Importance of Quality Agreements in the Pharma Supply Chain

Quality Agreements and the Pharmaceutical Supply Chain

By Paul Eichholz

Over the past several years, outsourcing within the pharmaceutical supply chain has become common. The rise of the “virtual” pharmaceutical company has resulted in a complex supply chain, with the same FDA requirements regarding Good Manufacturing Practice (GMP) compliance for both the virtual company and their manufacturers, packagers, laboratories, and component suppliers.

Importance of Effective Quality Agreements

The failure of the owner and the contracted facility to clarify goals, expectations, and responsibilities of the drug product can be detrimental to both organizations. Failing to complete these activities could potentially leave the organizations vulnerable to:

  • Potential failure to comply with cGMP requirements
  • Broken contracts
  • Failure to supply penalties
  • Shortages of drug product or critical components
  • Lost business

An effective quality agreement assists in mitigating these potential risks. Despite the fact that quality agreements are not mandatory per current cGMP requirements, they can often be more effective in improving quality systems and maintaining consistency in quality within the supply chain. Effective quality agreements also increase communication between organizations, resulting in more frequent interactions with quality assurance groups, giving each organization an improved sense of their quality focus.

FDA Guidance

FDA issued the draft guidance for industry entitled, “Contract Manufacturing Arrangements for Drugs: Quality Agreements” in May 2013. FDA’s guidance relies heavily on existing guidance documents, such as ICH Q7 Good Manufacturing Practice Guidance for Active Pharmaceutical Ingredients, ICH Q9 Quality Risk ManagementCH Q9 Quality Risk Management, and ICH Q10 Pharmaceutical Quality Systems.  The recent guidance incorporates specific elements of each ICH guidance as it applies in an outsourced supply chain, and then expands on each of those elements. The document applies to the manufacture of Active Pharmaceutical Ingredients, finished drug products, combination products, and biologics.

The guidance defines manufacturing to include the processing, packaging, holding, labeling operations, testing, and operations of the quality unit. It is important to note that FDA deems the group or party that introduces a drug into interstate commerce as the owner of the drug. Regardless of its marketing status, any outside firm that performs any manufacturing operations for the owner of the drug is considered a contracted facility.

FDA’s Expectations for Contract Facilities

Drug owners are responsible for assuring that any drug introduced into interstate commerce is neither adulterated nor misbranded because of the actions of their selected contracted facility. This is an important statement from FDA, making it clear that even a virtual pharmaceutical company, with perhaps one or two employees, is ultimately responsible for any drug placed into interstate commerce. Meeting this expectation requires a risk based approach, including taking the following minimum actions:

  • Conduct a thorough risk assessment that analyzes the appropriate controls for the supplier, based on the services or product provided by that supplier;
  • Assess the suppliers ability to perform the services required through audits, testing of components and supplies, and a review of previous issues or regulatory enforcement activities such as FDA 483’s, warning letters, or consent decrees;
  • Suppliers’ performance should be monitored, documented, and reviewed frequently. Owners should ensure that any issues are addressed adequately and expeditiously; and
  • Ensure appropriate written quality agreements are completed between all parties regarding responsibilities for GMP activities. A table or chart of responsibilities for each organization is recommended.

Critical Elements of a Quality Agreement

A well written quality agreement properly describes the various responsibilities between the owner of a drug product and a contracted facility. A one size fits all approach should not be utilized when negotiating quality agreement. Each quality agreement should be written to assure that the appropriate cGMP requirements and responsibilities for that contracted facility are covered, for example a quality agreement between a the owner of a drug product and an API manufacturer should cover the expectations in ICH Q7. Clear expectations regarding communication protocols for issues, concerns, and critical contact information for each firm should also be included. A quality agreement between a drug product’s owner and a contract manufacturing organization would typically include the following sections:

  • Purpose/Scope
  • Product(s) Governed by the Agreement
  • Contact Information
  • Agreement Terms and Expiration
  • GMP Compliance
  • Quality Control
  • Quality Assurance including:
    • Deviations/Investigations
    • Product Disposition Responsibilities
    • Complaint Handling
  • Regulatory Compliance including:
    • Handling of Regulatory Agency Inspections
    • Owner’s Right to Audit
    • Handling of Recalls
  • Dispute Resolution
  • Change Control/Change Management
  • Process and Cleaning Validation
  • Annual Reporting Support

A quality agreement does not excuse any of the contracted organizations from meeting cGMP or other regulatory requirements, even if those requirements are not specifically addressed within the agreement. Quality agreements provide an important tool for managing the complicated supply chain utilized in contract manufacturing of drug products, and ensures those drug products possess the quality, safety, purity, and effectiveness required by cGMP regulations.

Imagine having a drug product safety issue in the field that requires a recall to be performed, but your firm doesn’t have a quality agreement with the manufacture of the product. How would your firm handle the situation? What would you do if the contract manufacturer didn’t agree that a recall was necessary? Having an effective quality agreement eliminates those concerns and challenges.

Do you have quality agreements with your contract manufacturers, contract packagers, contract laboratories, and component suppliers? If not we can provide assistance and support in developing and implementing quality agreements with your suppliers throughout your supply chain. For information on how The Weinberg Group can assist your organization in addressing pharmaceutical supply chain cGMP compliance, contact us today.

Paul Eichholz, is Senior Vice President, Quality & Compliance at The Weinberg Group, the world’s leading food and drug consulting firm. If you have any questions or thoughts on this blog post or others, please reach out to us by email.