Compliance In The Life Sciences Industry Is Broad In Scope
Compliance and risk professionals in the life sciences industry face a wide range of responsibilities in their daily operations. They must navigate compliance requirements across multiple regulatory areas, from good manufacturing practices and pharmacovigilance compliance to safety in clinical trials, post-market surveillance, anti-bribery compliance, global supply chain due diligence, and much more. The scope and complexity of these responsibilities make their roles more critical than ever.
This blog serves as a compliance guide for the life sciences industry. In it, we cover major trends and their implications for compliance officers, as well as some of the key regulatory developments and challenges facing the life sciences industry today. We’ll also share a few simple best practices that life sciences companies can adopt to address those challenges. You can dive into even more details in the full ebook on this topic.
Major Trends in Life Sciences and Their Compliance Implications
Deloitte highlights several key trends in the life sciences sector in its 2024 Global Life Sciences Sector Outlook. These trends encompass a wide range of areas including heightened M&A activity, escalating pricing pressures, a volatile geopolitical landscape, regulatory changes in the US, and the rapid adoption of Generative AI (GenAI). Here, we delve into some of these trends and explore their implications for chief compliance officers and their teams.
Increasing Regulatory Scrutiny in M&A and Partnerships
The life sciences sector is witnessing robust M&A activity driven by large pharmaceutical companies seeking to fill portfolio gaps caused by patent expirations. However, this surge in M&A is accompanied by increased regulatory scrutiny, particularly concerning antitrust issues. Compliance officers must enhance compliance frameworks to ensure that all M&A activities meet antitrust laws and regulatory requirements. This involves conducting thorough due diligence to identify potential compliance risks in target companies and developing strategies to mitigate these risks. Additionally, maintaining detailed documentation of all transactions and compliance measures prepares organizations for possible regulatory inquiries and audits.
Adoption of Generative AI (GenAI) and Emerging Technologies
GenAI and other AI technologies are being rapidly adopted to enhance efficiencies across the life sciences value chain. AI is poised to revolutionize areas such as drug discovery, clinical trials, and patient care by increasing overall efficiencies and process innovation. Compliance officers must implement robust governance frameworks for AI technologies to ensure ethical use and compliance with data privacy regulations. Establishing oversight structures to monitor AI applications, managing risks such as bias and explainability, and ensuring that AI-driven processes align with regulatory standards are critical actions. Regularly updating policies to keep pace with technological advancements and regulatory changes is also essential.
Rising Pricing Pressures and Global Regulatory Changes
Global pricing pressures are intensifying, with governments implementing price controls to manage rising healthcare costs. In the US, the Inflation Reduction Act allows Medicare to negotiate drug prices, while other countries are also imposing stricter pricing regulations. These measures could impact R&D investments and market dynamics. Compliance officers must stay informed about global pricing regulations and ensure compliance with new rules. Collaborating with financial and legal teams to assess the impact of pricing pressures on the organization’s compliance strategy and developing transparent pricing policies are essential. Engaging with regulatory bodies to navigate the evolving landscape and monitoring pricing activities to prevent violations is also crucial.
Focus on Personalized Patient Experiences and Outcomes
Companies are prioritizing the improvement of patient experiences and outcomes by leveraging digital health technologies and personalized treatments. This approach aims to enhance patient engagement and trust, ultimately leading to better health outcomes. Compliance officers must ensure that patient data is handled in compliance with data privacy laws. Developing protocols for the ethical use of patient data in personalized treatments, ensuring transparency and patient consent, and implementing robust data security measures to protect patient information are key actions. Regularly reviewing and updating patient interaction protocols to maintain compliance with evolving regulations is also important.
Supply Chain Resilience and Geopolitical Dynamics
Life science companies are increasingly reliant on a smaller pool of trading partners, heightening the need to address location and concentration risks within their supply chains. This includes geopolitical instability, wars, climate risks, and trade route disruptions. Compliance officers must strengthen supply chain compliance programs to address geopolitical risks and ensure adherence to local regulations. Developing contingency plans to manage supply chain disruptions and maintaining compliance with international trade laws are critical actions. Collaborating with supply chain partners to ensure that all activities comply with regulatory standards and best practices is also essential.
Accelerating Speed to Value in R&D
The use of AI and GenAI in R&D is accelerating, aiming to expedite drug discovery and clinical trials. AI technologies can demystify complex disease biology, cut study timelines, and improve regulatory success. Compliance officers must establish clear compliance protocols for AI-driven R&D processes. Working closely with R&D teams to ensure that all AI applications comply with regulatory standards and ethical guidelines and monitoring AI-driven research activities to identify and address potential compliance issues early are critical actions. Fostering a culture of compliance within R&D by integrating compliance considerations into the innovation process is also important.
