The R&D Tax Aspects of Pharmaceutical Packaging
Pharmaceutical-Packaging-2
Pharmaceutical packaging must balance a
myriad of complex considerations. Besides the usual
requirements that apply to any consumer product,
pharmaceutical packagers must comply with very specific legal
and safety regulations.
In addition to simple issues such as the development of
effective designs and the ability to communicate with
consumers, pharmaceutical packaging companies must respond to
critical concerns, such as fighting counterfeits, ensuring
drug integrity, balancing child-resistance and elderly
accessibility, and responding to market trends that include
sustainability, smart packaging, and customization.
Faced with such a varied host of challenges, pharmaceutical
packaging firms must continuously resort to innovation. This
article will discuss how federal R&D tax credits can help
these companies succeed in a highly dynamic and increasingly
competitive market.
The Research
& Development Tax Credit
Enacted in 1981, the Federal Research and
Development (R&D) Tax Credit allows a credit of up to 13
percent of eligible spending for new and improved products and
processes. Qualified research must meet the following four
criteria:
- New or improved products,
processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Eligible costs include employee wages, cost of supplies, cost
of testing, contract research expenses, and costs associated
with developing a patent. On December 18, 2015, President
Obama signed the bill making the R&D Tax Credit permanent.
Beginning in 2016, the R&D credit can be used to offset
Alternative Minimum tax and startup businesses can utilize the
credit against up to $250,000 per year in payroll taxes.
Pharmaceutical
Packaging Overview
The packaging industry plays a unique and
strategic role in the healthcare market. Not only is it
responsible for providing life-saving drugs, medical devices,
and medical treatments but it must also ensure safety,
identity, convenience of handling, and proper delivery.
According to an article published by the Journal of Pharmacy
and Bioallied Sciences and entitled “Recent trends and future
of pharmaceutical packaging technology”, there are five main
functions to pharmaceutical packaging:
According to research firm Transparency Market Research, the
global pharmaceutical packaging market is expected to grow at
a CAGR of 5.6 percent from 2012 to 2018, eventually attaining
an overall market value of $73.04 billion in 2018.
| Containment |
The containment of the product is
the most fundamental function of packaging. The design
of high-quality packaging must take into account both
the needs of the product and of the manufacturing and
distribution system. This requires the packaging: not
to leak, nor allow diffusion and permeation of the
product, to be strong enough to hold the contents when
subjected to normal handling and not to be altered by
the ingredients of the formulation in its final dosage
form. |
| Protection |
The packaging must protect the
product against all adverse external influences that
may affect its quality or potency, such as light,
moisture, oxygen, biological contamination, mechanical
damage and counterfeiting/adulteration. |
| Presentation & Information |
Packaging is also an essential
source of information on medicinal products. Such
information is provided by labels and package inserts
for patients. |
| Identification |
The printed packs or its ancillary
printed components serves the functions of providing
both identity and information. |
| Convenience |
The convenience is associated with
product use or administration e.g., a unit dose eye
drop which both eliminates the need for preservative
and reduces risks associated with cross infection, by
administering only a single dose. |
A recent report by Transparency Market
Research predicts that the global pharmaceutical packaging
market will grow at a compound annual growth rate of 5.6
percent between 2012 and 2018, eventually attaining an overall
market value of $73.04 billion in 2018.
Despite favorable prospects driven by the expansion of
generics and a growing demand for customized treatments,
pharmaceutical packagers must face various challenges, which
include addressing product requirements while ensuring that
customer, marketing, retailer, and supply chain needs are
satisfied.
The following sections present an overview of recent trends
for pharmaceutical packaging and the strategic role of
innovation in this ever-evolving market.
Materials and
Processes
The use of innovative packaging materials
can greatly contribute to extending the lifecycle of
pharmaceutical products. Packaging integrity, for instance, is
crucial to maintaining a drug product’s quality throughout its
shelf life. Major challenges include the protection against
moisture, light, oxygen, and mechanical forces.
Nano-enabled packaging is an important area for
innovation. When incorporated in the development of
pharmaceutical packaging, nanotechnology applications can
enhance plastic materials' barriers, enable active components
to deliver functional attributes beyond those of traditional
active packaging, and help implement sensing and
signaling of relevant information.
Nanotechnology can make objects and films lighter, stronger in
terms of mechanical and thermal performance, and less
permeable to gases. In the context of packaging solutions,
nano-enabled materials can enhance drug safety by controlling
microbial growth and delaying oxidation as well as improving
tamper visibility and anti-counterfeiting.
Using nanotechnology, Singapore-based Tera-Barrier Films (TBF)
has developed a new plastic film that is thinner than aluminum
foil but as effective as an air and moister barrier. The
innovative material features an encapsulated nanoparticle
layer, thinner than a human hair, that actively absorbs and
reacts with water and oxygen molecules to trap them and avoid
permeation.
