Contract manufacture

 

1 Reasons for contract manufacture

There are daily articles in the daily and trade press about the merger of smaller production entities or even larger industrial concerns. In many cases, the consolidation of companies has a direct effect on the assignment of contracts to contract manufacturers. It is thus no longer unusual in today's pharmaceutical industry, for both smaller companies and for larger corporates to outsource development, production and analysis to a contract manufacturer.

The scope of the contract assigned can vary. A contract is termed full-service if the service is provided by the contract manufacturer from start to finish of a processing chain. In particular cases, everything from the procurement of starting materials, in particular primary and secondary packaging material and the excipients and active pharmaceutical ingredients, via the actual production up to the analytical testing of the manufactured dosage form is placed in the hands of the contract manufacturer.

In addition to this classic full-service contract assignment, in particular cases it is also possible for the contract giver to assign only sub-steps of the processing chain to the contract manufacturer. One example is applying the coating to film-coated tablets: the contract giver provides the manufactured tablet cores to the contract manufacturer, who carries out only the film coating sub-process then dispatches the film-coated tablets to the contract giver again afterwards.All the previous and subsequent steps, such as packaging and analytical evaluation, take place on the premises of the contract giver.

Before deciding on the scope of an outsourced contract, the contract giver must make the basic strategic decision to outsource the services, here in particular development, procurement, production and analysis. The following examples (see figure 17.A-1) should help to clarify the reasons why a contract giver could decide to call upon external service providers.

The requirements regarding the premises cannot be met by the contract giver

Example: The contract giver is bound by the application file for marketing authorisation to use an organic solvent in the manufacture of its medicinal product (for example ethanol, isopropanol, acetone). If the legal requirements regarding the safety features and equipment on the premises, in particular here explosion protection, air exchange rate, etc., or the requirements for the layout of the machines are not met, it may be necessary to outsource this step of the manufacturing chain to a contract manufacturer.

Technology not available

Example: For strategic reasons, certain technologies are no longer used in-house by the contract giver. However, if authorised preparations are still on the market and they are to be continued for strategic reasons, the manufacturing of this preparation, or the processing step, can be assigned to a contract acceptor.

Limited supply capacity during conversion measures

Example: Conversion measures being undertaken in-house by the contract giver mean the closure of a manufacturing segment for a defined period of time. For this defined period, a contract acceptor is commissioned to manufacture one or more preparations.

Limited capacity

Example: Due to seasonal factors, sales of a contract giver's medicinal product have risen to well above those forecast at the start of the year. Since the contract giver has no spare in-house capacity, additional capacity is required and manufacture is assigned to a contract manufacturer.

Legal requirements are not being fulfilled

Example: As with the application of organic solvent without the appropriate explosion protection equipment, certain treatment of starting materials, or of the semi-finished or finished products, poses problems for the contract giver, if it does not comply with this requirement. In this case, it should be decided, depending on the market share and sales of a medicinal product, whether upgrading or conversion in-house makes sense or whether this processing step can be outsourced to the contract manufacturer.

Manufacturing know-how is not available

Companies always specialise in a particular core competency. A typical reason for assigning a contract to a contract manufacturer is if authorised drug products are still on the market but these cannot be manufactured using the core competencies or technology available in-house.

The cost of producing small numbers of items in-house is too high

Specialisation in specific core competencies by the contract giver and by the contract manufacturer enables both to manufacture products economically and cost-effectively. As the contract manufacturer usually does not have its own field force and administrative division, the manufacturing costs can turn out to be lower. This example only considers the monetary aspect rather than any others.

2 Procedure for assigning manufacturing contracts

The assignment of contracts to contract manufacturers is a strategic decision on the part of the contract giver, which must be made jointly by the management board, Sales and Marketing departments and the responsible persons. figure 17.A-11 on Page 33 shows the sequence for assignment of a manufacturing contract in an SOP.

Once the basic decision to assign contracts to a contract manufacturer has been made, rules of play should be abided by (see figure 17.A-2).

Selection of a contract manufacturer for a particular dosage form

The contract giver has access to the application file for marketing authorisation in which the dosage form is defined. When looking for a contract manufacturer, a target-oriented pre-selection can be made according to this criterion. Some contract manufacturers have specialised in the production of particular dosage forms and offer this as their core competency to the market. Previous positive experiences of working with a particular contract manufacturer make it easy to select this specialist contract manufacturer for further contract assignments. Experience also shows, however, that contract givers pass on, through contacts they have with each other, their experiences of contact and dealing with a contract manufacturer .

Handover of confidential documents from contract giver to the contract manufacturer

To reach a conclusion on the feasibility of manufacturing and to enable calculation of an indication quote, it is mandatory to hand over the relevant documents to the contract manufacturer, e.g. extracts from the application file for marketing authorisation and from the manufacturing and analysis documents relating to the preparation. At this stage in the collaboration the contract giver should require a secrecy agreement between the contract giver and contract acceptor to be signed. From the point of view of the contract giver, this prevents the contract manufacturer from passing on extracts of the documents to a third party without the knowledge of the contract giver.

