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Pharma CEO On Opioids, Medication Prices And Overregulation

Anthony Tabasso, CEO of KVK Tech, talks with Chief Executive about the challenges in manufacturing a controlled substance, a highly-regulated industry, and manufacturing generic medications with lower price pressure.

You had mentioned manufacturing and expansion concerns. And I know you guys are all about manufacturing in America, whereas I know the trend in the last 10 years or so has kind of been overseas, overseas, overseas. Why is it so important for you guys to manufacture in America?

The big idea for us, the concept has been transparency, right? The number one goal in pharma is, or at least it should be, is quality. If you look at our core values as an organization, we have safety, compliance and productivity. And when we say compliance, we mean regulatory compliance to the FDA’s manufacturing standards. When we look around the industry, and I don’t know how familiar you are with pharma, but when the FDA inspects facilities all the time to make sure that they’re in compliance with the FDA regulations. And if they find that they’re not, they’ll issue a public document called a 483. And a 483 is a summary of what the FDA inspectors found at a particular site. And it basically tells management of that company, “Here are the deficiencies we found and the things you need to fix.”

If the deficiencies are sufficiently serious or if they’re not addressed when the FDA asked them to be addressed, that 483 can mature into something called a warning letter, which is a more serious action by FDA where they say, “Hey, we think that these violations are bad enough that we’re going to do something about it.” So, we started to see a trend of warning letters getting issued to pharma manufacturers overseas. And the issues that we saw started to repeat themselves. And among others, you saw kind of a generally lax approach to good manufacturing practices and companies that were putting productivity and getting the product out ahead of following the standard procedures.

[Issues] kept coming up from manufacturing plants overseas. And we saw this as an opportunity. It was an opportunity to basically leverage the talent that we have here in the U.S. and be able to manufacture these products with high transparency with the FDA and to our customers, right? Because one thing is we’re selling to the major wholesalers and even the smaller wholesalers and GPOs. Maybe they send an auditor to you once every two years, but when that auditor goes overseas, it’s very difficult for him or her to get a good sense of what’s going on there. But our view is, “Hey, come and see us anytime you want because we’re manufacturing here in close proximity to you guys and we’re doing it with a total emphasis on quality,” right? Because that’s the way that we compete.

The biggest concern for the wholesalers and the customers in our industry, right next to price, is supply chain reliability. So, if a plant overseas has an FDA problem and as a result they can’t ship products for six months, that’s kryptonite to a customer, right? They don’t want to have to deal with that. It makes their life more difficult. They’re going to have to pay more. The pharmacies are going to be out of stock, and they can lose patients to the chain across the street and it’s very difficult to convert those patients back. So, supply chain interruptions are kryptonite to people in our industry and we saw this as an opportunity, that if we can go in and if we can maintain 99% reliability because of our dedication and quality, and we can do that right in our backyard, that lets us compete with multi-billion dollar international companies and do it on the same footing. And that’s why you see that in the products that we have out in the marketplace, we have market share that’s equal to or greater than these household name generic manufacturers.

Final word of advice?

I would say to anyone in this space or in any industry is, invest in quality first. If your focus is on quality, everything else will take care of itself.

Read more: Newcastle Systems CEO On Being An “Orchestra Conductor”


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