Too many pharma companies have learned the hard way that the quality and compliance environment is getting much tougher. The cost of recalls or remedial actions to fix manufacturing and quality assurance deficiencies can run into hundreds of millions of dollars, and companies that suffer them typically make strenuous efforts to improve their processes and prevent recurrence.
Some of the companies that recently experienced major quality issues thought that they were performing well before problems hit, because they relied on vaguely-defined and inconsistently-measured quality KPIs. For example, one plant was reporting right-first-time rates of above 95 percent, while actually experiencing more than 300 deviations per 1000 batches—a metric that was not tracked or reported.
So what if your organization has yet to experience a high profile failure? Or even a minor one? Are companies with apparently effective quality and compliance systems best leaving them alone, on the basis that it is foolish to try and fix what isn’t broken?
Our experience working with some of the highest-performing quality organizations in pharma, medical devices and other industries, like auto, aerospace, chemicals and high tech, shows that precisely the opposite is the case. Leading companies are constantly testing, evaluating and evolving their quality capabilities in detection and management. It is that relentless improvement that keeps them one step ahead of potentially damaging problems.
But in the absence of a large-scale issue or explicit instructions from regulators, how do organizations select where to focus the improvement efforts? Quality vanguards make use of a range of diagnostic techniques to build a detailed picture of the strengths and limitations of their processes, organization and culture. Then they make prioritized and targeted interventions to close gaps to best practice.
DIAGNOSING QUALITY PERFORMANCE GAPS
To prevent quality and compliance issues, quality vanguards assess the inputs into their quality processes as well as the outputs, using internal, external and cross-industry benchmarks to compare their own current processes with the best available (see box for an example tool).
They also make smarter use of quality metrics, which should be tracked at local and functional levels. All companies take action when lagging quality indicators (e.g., customer complaints, recalls) reveal an issue.
Some pharma companies conduct leading indicator analyses (e.g., number of deviations per batch, share of overdue CAPAs, right first time, CTQ trends) at the aggregate level as well, to identify the early signs of potential issues. But it is very rare for any pharma company to constantly analyze leading indicators at a granular level for individual products and value chain steps—analyses that provide the true insights into potential issues.
One powerful way to reveal such systemic issues is the use of risk “heat maps,” which help assess quality performance across functional processes (e.g., sourcing, formulation and/or sub-steps, QC, packaging, maintenance, distribution), risk occurrence (e.g., observations per audit, number of customer complaints), operational maturity (e.g., right-first-time rates, capability of critical processes) and quality system maturity (e.g., CAPA cycle time, frequency of recurring deviations) at the site or even product level. Such maps can quickly uncover areas of high risk or significant opportunities to boost quality performance.
Quality decision-making and governance is another area where weaknesses can hide. Decision-making and governance policies need to be transparent, so that everyone in the organization, regardless of function, understands their quality goals and targets, is incentivized appropriately to achieve them, and knows immediately who is responsible for quality-related decisions. Without such clarity, companies risk compromising quality objectives in their desire to meet other targets, like output, for example.
Ineffective communication and execution processes between global and local levels can limit a company’s ability to react quickly to the early risk indicators and preempt potential quality and compliance issues. Post-mortem analysis of recent failure or near-failure cases is one of the most effective tools to identify potential areas of weakness in governance and decision making processes.
The final critical element in any organization’s assessment of its own quality performance is culture. The effectiveness of everyday decisions often depends on how well and clearly the company communicates the type and size of risks it is prepared to take, how decisions are weighed and whether all employees feel accountable for quality performance. Employees must feel comfortable escalating concerns around actual or potential quality issues to management. Managers must be willing to seek out different perspectives in order to inform their decisions, and teams must be willing to operate in close cooperation, while still being prepared to point out issues and challenge current practices.
These cultural characteristics may be subtle, but that doesn’t mean they should be ignored. Quality vanguards regularly reinvigorate and measure attributes of their quality culture through training, leadership role modelling, regular employee surveys and focus groups.
PRIORITIZING, PLANNING, AND DELIVERING IMPROVEMENTS
The harder any company looks at itself, the more faults it will find. Once companies start to scrutinize their quality processes, they are often overwhelmed by hundreds of different improvement opportunities. Vigorous prioritization is the key step that allows companies to move from diagnosis to rapid and significant performance improvement. That in turn, requires an explicit understanding of, and alignment on, the organization’s appetite for risks of different kinds.
”Zero tolerance” of any risk does not help meaningful prioritization or effective decision-making. Instead, companies must differentiate between issues that have impact on patient safety or product efficacy, and those that affect other goals, like manufacturing cost or delivery performance, and they must set clear targets for each.
Such an approach gives the organization a clear picture of its most important quality risks, allowing more efficient resource deployment.
Prioritized countermeasures or process changes don’t have to be standalone initiatives requiring separate resources and management. Quality improvement initiatives often work best when integrated with lean and continuous improvement or organizational capability building efforts. As with other organizational change efforts, care is required in planning the wider rollout of changes to balance speed of execution with the capacity of the personnel to absorb new working methods and the resources available to help staff make needed changes.
PROACTIVE QUALITY IMPROVEMENT IN ACTION
One large global pharmaceutical manufacturer recently applied many of the techniques described above to uncover and rectify some important weaknesses in its quality organization. The company had a strong track record of quality performance, but its leaders were unsettled by several “near misses” internally and a series of big failures elsewhere in the industry, and were determined to ensure the same thing did not happen to them.
An intensive diagnostic process gave management much to be happy about. It revealed good processes and a strong compliance culture across the organization. But it also identified some blind spots and hidden risks “camouflaged” by current quality measurements and governance. These included, among others, inconsistencies in the interpretation and reporting of quality KPIs and little visibility into supplier and vendor performance. Poor coordination between the central quality function and site-level organizations was also hampering standardization, implementation of global initiatives, and the free flow of best practices across the organization. And overall risk strategy was not well understood, which meant that “risk-appetite” was being locally determined. This affected decision-making, made it hard for sites to prioritize the quality improvement initiatives that mattered most and led to inconsistent risk levels across the network. Finally, some site-level quality managers, while they were executing existing processes very well, lacked the skills they needed to develop and implement new ones.
In response to these findings, the company’s quality function started working with its existing lean improvement teams to develop a simplified and streamlined set of quality KPIs and a new reporting structure focusing on a few leading indicators, while its supplier management group focused on revising its approach to risk assessment and communication with vendors. The company also enhanced its capability-building program to improve the problem-solving skills of its mid-level management at the sites, and it made important changes to the way quality performance and risk issues are communicated across the organization.
The same diagnostic approach can be equally useful when things do go wrong, helping companies to identify the root causes of quality issues, rather than just treating the symptoms. Another company—a medical device manufacturer—used this approach to change its culture and develop a collaborative relationship with the FDA after it received a series of warning letters. Critical issues identified through the self-assessment included finger-pointing and a lack of collaboration between executives in a historically decentralized organization, and insufficient internal capabilities to address issues in an orchestrated manner.
To address these issues and prevent future failures, the company established a process for semi-annual site risk assessments, including ratings and actions to address key risks. It introduced a “quality contract” that was signed by all employees. and built or brought in needed capabilities. Finally it centralized and clearly defined compliance accountability across all functions, ultimately allowing it to establish an open-book policy with the FDA.
About the Authors
Ted Fuhr ([email protected]) and Evgeniya Makarova ([email protected]) are leaders in McKinsey & Company’s Pharmaceutical Operations practice.
