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Should the Government Rate Plants on Quality?

Posted By Jeff Moad, February 06, 2013 at 4:26 AM, in Category: Factories of the Future

In his influential 1979 book, "Quality is Free," Philip Crosby asserted that prevention of quality problems "is not hard to do. It is hard to sell."

This has been particularly true in the pharmaceutical industry where buyers such as hospitals and doctors typically have no way to determine whether or not a particular drug product was produced using the latest equipment and best quality practices and, therefore, have no reason to pay a premium for one brand over another. In a newly-publishined paper, the U.S. FDA's top quality regulator, Janet Woodcock, contends that this lack of quality transparency has been a factor in causing an unprecidented shortage of the most necessary drugs in recent years. And, as a potential solution, she suggests that the FDA publicly rate pharmaceutical products based on the quality processes and the equipment that were used to produce them.

Without such a public quality rating program, says Woodcock and her co-author Marta Wosinska, drug manufacturers have little incentive to invest in the latest production equipment and to perfect quality processes, leading to more frequent shortages.

"The fundamental problem is insufficient market reward for quality (including reliability of production) stemming from the buyers' inability to observe it," writes Woodcock. "This, in turn, gives manufacturers strong incentives to minimize quality system investments, especially when faced with pressures brought about by new production opportunities, aging facilities, and the recent economic downturn."

Woodcock notes that the FDA has become more aggressive about inspecting pharma plants and warning manufacturers privately when it spots quality problems in the making. But, she notes, this has not improved quality or slowed shortages.

"We have now reached a point where FDA needs to engage the marketplace to help address the manufacturing problems, which unilateral FDA actions have not been able to prevent," she writes. "FDA could support the buyers and payers in their purchase and reimbursement decisions by providing them with meaningful manufacturing quality metrics."

Woodcock compares the idea to current programs under which government agencies rate restaurants for health safety and provide HMO scorecards. With such a public quality rating system in place, she says, "It would then be up to the marketplace to answer the ultimate question: How much are we willing to pay for quality?"

But, of course, Woodcock's proposal raises many more questions: Is the FDA equiped and capable of producing and updating quality ratings on all pharmaceutical manufacturing plants? And would consumers and healthcare providers, even if presented with such quality rating information, be willing to pay more for drugs that the FDA said were produced using more advanced processes and equipment?

Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit


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