clinical trial).

Commercialization

Great!  A company has received approval for its Drug or Medical Device and ready to make money!  

Well, of course it is not that easy.

Early on, a target market was identified.  That market now has to be actualized.  

What is the name of the product?  Most products end up with two names, the trade name and the original company.  In the U.S., you will see this in advertising;  For, example Ozempic® (semaglutide).  Ozempic is the trade name, semaglutide is the name it was developed and filed under.  A rather large amount of time and money is spent on this.

What is the "vibe" of the product?  All marketing materials including labeling, advertising, and provided inserts need to be designed and approved by the FDA.  They need to be different enough to distinguish them from other products and unique enough to be memorable.

How big is the market?  The company as part of its manufacturing process should have estimated the commercial launch needs and have validated the process.  Nothing more embarrassing than to launch a product and not have enough of it.

A sales force will need to be developed.  Insurance companies and Pharmacy Benefit Managers will have to be contacted to get the product on the formulary or allowed devices. If not, the company has to plan for how they will make the product available.  Distribution networks will need to be identified and activated.

Then, of course, physicians will have to prescribe the product.

Afterwards...

After all of this - all of this post and the previous three posts - the company will start to generate revenue.  Not profit - this has been a significant investment, as we will review tomorrow, but revenue.  Profitability is still a ways off.

Tomorrow we will look at some conclusions, including success rates, timing and costs, and why all of this matters.

Biopharmaceuticals And Medical Devices: A General Overview III (Medical Devices)

Drugs Part I

Drugs Part II

(Note:  As with Drugs above, this is a very high level view of a very complex and multi-year process and is only intended as an overview.)

A proposed Medical Device definition is "A contrivance designed and manufactured for use in healthcare, and not solely medicinal or nutritional".  A more "conventional" regulatory definition is here: in short if your item is intended to treat, cure, mitigate, or prevent disease and is intended to impact a human or animal system not using a chemical action internally and/or not activated via metabolic systems, it is a device.

So to answer the question, lots of things are a medical device.  A tongue depressor counts.  So does a scalpel.  So does a hospital bed.  So does an MRI machine.

But, all devices are not created equal and so there are classifications for devices.  In the United States, there are three classes (Class I, Class II, Class II) which are identified based on their risk to patient and user.  Class I is the "least" risky, Class III is the "most' risky.

There are distinct steps for designing a medical device - perhaps unlike Drugs, the process is a lot more standardized.  These steps are found in the US Document CFR 21 Part 820 (Quality System Regulations) and in the ISO Standard 13485 (Medical Devices - Quality Management Systems).

Design

All devices start with identifying User Needs:  what does the end user (patient, medical personnel, even marketing) need the product to do or be?   This is much more of an activity that it may seem, as it can involve getting input from a great many sources.   The User Need will be phrased in the form of a statement - for our purposes today, we will identify a User Need as "The product casing should be blue".

User Needs are then usef to generate Design Inputs, which are "The physical and performance requirements of a device which are used as a basis for device design" (21 CFR 820.3 (f)).  Each Design Input must be individually identified and must be clear, unambiguous, and non-conflicting with any other Design Input. As you can imagine, this will lead to hundreds or even thousands of Design Inputs.  Our example above will be translated into "The product casing must be Pantone Classic Blue Part Number #19-4052".   That may seem very specific - and it is intended to be.  Each input must be able to be objectively verified.

At this point a Design Review Team will be called together.  This will consist of personnel from all concerned departments - R&D, Engineering, Quality, Regulatory, Marketing/Business Development, Manufacturing, Supply Chain - and an Independent Reviewer who is not directly involved in the project but has the educational and scientific basis to assess the project.  All will be reviewed, unclear inputs corrected, additional needs identified.  When all agree on the User Needs and Design Inputs, the project will move to Design Output/Design Verification.

