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Compliance: U.S. Healthcare Industry Overview & Basic U.S. FDA Inspection Preparation William Sellers Director, J&J Regulatory Compliance ASQ Reading, PA 10 June 2013

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 2 Agenda Brief History of the U.S. FDA The U.S. Compliance Environment The Systems Approach to Compliance Preparing for the Inspection

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 3 Brief History of the U.S. FDA 1862Bureau of ChemistryEstablished by President Lincoln; predecessor of FDA 1906Food & Drugs ActBoth passed on same day Meat Inspection Act Prohibit interstate commerce of misbranded and adulterated foods and drugs Upton Sinclairs, The Jungle 1927Food, Drug & InsecticideBureau of Chemistry reorganized into two entities: Administration FD&I (regulatory) and Bureau of Chemistry & Soils (research) 1930Food & Drug Administration 1933FDA RecommendsBill introduced to U.S. Senate Complete Revision of 5 year battle 1906 Food & Drug Act 1937Elixir of SulfanilamideMade with diethylene glycol kills 107, many children Highlights need to establish safety before marketing 1938Food, Drug & CosmeticsNew drugs to be proven safe before sale (NDA) Safe levels for unavoidable poisons/toxic additives Authorized factory inspections

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 4 Brief History of the U.S. FDA (continued) 1951Durham-HumphreyDefines drugs that cannot be used safely without Amendmentmedical supervision and restricts their free sale - Rx 1958Food AdditivesManufacturers must establish safety in foods, drugs Amendmentand cosmetics specifically to induce cancers 1960Color AdditivesGRAS Generally Regarded As Safe Amendment 1972OTC Drug ReviewEnhance safety, effectiveness and labeling Regulation of BiologicsSerums, vaccines and blood products from NIH 1976Medical Device Amendments 1980Infant Formula Act 1982Tamper-resistant Packaging Regulations 1983Orphan Drug Act 1992Generic Drug Enforcement Act 2002Public Health Security and Bioterrorism Preparedness and Response Act 1962Kefauver-Harris DrugThalidomide Babies Western Europe AmendmentsIncreased drug safety and proof of effectiveness cGMPEnforced by the FDA under the 1938 Act Manufacturing principles that must be observed

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 5 The U.S. Compliance Environment FDAs 21 st Century Initiative 1997 FDA Modernization Act Integrate system (QSIT) and risk management approaches Focus on greatest risk to public safety Encourage industry to adopt modern and innovative technologies and approaches (science-based policies & standards) Support harmonization efforts within FDA and with other global agencies Workload Resources Worldwide Economics & Globalization The Great Recession = Tight Budgets . Everywhere No longer a cloistered industry of a small number of highly-specialized companies, protected by high capital, technology, and skilled labor barriers to competitive entry High profit margins, increased demand, and a pharmaceutical industry focused on cost reduction and containment have stimulated a surge in the number of new manufacturers and suppliers globally Increase in sourcing from emerging market countries to exploit lower operating costs and government incentives Exploding new technologies

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 6 High Profile Public Health and Safety Events Vioxx Recall Thoroughness of FDA clinical data review process questioned Contaminated Pet Foods melamine contamination (China supply of wheat glutens) Blood Thinner Heparin unknown contaminant (China supply of active API) Toys lead paint and tiny magnets (Multiple Far East manufacturers) Peanuts, Spinach, and Cookie Dough micro. contamination New Sheriff In Town On August 6, 2009, new FDA Commissioner Margaret Hamburg issued a major policy address in Washington, D.C., in which she discussed the Agencys "use of enforcement to promote public health." She stated her intent to "pump up enforcement" at FDA. Under her leadership, the FDA has changed its enforcement posture to one that is more aggressive and forward leaning." Hire investigators Streamline warning letter process and implement a warning letter close-out step Work more closely with its regulatory partners Prioritize follow-up on warning letters and other enforcement actions Be prepared to take immediate action in response to public health risks The U.S. Compliance Environment

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 7 The U.S. Compliance Environment Increased FDA Expectations Inspections Enforcement

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 8 Concepts of Systems-based Control Quality System Inspection Technique (QSIT) Quality by design Transfer of product and process knowledge - design through commercial manufacturing Set specifications, monitor/control processes, investigate discrepancies, and mitigate risks Quality must be built into the product. Testing for Quality is no substitute.

