Quality Agreements: Making Them Stick

A good working relationship is critical to the success of any vendor quality agreement, but the right approach to drafting these contracts can make them far more effective.

By Ajay Pazhayattil, WellSpring Pharmaceutical Corp.

As the drug industry increasingly outsources its manufacturing and R&D requirements to third parties, on or offshore, the Quality Agreement is becoming increasingly important. Failing to clarify goals and expectations, or the responsibilities of the contracting firm and its key vendors or service providers, can leave both partners vulnerable, opening up the possibilities of noncompliance, broken contracts, shortages of key materials, and lost business.

Quality Agreements (QA) help mitigate these potential risks in pharmaceutical manufacturers’ relationships with third-party contract manufacturers.

By spelling out, clearly, expectations for product quality and good manufacturing or laboratory practices (cGMP, cGLP), for both the contracting firm and its critical vendor or service providers, quality agreements help ensure that each partner is operating within the same frame of reference and that both are on the same wavelength. At this point, QA’s are not mandated, but “suggested” by global regulatory agencies and the International Council for Harmonization (ICH), whose guidelines aim to develop global standards for risk management and quality assurance.

Although QA’s are voluntary, many companies find that they can be more effective than outright regulations in improving quality systems and maintaining consistency in quality. They also increase communication between business partners, resulting in more frequent interactions with vendor quality divisions, which can improve the business relationship and give the contracting company a much better sense of its partners’ quality focus.  Generally, QAs are developed for critical vendors and services, as defined through risk analysis.  A formal corporate policy document should clearly indicate the types of vendors and services that will require a QA.

The scope of services must be carefully considered while drafting an agreement, as requirements are unique for each vendor depending on the type of service sought and the product. The agreement should always clearly specify the product(s) or service(s) outsourced.

QA’s should be living documents, rather than set in stone. A system should be in place to trigger revision of the document whenever there is any change request or an addition of product/service. Ideally, such systems should be evaluated for effectiveness during regular product reviews.

An effective quality agreement should clearly state the contracting company’s and the contractor’s individual responsibilities, and serve as a reference document for both the operating firm and its key vendor and service partners.

In its recent guidance, “a Quality Systems Approach to Pharmaceutical cGMP Regulations,” FDA suggests that QA’s clearly:

  • Describe the materials or service required
  • Clarify quality specifications and how they will be met, defining each partner company’s responsibilities in ensuring that product reflects these specs
  • Establish communication mechanisms between the sourcing company and its critical vendor partners.

Pharmaceutical manufacturers drafting QAs with vendors for the first time can expect some initial challenges upfront.  Some vendors, for example, may be slow to respond to, or to update major revisions in quality attributes or claims in variance within an existing agreement.  The best solution is to establish, and stick to, a mutually agreeable but fixed time frame for the project.

Regular follow-up is required and the QA drafting process should involve a cross-functional team with members, not only from quality departments, but from procurement, manufacturing, product and process development, regulatory and legal departments.

A signed Quality Agreement as well as change request pre-approval must be highlighted as major requirements to initiate and continue a smooth product or service supply. The potential impact of delays on either the QA or change request preapproval should be assessed and spelled out during initial interactions. Vendor partners need to view any current QA as legally binding and as a regulatory requirement. Since many service providers operate in several diverse industries, they should clearly understand current regulatory guidelines.  Be sure to pull the most relevant sections of guidelines for reference. 
     
Drafting a QA

Generally, QAs are drafted by quality professionals, who typically start the process by scrutinizing the types of services that the vendor offers, and their company’s expectations. In many cases, the same vendor may be capable of providing multiple services, but the negotiation must clearly focus only on those services that are expected to be provided as per the business/service contract.

It is important to review what additional responsibilities the organization will incur through the agreement, and what impact they could have. All departments must be involved in this process, and each must outline potential impacts.

For firms having multiple sites, a corporate quality agreement can be an excellent starting point for launching vendor QAs, reducing the time that individual quality groups might spend on QAs.

However, special attention must be paid to reviewing and incorporating site-specific requirements.  Normally a firm follows its own approach in formatting a quality agreement. Canadian firms, for example, would list all Health Canada GMP requirements and identify each party’s responsibilities. A checklist approach can alleviate any misinterpretations.

The key elements of the agreement include the scope and overview, abbreviations and definitions, general requirements, terms and area of responsibility (in a checklist format or as a description).

How to depict the responsibilities:

  • Vendors must be required to perform in a way that will ensure regulatory compliance, and any serious changes to vendor regulatory status must be communicated quickly. The agreement can indicate the documentation requirement that has to be provided at release and at specific intervals. Wherever possible be sure to request an annual product review report.
  • Recall management can be predefined, specifying that any related investigations and responses be completed within a specified timeframe. Agreements can also include a provision requesting the contractor firm’s self-inspection report and process control procedures.
  • Agreements should spell out requirements for validation and revalidation, as well as qualification and calibration frequency, as set by regulatory requirements.
  • The vendor’s outside supplier/contractor qualification and approval process must also be well defined, if the vendor site utilizes subcontractors as part of the process. A list of services contracted out by the vendor, as well as their emergency contacts should be attached to the Quality Agreement and noted by the contracting company. Special care should be taken to specify product storage and shipping conditions.

Nondisclosure and Room for Revision


An obligation to comply with the confidentiality agreement and the procedure to be followed for revision of a Quality Agreement must be included. A dispute resolution policy must be defined with the relevant authorities.

Finally, those signing the agreement must be the most senior personnel who are most responsible for the particular operation. Finally, each agreement must have an assigned revision or review date, as spelled out by the corporate policy document for that type of agreement.

Please note that this is not a comprehensive checklist of what is needed for a good Quality Agreement. Each agreement must be treated as unique, since the type of services, products and scenario can widely differ in each case.


 

About the Author
Ajay Pazhayatill is currently compliance manager at WellSpring Pharmaceutical Corp. (Oakville, Ontario), which offers clinical and commercial manufacturing and packaging services.  He previously worked for Patheon and a number of other companies in North America and India.  He can be reached at abapaz@yahoo.com

 

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