Building Regulatory Affairs: Efficiency Quadrant that Drives Spend

Author:

Best Practices, LLC has recently completed “Benchmarking Regulatory Affairs Staffing & Performance Excellence in Medical Devices,” a new operational benchmarking study.  After analyzing the data and probing the experience of 30 regulatory affairs (RA) organizations from large and complex companies (such as Johnson & Johnson) to smaller organizations (Graftys), we developed a new matrix showcasing the factors that are critical in shaping RA resourcing throughout the life sciences sector.

The matrix is divided into four quadrants.  Each quadrant identifies a distinct set of factors which should drive the resourcing decisions of management in order to maximize the efficiency of the RA function across the medical device space and produce better regulatory, compliance and business outcomes.

The “efficiency quadrant” (highlighted in green) is based on the practices that are:

  1. Within the organization’s span of control, AND
  2. Lead to the relative reduction or minimization of RA total expenses.

 

Regulatory Affairs Efficiency Matrix:  Key Resources Drivers

Internal Factors External Factors
Decrease Spend
  • Timely withdrawal of non-competitive products to reduce submission maintenance costs
  • High levels of automation or superior RA process management
  • Separate corporate regulatory group
  • Focus on specialists to benefit from the economy of scope
  • Offshoring & outsourcing
  • Reduction of FDA submission review times
  • Introduction of FDA “feedback” system to pre-empt incorrectly filed submissions
Increase Spend
  • Portfolio complexity, including higher number of PMA filings
  • High number of regulatory warnings and audits
  • Recent acquisitions
  • Lack of qualified staff to fill challenging roles in specific markets
  • High number of maintenance submissions
  • Number of countries requiring submissions
  • Increasing regulatory costs:  MDUFA has increased by CAGR of 25% over past 5 years

 

Here are the key internally manageable practices that emerge from the highlighted “efficiency quadrant” that can enable savvy RA leaders to significantly reduce operational expenditures:

 

  1. Timely withdrawal of non-competitive devices to reduce submission maintenance costs.

    Once a product is launched, the role of the RA organization is often marginalized or forgotten by management teams more focused on market results.  However, even after regulatory approval, RA groups are still obliged to collect and report data pertaining to products in the market.  To avoid resource waste, RA leaders should acquire P&L data on each of the product category – and highlight the added cost of submission maintenance to commercial colleagues.  Products that are near the breakeven line should be scrutinized in light of built-in submission maintenance costs.

 

  1. High levels of automation.

    Interestingly, according to our research, some of the companies with the most highly complex products portfolios also maintained high device safety standards despite low staffing levels.  Further analysis of this group revealed that narrowness in a portfolio – despite depth – and a high degree of automation in submissions allowed minimum staffing on the submission of Class III devices.  Those RA groups that operate only within, for example, one therapeutic area were able to maintain a higher level of automation than those groups at organizations with broader portfolios.

 

  1. Staffing specialization to benefit from the economy of scope.

    With respect to the staffing specialization, companies can be divided into three general groups:

  1. Highly specialized, where pre- and post-market specialists represent over 80% of total RA staff
  2. Generalized, where generalists represent over 80% of total staff
  3. Mixed, where generalists and specialist each represent about half of the staff

On average, 50% of staff in RA organizations consists of generalist, 30% of pre-market specialists and 20% of post-market specialists. Those which deployed mostly specialized or mostly generalized staff were able to benefit from the economy of scope; these companies frequently achieved total spending on staff.  Specialized staff typically receives higher pay, but are also more productive on average. With less focused skillsets, generalists earn lower salaries, if properly trained and developed can deal meet a wide range of critical RA responsibilities effectively.  Typically, companies that fail to strategize around the optimal mix of staffing – and tend to higher simply based on current market or product-specific needs – are saddled with notably higher staffing spend.

 

  1. Offshoring and outsourcing.

    While our research did not link higher levels of outsourcing with lower RA expenses, companies who retain outside expertise are better positioned to navigate in key foreign markets, and smoothly adjust, for example, to new regulations around e-submissions and changes in regulation (e.g., Europe).

 

  1. Separate corporate regulatory group.

    According to our analysis, a separate regulatory group constituted anywhere from 1% to 29% of total regulatory staff, across the industry.  Such redundancy in total regulatory staff is reflected in higher headcount costs.  However, central groups are often better aligned and equipped to standardize processes, share lessons learned, guide on the corporate strategy and centralize other critical information – activities which if successfully harnessed can easily be worth the larger RA staffing investment.  This dynamic is borne out clearly in one final metric we uncovered:  companies with separate corporate regulatory groups achieved a 20% lower total spend than those who operated without such a group.

One Response to Building Regulatory Affairs: Efficiency Quadrant that Drives Spend

  1. I did not know that companies with separate corporate regulatory groups achieved a 20% lower total spend than those who operated without one. This seems like it could make a big difference to find someone to take care of your regulatory affair services. Finding a service that will have trained staff who know how to take car of it could give you a chance to focus on other aspects of your business.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: