1. Management of GMP Outsourced Activities The Role of Technical Agreements / Quality Contracts
Presented by: Karen S Ginsbury
PCI Pharmaceutical Consulting Israel Ltd
For: IFF, Copenhagen, Denmark
October 2011

2. Course Objective Clarify and ensure that matching expectations exist
Define who is responsible for what: NO shared responsibilities
Understand that outsourcing doesn’t mean “no oversight”

3. To be covered
The regulations and guidelines (EU and US) pertaining to contract manufacture and the requirements for technical agreements / quality contracts
Define and Synchronize expectations for "The Work"
Who is responsible for initiating the contract: sponsor or contractor
Defining contact persons
Quality Contract template
List of key responsibilities
Key elements of the contract
Contract Review

5. Purpose of Contract Regulatory requirement Business necessity Reduce:
Costs
Frustration
Confusion
Increase / improve:
Clarity
Communication
Value for $ (Euro(
Efficiency and benefits
associated with pharmaceutical outsourcing

6. Not the Purpose of the Contract
To replace due diligence
To replace audits
To replace oversight
To negate the need for sponsor / contract giver oversight of outsourced activities
To negate the need for management review at the contract giver relating to outsourced activities
To mitigate all risks associated with contract manufacturing in lieu of other mitigation measures

7. Regulation
EU Chapter 7: Contract Manufacture- under revision – new title “Outsourcing”
US cGMPs - both the contractor and your company would have responsibility in the event of failure
Q10 talks about contractors as does ISO 9000 requiring “ Contract Review”

8. Contract Manufacturing: Legal Framework – Regulations21 CFR
211.22(a) The quality control unit shall be responsible for approving or rejecting drug products manufactured, processed, packed, or held under contract by another company
21 CFR Testing and approval or rejection of components, drug product containers, and closures
21 CFR Part Contract manufacturers are an extension of the manufacturer's own facility

9. 21 CFR (b)
The Food and Drug Administration is aware that many manufacturers of pharmaceutical products utilize extramural independent contract facilities, such as testing laboratories, contract packers or labelers, and custom grinders, and regards extramural facilities as an extension of the manufacturer’s own facility

10. How FDA Perceives Responsibilities
Contract manufacturers are responsible for manufacturing product in conformance to CGMP.
The firm that hires a contract manufacturer may also assume certain specified responsibilities under 211 or elsewhere.
Sponsors and private-label distributors are also accountable under the statute

11. FDA Guidance for Industry: Quality Systems Approach to Pharmaceutical CGMP Regulations(2006) / Q10?
“Outsourcing involves hiring a second party under a contract to perform the operational processes that are part of a manufacturer‟s inherent responsibilities.... Quality systems call for contracts (quality agreements) that clearly describe...”
materials or service to be provided
specification-setting responsibilities
communication mechanisms
training, qualifications, and monitoring expected
Harmony with both parties‟ quality standards i.e., they should not be in conflict

12. FDA on Quality Agreements
Identification of the contract site address, building, and equipment/line, and services/materials to be provided
Description of the drug, its intended use: all specifications
Provide for periodic audits to CGMP and contract specifics
Commitment to share regulatory inspection findings
Procedures for change control
new equipment, facility modifications, change in key personnel, change in SOPs and test methods
Full disclosure of all errors, deviations, changes, OOS results, investigations, as well as adverse events that did or might impact drug

13. EU – Chapter 7 current
Current version: contract manufacture and analysis – 2 pages
Describes need for a quality / technical agreement so nothing new there

14. Concept paper on revision 2009: Which types of activities are included
“GMP inspectors commonly see outsourced activities which if performed normally would be subject to inspection e.g.
Qualification and validation work for new premises
Maintenance and calibration of equipment and premises
Storage and distribution
Artwork generation and print ready material
Assessment and sourcing of starting and packaging materials
QP and other professional services such as GMP audits of suppliers
Washing and depyrogenation and or sterilisation of packaging materials used in manufacture.
Hosting of IT functions
Document archiving and storage

15. EU Chapter 7 – Nov 2010 for comments
Title: Outsourced Activities
3.5 pages
The pharmaceutical quality system of the Contract Giver, including management responsibilities, extends to the control and review of any outsourced activities
The Contract Giver is ultimately responsible to ensure processes are in place to assure the control of outsourced activities
These processes should incorporate quality risk management

