For years now, the pharmaceutical and life sciences industry has had to contend with a less than stellar reputation mainly due to unethical business practices and high drug prices.

The pharmaceutical industry is among the most heavily regulated in the world. It is subject to intense scrutiny and with good reason: medicines and treatments can have an enormous impact on the lives of patients, both good and bad. A number of guidelines have been established in relation to government drug price reporting, quality control activities, patient privacy, medical device testing, sales and marketing practices, and post-marketing drug safety reporting. These areas are closely monitored by regulators making compliance a top priority for companies in this sector.

For a drug manufacturer, compliance involves adhering to applicable laws and legislation issued by various governing bodies, and following the guidelines established by regulators that explain how the laws can be practically implemented.  Regulations tend to be amended often, and new measures can be introduced quickly causing headaches for compliance teams in pharmaceutical companies who are trying to keep pace with the changes.

The consequences of regulatory non-compliance can be severe and costly, often resulting in penalties and fines, reputational damage, restricted market access, product delays, and though quite rare there is also the possibility of being regulated out of business. This is becoming more evident as aggressive investigations and prosecutions routinely dominate headlines where leading brands are penalized on various counts including pricing violations, distributing unapproved drugs, failing to disclose negative information about a product, bribery, environmental violations, false advertising, and fraudulent and anti-competitive practices.

In this blog, we delve into how the pharmaceutical and life sciences industry is regulated, explore the key regulatory compliance risks facing the sector, and explain how a powerful and robust compliance management program designed to reduce risk and enhance management controls can help pharmaceutical companies demonstrate compliance.

Who is the driving force behind the heavily regulated pharmaceutical and life sciences sector?

New scientific developments and technological advancements mean that legislation is constantly evolving, and regulatory agencies play a crucial role in helping drug manufacturers comply with these changes.

In a bid to protect consumers from harmful drug effects and ensure product quality, nearly all governments around the world have regulatory agencies to provide guidance for pharmaceutical and MedTech companies. In the USA, the Food and Drug Administration (FDA) ensures new drugs are tested rigorously for effectiveness and safety, while Australia has the Therapeutic Goods Administration (TGA), then there’s the Medicines and Healthcare products Regulatory Agency in the UK,  European Medicines Agency in the European Union (EMA) and Medicines Control Council (MCC) in South Africa.  Each of these regulators will issue a whole host of regulations, and pharmaceutical companies must find a way to keep pace with the changes and demonstrate compliance or risk the consequences.

The Risk of Non-Compliance

In the pharmaceutical sector, non-compliance is when drug and medical device manufacturers do not follow the rules, regulations, and laws that are related to their practices. Today more than ever, pharmaceutical and MedTech companies are allocating more management time and resources to compliance as more regulations emerge and complexity increases.

The potential ramifications involved in this area are far reaching. A study by Poneomon Institute of 46 organizations put the cost of non-compliance 2.65 times higher than the cost of compliance (compliance cost was estimated at $3.5 million, whereas the cost of non-compliance could potentially total $9.4 million). However, the consequences of non-compliance extend well beyond dollars and financial losses. It opens the door to security breaches, business disruptions, licence revocations, a damaged reputation, and erosion of trust.

The global pharmaceutical manufacturing market is projected to grow at a compounded annual rate of 11.34% from 2021 and reach a whopping estimated USD $957.59 billion by 2028, meaning this sector must take compliance seriously. The exponential growth in the industry combined with the sector seamlessly adapting in response to the rapidly evolving expectations of investors and customers has also ushered in complexity and opened the gates to many new regulations that could potentially slow down innovation and time to market and impede decision-making across the pharmaceutical sector.

Complexity increases the underlying risk of non-compliance, and many pharmaceutical companies know the downside of managing this complexity all too well. Consequences include late fill and finishing on the production line, interruption of the supply chain, and delayed drug testing and approvals, all of which lead to pulling products from the market.

As an organization grows, the expansion and evolvement of compliance requirements can easily overwhelm compliance teams who are relying on manual processes and antiquated systems, leaving them struggling to comply with regulations and maintain up-to-date licences and labels.

Manual Compliance Processes: The Challenges

Pharmaceutical and life sciences companies have long since relied on traditional manual processes like spreadsheets and emails to ensure compliance. But these outdated processes are no longer fit for purpose in the quest to stay compliant as they restrict their ability to meet existing requirements and address change. In an increasingly complex regulatory landscape packed with compliance obligations, organizations that continue to rely on this antiquated and laborious approach to compliance are hamstrung by disjointed, complex, and time-consuming processes.

Flawed processes that rely on emails and spreadsheets present challenges that further compound the already complex compliance environment including:

Lack of an audit trail: Manual processes fail to detail who reviewed what and when, which action was decided upon, and when it was implemented.

Lack of accountability: Deprived of an audit trail and task allocation, there is limited accountability for regulatory compliance.

Restricts a holistic view of compliance: A reactive, siloed approach to compliance restricts an organization’s holistic view, inhibiting planning, budgeting, and process transparency.

Inaccurate information: The process of manually tracking and controlling all versions of emails and documents causes information to quickly become out of sync and irrelevant.

Limited reporting: Regulatory intelligence is curtailed by an inability to view instant reports on status and progression.

Wasted resources and spending: Manual compliance monitoring drains valuable resources and exposes hidden costs through the creation of silos resulting in multiple processes, duplication of effort, and missed opportunities.