Increased Collaboration Across National Health Regulatory Authorities
National health regulatory authorities are increasingly collaborating to share information in areas such as product manufacturing site inspections, post-market product safety surveillance, technical guidelines, and regulatory standards development. This trend aims to harmonize regulations and improve global health outcomes. Compliance officers must enhance cross-border compliance strategies to align with international regulatory standards. Engaging in active communication with global regulatory bodies to stay updated on collaborative initiatives and shared guidelines and implementing systems to track and comply with international inspections and post-market surveillance requirements are critical actions. Developing training programs for compliance teams to understand and adapt to diverse regulatory environments is also important.
Key Areas of Compliance in the Life Sciences Industry
The life sciences industry is heavily regulated, which means that compliance professionals must navigate a wide range of state, federal, and international laws and regulations that span the drug and medical-device development lifecycle. This includes good manufacturing practices, pharmacovigilance compliance, clinical trial safety, post-market surveillance, anti-bribery compliance, data privacy, and global supply chain due diligence and more. It’s an evolving landscape, and compliance officers must always be ready for new risks and regulatory expectations that emerge. Below, we examine some of the most pressing regulatory areas that shape compliance in the life sciences industry.
Good Manufacturing Practices
Good manufacturing practices (GMP) refer to guidelines laid out by regulatory agencies to ensure high-quality and safe products and apply to both pharmaceuticals and medical devices. Various countries have their own GMP regulations. In the United States, the Current Good Manufacturing Practice (CGMP) regulations, enforced by the U.S. FDA, establish baseline requirements for the “methods, facilities, and controls used in manufacturing, processing, and packing of a drug product.” The European Union, too, has its own GMP guidelines that apply to any manufacturer that sells products on the EU market. The Pharmaceutical Inspection Co-operation Scheme (PIC/S) – a non-binding, informal cooperative arrangement between regulatory authorities for GMP of medicinal products – is another group active in developing harmonized GMP standards and guidance documents.
Quality Management System Regulations for Medical Devices
For medical device companies, ISO 13485, established by the International Organization for Standardization (ISO), is the most widely adopted international standard that specifies requirements for creating a medical device quality management system (QMS). Many regulatory authorities use it globally under the Medical Device Single Audit Program (MDSAP). In January 2024, the U.S. FDA issued a final rule amending its device current good manufacturing practice (CGMP) requirements of the Quality System (QS) regulation under 21 CFR 820 by aligning it more closely with ISO 13485. This action was taken to harmonize the FDA's regulations with the international consensus standard for medical device QMS used by many other regulatory authorities globally.
Pharmacovigilance Compliance
Safety is critical in the life sciences industry. In the pharmaceutical sector, pharmacovigilance – an umbrella term used to describe the processes for monitoring and evaluating adverse drug reactions – is a key component of an effective drug regulatory system, clinical practices, and public health programs. The European Commission describes pharmacovigilance as involving the following key activities: collecting and managing data on the safety of medicines, looking at the data to detect “signals” (e.g., new or changing safety issues), evaluating data and making decisions about safety issues, proactive risk management to minimize any potential associated risks, protecting public health, communicating with and informing stakeholders and the public, and auditing outcomes and key processes involved.
Physician Payment Sunshine Act Compliance
Like many industries, the life sciences industry is not immune to acts of bribery and corruption. A key part of preventing bribery and corruption in the life sciences industry is to be transparent with key stakeholders and regulators in interactions with healthcare professionals and patients. Under the Physician Payment Sunshine Act, manufacturers of medical devices, drugs, biologicals, and medical supplies must track and report to the Centers for Medicare and Medicaid Services (CMS) monetary payments or other “transfers of value” provided to physicians, non-physician practitioners, and teaching hospitals. Transfers of value may include expenses associated with conference travel reimbursement, speaking engagements, and consulting fees; ownership or investment interests in manufacturers held by healthcare professionals or their family members; and research payments for product development activities, such as clinical trials.
Supply Chain Due Diligence
Robust supply chain risk management is another way to ensure safe and ethical practices throughout the drug development or medical device lifecycle. It’s also an area that’s gaining increasing regulatory attention globally as more and more countries are passing laws that require companies across all industries to be more transparent about, and accountable for, environmental and human rights violations, and mitigating such risks in their global supply chains. Examples of laws that establish requirements around the prevention of environmental and human rights harms include the German Supply Chain Due Diligence Act (LkSG), the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), and France’s Corporate Duty of Vigilance Law.
