Tony Scott credits Hovione CEO Guy Villax with coining the phrase, "saints and sinners" when referring to the notoriously uneven playing field in the world of API and excipient manufacture at the launch of EFCG during CPhI in Brussels in 2004 . The European Fine Chemicals Group - better known as the EFCG - has become a household name over the last six years when it comes to pushing for better regulation of APIs and excipients. With important issues on many different fronts, ranging from Reach regulation to generic user fees in the U.S., it's all the better that Roger LaForce, general manager of Fabbrica Italiana Sintetici (F.I.S.) was recently elected as the EFCG Pharmaceuticals Business Committee chair.

The position had been vacant since the untimely death of Merck's Arnulf Heubner in November 2009, and while "everyone pulled together" as EFCG Adviser Scott says, the breadth of topics on the group's agenda have made it necessary to have a leader on this committee. Brandi Schuster recently talked to LaForce and Scott about a whole host of EFCG issues - and what sets their member companies apart from the "sinners."

CHEManager Europe: A hot topic now is the European Chemical Agency's redefining of intermediates under Reach and also the redefinition of what constitutes strict control. How has the EFCG been involved with this?

Tony Scott: Frankly, the industry feels let down by the authorities, who consulted with us on this topic for years. Intermediates handled under strictly controlled conditions have reduced information requirements under Reach. Now they are requiring almost full containment for intermediates, which is totally unacceptable and contrary to the Reach legal text.

Our examples of how strictly controlled conditions for intermediates is done in reality were completely ignored by the ECHA. Full containment is impossible for most of the batch-processing industry, so they are pushing the industry to spend a lot more money for equipment, training and substance testing or to move out of Europe. This guidance also came out after the registration deadline on Nov. 30, which means companies who aren't compliant now have to file a full dossier, which will result in more unnecessary animal testing, something Reach was supposed to avoid.
ECHA has removed all flexibility within the implementation of strictly controlled conditions, which can only push the manufacture of intermediates and the supply chains that use them out of Europe if their guidance is followed.

This guidance is not law, it's merely guidance and ECHA does not have the authority to tell the member states how to interpret the legislation. They've also removed any risk-based assessment, which means someone with a harmless chemical has to handle it in the same way they would handle a most potentially harmful intermediate. This really is a matter of survival and jobs; and some of our member companies will be out of business if this is implemented as is.

Roger, would you consider this to be the biggest issue on the EFCG plate right now?

Roger LaForce: I would say the biggest issue is the survival of the European fine chemical industry because of this. We have been heavily involved with the workability of the legislation as well as the enforcement, and will continue to be.

Another considerable task for the EFCG is its work to ensure a level playing field for manufacturers of excipients and APIs in Europe in light of poor-quality imports, and a lot has been achieved. What else is on the agenda now?

Tony Scott: For example, we are currently working with the SOCMA Bulk Pharmaceutical Task Force and the U.S. Food and Drug Administration on a proposal - the generic drug user fee program - that would support the use of API site registration fees and foreign inspection fees.

Why the U.S. FDA and SOCMA, which is the Society of Chemical Manufacturers and Affiliates in the U.S.?

Tony Scott: Europe represents the largest concentration of FDA inspected sites dedicated to APIs, the number of manufacturing sites being several times greater than in the U.S. The FDA actually invited input from the EFCG, and we are honored to contribute to the public enquiry.

Many have heard the proposal referred to as generic drug user fees. What's the basic idea behind it?

Tony Scott: Companies who want to sell into the North American or European markets would have to register their company with the exact location, and then an inspection will take place. There would be a fee upfront for registration, then another fee for the inspection itself, which would sort out the "saints" from the "sinners."

This really sends the message that we've been hammering at for the last six years: We have to stop the importation of substandard APIs into the U.S. and Europe. Generic drug user fees would be a deterrent to who are exploiting the lack of controls for profit without any concern for the safety of patients.

While API regulation is obviously important, the critical voices on the lack of any kind of regulation for excipients are getting louder and louder.

Roger LaForce: This is also something I've heard in my talks with companies. Even if APIs aren't perfectly regulated, they are still better off than excipients. If you look at the market value of APIs, it's huge compared to excipients. However, in terms of volume, excipients make up the majority of an entire drug. Therefore, similar quality standards as exist for APIs are crucial.

Tony Scott: An excipients expert in the industry once said to me, "You think you have a problem with APIs? You ain't seen nothing yet." This convinced me and the rest of the EFCG board that something had to be done about the quality of excipients. As a response in 2007, we published a position paper on the need for the certification of excipients, and in 2008, we created what is now known as EXCIPACT, a consortium with the International Pharmaceuticals Excipient councils in both Europe and the U.S., FECC - the European Distributors trade body and the Pharmaceutical Quality Group in the UK.

We went live in March with a view to launching a non-profit company that will be responsible for excipients standard certification worldwide. I would say that we made a lot of progress on that front in a very short period of time, and we're in a good place. We're ready to go, but we need to not only engage the industry, but also the stakeholders.

There is a certain level of anxiety for some excipient makers whose products are mostly used in non-pharmaceutical applications who would then have to move to GMP production standards. What do you say to them?

Tony Scott: We are looking to raise manufacturing and distribution standards and level the playing field in an area critical to patient safety using a risk-based approach. Should we change our policy to suit someone who is unwilling to raise their standards where necessary to supply the pharma market? We don't think so.