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 9 Quality Facility & Equipment Production Laboratory Controls Packaging & Labeling Materials 6 Systems Company out of control if any one system is found to be out of control 2002 Abbreviated Routine Drug Inspections 2 or more systems Quality system mandatory

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 10 A Closer Look at the Quality System Provide Leadership Expectation and Direction for: Product and process quality Customer value and satisfaction Continuous improvement Design and Resource the Organization to Achieve Success Quality unit on equal standing with other units Structure - decisions of quality and compliance made independent of conflicting operational priorities Qualified personnel Design Process for On-going System Reviews Suitable Adequate and effective Correction and improvement Management Responsibilities

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 11 Appropriate Allocation = Robust Quality System Design and maintain suitable facilities and equipment Acquire materials and services suitable for intended purpose Provide for the development and implementation of suitable systems, processes and controls Identify and develop qualified personnel Education and experience On-going training and education includes GMP and work duties Transfer of knowledge Culture of improvement, encouragement, and engagement Resources A Closer Look at the Quality System

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 12 Design, implement, maintain, and document products and processes Qualifications and validations Procedures and work instructions Critical process parameters and specifications Change Control Examine inputs, materials, and products Perform and monitor operations Robust in-process controls Process capability SPC/PAT Address non-conformities Manufacturing A Closer Look at the Quality System

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 13 Trends Rejections Annual Product Reviews Consumer complaints Deviations and CAPA Change Control Internal Audits and Assessments External manufacturers and Suppliers Risk Management Aid in development of critical process parameters and specifications Mitigate risk = proactive approach to Quality Product & Process Evaluation A Closer Look at the Quality System

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 14 Preparing for the Inspection Why An Inspection ? New Facility Routine: Every 2 years For Cause Follow-up to warning letter Complaints from customers, industry, etc. Recall Effectiveness Check Pre-approval Inspection (PAI) The Federal Food Drug and Cosmetic Act (FDC Act) gives the FDA the authorization to inspect establishments (at reasonable times, within reasonable limits and in a reasonable manner)

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 15 District Offices Atlanta Florida New Orleans San Juan District Offices Dallas Kansas City Denver District Offices San Francisco Los Angeles Seattle District Offices New York New England District Offices Chicago Philadelphia New Jersey Baltimore Minneapolis Detroit Cincinnati FDA Office of Regulatory Affairs Regional & District Offices Denotes Regional Office Preparing for the Inspection

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 16 Preparing for the Inspection Culture Quality and Compliance is the way business is done every single day. The Inspection is your opportunity to communicate and demonstrate this commitment. Know your gaps and your plans to mitigate. Preparing for an inspection is an every day event. 20 Minute Rule You are never more than 20 Minutes away from being fully ready for inspection. Good Housekeeping and 5S Techniques Correct, complete, and organized documents Procedures Perfected & Systems Challenged Inspection Readiness Inspection Conduct Internal Audits Routine Management Reviews Personnel Educated, trained, and engaged Subject Matter Experts (SMEs) Be confident and factual

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 17 Preparing for the Inspection Investigator Interview Techniques for Gathering Information & Data FDA Investigators are Trained to Maximize Disclosure Five Questions Silence (after question answered) Rapid-fire Questioning Restate Answer as Question Same Question Several Different Ways Same Question of Different Employees Questions About Another Area or Job Broad, Open-ended Questions Hypothetical Questions

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 18 Preparing for the Inspection What If the Investigator Talks to Me? Be friendly, polite, and cooperative Project confidence (Dont Brag) youre the expert Show by attitude and actions - inspection is important and serious Understand each question and its context before answering Answer clearly and concisely - make references to site procedures or official documents Answer only the question asked stop talking when the question is answered Its OK to say you dont know Dont get defensive, confrontational, or feel threatened Dont answer for someone else or about other areas

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 19 Confidential Preparing for the Inspection What Can Cause Investigator Suspicion ? Any attempt to delay or stall Unavailable records Refusals to provide records or information Evasive answers Suspicious body language No eye contact or excessive glancing to others Indication of record falsification Changing answers Data that is too good Significant amounts of training completed on the same date Sudden halts in production Obvious worker confusion or erratic behaviors

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SUBGROUP NAME: REGION AND/OR PROJRCT | Confidential | Month 00, 0000 Confidential. For J&J internal use only. | 20 Thank You Questions & Comments ?