WASHINGTON _ CEOs of cash-starved biotechnology companiesmay be tempted to cut back their regulatory affairs departments, butexperts warned here on Tuesday that regulatory compliance is nowmore important than ever.At a Food and Drug Law Institute conference, "Biologics Update '94,"attorney and regulatory specialist Anthony Howard said that the toughfinancing environment in the biotechnology industry has coincidedwith a reinvigoration of FDA enforcement and compliance activities.The two clashing realities could spell disaster for companies thatminimize regulatory issues."Under financial constraints, it's easy for a corporate culture to developthat disregards regulatory concerns," said Howard, who is a partnerwith the Washington-based law firm King & Spalding. "Managers anddirectors may be much more concerned about the financial impact ofcompliance than they are about the regulatory impact of non-compliance."The daily activities of a company's regulatory personnel _ meticulousrecord-keeping, timely report filing, expert data management andextensive Good Manufacturing Practice (GMP) controls on productbatches produced for clinical testing _ are both unglamorous andcostly pursuits.Howard, who counts at least half a dozen biotechnology companiesamong his clients, said that young companies short on cash areloosening controls on the conduct of clinical trials and, in some cases,avoiding the creation of regulatory affairs or quality assurancedepartments altogether.Companies that are living "hand-to-mouth" to pay off operationalexpenses while simultaneously attempting to meet the expectations ofventure capitalists who want to realize quick returns on theirinvestment are the most vulnerable. Howard said he's seen examples ofstart-ups where an investigational new drug application was filed and acompound entered human testing well before any corporate regulatoryframework was in place."The only companies I've ever seen that were successful in movingfrom the start-up to the product license application (PLA) stage havebeen those that hired an experienced, well-qualified regulatory affairsperson in the first round of staffing," Howard told BioWorld. "In thelong run, it's easier and quicker to do it right the first time."Howard said that individuals at the top of the regulatory affairs heapmay expect high salaries and vice presidential positions, but that theinvestment is well worth it. "The initial regulatory compliance personcan determine the course of the entire company," Howard said.But even a regulatory guru in-house can't save a company whosemanagement ignores and devalues regulatory concerns. Somecompanies suffer from "shoot the messenger" syndrome, creating acorporate culture where good regulatory news is welcomed by topmanagement while bad news is punished. Such an atmosphere isdeadly for a frank discussion of regulatory problems, said Howard.When Commissioner David Kessler took office in December 1990, theFDA was still reeling from the generic drug scandal of the late 1980s(the scandal involved bribing of FDA officials and falsification of databy generic drug manufacturers). As a result, Kessler pledged thatregulatory enforcement and compliance would be a top priority for theagency.The Generic Drug Enforcement Act of 1992, although aimed at genericdrug manufacturers, contains provisions that apply to all drugmanufacturers, Howard said. These provisions demonstrate the seriouslegal responsibilities assumed by regulatory staff. The law prescribesmandatory debarment of any individual convicted of a felony forconduct "relating to the regulation of any drug product." (Debarmentmeans the person may not provide services in any capacity to acompany that has an approved or pending drug product application.)The preparation of PLAs is thus a very serious business, Howard said.And the FDA has fortified its efforts to make sure it's done right. TheFDA's "validity assessments" of all PLAs involve an audit ofsubmitted data and collateral records to establish the authenticity,accuracy and completeness of the data. If a PLA is seriously flawed,regulatory personnel can be debarred and a company can be put onregulatory hold until the matter is resolved.Living proof of Kessler's commitment to enforcement arrived atTuesday's conference in the person of James Simmons, acting directorof the office of compliance at FDA's Center for Biologics Evaluationand Research (CBER). Simmons began his enforcement career at FDAin 1961 as a field investigator in the agency's Los Angeles districtoffice. He is often referred to by industry insiders as a "hard-liner."If confirmation proceedings run smoothly, Simmons will becomedirector of CBER's compliance efforts shortly. He echoed Howard'sadmonitions to biotechnology companies."The biotech industry represents a subset of the pharmaceuticalindustry, mostly start-up research-intensive companies that may nothave extensive regulatory staff but that hold great promise formedicine," Simmons said. "That promise may be compromised unlessthese companies adhere to GMP requirements."Indeed, Simmons is so concerned that young biotechnology companiesdon't fully understand GMP regulations that CBER plans to sponsor anindustry workshop on the subject in 1995. n

-- Lisa Piercey Washington Editor

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