The Unintended Consequences of a Drug Quality Rating System

The U.S. Food and Drug Administration (FDA) has been pursuing a framework for a pharmaceutical manufacturing site rating system, the Quality Management Maturity (QMM) program, which aims to improve operations and curb drug shortages.

Greater focus on supplier quality incentives and rewards, including payment for reliably meeting providers’ supply requirements, is key to incenting manufacturers to participate in healthy and sustainable pharmaceutical markets. However, a rating system like the QMM may generate unintended downstream consequences that exacerbate drug shortages and create new operational challenges for U.S. healthcare providers.

A Rating System Approach Picks Winners and Losers

The FDA recently formed a multidisciplinary working group on the QMM rating system, stating that ratings could provide intelligence on production facilities’ performance and robustness, and support flexibility for manufacturers to make post approval manufacturing changes with less regulatory oversight.

Currently lacking are the necessary details for operationalizing and implementing a rating system, including how ratings are managed and how facilities that receive any score under the top rating will be managed in the current regulatory environment.

For instance, such a system may be inherently subject to bias and proposes to assign a rating or ranking to every FDA-approved drug manufacturing site around the globe. Under this model, one single drug with the same dosage and strength produced by same manufacturer with the same National Drug Code (NDC), in theory, could accrue a different quality rating based on the specific facility at which it was produced – creating confusion, little parity and potentially the need for multiple labels to distinguish between the 5-star and 3-star “twin” products.

A quality rating system can also unintentionally select winners and losers in an already-constrained environment – further increasing barriers to entry and discouraging competition. With the likelihood for pricing variability on high versus low-rated products, many lesser-rated manufacturers may make the difficult decision of reducing production or exiting the market entirely – two actions that can, and have, triggered drug shortages.

Click here to read the full byline published in Healthcare Innovation