It offers both transparency and stretchability, a combination
not possible with aluminum-based packaging materials. By
bridging the gap between aluminum foil and transparent oxide
films, TBF expects to pioneer a new generation of packaging
materials that can prolong the shelf-life of pharmaceuticals.
In addition to new materials, innovative processes are also
crucial for the pharmaceutical packaging industry. One example
is the blow-fill-seal (BFS) technology, a process in which
plastic containers are formed, filled, and sealed in a
continuous process within a sterile enclosed area inside a
machine, with no human intervention.
Combining flexibility in packaging design, low operating
costs, and a high degree of sterility, this superior form of
aseptic processing offers considerable advantages over
conventional aseptic filling or preformed containers. It is
particularly suited for biologics, proteins, and other complex
solutions that cannot be exposed to high temperatures and,
therefore, cannot undergo conventional terminal sterilization.
Headquartered in Somerset, New Jersey, Catalent Pharma
Solutions has developed the ADVASEPT technology, an advanced
aseptic filling solution for biologics, parenteral,
respiratory, and other products. The innovative, glass-free
vial design leverages automation and engineering controls to
optimize the BFS process. Within just 15 seconds, containers
are formed, filled, and sealed in ISO 5 aseptic conditions.
The issue of temperature-sensitive drugs also calls for
innovative materials and processes, not only in primary
packaging, but throughout the supply chain. Fluctuations in
temperature can directly affect a product’s stability and its
therapeutic effectiveness.
According to the 2014 Global Cold Chain Report, more than 50
percent of the world’s best-selling drugs will require cold
chain protection by 2016. Driving forces include the expanding
number of biologics, more attention to
controlled-room-temperature distribution, and rapidly growing
drug sales in emerging markets.
The Global Healthcare Cold Chain Logistics Market Report &
Forecast (2013-2018) by the IMARC Group, predicts an increase
in the market value of cold chain logistics from $7.3 billion
in 2013 to $11.4 billion by 2018.
Manufacturer of labeling and packaging solutions, Avery
Dennison has created a variety of products for the
pharmaceutical market. The company offers cryogenic labels
capable of withstanding temperatures of -196°C to +90°C, and
performing in conditions of dry ice, steam autoclave, and
gamma radiation.
In addition to sustaining the flexibility and adherence
required when using liquid nitrogen during the cryogenic
process, the labels are resistant to chemicals commonly found
in clinical environments, including Xylene, Isopropanol,
Dimethyl Sulfoxide, and 10% Hydrochloric Acid.
A
recent article by the Pharmaceutical Technology Magazine
points out to the expected trends in temperature-controlled
logistics, namely, the growth of pre-qualified shippers, more
sophisticated supply chain services, rising interest in
reusable packaging, and advances in temperature-monitoring
technology.
Nanotechnology, blow-fill-seal, and cold chain logistics are
just a few aspects that drive materials and processes
innovation for pharmaceutical packaging. Companies investing
in these and other innovative technologies should take
advantage of federal R&D tax credits.
Design Trends and
Challenges
The design of pharmaceutical packaging
systems must overcome significant challenges. Balancing
child-resistance and accessibility for the elderly is one of
them. Simply put, a package must prevent the accidental access
and poisoning of children while making sure that adults,
including seniors, can easily open and close it.
Innovative design is key to finding this delicate balance. An
interesting example comes from Australian-based multinational
packaging company Amcor, which recently introduced its
patented Amcor Opening Feature (AOF) for child-resistant
blister lidding.
With AOF, blister contents are easily accessed with a targeted
push-through motion rather than the traditional peel or
peel-push method often required for child resistance.
In addition to enhancing both senior friendliness and child
resistance, the innovative solution is also a more sustainable
alternative to conventional ones. AOF Blister Lidding allows
the use of a two-ply structure compared to a standard
three-ply structure. Because peel tabs are not required, total
package size can be reduced up to 40 percent.
Responding to new regulation that requires child-resistant
packaging for any over-the-counter or prescription products
containing imidazolines equivalent to 0.08 milligrams or more,
Buena, New Jersey-based Comar LLC launched the SecureCap
closures.
Specially designed to safely package and dispense eye drops
and nasal sprays, the solution consists of a two-piece
push-and-turn proprietary technology that combines effective
child-resistant and senior-friendly performance. Keeping
in mind that a successful solution should also be easy to
implement, SecureCap closures were carefully designed to
accommodate industry-standard finishes on plastic dropper
bottles and metered dose sprayers. They can be used with
existing materials and applied with existing capping equipment
on most filling lines, saving manufacturers’ time and money.
In addition to major design challenges, new market trends
should also guide pharmaceutical packaging innovation
priorities. An important example is the emergence of
customized treatments, focused on user-centered drug delivery.
