March 12, 2019 PAP-Q1-2019-NI-003
Corporate social responsibility (CSR), also known as corporate citizenship, encompasses business practices designed to support corporate social accountability to all stakeholders, the public and the organization itself. CSR in the pharmaceutical industry is somewhat more complex than in other sectors, given that pharmaceutical companies, while dedicated to helping improve the quality of life and hopefully extend it for patients, are also for-profit businesses. Even so, pharma companies that pursue effective CSR strategies tend to achieve better corporate financial performance than those that do not.1
Corporate values and business ethics should be closely linked and, when selected wisely and implemented effectively within a comprehensive risk management framework, often create market value and differentiation. Relevant elements of CSR in the pharmaceutical industry include pricing, access to medicines, quality of the supply chain and drug distribution, R&D practices, development of drugs to treat rare diseases or diseases prevalent in emerging economies, appropriate management of intellectual property, and collaboration with governments to ensure sufficient capacity for vaccines and drugs that may be used in response to potential terrorist threats and to develop public policy.1
Transparency is relevant to many different business aspects and operations in the pharmaceutical industry. It relates to publishing of clinical trial results and sharing of these data with third parties to enable wider use of R&D investments. It also includes revealing marketing and advertising expenditures and allowable payments to practitioners and others in the healthcare sector.1
Transparency also provides a means for demonstrating the need for and legitimacy of collaborations between trade associations and pharmaceutical companies with various representatives in the healthcare system. These collaborations are important for promoting research, the proper use of medicines and the prevention of conflicts of interest.2
The pharmaceutical industry is appropriately heavily regulated, given the potential negative consequences of low-quality, unsafe medications. Compliance with those regulations is generally seen as a cost of doing business in the sector. Perceptions of integrity and reputation are often closely associated with the success of pharmaceutical brands.3
Today, the industry is leveraging digitization, smart devices, the cloud and the Industrial Internet of Things (IIoT) to track production and quality metrics in real time in combination with validation-friendly software, enabling live regulatory reporting. Drug manufacturers are also able to use predictive analysis to implement more effective preventive maintenance programs and to rapidly respond to changes in the production environment and compliance requirements.3
Indeed, pharma companies are focused on changing the perspective and looking to see how compliance can be converted from a cost-generation activity to one of value creation.4 Mitigating compliance risks not only helps companies avoid fines, remediation costs and reputational damage, it ensures the sustainability of the pharmaceutical industry.
In the future, accounting organization Deloitte predicts that companies will improve their compliance activities by taking an enterprise-wide approach. This includes leveraging big data and implementing continuous readiness models to reduce the cost (and increase the efficiency) of audits and inspections, engaging with regulators to emphasize quality culture and ethical behavior and, most importantly, operating with integrity as the norm. Firms that are successful in this endeavor will attract the best talent and may even offer their services to firms that lack mature compliance programs.4
Sustainability in the pharmaceutical industry pertains to two different business aspects: minimizing risks across all operations and lessening the environmental impacts of production processes.5 The latter refers to the reduction of energy and raw material consumption, as well as waste and emission generation. Achieving these goals is increasingly challenging. As the pharma industry shifts to smaller-volume specialty drug products that target smaller patient populations, manufacturers must make more products and switch production processes more frequently. More complex drug substances are also driving the development of a wide variety of novel delivery solutions, which further complicates manufacturing.6
Pharmaceutical companies are taking steps to increase their environmental performance. In small-molecule manufacturing, solvents are being incinerated to recover stored energy as heat, reducing the volume of waste and lowering conventional fuel consumption. Discharge water is also being repurposed for use in cooling towers and building sanitation systems, reducing water consumption.7 In large-molecule manufacturing, the adoption of single-use technologies is reducing the need for clean-in-place and steam-in-place operations, leading to significantly reduced water consumption and waste-water generation.5,7 These systems also require smaller operating footprints, reducing the size of facilities and consequently the energy needed to operate HVAC (heating, ventilation and air conditioning) and other systems.From a packaging perspective, the key to overcoming environmental sustainability challenges is taking patient needs into consideration from the start of a development project. Combination products that include a drug and medical device together represent another approach receiving growing attention. Serialization is helping manufacturers to more effectively track products throughout the supply chain and identify opportunities for simplification and waste reduction.6 The industry’s commitment to sustainability was actively displayed in 2015 when companies, including Johnson & Johnson, Patheon, Genentech and Novartis, signed the American Business Act on Climate Pledge. As signatories, these companies agreed to reduce their carbon/greenhouse gas emissions, water use and waste to landfill and to increase their use of renewable energy.8
Drilling down within the concept of sustainable manufacturing practices leads to the principles of green chemistry. Green chemistry involves reduction of the use of hazardous materials and the environmental impact of chemical processes and products. Overall synthetic routes to APIs are developed to minimize the number of steps involved. Atom economy in each reaction is maximized, leading to incorporation of a high percentage of the atoms from the raw materials into the product and generating little or no by-products. Where possible, any by-products that are produced are recycled as starting materials for other reactions or used as fuel. The use of solvents is also minimized, and these materials are often reused or diverted as fuel streams. In many cases, reactions are performed continuously in flow reactors, often allowing for the elimination of solvents altogether.
