Over 80% of APIs are now sourced from counties outside of the US, including from developing countries. As such, drug quality has become more difficult to control. Drug manufacturing plants in the US, owned by US-based manufacturers, are sometimes plagued by quality concerns. Yet, because of the highly-regulated environment and the transparency with which US and European firms operate, consumers have high expectations of quality from products manufactured in the US and Europe. Quantifying the risks associated with offshore manufacturing, and identifying its causes are important steps in controlling the quality of drugs that come from widely-dispersed facilities.

In an article published in the Journal of Operations Management, researchers compared 30 pairs of regulated drug plants on the mainland and Puerto Rico and analyzed inspection data that FDA compiled on those plants. They found that, on average, Puerto Rican plants operated with a significantly higher quality risk than matching plants operated by the same firm located in the mainland US. They found the risk to be unrelated to the distance between the plant and the company headquarters, the education of the local population near the plant, or the number of similar drug manufacturing plants in the area. In an accompanying press release (http://researchnews.osu.edu/archive/offshoreplants.htm), the authors ascribe the quality gap to difficulties in working across cultures. “We believe the quality differences we found in Puerto Rican plants were driven by challenges in transferring knowledge from headquarters to the plant, due to cultural differences, primarily differences in language and values.”

To be clear, the press release stresses that the overall quality risks from Puerto Rican facilities are small. However, they say, for a US manufacturer, any increase in risk is a cause for concern.

John Gray, lead author of the study and assistant professor of operations at Ohio State University’s Fisher College of Business also stresses the importance of experience in ensuring a well-run facility. “One of the managers I spoke to currently in a Puerto Rican plant said it best: No one here knows what it looks like to run a world-class operation in terms of quality control,” Gray said. This kind of knowledge can’t just come from books and manuals, he said, especially when you’re dealing with workers who speak another language and come from another culture.”

The authors indicate that they will be following up with studies on plants based in other locations. Puerto Rico is a region without a large domestic drug manufacturing industry. It will be interesting to see how pair-matched facilities in China, for instance, fare with regards to quality risks. There, cultural barriers may be higher than in Puerto Rico, but local managers may bring their own experience in domestic production to the floor. I look forward to seeing the results.

For related articles see:

FDA Files Consent Decree Against Johnson & Johnson

PhRMA Raises Concern about Tax on Offshore Manufacturers in Puerto Rico – Pharmaceutical Technology

Offshoring Biomanufacturing