The consolidation of a personalized approach to medicine,
embodied by President Obama’s Precision Medicine Initiative ,
opens the way for a transition in the pharmaceutical industry,
from supply-driven to demand-driven. This scenario
should bring two major consequences. First, it should generate
a surge in alternative drug delivery methods, including
injectable, transdermal, pulmonary, and nasal.
According to a recent analysis from Frost & Sullivan,
while demand for tablets and capsules will remain important,
the use of pre-filled syringes and inhalers will surge, due to
their ease of use and improved customization. Second, by
advocating the spread of tailor-made treatments, the
personalized medicine approach should encourage a
customization of packaging, specially designed to target
specific individuals or groups.
Pharmaceutical packagers must invest in new technologies that
enable the sort of just-in-time manufacturing that a
demand-driven industry requires. Additionally, they must pay
increasing attention to user interface.
In this context, some believe that the use of cutting-edge
technology, such as 3D printing, is not as farfetched as it
may sound. According to Peter J. Schmitt, Managing
Director at Montesino, we can envision walking into a pharmacy
and having a 3D printer (or similar device) produce a
completely customized package in a not too distant
future.
Combination Products
Besides responding to a growing demand for
customized treatments, packaging companies must keep up with
another important pharmaceutical trend, namely, the
multiplication of combination products.
A
recent study by Transparency Market Research defines
drug-device combination products as “individual products
comprising of two regulated components, an active
pharmaceutical ingredient and medical device that are
chemically or physically combined to produce a single product.
The drugs that are present within the device are either
surface-coated or impregnated.”
The same report estimates that the global drug-device
combination products market will grow at 7.9 percent CAGR
between 2013 and 2019. Driven by factors such as the rising
incidence of cardiovascular diseases, pain causing anomalies,
colorectal cancer, diabetic retinopathy, asthma, prostate
cancer, obesity, and a rapidly growing geriatric population,
combination products are expected to have major impact on the
overall healthcare market.
Combination products such as insulin injector pens,
metered-dose inhalers, transdermal patches, and pre-filled
syringes add convenience and save users’ time and effort.
According to Michigan State University Ph.D. and assistant
professor Laura Bix, however, such products add significant
complexity to the packaging system. In some cases, the device
itself becomes the primary package for the drug product.
Device manufacturers must then consider a host of factors,
such shelf life efficacy, moister permeation, and drug
stability.
Also, packages for combination products must be able to
maintain a sterile environment for the drug-device
combination. Designers have to make sure that all materials
are compatible with the sterilization process, so that they
are not adversely affected by it. They must also consider the
package’s geometry and size, which can affect the
sterilization process.
On January 2015, the FDA published a draft guidance that
clarifies current good manufacturing practice (cGMP)
requirements for combination products. The document expands on
the definitions of drug containers and closures versus
delivery devices, as reproduced bellow:
“If the article merely holds the drug, it is only subject to
drug cGMPs as a container or closure. An article that does not
merely hold or contain the drug, but also delivers it, is not
merely a container or closure and may also be subject to the
Quality System regulation.”
Sustainable Packaging
Pharmaceutical packaging must respond to a
variety of complex demands, among which is a growing concern
about its environmental footprint. Responsible sourcing,
resource optimization and waste reduction, water conservation,
energy efficiency and the use of renewable energy, along with
reduced greenhouse gas emissions and pollution, are examples
of new inescapable priorities.
The upstanding challenge is to meet such priorities while
maintaining a package’s safety and accessibility. Innovation
in eco-design can help companies enhance their sustainable
practices while increasing profitability.
Based in Newark, New Jersey, Keystone Folding Box Company is
the creator of award-winning sustainable compliance packaging
Ecoslide-RX. The child, resistant, senior-friendly package is
made from a hundred percent recyclable material; it contains
no plastic in its secondary packaging and, unlike other
paperboard compliance packs, requires minimal film and
foil. The solution is suited for prescription products,
physician’s samples, and clinical trial materials. It is also
more affordable than most blister packages and can be
efficiently produced via high-speed automation lines.
Adopted by an increasing number of organizations, Ecoslide-RX
was initially introduced at Wal-Mart pharmacies in 2012. On
January 6th, 2015, the retailer announced the incorporation of
the new Ecoslide-RX 2.0, with a host of upgraded features.
Many pharmaceutical and medical device companies are
committing to sustainable practices and expect their packaging
partners to do so as well.
With operational headquarters in suburban Minneapolis,
Minnesota, medical technology and services company Medtronic
has set goals to reduce packaging size and weight, reduce
packaging toxicity, replace paper manuals with electronic
manuals or compact disks, reduce packaging waste in landfills,
and promote recycling.
The company’s design teams developed packaging that no longer
contains PVC and uses much less material, while still meeting
all international codes for sterile medical equipment.
