Standardized Quality Agreements

Published on: 
Pharmaceutical Technology, Pharmaceutical Technology-08-01-2010, Volume 2010 Supplement, Issue 3

Representatives of SOCMA and IPEC explain new quality agreement templates and their use for meeting regulatory expectations and securing the pharmaceutical supply chain.

Recent regulatory requirements and several supply-chain breaches involving active pharmaceutical ingredients (APIs) and excipients have heightened the pharmaceutical industry's awareness of and need to increase supply-chain monitoring and control. One outcome has been the growing use of quality agreements among drug-ingredient manufacturers (including custom manufacturers), suppliers, and distributors. Two associations, the Society for Chemical Manufacturers and Affiliates (SOCMA) and the International Pharmaceutical Excipients Council (IPEC), recently developed quality agreement templates that can be used by industry free of charge to help ensure supply-chain quality and to meet regulatory expectations.

On the following pages, representatives from both organizations discuss the thought process behind their templates, the content that should go into the agreements, and the benefits of using such agreements. SOCMA's templates are designed for manufacturers and users of APIs, and the IPEC templates target suppliers and users of excipients.

Quality Agreements for Manufacturers and Suppliers of Active Pharmaceutical Ingredients, as recommended by SOCMA's Bulk Pharmaceutical Task Force

by Brant Zell

Manufacturers of active pharmaceutical ingredients (APIs) are inundated with customers requesting quality agreements to meet US Food and Drug Administration expectations and requirements. A quality agreement is important for ensuring the integrity and quality of pharmaceutical intermediates, APIs, and other pharmaceutical ingredients in the supply chain. A quality agreement is the best way to ensure compliance with the International Conference on Harmonization (ICH) Q7 Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients guideline, which FDA published as guidance for industry in 2001, to meet regulatory expectations on current good manufacturing practices (CGMPs) and filing requirements (1).

According to ICH Q7, such an agreement should clarify and define what the GMP manufacturing and filing requirements are and who will be responsible for completing each required activity (1). A quality agreement is a legally binding document that has to be agreed upon by both parties (i.e., sponsor company and supplier or contract manufacturer) and their quality groups.

The standardized quality agreement approach is crucial for the API manufacturer because it helps to avoid having a different set of requirements and quality-system processes for each customer. The Bulk Pharmaceutical Task Force (BPTF)*, an association of manufacturers of APIs, excipients, and API intermediates, and an affiliate of the Society for Chemical Manufacturers and Affiliates (SOCMA), a US-based trade association representing custom and batch manufacturers, issued two standardized quality agreement templates for the pharmaceutical industry in May and July of 2010. One template is designed for general API manufacturing (i.e., an API producer that manufactures its own products and sells them to multiple customers) and the other template is designed for custom API manufacturing (i.e., a contract manufacturer providing proprietary APIs). This article explains the background and use of these templates. If used properly, these templates provide regulatory-compliant documents that can be used by the API producer and its customer.

The general API manufacturing agreement template

To achieve a safe and effective drug supply in a global marketplace, ensuring the quality, purity, and security of, and preventing contamination of the API is crucial. Suppliers should use a suitable supplier-qualification process with a drug manufacturer as part of its supplier-approval process. A quality agreement can serve as a key component in this approval process, but the agreement should not take the place of an audit of the manufacturing facility. Quality agreements between drug and API manufacturers are used to help both parties understand and define who is responsible for adhering to certain compliance requirements. Without a quality agreement in place, it is difficult for drug and API manufacturers to meet regulatory requirements and inspectors' expectations.

Since the adoption of ICH Q7 and recent industry attention on supply-chain integrity, API manufacturers have been inundated with requests from customers to have a quality agreement. ICH Q7 requires agreements for all third-party activities, and today, it is common industry practice for key suppliers to have an executed quality agreement with their drug manufacturers as well.

A quality agreement typically supplements a supply agreement. In the past, GMP issues were included in the supply agreement, but the quality group was not usually involved in these agreements. This oversight caused a potential situation in which the requirements listed in the supply agreement were not practical, that is, they could not easily be implemented into the supplier's quality system, sometimes leading to noncompliance. The best practice is to have both a supply and a quality agreement in place, with the supply agreement focusing on commercial issues (e.g., the supply template has the requirement to meet specification, and the quality template covers how to handle nonconforming product), and the quality agreement focusing on GMP and compliance issues (e.g., manufacturing and filing requirements). The quality agreement should clearly state which party is responsible for completing each required activity.

