The Guidance emphasizes that the most essential elements of a Quality Agreement are the sections delineating the Owners' and Contracted Facilities' respective responsibilities for the manufacturing process, and change control.

On May 28, 2013, the U.S. Food and Drug Administration (FDA) published a draft guidance ("the Guidance") detailing the FDA's current thinking on contract manufacturing arrangements for drugs. Specifically, the Guidance details the FDA's suggested uses for Quality Agreements, which are written agreements that define parties' responsibilities in the contract manufacturing process and which seek to assure drug quality, safety and efficacy. While the Guidance is not binding, it is a tool that drug manufacturers can use to prepare contract manufacturing arrangements that are compliant with applicable laws and regulations.

Who Must Have A Quality Agreement And What Must the Quality Agreement Contain?

Quality Agreements are required because both Owners and Contracted Facilities¹ must comply with Current Good Manufacturing Practices (cGMPs) under the Federal Food, Drug, and Cosmetic Act (FDCA). Drugs are adulterated if the methods used to manufacture, process, pack or hold them do not conform to cGMP. Both Owners and Contracted Facilities must take steps to ensure that drug products are not adulterated or misbranded. Quality Agreements are designed to achieve that goal.

The Guidance emphasizes that the most essential elements of a Quality Agreement are the sections delineating the Owners' and Contracted Facilities' respective responsibilities for the manufacturing process, and change control. The Guidance states that the Quality Agreement has to clearly document each cGMP activity related to the service or operation covered by the Quality Agreement, and which party is responsible for each specific cGMP activity. These specific cGMP activities should include:

Quality Unit Activities

• Final product release and the release of a product for the operations performed at the Contracted Facility,
• Communication plan between the Owner and Contracted Facility,
• Procedures for the Owner's evaluation and audit of the Contracted Facility's operations and
• The parties' expectations for regulatory inspections and obligations for reporting inspection findings.

Facilities and Equipment Activities

• The site at which manufacturing activities will be performed;
• Validation, qualification and maintenance activities; and
• Other facilities and equipment maintenance.

Materials Management Activities

• Setting specifications for raw materials and conducting sampling/testing;
• Inventory management, quarantine and prevention of mix-ups and cross-contaminations; and
• Allocation of responsibility for storage under labeled conditions.

Product-Specific Terms

• Product/component specifications,
• Defined manufacturing operations (i.e., batch numbering, expiration/retest dating, lot disposition, etc.),
• Process validations (design, qualification and ongoing validation) and
• The Owner's personnel with authorization to be in the Contracted Facility.

Laboratory Controls

• Controls over sampling and testing samples;
• Qualification, calibration and maintenance of laboratory equipment (The Guidance states that this responsibility should rest with the Contracted Facility, and the Owner should be responsible for auditing these activities.); and
• Laboratory investigations, including deviations, discrepancies, failures and out-of-specification laboratory results.

Documentation

• Procedures for the Owner to review and approve documents (i.e., Standard Operating Procedures, laboratory records, etc.);
• Accessibility of cGMP-related documents;
• Maintenance of cGMP-related documents under a certification or controlled copy procedure; and
• If applicable, processes to maintain the integrity and reliability of electronic records.

Change control is the other key element of the Quality Agreement. It requires the parties to determine when the Contracted Facility must notify the Owner of any changes in the facility's operations or processes (e.g., process capability analysis, customer complaints, recalls, or new or revised product claims), and which changes require, or do not require, Owner review and approval.

In addition to the key provisions on responsibilities and change control, the Guidance states that the Quality Agreement should also contain a well-defined purpose and scope; basic terms, such as effective date and termination clauses; and the parties' preferred method of dispute resolution.

What Manufacturing Activities Are Covered by the Guidance?

The Guidance applies to all commercial manufacturing of active pharmaceutical ingredients (APIs); finished drug products; combination products; and biological drug products, including human drugs, veterinary drugs, biological and biotechnology products, and drug constituents. Commercial manufacturing includes processing, packing, holding, labeling operations, testing and quality unit operations—i.e., manufacturing processes that result in a drug that is intended to be marketed, distributed and sold, or intended to be sold.

The Guidance also supplements existing documents describing the roles and responsibilities of Owners and Contracted Facilities. For example, there is an existing International Conference on Harmonisation (ICH) guidance on cGMPs for APIs, ICH Q7, which recommends that manufacturers maintain written agreements with Contracted Facilities and also audit the contractor's facilities. ICH Q9 also provides manufacturers with a comprehensive evaluation tool in the audit and implementation of supplier quality agreements. Finally, ICH Q10 clarifies that it is the pharmaceutical company's obligation to ensure that processes are in place to ensure the control of outsourced manufacturing facilities.

Conclusion

The Guidance creates what is likely to be a useful framework for drafting Quality Agreements and delineating the various responsibilities of Owners and Contracted Facilities in the commercial manufacturing process. However, the Guidance should be closely analyzed in conjunction with all applicable laws and regulations to ensure that all Quality Agreements conform to necessary legal requirements. The FDA is also accepting comments on the Guidance, which must be submitted by July 29, 2013.

About Duane Morris

Duane Morris attorneys counsel clients in the pharmaceutical industry on virtually all aspects of their business and at all stages of the client's lifecycle, from bringing new products to market, review of promotional materials, price reporting, adverse event reporting, import and export issues and manufacturing questions, to conducting self-evaluative audits and designing corrective action plans. Duane Morris also regularly assists clients in dealing with governmental regulatory agencies—including the FDA, DEA, CMS, OIG, HHS, DOJ, the FDA Office of Criminal Investigations and state regulatory authorities—in matters involving regulatory enforcement actions, False Claims Act litigation, internal investigations, fraud and abuse, off-label promotion and federal and state anti-kickback statutes.

For Further Information

If you have any questions about this Alert or would like more information, please contact Elinor L. Hart, Frederick (Rick) R. Ball, any of the attorneys in our Pharmaceutical, Medical Device, Pharmacy & Food group, or the attorney in the firm with whom you are regularly in contact.

Note

1. An Owner is the entity that introduces a drug into interstate commerce. The Contracted Facilities are the outside entities that perform manufacturing operations for the Owner.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.