Pharmaceutical Manufacturers Could Be Wasting $50 Billion A Year

U.S. pharmaceutical manufacturers could be wasting $50 billion per year in manufacturing costs, based on data from joint research project.

U.S. pharmaceutical manufacturers could be wasting $50 billion per year in manufacturing costs, based on the findings of a joint research project conducted by researchers at Washington University and Georgetown University.

The Pharmaceutical Manufacturing Research Project was launched in 2002 in two stages.

The first stage involved working with the Food and Drug Administration to collect and compile confidential data from internal databases. Based on this information, researchers developed statistical models to asses the probability of a facility being chosen for inspection, investigator training and experience and the findings of that investigator, as well as probability models for facility non-compliance.

The second stage of the study involved collecting data from 42 manufacturing facilities from 19 different manufacturers. The data was then analyzed and broken down into categories such as process development cycle time yield performance and product unavailability.

Researches identified five results that were generally consistent throughout the analysis process:

1. Information technology universally corresponds to superior manufacturing performance metrics.
2. The position of decision rights impacts performance metrics.
3. Facilities engaged in contract manufacturing, generally, but not always, corresponded to inferior performance.
4. The use of process analytic technology tools generally, but not always, corresponded to worse performance.
5. Scale and scope can be both a benefit and detriment to performance.

The study received no funding from either the FDA or the pharmaceutical industry.

Jackson Nickerson, of Washington University, said the $50 billion is based on an estimate not directly derived from the study.

During the past four years, he said, scores of regulators, manufacturers, and equipment suppliers to the pharmaceutical manufacturing industry were interviewed. In response to  inquiries about how much cost of goods could decline if the FDA changed the way it regulated and manufacturers responded by innovating in process manufacturing, the researchers received estimates of between 10 percent and 50 percent or more. 

"Given that the vast majority of estimates exceeded 25 percent and none were below 10 percent, we took what we think is a conservative percentage, 15 percent, and applied it to the aggregate cost of goods sold," Nickerson said. "The result is our estimate of $50 billion."

The entire report can be read by clicking here.

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