Standardizing quality agreements. If the requirements in quality agreements differ too much between customers or the responsibility of who is doing what constantly changes, there is a high probability that some required activities may be overlooked and that noncompliance is present. A standardized agreement alleviates this problem by placing limits on the variability of the agreement's language. A standardized document also sets the stage for an agreed-to, workable arrangement between the two companies and their quality departments. Another benefit to having a standardized template is time savings—the API manufacturer does not have to create a new agreement for each new project.

Without a standardized template, a lot of time is often spent on the review and negotiation process, including the involvement of both teams' legal departments, which can cause serious delays and high costs. Such time constraints can also place pressure on both parties to get things completed before the supplier can complete the desired manufacturing. When standardized templates are used, the legal language and concerns need only be reviewed and amended once, when setting up the standardized template within the company. The quality system of the supplier can be designed to easily incorporate the final quality agreement.

As a legally-binding document, a standardized quality agreement, should contain the following:

  • Scope of work to be performed, including manufacturing locations

  • Applicable laws and standards

  • Clearly defined responsibilities regarding regulatory and filing requirements, including which party will perform the filings

  • Change-control and notification requirements

  • Expectations regarding the use of third parties

  • Resolution-management procedures should any disagreements arise between the two parties

  • Rights of each party (e.g., IP, statement of compliance, client confidentiality)

  • Contacts for each party, including the individuals responsible for ensuring compliance to the agreement and any changes to the agreement.

Content of the BPTF Quality Agreement Templates

Both of SOCMA's BPTF Quality Agreement Templates provide guidance for drafting agreements relating to the manufacture and release of APIs regulated by FDA. The templates are based on the collective experience of API industry members as well as the knowledge gained from executing quality agreements with drug manufacturers and reviews of these agreements by FDA inspectors. Specifically, the BPTF Quality Agreement Templates contain the following sections:

  • Legalities (e.g., agreement parties, scope, effective date, terms, amendments, survival cause, resolution of quality issues)

  • Manufacturing location(s), including third parties

  • Responsibility (a table that addresses key CGMP and filing issues)

  • Appendix 1: Products covered under the agreement

  • Appendix 2: Contacts and responsible parties for the agreement

  • Appendix 3: Product specifications.

Parties signing the agreement may spend a significant amount of time negotiating the legal language. From a US perspective, common language in this section should be acceptable to both signatories. If there is a conflict between the quality agreement and another agreement that may already be in place (e.g., a supply agreement), it is recommended that the quality agreement prevail to avoid any potential quality concerns. It is important to include this type of language in the supply agreement.

In the Responsibility section of the BPTF Quality Agreement Template, BPTF provided its recommendations for each requirement such as change control, who will file regulatory documents, and who will manage stability programs. It is expected that a supplier would develop its own recommendations for this section (preassigned checked boxes are included in each section of the template based on best practices and experience) and start the negotiation process with their customer. The goal is to have a minimal number of changes to the document which will help minimize the impact on the supplier's existing processes, procedures, and quality system.

Change-control requirements tend to vary considerably in quality agreements. The definition of the term "significant," for example, is an important part of a quality agreement. A practical, yet regulatory-compliant model, is needed for change control. The supplier cannot practically notify a customer about every change, however, significant regulatory changes should be reported to the customer and approved. Additionally, it is not feasible for a supplier to have a different change-control and notification standard for each customer. These processes should be standardized.

Additional considerations for custom API manufacturing

Although the BPTF Quality Templates for general API manufacturing and custom API manufacturing have common elements, quality agreements with custom manufacturing organizations tend to contain more options and are therefore more complex. Again, there is a big advantage to both parties (i.e, the API manufacturer and the custom manufacturer) to keep the same standards for each customer.

The BPTF Custom Manufacturing Organization Quality Agreement Template provides for key differences betwee custom API manufacturing and routine API manufacturing. In custom contract manufacturing business, each project may have a different customer, and the project may only involve a few batches. The custom template, therefore, incorporates flexibility in CGMP responsibilities and filing requirements. For example, the customer may have developed or own the manufacturing process, in which case the manufacturing process may be transferred from the customer, and the customer may own the intellectual property (IP). In standard manufacturing, on the other hand, the supplier typically has developed and owns the manufacturing process, and thus owns and controls the IP and related drug master file (DMF) for the process.