How the Pharma Sector is Using Software to Digitize Compliance Processes

Ensuring compliance with regulations, policies, and procedures is a massive undertaking that requires constant monitoring and reporting and complex mapping between regulations, business processes, and policies.

Smart pharma companies understand that spreadsheet-based compliance programs deprive them of the structure and processes needed to track their actions and provide an audit trail for regulators. This is why many are turning GRC software solutions to add structure to their processes. Software enables them to collate and map extensive amounts of data and provide proof of compliance through extensive reporting capabilities.

Let’s take a deep dive into how mature pharmaceutical and life sciences organizations are managing their compliance requirements using purpose-built GRC software.

Digital Obligations Library

A big part of compliance is knowing what rules to adhere to. Software facilitates the implementation of a comprehensive on-line obligations library, enabling organizations to know what to follow and when to follow it. Obligations are logged using online forms, with all information feeding directly into the tool. Teams can log expiry dates, add links to relevant business processes, assign ownership, and upload supporting documentation. Empowered by this database of regulatory requirements which is updated in real-time the teams can prioritize tasks by tracking progress and analyzing results based on the risk of non-compliance.

Many pharma companies are already harnessing this genre of software to automate the non-compliance risk management process by setting up ‘obligations libraries’ linked to ‘controls’ that notify relevant stakeholders of compliance failures and potential exposure.

Automated Policy Management

Automated policy management capabilities available within GRC platforms can help an organization maintain an up-to-date library of relevant policies that link back to the corresponding regulations or business processes. Automated policy management capabilities allow an organization to:

Build a central repository of relevant policies and procedures, which can be housed alongside mandatory regulations.

Access vital policy information conveniently, and benefit from a timestamped history of all revisions and changes.

Utilize workflows to automate the policy approval process supporting accountability.

Establish employee attestations that show staff have read and understood the policy.

Run reports on policy status and understand areas of non-compliance with convenient dashboards.

Regulatory Change Management

Many GRC software solutions provide integrations with regulatory content providers to offer ‘regulatory horizon scanning’. Software with integrated regulatory feeds from third parties enables organizations to receive notifications when relevant regulations change, providing them with clarity when navigating the dynamic regulatory landscape. Workflows are automatically initiated so they can make and document the required changes to remain compliant quickly and efficiently.

This ability to access a broad spectrum of up-to-date regulatory content and intelligence ensures they keep pace with changing rules and regulations. Once embedded, the software can support the creation of a comprehensive regulatory change program with automated workflows and stringent signoff and approval processes.

Audits and Safety Checks

Audits and safety checks are conducted in the pharmaceutical industry to ensure safety and quality standards. Using software enables pharmaceutical organizations to build a centralized register of all their audits in one place and effectively implement recommendations for the findings identified.

It streamlines the process by aggregating audit and inspection data into a consistent format and implementing automated workflows to add ownership and accountability. This allows businesses to maintain a central audit register that enhances data accuracy, accessibility, and usability. Automation enables teams to set reminders for upcoming audits, and send notifications for outstanding audit actions. Maintaining a digital record of audit findings and the action taken enhances the efficacy of the audit process when demonstrating compliance to external auditors and regulators.

Incident Management

Incident management in the pharmaceutical and life sciences sector requires special attention to detail. Whether it’s an IT failure or a major disaster like a halt in production, or a building evacuation or technical fault, these unforeseen events can have far reaching ramifications for the safety of employees, the environment, and patients. A comprehensive incident management process is essential to keep operations running smoothly during an unplanned incident, from ensuring there’s enough staff to maintaining power.

A GRC platform with automated incident management capabilities ensures all associated events are managed to a full resolution, without any breakages along the way. Staff can log incidents using online forms that feed directly into the tool capturing detailed, consistent information and evidence. Software also provides a flexible workflow that details and documents the triage, remediation, and stakeholder notification process. Incidents can subsequently be linked to risk registers and obligations libraries, and a fully time-stamped audit trail is evident.

How the Pharma and Life Sciences Sector is Benefiting from the Digital Revolution

Digitizing processes has become crucial for pharmaceutical organizations who want to demonstrate compliance, streamline and automate processes, and improve performance.

In the long run, digitization will support these companies by giving them a competitive edge, helping them to get products to market quickly, meeting consumer demand and increasing their supply chain efficiency. 

Until now the pharmaceutical and life sciences sector has been rather cautious in applying digital technology, and that hesitation is fast becoming a hindrance. Given the rapid change of pace in technology, pharmaceutical organizations need to make the digitization of their operations a priority to ultimately provide better care. Innovative tools and techniques that originated to support highly regulated industries like financial services are simplifying complex compliance requirements across the pharma landscape.

As organizations in the sector start to embed best-practice compliance tools into their processes, they are able to:

Make linkages between data sets across, risk, compliance, and incident management.

Create automated rules that add areas of non-compliance to the risk register.

Log incidents and automatically link them to compliance obligations.

Set controls that detect emerging risks or flag non-compliance.

Comprehensive compliance monitoring via a single point of oversight

View real-time dashboards and reports, streamlining reporting and producing audit trails.

If you would like to learn more about how organizations in the pharmaceutical and life sciences sector are digitizing their compliance processes, request a demo of the Riskonnect platform.