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Supplier Qualification: Implementing Quality Agreements The Right Way

Designing compliant contracts with suppliers and service providers

Supplier qualification is an integral part of any pharmaceutical quality management system (“QMS”). Outsourced activities need to be managed and controlled – see EU GMP Guide Part 1 Ch. 1.4. (vii) and ICH Q10. Furthermore, in addition to the actual definition and control of outsourced activities, Chapter 7 of the EU GMP Guide also explicitly mentions the (mutual) agreeing on the activities to be performed. The requirement for a written agreement has been clearly defined since at least the introduction of the ICH Q10 Guideline (2.7. (B)); by the way, this also applies to manufacturers of active ingredients (1).

This results in both, the regulatory logical necessity and the business need for contracts with suppliers and service providers who deliver or render pharmaceutical materials or services, respectively. Corresponding requirements (2,3,7,8) and indications do exist for the US FDA-regulated environment (4,5 in combination with (6)).

The supplier is an integral part of the manufacturing process

The supplier thus becomes an inherent and controlled part of the manufacturing process of the pharmaceutical manufacturer or marketing authorisation holder (“MAH”). Consequently, the FDA for example regards contractors as an extension of the manufacturer and reserves the right to also inspect outsourced production facilities of this kind (4). As can be expected, the FDA has already issued Warning Letters (10) that clearly reference contracts, so-called quality agreements, or rather ambiguous regulations in such contracts.

Points of reference for drafting quality agreements

So, what should be the content of an appropriate quality agreement? Is the same breadth, depth and stringency to be applied for every supplier, and how can this document ideally be standardised? There are various sources and guidelines for this.

The easiest situation arises with the use of consultants: according to Chapter 2.23 of the EU GMP Guide Part 1 they can be qualified by means of CVs and a description of the task being outsourced; a typically available commercial contract should be sufficient here. On the other side of the criticality spectrum, the FDA has issued a guideline for contract manufacturing that can also be applied to warehousing and distribution. Unfortunately, there is no list of specifications here; rather, critical aspects are outlined in prose.

Despite having an agreement, both parties are always responsible for GMP compliance, and neither can completely shirk its responsibility by delegating responsibility, as various Warning Letters show (note the differences in the release step by the quality-unit in the USA vs. QP approval in Europe). In addition to the actual content of the agreement and corresponding definitions, the FDA recommends regulating the core areas of manufacturing and quality. How this is done is left open by the document. “Check tables” that clearly assign responsibility for each aspect, and which can easily contain 100 lines or more (the so-called responsibility (assignment) matrix), have proven to be effective. Manufacturers should consider the following points, in particular, when it comes to the mutual provision of information:

• Irregularities, such as deviations and OOS
• Audits/inspections and their findings where relevant to contract manufacturing and the product (including withdrawal of the CEP, manufacturer’s license; import alert)
• Complaints and recalls
• Changes on both sides must be clearly communicated in advance and mutually approved.

In addition, it is necessary to clarify:

• whether, for example, manufacturing protocols, master and other documents need to be sent to the contract giver for approval or for information
• how to proceed with document retention in general 
• who is responsible for qualification and validation (also relevant from a commercial point of view).

Interestingly, the FDA Guide does not touch upon the topic of contractor employee training, which is otherwise given great attention. This should be regulated, however – especially for suppliers of goods and services that are more technical in nature.

Specifications in a quality agreement

It seems obvious that delivery and performance specifications need to be defined for all products and services. For contract manufacturing, however, such a specification includes an extensive document with master batch record sections and information from the registration documentation, the so-called “product specification file”. Further key aspects of an agreement always include the right to auditing and a prohibition on or an obligation to approve subcontracting. This results in the following basic framework in terms of the contents of the contract for contract manufacturers, as well as laboratories and other suppliers and service providers.

• Subject of the contract
• Mutual rights and obligations/responsibility matrix (“check table”)
• Mutual information obligations
• Procedure for complaints regarding materials delivered or services provided
• Change control ((raw) materials, service, changes in personnel, facilities)
• Notification of deviations, etc.
• Detailed right to auditing
• Regulation on commissioning third parties (“subcontracting”) 
• Additional points must be recorded in attachments that are to be maintained, for example, the responsible contact person. Specifications are also listed here, for example, on the goods to be delivered/services to be rendered (e.g., in the form of a product specification file), the facilities and equipment to be used, legal standards to be complied with, or specification documents of the contract giver.

Additional templates for scenarios with suppliers/service providers

A freely available standard for active ingredients from the APIC is far more detailed in substance than the FDA document, and can be adapted to various other supplier/service provider scenarios. In addition to extensive explanations and useful text modules, the standard also offers an example of the responsibility matrix previously mentioned. A similar, and recently revised, document has been in existence at the IPEC for a long time now; there are also collective templates for single-use products (9). The BAH has drawn up a set of agreements in the form of a contract manual that is also applicable for special suppliers, such as contract analysis or logistics services, which can be used to efficiently regulate services that are relevant to GMP and GDP (11).

Summary: Complexity and criticality of the service as a benchmark

According to EU GMP Part 1 Ch.5.28, it appears that, instead of a contract, a pure specification is sufficient as a basis for delivery, e.g., for simple “non-pharma” catalogue items, and, that for consultants, the demands in terms of a contract are lower. Nevertheless, for each supplier or service provider, there should be a formal document (“dossier”) that is created as part of the supplier qualification. The complexity of the contract should reflect the complexity and criticality of the material/service provided; however, certain minimum requirements must be met wherever possible.

References and notes

(1) EU GMP Guide part 2/ICH Q7, Chapter 16.12: There should be a written and approved contract or formal agreement between the contract giver and the contract acceptor that defines in detail the GMP responsibilities, including the quality measures, of each party.

(2) PIC/S PE 009-14, Chapter 7: Contract manufacture and analysis also requires quality agreements. [corresponds to EU GMP]

(3) AMWHV §9 (1): A written contract must exist between the client and contractor for every activity that forms part of the order – in particular, production, testing and placement on the market, or any related process that is carried out as part of the order. The contract must clearly define the responsibilities of each party and, in particular, must regulate compliance with good manufacturing practice [...]

(4) US Food, Drugs and Cosmetics Act; § 374. Inspection, (a)(1).

(5) 21 CFR 211.22 (a): The Quality control unit should be responsible for approving or rejecting drugs that are manufactured, processed, packed or held under contract by another company.

(6) 21 CFR 211.22: Quality unit activities and procedures should be in writing.

(7) Guidelines on Good Distribution Practice of medicinal products, Chapter 7. (2013/C 343/01)

(8) Guidelines on principles of Good Distribution Practice of active substances for medicinal products, Chapter 6.12. (2015/C 95/01)

(9) https://bpsalliance.org/technical-guides/

(10) e.g., Cosmelab Co Ltd, South Korea, 2020; Reference #: 320-20-17 [https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/cosmelab-co-ltd-590480-01092020]

(11) See references 7 and 8