If the IP is owned by the customer, the quality agreement needs to reflect that fact. For CMOs, the batch records, analytical method validations, stability, and even the process validation may be the responsibility of the customer rather than the supplier. Additionally, filing requirements such as product-label codes can be submitted by the customer. Using a DMF or chemistry, manufacturing, and controls (CMC) filing information in the drug submission must be defined for custom manufacturing organization. The BPTF Custom Quality Agreement Template accounts for these differences and, in many cases, one just needs to click on the appropriate box when using the templates.


A standardized quality agreement is crucial for API manufacturers. An API manufacturer cannot use different sets of requirements and quality system processes for each of its customers. BPTF Quality Templates offer a regulatory-compliant quality approach to API producers and their customers.

*BPTF was organized in 2002 as an affiliate group under SOCMA. BPTF is focused on facilitating CGMP compliance and addressing related CGMP issues that affect chemical manufacturers. The members of BPTF currently include: Albemarle, Ash Stevens, BASF, Chattem Chemicals, Cherokee Pharmaceuticals, Copperhead Chemical Company, ISP Chemicals, Lonza, and SAFC.


1. FDA, ICH Q7 Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients (Rockville, MD, 2001).

WEB: To view and download SOCMA's BPTF Quality Agreement Templates in PDF format, visit

Brant Zell is chair of the Bulk Pharmaceutical Task Force for the Society for Chemical Manufacturers and Affiliates (SOCMA), a member of the FDA Industry Coalition, and vice-president of quality and environmental, health, and safety for Cherokee Pharmaceuticals LLC, 1835 Market Street, Suite 1100, Philadelphia, PA 19103, tel. 215.988.8986, fax 215.569.1925,

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.

Seeing this challenge as an opportunity to improve communications between excipient users and suppliers, the International Pharmaceutical Excipient Council (IPEC) developed the IPEC Quality Agreement Template in June 2009. The guide and template were the result of several years of work by IPEC's Quality Agreement Subcommittee, which was comprised of excipient manufacturders, distributors, and users from IPEC–Americas and IPEC-Europe. IPEC is an international trade association with members representing the pharmaceutical and excipient industries. One of IPEC's goals is to develop and implement voluntary industry guidance that enhances the quality of excipients used in pharmaceutical products. IPEC views the quality agreement as an instrument that creates a quality partnership between two companies. Parties involved in drafting the agreement, therefore, must be flexible. The purpose of the IPEC Quality Agreement is to provide excipient users and suppliers with a common starting point to create their own quality agreements that address fundamental quality issues specific to the manufacture and use of excipients.

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.


The final section of the IPEC Quality Agreement Template includes the names and contact information for the quality contacts of both parties. The identified individuals should be the persons responsible for compliance with the quality agreement as well as the ongoing maintenance of the agreement. Signatories to the agreement, appendices, and references are also included.

Having appropriate quality agreements in place can significantly improve communication, limit product quality issues that result from misunderstandings, and improve supply-chain relationships. The IPEC Quality Agreement Template can help users and suppliers of excipients reduce the time and effort needed to complete successful quality agreements and ensure that agreement on important points is achieved.


1. FDA, Guidance for Industry: Quality Systems Approach to Pharmaceutical CGMP Regulations (Rockville, MD, 2006).

2. B. Hasselbalch, "Public Health challenges for the Quality of Human Drugs," presented at the 2010 FDA/Xavier University Global Outsourcing Conference, Cincinati, OH, June 2010,

3. IPEC, Joint IPEC-PQG Good Manufacturing Practices Guide for Pharmaceutical Excipients (2006)

View the IPEC and SOCMA Quality Agreement Templates at

Plus: Read more about the US Food and Drug Administration's expectations for Quality Agreements in the August 2010 issue of Pharmaceutical Technology, Insider Solutions column.

Alexa Smith is the Global Regulatory Services Manager for Colorcon (Harleysville, PA) and chair of the Quality Agreement Template Subcommittee of the International Pharmaceutical Excipient Council (IPEC),