16. EU Chapter 7 – Nov 2010 for comments
The Contract Giver should monitor and review the performance of the contract acceptor and the identification and implementation of any needed improvement
The Contract Giver should be responsible for reviewing and assessing the records and the results related to the outsourced activities
He should also ensure that all processed products and materials delivered to him by the Contract Acceptor comply with their specifications or that the products have been released by a Qualified Person

17. ICH Q10 on Outsourcing
2.7 Management of Outsourced Activities and Purchased Materials
The pharmaceutical quality system, including management responsibilities… extends to the control and review of any outsourced activities and quality of purchased materials
The pharmaceutical company is ultimately responsible to ensure processes are in place to assure the control of outsourced activities and quality of purchased materials
These processes should incorporate quality risk management and include:

18. ICH Q10 on Outsourcing
Assessing prior to outsourcing or selecting suppliers, the suitability and competence of the other party to carry out the activity(e.g audits, material evaluations, qualification)
Defining responsibilities and communication processes for quality-related activities of involved parties
For outsourced activities, this should be included in a written agreement between the contract giver and contract acceptor

19. ICH Q10 on Outsourcing
Monitoring and review of the performance of the contract acceptor or the quality of the material from the provider, and the identification and implementation of any needed improvements
(Monitoring incoming ingredients and materials to ensure they are from approved sources using the agreed supply chain )

20. ISO 9001:2008 on Contract Review
Contract review procedures should make sure that:
Your customer's order is clearly and completely defined.  When verbal orders are received, make sure that you  and your customer agree on what is required -DISCUSS
You have resolved all differences between the original tender or proposal and the final contract or sales order
Your organization is capable of supplying the  products ordered by the customer
Amendments
Develop procedures which specify how customer contracts  are amended, and which ensure that changes in contracts  are communicated throughout the organization
Records
Develop a record keeping system that you can use to  document the review of customer orders and contracts.

21. The Process of Outsourcing
Identify potential candidates
Narrow list to 1 / 2 / 3?
Mail questionnaire?
Select 2?
Perform audit / introductory visit (assess transparency / cooperation)
Initiation of contract 21

22. Who does what?
Who is responsible for identifying potential candidates?
Who is responsible for initial contact?
Audits?
Are these procedures covered by a company policy / SOP?
Are there records of outcomes maintained? 22

23. Which activities does your company outsource?

24. Who is responsible?
Is there a single, key contact person responsible for the success and oversight of the outsourced activity?

25. Defining / Synchronizing Expectations
Have you defined the scope of what you are going to outsource?
Does everyone in the company agree?
In writing, signed off “basis for design”
Is it periodically reviewed
Do you report to senior management at Management Review meetings on problems with outsourcing?

26. Process Mapping
Have you mapped out the processes – what about when they become really complex

27. Process Map: virtual company
Lead Contractor
Sponsor?
Manufacture DS and DP 1
Synthesis
Formulation, Filtration, Aseptic filling, labelling DS
Company A DP
Company B
QC testing by: All parties LC
Coordinate
shipping
DS QC testing
DP QC testing 2 5 4
Shipping A
Except Assay LC
Perform Assay
Company A
NMR LC
Assay
Company B
Rest
CoA and DS Batch Release by Company A
CoA and QP Batch Release of DP 3
Company A
Company B 6

28. What is Risk? The likelihood that a particular hazard will occur
The severity of HARM if that hazard occurs
The likelihood of detection of that hazard if it occurs

29. Safe and Effective Product
The goal
Safe and Effective Product

30. Control Strategy: Definition
A planned set of controls, derived from current product and process understanding, that assures process performance and product quality
The controls can include parameters and attributes related to drug substance and drug product materials and components, facility and equipment operating conditions, in-process controls, finished product specifications, and the associated methods and frequency of monitoring and control (ICH Q10)

31. Outsourcing Control Strategy
Machines
Man
Safe and Effective Product
Materials
Methods
Other

32. Factors Affecting Outsourcing Risk

33. What needs to be in there?
Giver:
Overall responsibility for product
Responsibility for Ctx, IMPD / MA / IND / NDA information and COMMUNICATION of critical issues to the Acceptor
Auditing and evaluation of contractor
Product release / review of results unless QP agreement included
Notification of any hazards related to their materials

34. What needs to be in there?
Acceptor
Will work in accordance with relevant GxP regulations . need to itemize which are relevant e.g: EU US
Other?
Accepts that they are open to inspection by regulatory authorities
Agrees to be transparent regarding regulatory findings?

