When examining the justification of automation investments there are tangible and intangible costs and benefits. One of the most intangible, yet possibly the most important justifications for implementing a robust Calibration and Maintenance program at your facility is the cost of non-compliance to FDA Good manufacturing Practices (GMP). In the first part of this series I listed the several intangible costs of non-compliance:
- Remediation Costs
- Product Recalls
- Plant Closings
In analyzing the costs of non compliance the stakes can be very high, not just financially, but personally to those involved, including senior management. In this post I cover 3 more costs that should be considered in your evaluation. These costs are large and can dwarf any return on investment calculations covering more tangible items like productivity gains.
Stock Share Price
If you think the cost of closing a revenue generating plant is expensive, take a look at the hit a major pharmaceutical company’s stock price takes after a major FDA enforcement announcement – it can be measured in Billions of dollars. This reflects many of the other contributors already listed, but most importantly the decrease in profitability the company must absorb.
If circumstances are warranted, the FDA, under the power of the Consent Decree, has the ability to fine companies with serious GMP compliance issues. These fines can easily run in the 100’s of millions of dollars.
Nothing puts a damper on your career like having your boss go to prison! There have been some cases where the compliance issues were deemed fraudulent and under the Park Doctrine the company executives as individuals were held accountable.
While most manufacturing and quality investments need documented justification real costs and benefits, the intangibles around the costs of non-compliance need to be addressed and positioned. In reality, these costs come about because of risks undertaken either consciously or not. As professionals in our industry we have the obligation to at least bring these to the table.
What role does the cost of non compliance take in your organization?
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