Design Outputs are "the results of a design effort at each design phase and at the end of the total design effort" (21 CFR Part 820.3 (g)).  The outputs will form the basis of the final design documentation - batch records, testing, labeling, etc.).  Each Design Input will have a Design Output which will need to be independently verified.  All of these Design Outputs will be putting into a Design Verification Protocol - again for our example, the Design Output would need to be "Product casing color is verified as Pantone Classic Blue Part Number #19-4052" - likely pulled from the manufacturing documentation for the casing in this case.

Another Design Review will take place to ensure that there are no new User Needs or Design Inputs, that all Design Inputs have Design Outputs, and that the Design Outputs are verifiable.  If approvable, it moves to Design Verification.

Design Verification is (rather straightforwardly) ensuring the Design Input meets the Design Output.  Personnel will move through the Design Verification protocol and verify and/or test every single Design Input.  Each Design Output will be recorded as meeting the Design Input, partially meeting the Design Input, or not meeting the Design Input.  At the end of this process the Design Verification Protocol will be reviewed and those Design Outputs which are found to not fully meeting the Design Inputs will be reviewed for additional clarification, correction, and testing.  In our example, if the manufacturing paperwork could not verify that Pantone #19-4052 was used on the casing, this would need to be resolved by an investigation and perhaps a remanufacture of the part - or, the User Need could be re-examined to see if that shade of blue is really needed, or just any "blue".

Assuming all items have been identified, a Design Verification Report is generated, to be presented to the Design Review Committee for approval. 

As you can imagine, there is a lot of documentation (physical or electronic) generated by this.  One of the most critical items is the Design Trace Matrix, which traces each User Need to Design Input to Design Output to Design Verification Result.  This document allows complete traceability up and down the design process.

A note:  This process takes place for each major component of the system.  For a system that has hardware/instrumentation, software and firmware, and consumables/reagents, every item will have a design history.  

The product is ready to move to Clinical Validation.

Risk Management

As noted above, the consideration of risk is a primary factor in determining the classification of product.  A risk - in Medical Device terms - is the combination of the probability of the occurrence of harm (injury or damage to people, property, or the environment) and the severity (measure of the consequences of a hazard) of that harm.  The ISO standard 14971 defines the risk management standard and is really the gold standard for all risk management (and largely a universal consensus standard).

A very short definition (for a very long process) is that intended use of the device and its use conditions are identified, along with what safety would look like and potential hazards and harms identified (including not just impact on the patient, but on the user (electrical hazards, chemical hazards) and the environment (spills, disposal of reagents)).  Using a numerical system, the risk are graded and evaluated.  Where risks exceed an acceptable level due to impact or frequency, risk mitigation and/or controls will need to be introduced, which may very well impact the Design Inputs/Design Outputs/Design Verification which in turn may then require another Design Review Meeting.

Another useful tool is the Failure Mode and Effects Analysis (FMEA) or the Failure Mode Effects and Criticality Analysis (FMECA).  Every potential failure mode is identified and evaluated against probability of occurrence, severity of that occurrence, and impact of the occurrence (for the FMECA, criticality of the failure is also evaluated).  Again, a rubric is used to evaluate unacceptable levels of failures.

The point of this entire exercise is to identify all risks and move them to acceptable risk levels (sometimes called "residual risk levels").  Like drugs, all medical devices entail some kind of risk; the goal is to remove as much risk of failure as possible and control the rest. 

Using our example above, the risk would be assessed under "What is the impact if the casing is not Pantone #19-4052"?  Possibly nothing - but perhaps in a clinical lab setting, that shade of blue may be not be able to be discerned for certain vision issues and could conflict with other similar pieces of equipment.

As with the Design Process, there are multiple iterations of the Risk Management Process.  The final documents will be held in a Risk Management File, which should contain every known risk for the product.  When a new risk is uncovered (either in development or in use), it should get added to the Risk Management file and assessed - in some cases, it may entail a  redesign.

(A note for general use:  Risk can only be avoided, mitigated, transferred or shared (to someone/something else), or accepted. True in real life as well as in medical devices.)

Validation

Validation (or as it is often known "Clinical Validation") is the use of the product in the potential use environment.  The difference between verification and validation, if helpful is:

Verification:  Did we make the thing right (e.g., per the Design Inputs)?