The environmental benefits resulting from Medtronic’s efforts
include an annual reduction of over 500,000 pounds of
packaging waste and paper, and another potential 190,000
pounds if packages are reused. The company has realized over
$2.3 million in cost savings in a two-year period.
British multinational pharmaceutical company GlaxoSmithKline
has also employed a variety of packaging sustainability
solutions, from reducing carton board thickness and using less
ink, to introducing “zero waste-to-landfill” programs at its
manufacturing sites.
Clinton, Tennessee-based Pharma Packaging Solutions has
advocated source reduction substrate options, leading a number
of international brands from three-ply corrugated materials to
strong, single-sheet, direct print substrates. This simple
switch can go a long way in meeting a company’s sustainable
and economic needs.
Sustainable packaging efforts can reflect on a company’s
profitability, by reducing overall production, shipping, and
warehouse costs. Moreover, such efforts can directly affect a
company’s ability to do business.
An increasing number of customers in the healthcare market are
implementing Wal-Mart-like sustainability programs.
Sixty-year-old healthcare provider, Kaiser Permenante, for
instance, has been a pioneer in using scorecards to evaluate
the environmental footprint of its partners.
The pharmaceutical industry must be ready to respond to a
growing concern with packaging sustainability. Innovative
efforts to reduce the environmental footprint of packages can
positively influence the bottom-line, even more so when
supported by federal R&D tax credits.
Smart Packaging and
Medication Adherence
The Centers for Disease Control and
Prevention (CDC) defines medication adherence as “the
patient’s conformance with the provider’s recommendation with
respect to timing, dosage, and frequency of medication-taking
during the prescribed length of time”.
The organization estimates that 20 to 30 percent of drug
prescriptions are never filled, while medication is not
continued as prescribed in nearly half of the cases.
Non-adherence causes 30 to 50 percent of treatment failures
and 125,000 deaths annually, resulting in an economic burden
of $100 to $289 billion per year.
Pharmaceutical packaging innovation can greatly contribute to
fostering adherent behaviors. Effective packaging solutions
must be able to communicate with users, driving patient
compliance and reducing errors. This is
increasingly made possible by the incorporation of innovative
technologies that remind patients to take their medications
and even allow doctors to remotely monitor the use of
prescribed drugs.
The so-called “smart” packs, for instance, carry a microchip
capable of capturing use-related data. The devices register
when a medicine is taken; remind when the next dose is due
(they do so by bleeping at prearranged times); provide
features, such as the expiration date, storage conditions, and
tamper alerts; and even record responses to simple monitoring
questions (e.g. “is your blood sugar normal?”).
Collected data is then downloaded into reading software and
used to build a record of individual adherence. Using Near
Field Communication , RFID , Bluetooth, or even cellular
networks, smart packages can easily establish communication
with a variety of gadgets.
A
number of electronic adherence monitoring solutions are being
developed. Headquartered in Richmond, Virginia, global
packaging company MWV has used cutting-edge technology to
create the Cerepak Smart Adherence Packaging.
Targeted at the clinical trials market, the innovative package
contains a tiny, hidden microprocessor and printed, conductive
inks that record the date, time, and location of each pill
removed from it. Cerepak tracks the removal of each specific
tablet, which is critical for dose titration (pill dosage
changes) and for regimens with a mix of placebo and active
drugs.
Additional features include “prompt” technology that uses
light and vibration to help patients remember to take
medication and optional one-push-button questionnaires to
record Quality of Life (QOL) feedback (pain, insomnia, thirst)
at each dosing event.
The company offers a complete software platform for the
uploading of information. Using Near Field Technology, both
dosing and questionnaire data are immediately sent for
analysis.
Even though the core technology already exists, further
research and development efforts are necessary to lower
manufacturing costs and enable large-scale adoption of smart
packages. In addition to the unit costs of production, the
implementation of back-end systems, and the need for
regulatory approval are also a barrier.
The creation of standardized datasets that enable an interface
between medical devices and electronic prescribing systems is
also a necessary step for widespread implementation. A world
standard for electronic adherence data collection is crucial,
as it will allow manufacturers to compete with each other on
features and not on technical standards.
A
global data standard will enable the pre-programming of smart
packs based on the medicines they carry. One can also envision
pharmacies performing in loco programming, based on specific
monitoring requirements or agreements with health
commissioners.
eHealth initiatives for medication adherence should become a
major part of the pharmaceutical future. In this scenario, the
development of smart packages is an important step that could
give companies invaluable comparative advantages. R&D tax
credits could be a strategic tool in supporting smart
packaging pioneers.
Conclusion
From emerging sustainability requirements
and new customization demands to the implementation of smart
packaging and the rise of combination products, pharmaceutical
packaging companies must respond to a host of complex market
trends. Federal and state R&D tax credits can help pave
the way to the future of pharmaceutical packaging.