35. What needs to be in there?
Change control
Deviation and OOS reporting
Significant? Time frames ?
List of responsibilities (does it duplicate the actual content of the contract and if so – which takes precedence?)
Archiving and retained samples

36. Contacts Who is the key / primary contact for each side
Limit it (preferably to one person) because of misunderstandings that arise if there are several persons listed communication is critical
What happens if a listed contact leaves – who is responsible at Giver and Acceptor for ensuring contracts get updated / notification – is there a formal method

37. Specifications / MMIs / Analytical test methods etc.
In or out?
What about if they get updated?

38. Factors Affecting Risk
Dosage Form Type
Parenteral and ophthalmic products (sterile products)
Inhalation solutions (sterile products)
Aerosol and dry powder inhalants
Nasal sprays
Vaginal suppositories, ointments and creams
Topicals
Rectal suppositories, ointments and creams
Oral liquids (aqueous)
Oral liquids (non-aqueous)
Oral tablets Liquid- and powder-filled capsules

39. Factors Affecting Risk
Drug Substance Synthesis
Formulation
Physical Characterization
Manufacturing Process
Packaging System: Container / Closure
Prior Experience

40. What needs to be controlled...
Specifications (YOURS) (THEIRS)
Please provide a brief description of your quality system
Do you have any certifications / FDA / EU / ISO etc. Do you have a registered DMF? #
When was the company founded? Owners?
How many employees: operations, QA / QC
Name and details of contact person (job function)
(special questions for particular product)

41. Some Little Details Address of contract site
Agents / brokers: transparency regarding manufacturer
Do you manufacture / pack / distribute / test etc. from any other site?
Do you use sub-contractors
What else do you manufacture
capacity

42. Requirements
Need a formal purchase order for each consignment / activity with a copy in the warehouse
Need the contractor to appear on a controlled list of approved outsourcers
Damaged units where material was exposed or potentially damaged will not be accepted
OOS / out of trend / questionable results?
Formal contract review
Annual? Contract review / update
Update key contact(s)

43. Define the scope of the Project
Need to be exceedingly precise
E.g. outsourcing process development and production:
who will own the developed process? Your company or the contractor?
If the latter you may be paying royalties forever, so be aware of this upfront and define in the contract
If the former, the contractor will have to perform technology transfer…to your company PUT IT IN THE CONTRACT

44. Define the scope of the Project
Need to be exceedingly precise
Need to discuss the scope with relevant functions within your company and put out a document agreed and signed by relevant parties
E.g. outsourcing production only who is responsible for technology transfer / process transfer to the contractor? Your R&D? Your production?

45. Defining Your Company’s Requirements
What are you outsourcing:
All aspects of manufacture and control?
Part of the manufacturing process?
Process development and manufacture?
Only manufacture
Analytical methods development?
Bioanalytical methods development?
Toxicity testing
Proof of Concept
Management of Clinical trial from start to finish?

46. Define the scope of the Project
Need to be exceedingly precise
E.g. outsourcing an entire clinical trial from start to finish does the contract include:
Auditing sites?
Before, during at end of trial or all of these?
Selection of statistical methods?
Analysis of data?
Auditing of data?
Who decides on the clinical protocol?
Patient exclusion criteria, inclusion criteria etc?
How much input from your company? Who went to the FDA pre-IND meeting?!

47. Defining the Project Takes time May require input from consultants
Particularly for a small start-up company without the necessary input in-house
If poorly defined will result in failure of the project

48. Define the scope of work
Manufacturing operation
Calibration / Qualification of HPLC
Packaging and labelling of clinical trials materials including randomization and blinding
Integrity testing of HEPA filters
Sterility testing

49. Define applicable GMP regulations and guidances

50. FDA : Recent Industry Guidance
Process validation
ICH Q10 pharmaceutical quality system
Identifiers for solid oral dosage form drugs
Risks for melamine contamination
Testing of glycerin for diethylene glycol
Contract manufacture (under development 2011)
FDA view: Help industry be responsible through the development of standards and best practices
Industry: are your contractors familiar with these guidances – not enough if you are!

51. EU: Currently Being Updated
EudraLex Vol. 4 GMP for Medicinal Products (EU-GMP)
Part I: Basic Requirements for Medicinal Products
Chapter 1 Quality Management
Chapter 2 Personnel
Chapter 3 Premise and Equipment
Chapter 4 Documentation
Chapter 5 Production
Chapter 6 Quality Control
Chapter 7 Contract Manufacture & Analysis
Chapter 8 Complaints and Product Recall
Chapter 9 Self Inspection
Implementation ICH Q9, Q10 principles e.g. Management review, QRM
Implementation ICH Q9, Q10 principles
Dedicated Facilities (incl. Ch5)
CSV
QbD, Right first time, Contract manufacturing
Transfer of analytical methods
Implementation ICH Q9,Q10 principles
Quality Defect contact points & QRM
GDP – expanded from 4 pages to 32!