What's really at stake?

Roger LaForce: Many European companies are investing in quality plants and are continuously involved in upgrading and investing in maintenance, adding new technologies. For example, if we look at how the issue of containment has evolved, not just within high potent APIs but also in general: In emerging countries, there are still plants where APIs are being made in conditions that are no longer acceptable in the U.S. and Europe. So while we're headed to having a pharma-level kind of manufacturing for chemicals, emerging countries are at least 10 years behind us. That means there is still a huge gap in standards, and European companies are heavily investing in this area.

However, this ends up working against us, as it gives a competitive edge to manufacturers who don't invest in this area and therefore can produce cheaper products, which are imported into Europe even though they do not meet European standards because the exporting countries don't regulate such sales -caveat emptor - and the enforcement agencies here do not have the resources to catch them. Containment levels are well regulated in the pharmaceutical sector, several systems are applied such as the one from ISPE, SafeBridge, and every large pharma company has set its own system. It would be important to consult these systems before putting into force another one.

How much of a responsibility do companies have who are sourcing from emerging countries to make sure that the products they are buying are of high quality and not contaminated?

Tony Scott: Legally? They are 100% responsible, but no one is enforcing it effectively. If it comes down to a qualified person signing off on a product quality or a finance director looking at the cost of a particular raw material, guess who wins every time?

So companies are, in a way, forced to source chemicals at the lowest price possible?

Tony Scott: In many situations, yes, especially if their customers in turn are also asking for the cheapest product. Good examples can be found in the national health services of EU member states looking for the best price on generic prescription drugs, and the number of people in the U.S. and elsewhere who order their prescription drugs online out of Canada. They don't know where it was made or where it is really coming from or if it is a counterfeit or not.

Roger LaForce: The pressure on the drug industry to reduce costs is also very heavy; politicians are always eager to show their voters that they have achieved something. This is a very complicated and long-term process, which is why it's important that the EFCG is vocal in raising its concerns and finds a better way to communicate with government organizations, not only in Brussels, but also in other countries. This is one of the reasons why we need to raise the flag to give the EFCG viewpoint a higher profile.

How closely does the EFCG work together with the relatively new pharma supply chain consortium Rx-360, which is very active with the U.S. FDA?

Tony Scott: We have been an observer member of Rx-360 since 2010. We fully support their work in increasing the security of the supply chain and in reducing the number of audits of our members' products. As Rx-360 is a U.S.-dominated consortium, our role is to spread the word in Europe and to get involved to correct the perception that Rx-360 is only about API, excipients and final products. It's not as they may also approach our members to audit their intermediate products, most of which do not need cGMP facilities.

Nevertheless, what they've done in the last two years is really quite remarkable; they are currently in a pilot phase of auditing facilities in Europe, the U.S. and Asia for both APIs and excipients, which is potentially great for the industry. Also, we as the EFCG have sometimes found it difficult to engage in dialogue with government agencies around the world, and the fact that we now have American companies and trade bodies agreeing with our policies on APIs and excipients is very helpful for us.

But communication with government bodies is absolutely essential for groups such as the EFCG. What are your plans for improvement in this area?

Roger LaForce: One of our objectives is to simply reinforce the contacts by informing them of what we're doing. For example, we've put together an informative brochure that gives a good overview of our activities. We're also launching a new public website this month.

Tony Scott: I do think we need to really get on a regular discussion basis, not only with the FDA and the EMA, but also with, for example, the Chinese and Indian regulatory bodies. The Indian Chemistry Council has been very helpful and has opened the door for us there, for example.

The EFCG's work is also interesting for players coming out of these emerging markets who want to do business in Europe and who want to improve their own images.

Roger LaForce: Yes, of course, and there are a lot of multinational companies in these regions who do good work. I think we do make an impact because the European industry as a whole is buying a lot of products from these areas and has its own facilities in these countries, and they are certainly interested in having a solid relationship with us. It must be a two-way street.

Tony Scott: I also think that if companies from emerging countries want to be successful in an international market, they have to wake up to the fact that they need a brand that sells, then they have more of a chance of being seen as a company that operates consistently at a high quality standard and on more of a level playing field, at least from a regulatory standpoint. This can take time to achieve.

Are there other countries out there that are emerging as sources for low-quality formulation and packaging that aren't on the radar yet?

Roger LaForce: Vietnam is building up in this area for example; a lot of Chinese companies are going to Vietnam, particularly on the dosage form side at the moment. Turkey is another possibility, as is Russia. However, there just really aren't any countries that can compete with China and India.

In the Chinese provinces where most of the pharmaceutical chemical manufacturers - such as the areas around Shanghai - have very strict regulations and some companies are moving their plants to provinces with more lax laws. We need to watch the how the government will handle this move to avoid stricter regulations.

What about India?

Roger LaForce: It's a different story there. First of all, the country needs to develop its internal infrastructure - roads, trains, ship ports, airports, etc. India is still relying a lot on private entrepreneurs whereas China has a master plan. Either way, in any big country it is impossible to have a homogenous situation, and if there are people who don't want to comply with regulations, then it's very easy for them to move to a region in the same country that doesn't have such strict regulations. However, they may be an improvement in the future.

A number of large Western pharma houses have announced that they want to grow in emerging countries and markets. Patients in these markets need to have the same quality standards as we have in the so-called triad regions - Europe, USA and Japan.