Feasibility check and tender from the contract acceptor to the contract giver

After examining the documents from the contract giver, the contract acceptor must decide whether it is feasible in principle for the preparation to be manufactured in-house.

Since this can be dependent on several factors, several representative examples are given:

• Can the capacity be supplied by the desired delivery date?
• Can the technology described in the submission file be reproduced on the premises?
• Does experience of processing the formulation exist?
• Is it necessary to manufacture a development batch (smallest scale in the range of 3-5 kg) or a pilot batch (scale of the future production batch)?
• Is all the product specific information from the dossier available (raw materials, packaging material, specifications, manufacturing and analytical documents)?

Once the feasibility study by the contract manufacturer is completed and the level of investment to produce a preparation is ascertained, this translates commercially into detailed planning of deadlines and the indication quote.

Determination of one or more contract manufacturers by the contract giver

Depending on the philosophy of the contract giver, a decision is made whether to consider just one contract manufacturer or whether to also consider a second alternative contract manufacturer when assigning a preparation. One argument for the selection of a second contract acceptor is that, if there are problems with one contract acceptor, supply capacity can be ensured in the short-term with an alternative contract acceptor.

• Example 1: a longer-term technical malfunction of a machine would mean that the contract manufacturer is not in a position to carry out manufacturing for several weeks. The contract giver would try to obtain a manufacturing date with an alternative supplier as quickly as possible .
• Example 2: the contract manufacturer is not in a position to react to a market or requirement situation at short notice due to its own capacity limits. An alternative contract manufacturer can react more quickly if necessary and assure supply capacity.

Carrying out an audit of one or more contract manufacturers

Before a contract acceptor is accepted and formally approved by a contract giver, an audit must be carried out on the premises of the contract manufacturer (see chapter 6 Audits of contract manufacturers). This ensures that the responsible persons from the contract giver and contract acceptor become acquainted at an early stage and form an impression of the contract manufacturer's GMP-compliant processes and systems and its quality assurance activities.

Approval of the contract manufacturer by the contract giver

The audit of a contract acceptor generally forms the basis for the decision about which future contract acceptor to work with. Each audit is concluded with an audit report. In addition to general information about the company structure, this report also contains observations about the deficiencies. It is particularly important to point out that a formal documented approval document should be compiled, that can be presented to both in-house quality assurance and to the competent authorities.

Scope of the contract assigned

Once the contract giver has selected and formally approved a contract manufacturer, all activities and responsibilities to be carried out by the contract giver and the contract acceptor respectively must be established in detail. As a rule, the following procedure is normally followed:

• Manufacture of development or pilot batches
• Procurement of primary and secondary packaging materials
• Procurement of excipients and active pharmaceutical ingredients
• Approval of the starting materials
• Transfer of analytical methods
• Manufacturing of validation batches
• Determination of the manufacturing technology
• Determination of the packaging technology
• Determination of sampling during validation and routine manufacture
• Physical and analytical testing scope
• Release of intermediate products and final products
• Storage and delivery of the finished product

Agreement between contract giver and contract acceptor

The agreed order size forms the basis for defining the respective duties and responsibilities. For this, a contract manufacturer agreement between the contract giver and contract acceptor must be concluded before production starts. The contract defines exactly the duties and responsibilities of the contract giver and the contract acceptor (see chapter 8 Framework contract for contract manufacture and quality control). Reference is made there to the fact that the contract manufacturer agreement is not simply an imposition on the contract giver and contract acceptor, but is in fact a legal requirement which is regularly checked by the supervisory authorities in the course of the GMP inspection (see chapter 18.F Inspection of contract manufacturers).

Planning and evaluation of development and pilot batches

A fundamental component of the agreement between contract giver and contract acceptor is determining whether, as part of the product transfer, provision should be made for the manufacture of development batches. In the course of open co-operation between the contract giver and contract acceptor, discussions should therefore include the following issues:

• What experience is available to the contract giver or the contract acceptor of processing the active pharmaceutical ingredients and excipients or the formulation?
• Are changes in manufacturing technology necessary as part of the product transfer? If the need for changes was already assessed and determined during the feasibility study, this should be communicated to the contract giver. If the contract manufacturer deems that the manufacture of the medicinal product does not comply with the manufacturing steps and technologies described in the application file for marketing authorisation, considerable re-registration measures and costs for the contract giver can be associated with this.
• Is it necessary to change the batch size?
• Does the contract giver already have experience of the setting parameters for the facilities/machines?
• What are the critical processing steps (after risk analysis)?
• Are stability data and follow-up results already available?
• Do investigations for cleaning validation need to be carried out?