52. FDA on: Corporate Responsibility for Outsourcing
Assure preventive controls
With suppliers and their suppliers
With contractors and subcontractors
Investigate and act on nonconformities

53. You just might want to take a look…

54. FDA Concerns
Transparency between sponsor and contract site regarding drug application commitments is crucial.
Potential high costs of selecting contract sites based solely on unit dose cost for NDA and ANDA products under FDA’s GMP systems inspection approach.
How thorough are sponsor audits of contract sites when they can not audit the entire universe of data due to limitations imposed by confidentiality agreements?

55. Transparency
Some sponsors do not provide a copy of the drug application commitments to the contract site that will perform that operation.
Red Flag for the FDA PAI
How can the contract site assure they are meeting the drug application commitments if they do not have a copy of them?
What if the NDA/ANDA sponsor fails to disclose critical drug application information to the contract site?

56. FDA will do it if you don’t
When the contract site does not have a copy of the drug application commitments applicable to their contracted responsibilities, FDA must conduct the GMP audit and also audit the integrity of the drug application information transfer process between the sponsor and the contract site.

57. Consider…
Sponsors: Is it a good business practice to withhold relevant drug application information from your Contract partner? How can you be assured the Contract site understands the drug application commitments if you don’t provide a copy of them?
Contract Sites:Is it a good business practice to make or test a drug application product without having a copy of the relevant sections of the drug application? How can you be sure you are meeting the drug application commitments?

58. Questions for Evaluating a Potential Contractor
Good FDA GMP track record for consecutive inspections?
Robust GMP systems?
Quality assurance oversight of operations & product?
Well controlled raw materials system?
Production system under control?
Facility & equipment well maintained?
Lab is capable of generating scientific, sound test data?
Packaging & labeling system is well defined and controlled?

59. How Robust can an Audit Be?
How can you thoroughly audit a GMP system when you can not review all the deviations, investigations or data generated in that system?
If the Contract site makes a drug product for Client A and Client B comes to do a GMP audit, then Client B can not see Client A’s records.
What if evidence of a serious GMP system failure is contained in client A’s records, but Client B can’t review that record?

60. Use of unapproved material
Personnel in the receiving warehouse & Materials Management indicated they do things quite differently than what is described in the SOPs. SOP ABC was not followed.
Warehouse –Don’t actually look at the official Material Specification Sheets in the binder when an order arrives. If the order received matches what’s in the computer, then it’s OK because that’s what Materials Management ordered.
Materials Management: That raw material was in short supply so we had to switch to another supplier. QA was not notified of this change.
FDA-483 issued
Would you have identified the issue?s
YOU need to assure YOUR audits of contract firms are robust enough to identify serious system deficiencies in spite of limitations imposed by confidentiality agreements

61. Two for One Warning Letters Kathleen Culver, FDA June 2010
My FDA Crystal Ball
FDA acknowledges the reality of contract operations in the drug manufacturing community
FDA has to deal with and manage the complexity contract operations brings to the FDA evaluation process before and after drug application approval.
What happens when a commercial drug product produced by a contract firm under the sponsor’s oversight is found to be non-GMP compliant and adulterated/misbranded?
Aren’t both parties, the sponsor and the contract site, RESPONSIBLE for assuring the drug product is made under GMP control and meets all legal specifications?
If the contract manufacturing site gets a Warning Letter because the drug product is adulterated or misbranded, shouldn’t the sponsor also be held accountable by FDA?

62. Drawing up a Technical Contract
Define project timelines
If you need an analytical method developed and validated prior to a clinical trial there is no point in having product manufactured, CRO ready to go with patients lined up and the method development floundering
MUST have inter-dependent activities aligned

63. Drawing up a Contract Allow for catastrophes:
The CRO spills all your material
The methods validation fails
Fire at the contract manufacturer
Define project milestones and when they MUST be achieved
NAME names: who is responsible for what at your company and at the contractor

64. Quality Issues
7.10 A contract should be drawn up between the Contract Giver and the Contract Acceptor
specifying respective responsibilities for manufacture and control of product [could apply equally to CRO, proof of concept, tox, etc.]
Technical aspects of the contract should be drawn up by competent persons suitably knowledgeable in pharmaceutical technology, analysis and Good Manufacturing Practice
All arrangements for manufacture and analysis must be in accordance with the marketing authorisation and agreed by both parties

