SETTING THE STAGE

To better understand the scope of the changes Bayer must undergo to comply with the FDA's New Drug Application (NDA) process (FDA Proposes First Requirement for Electronic Submissions, 2002), a background in the FDA's role is important. The next section provides an overview of the process pharmaceutical firms must follow and the need to meet these guidelines.

New Drug Application Process

The Center for Drug Evaluation and Research (CDER) is a government agency whose job is to evaluate new drugs before they can be sold to the public. The CDER focuses on prescription and over-the-counter drugs, both brand name and generic, to ensure that they work correctly and that the health benefits outweigh the known risks. The information is also made available to doctors and patients to provide them with the information they need to use these medicines wisely.

The regulation and control of new drugs in the United States has been based on the New Drug Application (NDA). Each new drug has been subject to a NDA approval before it is allowed into the U.S. commercial market. Any data gathered during animal studies and human clinical trials become part of the NDA. (About CDER, 2002)

The Food & Drug Administration (FDA) has evolved considerably since its founding in 1938. When the Food, Drug, and Cosmetic Act (FD&C Act) was passed in 1938, NDAs were only required to contain information about an investigational drug's safety. In 1962, the Kefauver-Harris Amendments to the FD&C Act required NDAs to contain evidence that a new drug was effective for its intended use, and that the established benefits of the drug outweighed its known risks. In 1985, the FDA completed a comprehensive revision of the regulations pertaining to NDAs, commonly called the NDA Rewrite, whereby the modified content requirements restructured the way in which information and data are organized and presented in the NDA to expedite FDA reviews (Questions About CDER, 2002; Benefit vs. Risk: How FDA Approves New Drugs, 2002).

Pipeline Products and NDAs

There are many challenges to the FDA mandate. Continued growth and improved efficiency are strategic goals for Bayer. Efficiency remains one of the key factors to continued success and the Pharmaceutical Division has recently implemented many restructuring and cost saving measures to improve not only operating costs, but also the adeptness with which processes are executed. For example, by implementing SAP, an enterprise-wide software solution company-wide, Bayer is trying to improve efficiency by integrating many of its existing systems. The SAP project is a long-term undertaking for Bayer and the complex technological and organizational issues are daunting. Another way Bayer is using information technology is with paper-free workflows (Bayer continues expansion of e-commerce, 2001).

Bayer's New Drug Application (NDA) submission project involves such a paperless plan and the expected benefits of this system include faster submission of NDAs. Slated as a replacement for the outdated and overburdened manual document management system, the updated system will allow for the timely submission of new drugs since the extremely competitive nature of the pharmaceutical industry necessitate faster and more efficient ways of getting FDA approval for these "cash cow" drugs.

To maintain its position within the competitive pharmaceutical industry, it is important to consistently have new development products in the pipeline. Pipeline products are used as criteria for judging the overall status of a pharmaceutical company as much as currently marketed products. Bayer feels they have maintained the desired growth trend through partnerships with high-tech drug discovery companies such as Millennium pharmaceutical (Genomic technology pays off: Bayer and Millennium expand research program, 2001)and most recently, with Aventis CropScience in its crop science division (Bayer acquires Aventis CropScience, 2001). Such partnerships will assist Bayer in reaching its goals for target compounds that may eventually become successful new drugs.

Together with the $1.1 billion in research and development expenditures and 3,880 pharmaceutical employees currently working on research and development for Bayer Corporation, the company is dedicated to building a productive pipeline and maintaining the growth trend of the past. In the near future, Bayer Pharmaceutical is planning on having a better alternative to Viagra™ all while continuing its promising work on early stage compounds that are being designed to combat cancer, asthma, osteoporosis, stroke and metabolic diseases (More blockbusters in the pipeline, 2001).

To its credit, Bayer Pharmaceutical has many successful and valuable FDA approved products on the market. These include Adalat™ and Baycol™ in the cardiovascular segment, Cipro™ and Avelox™ in the infectious disease segment, Glucobay™ for metabolic disorders, Nimotop™ for diseases of the central nervous system, and Kogenate™ to treat hemophilia. Combined, these products helped produce over $10 billion in revenues (see appendix) for Bayer Corporation. Incidentally, the recent bio-terrorist threats in late 2001 have seen the demand for one drug in particular, Cipro™ rise to unprecedented levels. The demand for similar drugs has never been greater and anything that can be done to speed up the NDA process is paramount. For example, as this case was being written, Bayer was in the process of obtaining FDA approval for Vardenafil™ a Viagra™type drug with fewer side effects, smaller doses and quicker response time (Bayer files applications for Vardenafil in United States and Mexico, 2001). This drug may be the biggest development for Bayer since Ciproflaxin™and Aspirin™ Thus, timely filing of the NDA is critical to Bayer to keep pace in the competitive pharmaceuticals industry.

Further complicating the issue is the use of this new electronic document submission system for the first time. While the benefits for management are unquestionable, implementing a system for the first time while compiling a top priority NDA is difficult. The reason for this risk is not strictly monetary, although it is estimated that for every day the NDA is delayed, it will cost the company millions in revenues. Strict version control and validation guidelines have been set by the Food and Drug Administration, and the manual method did not meet these requirements (New Drug Application (NDA) Process, 2001).