Validation:  Did we make the right thing (e.g. per the User Needs)?

A protocol will be developed and clinical sites engaged as well as all items approved by the Design Review Board.  Similar to the clinical process as identified in Drug Overview Part II, there is a whole set of processes involved to insure patient safety and control of the clinical trial. 

At the conclusion of the Clinical Validation, a final report will be generated. The results of the Design Verification will be added to the Design Trace Matrix so there is complete transparency up and down the design chain from User Need to Design Validation.  Any Design Issues or new Risks will need to be addressed, and possibly a second Clinical Validation conducted  Once all issues have been resolved and the report issued, the product will be ready for regulatory submission.

Quality Systems

Underlying all of this, of course, are Quality Systems. Just as with Drugs, there needs to be a system which ensures that all products are documented, manufactured, and released per written procedures and per the approved Design Documents. Just as with drugs, one needs a Quality Manual (corporate statement and discussion of the systems to ensure Quality), Standard Operating Procedures to cover systems like documentation, manufacture, material receiving and testing, product testing, and release.  Materials have to purchased and verified per specification.  Manufacturing facilities need to be maintained for cleanliness and environmental control.  Manufacturing equipment has to be purchased, qualified, and maintained.  Records have to be retained.  The individual Device History Records (batch records for manufacture) need to be created, approved, and executed.  The Device Master File, including the Design History, the Risk Management File, and all documents need to make the product, needs to be controlled and maintained.  Personnel need to be qualified and trained.  Variances like deviations and nonconformities need to be captured and assessed.  Improvements in the form of Corrective Actions and Preventive Actions need to be identified, investigated, and executed.

In short, everything that was done for Drugs is effectively also done for Medical Devices.

Tomorrow, we will discuss Intellectual Property, Regulatory Submissions, and Commercialization.

Spirals And Learning Lessons

One of the nicer things that has happened this year is that I have had the opportunity to more frequently connect with one of my bestest work friends, Rainbow (as I reminded her this recently, we have known each other for 18 years now.  She started to deny it, then did the math, and said "Oh?).  Our talks are about writing - her career as a freelancer and my own very tentative start into the field (She is convinced I am a natural;  I am convinced less so), but they have also evolved into a sort of weekly mutual support group about life.

She has obviously been heavily involved in the current Hammerfall, both with listening to me rave on Monday prior to the event and then on our weekly Friday calls, where I was reflecting on all that the week had brought me, good and bad.  As we rambled through our conversation, she mentioned that fact that in her life, she often thought that she kept coming back to the same issue until it got resolved - the lesson that she had to learn and could not get beyond until it was resolved.

I have read of and heard of this principle before - it has been described as a spiral, in which we continue to meet the same issue or problem in different ways until we master the issue (and, of course, we get something else we need to work on).  And the principle of "stuck in place" until something is learned is not unknown to me.

Except, possibly, this has all become far too real.

If I am completely honest, part of my frustration with what lies ahead is that is seems a lot like what lies behind, at least in a career sense. If I look at the last 7.5 years, my most recent position and the position I left in 2016 are exactly the same, both in the type of industry and the position.  And, perhaps in the offing, a return to the same company I left 7.5 years ago to the same position.

This may be an example use of the term "irony" in the dictionary.

Amazing.  A huge circle that brought me to (in theory) the pinnacle of positions in my career field, to a separate field, and then right back around to the position I was in.  

There is something, apparently, that needs to be learned.

What might that be?  I have no idea at the moment, but fortunately (?) I have a lot of time over the next two weeks to think about it.  Perhaps it is something as simple as "I need to embrace the career and the knowledge base in a way that I have not before" or "I need to develop certain aspects of a managerial level before I can go on" or even "I need to accept that for the next stage of life this - and not anything else I am think of (or in some ways, enjoy more) should be my career focus".

Maybe it is simply "Learning to accept what is provided without complaining".  

But I am here for a reason.  And it is evident that whatever that reason is, I have seemed to miss the lesson before and thus get (yet) another attempt at learning it.