65. Quality Issues - Complaints
Who is responsible for investigating complaints?
Will the contractor allow your QA person / consultant access to:
Facility
Personnel
Records
in order to conduct a detailed investigation?
…or will you have to make do with their abbreviated report saying it is not their responsibility

66. Quality Issues
The contract should permit the Contract Giver to visit the facilities of the Contract
Acceptor
In the case of contract analysis, the Contract Acceptor should understand that he is subject to Inspection by the competent Authorities […and of course for contract manufacture… also CRO’s]

67. Quality Issues Who makes product release decisions?
What about when a deviation is involved?
How do you know that you have transparency to allow you to make an informed decision?
Disposition decision may be affected by who bears the cost of a failed batch…does the contract address that?
What about laboratories: could use a third party to decide where results differ at giver / acceptor provided have provision in contract

68. When to Audit Prior to signing contract? Prior to initiation of work?
During Work – don’t audit – do be on site (and of course annual or periodic audits)
By mail prior to signing contract?

69. Contract Manufacture: Auditing
Need to audit prior to signing contract, but need a company representative close at hand during all manufacture – needs to be closely controlled at all times
Need to have access to batch records and analytical results (if they are doing analysis)
Need a clause in the contract concerning:
Deviations
Changes
from approved manufacturing process and methods, including reporting deviations relating to operator, machine, materials malfunction
Complaints may result in audit
Annual audit essential

70. Contract Analysis What about OOS??
Your contract lab may claim to be “GLP compliant”
You need them to be GMP compliant with respect to laboratory regulations
ISO does not address out of specification results

71. CRO / Toxicology / Other
Audit by mail prior to signing contract
Particularly for animal studies, choices are quite limited
Are some very large concerns involved that become quite lax in their procedures if not carefully audited
Initiation visit / audit
Ongoing audit during study
If close by, request company rep present during study performance

72. Project Oversight Generally have at least two functions involved:
Operations or (for small company may be CEO) overseeing timelines and meeting milestones
QA (may be a consultant for a virtual company) overseeing quality issues
QA cannot perform their part unless the contract requires punctual reporting, especially deviations

73. Project Partnering Outsourcing involves large amounts of funds
Need to partner the contractor:
he knows that you are going to put a lot of money into her company (setting up a cell bank can be 1 million dollars) so she wants to accommodate your Q requests
You know that he is going to help realize your product to market timeline and are happy to invest that money
Mutually beneficial arrangement

74. Quality Issues Contract must address QP release
Who is responsible for:
purchasing materials
Testing and releasing materials
undertaking production and quality controls including IPC
who has responsibility for sampling and analysis

75. Quality Issues
Manufacturing, analytical and distribution records, and reference samples should be kept by, or be available to, the Contract Giver
Any records relevant to assessing the quality of a product in the event of complaints or a suspected defect must be accessible and specified in the defect/recall procedures of the Contract Giver
[these are regulatory requirements… what will you do if you didn’t address them in the contract and you have an IP issue with the contractor

76. Define contract giver responsibilities

77. Define contract acceptor responsibilities

78. What about Specifications
Are they appended
What about manufacturing instructions
Test methods
Packaging instructions
Clinical trial protocols etc.

79. Who is responsible for updating

80. Deviations and Changes
What is “significant?”
What is “immediate” notification
OOS – and laboratory error – do you want to be notified?

81. What to do about Regulatory Inspections
Can you be present?
On call?
Notified immediately? Of adverse outcome
Involved in response writing?
Notified of responses?
Involved in ANY response directly involving your product
Other?
DISCUSS with their QA / regulatory BEFORE initiating a Technical Service or Master Service Agreement
AND contract giver must notify acceptor if they are to be inspected because support (rapid) may be needed

82. In Conclusion The quality of the output is:
Dependent on the contract acceptor
Highly dependent on the contract giver
Requires a lot of work before initiation
Requires a lot of work during the project
Must have face to face meeting before kick-off
Cannot be left to chance
If the contracted work is to be of value

83. In conclusion Outsourcing is growing and is global
It is a business necessity and will continue to grow
There are business needs that must be met
There are compliance and quality needs that if not met will bring down your company
It is a partnership both with the contractor and within your company
It needs to be managed – but it is not a Quality Assurance “Responsibility” on a day to day basis

84. Thank you for your attention