Green chemistry, in the broadest sense, involves consideration of the entire life cycle of compounds that are manufactured, from the raw materials and their origins through production to use and disposal.9 The result is optimization of processes and products. These approaches not only benefit the environment. Pharmaceutical companies that have implemented green chemistry solutions have reported significant improvements in productivity and yield and reductions in waste generation.10
Many drug manufacturers have joined the American Chemical Society’s Green Chemistry Institute Pharmaceutical Roundtable,11 which encourages innovation in the pharmaceutical industry through the integration of green chemistry and green engineering. One of the challenges to adoption of green chemistry has been a lack of harmonization among available metrics and inconsistent starting points for analysis. Representatives from several pharmaceutical companies developed the Green Aspiration Level as a proposed metric for enabling consistency in achieving and reporting smart green manufacturing goals and introduced the Green Scorecard as a value-added sustainability communication tool.12
Advances in drug development are occurring rapidly as greater understanding of human biology and disease mechanisms is combined with new screening tools and genetic engineering technologies. Novel, targeted medicines — from antibody–drug conjugates to cell and gene therapies and immuno-oncology drugs — have the potential to treat and even cure many diseases that were previously considered untreatable. These targeted therapies typically have reduced side effects. Many are personalized medicines intended to treat patients with specific traits. Both of these advances reduce inefficiencies and waste in the healthcare system.13
On the technology front, digitalization is creating vast quantities of data that are being leveraged with nascent machine learning and other artificial intelligence approaches. These advances are boosting efficiency and productivity and are expected to have dramatic impacts on the acceleration of drug discovery and development.14
The focus on patient centricity is also driving new approaches to drug development. Consideration of patient needs, such as ease of use and convenience, early in the development cycle are leading to new dosage forms and delivery technologies.13 Clinical trials are also being changed to better reflect practical implications for participants, which is leading to more robust and reliable results. New diagnostic tests and the use of wider data sources are helping to identify patients most likely to benefit from new treatments, which is also leading to more efficient trials.13
Of course, novel medicines should not be exclusively available to the wealthy or to patients located in mature economies. A combination of political, economic and infrastructure issues often prevent people in the least-developed countries from obtaining even basic medicines. Many pharmaceutical companies have become involved in a variety of product-development partnerships, including those targeting the development of neglected tropical and noncommunicable diseases.15
New funding models are also being pursued to leverage charitable monies raised by philanthropic organizations in targeted drug development efforts.16 Strong collaborations between foundations such as L’Association Française Contre les Myopathies (AFM), the Cystic Fibrosis Foundation and Cancer Research UK and the pharmaceutical industry are leading examples. Wealthy individuals, such as Bill Gates via the Bill & Melinda Gates Foundation, PayPal co-founder Peter Thiel via the Thiel Foundation, and Facebook’s first president and Napster founder Sean Parker, are also funding research into next-generation drugs for many different diseases.
Taking a new approach, the Pharmaceutical Research and Manufacturers of America (PhRMA) recently launched The Value Collaborative™, an initiative intended to bring together stakeholders to discuss new innovative ways to pay for medicines and advance patient-focused solutions for better health, according to PhRMA.17 The industry is advocating for reforms that prevent pharmacy benefit managers (PBMs) and other entities in the supply chain from having their compensation calculated as a percent of the list price of a medicine and instead use a fee that is based on the value their services provide.18 PhRMA asserts that reforms to prevent PBMs and others in the supply chain from being paid on the basis of the list price of a medicine can fix broken incentives and make the system work better for patients.
Separately, drug companies are investing at record levels in the development of novel drugs to treat rare diseases. In 2016, the FDA reported receiving 582 requests for orphan drug designation, over 100 more than in the previous year.19 Not all were approved, but the agency issued designations for 333 drugs in development in 2016. With over 7,000 conditions classified as rare according to U.S. standards (affecting fewer than 200,000 Americans) and just about 600 drugs approved, there are many targets remaining for the industry to pursue.
Mr. Walker is the founder and managing director of That’s Nice LLC, a research-driven marketing agency with 20 years dedicated to life sciences. Nigel harnesses the strategic capabilities of Nice Insight, the research arm of That’s Nice, to help companies communicate science-based visions to grow their businesses. Mr. Walker earned a bachelor’s degree in graphic design with honors from London College of Communication, University of the Arts London, England.