Anti-Bribery and Corruption (ABAC)
Like all industries, the life sciences industry must ensure compliance with relevant anti-bribery and corruption (ABAC) laws and regulations. Given the significant role governments play in healthcare systems globally, it is not surprising that the healthcare and life sciences sectors are among the industries with the highest Foreign Corrupt Practices Act (FCPA) risk. Since the first FCPA enforcement action related to life sciences in 2002, companies in these sectors have incurred over $1.5 billion in penalties and disgorgements related to FCPA violations.
The Role of Emerging Technologies in Life Sciences
A rapidly evolving area in the life sciences industry is the integration of artificial intelligence and machine learning (AI/ML). In many ways, AI/ML has already transformed the development, treatment, and evaluation of patient therapies. The FDA reports that the number of drug and biologic application submissions incorporating AI/ML components has risen sharply in recent years, with over 100 submissions in 2021 alone. One notable application of AI/ML is its capability to analyze extensive medical literature to predict which patients may respond better to certain treatments or be at higher risk for side effects, thus enhancing personalized treatment options.
Compliance Best Practices in Life Sciences
In addition to following the guidance documents laid out by regulatory bodies and international standard-setting frameworks, effective compliance programs incorporate several tried-and-true best practices. Key steps for building successful compliance programs include securing adequate resourcing, gaining leadership support, and implementing the following essential practices:
Make Risk Management a Cross-Functional Effort
Collaboration between compliance and other business functions – such as research and development, regulatory affairs, and sales and marketing – not only helps business units align their objectives but also helps ensure product safety, drives innovation, fosters good manufacturing practices, and helps mitigate risks. A cross-functional effort ensures that the risks and concerns of all key stakeholders are being considered and addressed.
Establish Robust Data Governance Oversight Practices
Implementing robust data governance policies and procedures helps not only to build trust in the integrity of data but also ensures that disclosures are made in a timely and accurate manner. A robust data governance program also ensures that compliance with good manufacturing practices, good laboratory practices, and good clinical practices remain current and up-to-date. Key questions to consider include: How does the company monitor for adverse events? How do those reports come into the compliance program? How does the company determine when to make a report to a regulatory agency? How are adverse event disclosures tracked to ensure they are made on time?
Collaborate with Regulators and Other Industry Stakeholders
National health regulatory authorities globally continuously rely on stakeholder input – including from industry, patient groups, academia, and others — to cultivate a patient-centered regulatory approach emphasizing collaboration and health equity. As a new and developing area, for example, the FDA has indicated in discussion papers that it’s seeking input from industry regarding the use of AI in medical products to address critical areas of transparency, explainability, governance, bias, cybersecurity, and quality assurance. Life sciences companies would benefit from participating in these discussions to have their concerns heard and share in industry-led solutions.
Stay on Top of Regulatory Developments
National health regulatory agencies continue to announce new initiatives to help guide the industry. In Europe, for example, the Accelerating Clinical Trials in the EU (ACT EU) — a collaboration between the EMA, the Heads of Medicines Agencies (HMA) in the Member States, and the European Commission — launched two new pilot programs in June 2024 aimed at improving the quality of clinical trial applications. Continuously scanning for regulatory updates will help ensure life sciences companies stay up-to-date on the latest compliance developments and best practices.
Avoid Common FDA Compliance Violations
Compliance professionals in the life sciences industry can benefit significantly by recognizing and avoiding common compliance failures. Instead, they should adopt best practices that align with regulatory expectations. This includes timely and accurate submission of safety information, thorough identification and processing of adverse events, thorough record-keeping, robust and detailed written procedures, solid safety agreements with partners, comprehensive employee training programs, and prompt corrective actions for any issues identified during inspections. By adopting these proactive measures, compliance professionals can enhance their organizations' compliance posture and mitigate the risk of regulatory violations.
Compliance professionals need to be both vigilant and adaptable as they face a multitude of challenges. These range from adhering to good manufacturing practices and pharmacovigilance to complying with anti-bribery laws and managing global supply chain due diligence.
Emerging trends, such as increased M&A activity, the rapid adoption of AI, and heightened regulatory scrutiny, add further layers of complexity. Compliance officers must enhance their frameworks to effectively address these developments, ensuring the ethical use of technology, compliance with new pricing regulations, and readiness for intensified regulatory scrutiny.
By adopting integrated systems and fostering collaboration, compliance teams can ensure their practices are robust, agile, and capable of meeting the complex challenges they face.
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