Quality Agreements for Manufacturers and Suppliers of Excipients, as recommended by IPEC
by Alexa Smith

Quality agreements are frequently a topic of discussion and sometimes angst in the current regulatory environment, which calls for industry to develop better knowledge of its excipient supply chain. Although not currently a regulatory requirement in the US, quality agreements are viewed by industry and regulators as an effective communication tool between pharmaceutical manufacturers and their excipient suppliers. In many cases, unfortunately, negotiations over the wording of an agreement can take months or years to resolve, sometimes damaging the relationship between the two parties rather than making it stronger.

To alleviate this problem in the past, pharmaceutical companies tried to design one-size-fits-all quality agreement templates. These templates, while suitably worded by their own legal department, differed from those developed by the legal departments of other pharmaceutical companies and, often, were not appropriate for the excipient supplier. As a result, few quality agreements were actualy put into place.

Quality agreements are intended to serve as an agreement between quality departments and should complement—not replace—commercial agreements. A quality agreement should define who is responsible for quality activities and how quality issues will be resolved. By clearly delineating good manufacturing practice (GMP) responsibilities, costly product-quality issues resulting from miscommunication can be reduced or eliminated.

The excipient agreement template

The IPEC Quality Agreement Template is divided into two sections. The Introduction and Purpose sections of the document are presented in a legal-style format and include the terms and conditions and scope of the agreement. The most important part of the agreement is the Quality Responsibilities section, which is presented in a tabular format. The tabular format allows for quick and easy identification of the quality responsibilities. In the Quality Responsibilities table, pertinent quality responsibilities are segregated by category with their assignment so that in the completed quality agreement, responsibilites for each activity can be identified with ease.

As the supply chain of pharmaceutical excipients becomes more complicated, it is important to understand which parties in the chain are responsible for which quality activities. To this end, there are two versions of the IPEC template: one can be used when purchasing an excipient from an excipient manufacturer (i.e., the original manufacturer) and one can be used when purchasing an excipient from a distributor. The ideal situation is to have quality agreements in place between all of the parties in the supply chain, from the original manufacturer to the end user. The manufacturer template is meant to be used between the original manufacturer and either the end user or a distributor. The distributor template is designed for use between a distributor and the end user.

FDA's 2006 Guidance for Industry: Quality Systems Approach to Pharmaceutical CGMP Regulations states that, in the case of outsourced operations, the quality system should include quality agreements between the parties (1). The guidance states that the quality agreement should clearly describe the materials or services to be provided as well as who is responsible for setting specifications, and how the parties will communicate on quality issues. Training, qualifications, and monitoring should also be addressed in the agreement. It is essential that the quality standards used by both parties be aligned for the quality agreement to be successful.

FDA further expressed its expectations regarding the content of a quality agreement in June 2010, when Brian Hasselbalch, team leader of Guidance and Policy within the agency's Division of Manufacturing and Product Quality, which falls within the Center for Drug Evaluation and Research's Office of Compliance, spoke at the FDA/Xavier University Global Outsourcing Conference in Cincinati, Ohio. Hasselbalch stated in his presentation that quality agreements should contain agreement on the following points:

• Products and manufacturing sites covered by the agreement
• Specifications
• Audits
• Sharing of relevant regulatory inspection findings
• Change control
• Disclosure of relevant nonconformance (2).

The IPEC template addresses each of these topics. However, the template does not suggest that it is germane to list every element of the quality system agreed to in a quality agreement. During the design of the template, it was agreed within IPEC that it was not necessary to reiterate agreement on every point of the quality system when general agreement on the applicable quality criteria has been stated. For example, if the parties have agreed that the 2006 Joint IPEC-PQG Good Manufacturing Practices guide for Pharmaceutical Excipients guide (3) will be followed, it is not necessary to list in the quality agreement each and every element of the GMPs. What is important to include however, are quality responsibilities that may require action by one or both parties.

Template content. The first section of the IPEC Quality Agreement Template covers the purpose of the agreement and includes the typical legal needs of a contract such as parties to the agreement, terms of the agreement, assignment, confidentiality, and choice of law. In addition, this section addresses the excipients and sites covered by the agreement and the quality criteria that will be the basis for the agreement. As noted, it is essential that the quality criteria be specifically delineated in a quality agreement. The Joint IPEC–PQG Good Manufacturing Practices Guide for Pharmaceutical Excipients is recommended in the template as the primary quality criteria reference but examples of other suitable quality criteria are also provided.

The second part of the template is the core of the agreement: the quality responsibilities. This part is divided into the following sections:
1. Compliance
2. Manufacturing, packaging, and labeling
3. Documentation and records
4. Storage and distribution
5. Change control
6. Nonconformance
7. Auditing.

The quality responsibilities called out in a quality agreement should be those where action is required by one or both parties, rather than noting every element of the quality criteria that is specified. The following discussion highlights the salient points for each topic in the Responsibilities section of the template. This discussion is based on the template recommended for the manufacturer; some of the points are not applicable to the template for distributors.

Compliance. This section focuses on responsibilities associated with complying with the relevant quality criteria as well as the agreed-upon specifications for the excipients that are the subject of the quality agreement. Regulatory-inspection findings and the need to communicate relevant findings between both parties of the agreement are addressed. Although the use of third parties is addressed in the Purpose section of the template, this section also points to the need for third-party quality agreements.

Manufacturing, packaging, and labeling. This section looks closely at documentation related to the suitability of the manufacturing process and equipment as well as suitability of cleaning processes. The agreed length of retain of samples should be specified here as well.

Documentation and records. This section focuses on the certificate of analysis (COA) that will be supplied with the excipients. Both parties should agree on how the COA will be prepared. The IPEC template suggests the use of the 2000 IPEC-Americas Certificate of Analysis Guide for Bulk Pharmaceutical Excipients. This section also calls for agreement on the length of time quality records will be retained.

Storage and distribution. Documentation related to the support of assigned reevaluation or expiry dates as well as agreement to ship and store product according to the manufacturer's recommended storage conditions are covered in this section.

Change control. In this important section, the template recommends the parties agree on how to handle change control. To simplify the process for change-control notifications, the template recommends specifying that change control will be handled in accordance with the 2009 IPEC-Americas Significant Change Guide for Bulk Pharmaceutical Excipients (2nd revision).

Nonconformance. The subject of nonconformance requires a significant amount of communication between the manufacturer and the user of an excipient. The parties must understand and agree on their individual responsibilities for communicating non-conformance issues. This section calls out communication expectations for specification results, significant manufacturing deviations, complaints, and recalls.

Auditing. Both parties should understand the expectations of the other with regard to auditing the manufacturing facility. Audit communication methods, timelines, and reports should be spelled out in this section of the quality agreement to eliminate misunderstandings.