As result of this risk analysis, both the contract acceptor and the contract manufacturer must define whether it is necessary to manufacture one or more development or pilot batches. If, in a product transfer, the manufacturing of development or pilot batches is dispensed with, there is a sizeable risk that the first manufacture of the preparation will not be carried out in an optimum manner. Since the first three batches are normally treated as validation batches, there is a direct risk that the validation will not comply with legal requirements (see chapter 7 Process Validation).

It is understandable, for smaller companies in particular to prefer to dispense with the development and pilot batches. It is less a question of a lack of understanding of GMP but rather a monetary problem. It may be that for test purposes a contract manufacturer requires starting materials for a complete batch, which cannot then be turned into products for sale because they do not correspond to requirements. This would indicate that the contract manufacturer, with its experience of numerous active pharmaceutical ingredients and excipients, should advise the contract giver specifically about this issue and deliver a realistic evaluation.

Carrying out the validation work

Carrying out the validation work lays the foundation for meaningful product transfer. For a prospective or concurrent validation, three batches are generally planned, manufactured, packaged, analysed and evaluated (see chapter 7 Process Validation). The results are evaluated by the contract manufacturer. The contract manufacturer communicates changes to settings for facilities and machines or makes suggestions for further optimisation of manufacture and analysis in accordance with the application file for marketing authorisation. The decision about actually releasing the recommendation for implementation can only be taken by the holder of the marketing authorisation or the pharmaceutical entreprenueur. If the scope of the validation work is inadequately defined during the design phase, considerable delays can be expected at a later point.

Implementation of the validation results

The results of the validation work are usually evaluated by the contract manufacturer. Since the contract manufacturer is not the holder of the marketing authorisation, it also cannot be responsible for the implementation of the validation results. For this reason, the results from the contract manufacturer can only be viewed as recommendations. The contract giver must check in its application file for marketing authorisation whether, from a regulatory point of view, these recommendations can be implemented without further measures (e.g. notification of changes to the regulatory authorities). The contract acceptor can only adopt them into its change control program once written authorisation to implement the recommendations is received.

Approval of the manufacturing instructions

If the contract giver accepts the recommendations from the validation work by the contract manufacturer, these changes are then taken up in the contract manufacturer's change control program. The latter must then include the approved changes in a new manufacturing instruction. A version number or new edition date makes it apparent to both parties at all times, which version is currently applicable. The contract manufacturer should insist that the valid master copy of the manufacturing instructions is signed and dated as approved by the responsible persons in-house, and by the contract giver. The valid manufacturing instructions signed by both parties are usually an appendix to the contract.

Change control

If the results of the validation are incorporated into the manufacturing instructions and the manufacturing instructions are approved by the contract giver and contract acceptor, a working change control system must be in place. This means communicating changes and deviations from the approved manufacturing and packaging instructions and from the testing procedure to the contract giver immediately. The contract manufacturer must ensure that there can be no changes without the verifiable written agreement of the holder of the marketing authorisation, as the contract manufacturer cannot usually assess whether the changes still need to be harmonised with the application file for marketing authorisation.

Duties of the contract giver

It is in the nature of things that when a contract is assigned to a contract manufacturer, a part of the information about the manufacture of the preparation is no longer within immediate daily reach. A considerable level of trust must, therefore, already have been built up between the contract giver and the contract acceptor and the staff of the respective company. For this reason, it has been proven to be an effective approach to build up close permanent contact with the contract manufacturer from an early stage. The factors required for building trust include readiness to provide information, understanding of audits, transparency regarding errors, sharing know-how and a culture of communication. Practice and day-to-day business will show how the collaboration actually works.

Many contract givers hold marketing authorisations for several preparations with different dosage forms. This often means selecting a number of different contract manufacturers with different core businesses (specialisation in particular dosage forms and manufacturing technologies).

Factors such as delivery date and quotation price still play a large part in the selection of a contract manufacturer. How the two parties work together during day-to-day business should be considered, particularly if problems arise during manufacture. How does the contract manufacturer handle problems, how quickly is information provided and what solutions are suggested? It is therefore advisable to get to know the relevant responsible person at an early stage to gain a first impression about the contract company's level of understanding of basic pharmaceutical matters and a rough view of the production processes. The duties of the contract giver are highlighted in figure 17.A-3.

Selection of one or more contract acceptors

Contract givers are often of the opinion that it is adequate simply to collaborate with one contract manufacturer. In contrast, other contract givers favour assigning a particular preparation to several contract manufacturers. Then if there are problems with delivery reliability or a lot of quality issues, it is possible to switch production to an alternative contract manufacturer quickly. In principle, one can observe that it is always easier for a contract giver to communicate with a manageable number of contract manufacturers. One should bear in mind, when doing this, the considerable investment required for qualification of another, alternative contract manufacturer. Not only must this alternative contract manufacturer be selected, it must also be audited. If the alternative supplier is then commissioned to carry out production, in addition to defining all responsibilities in a contract, it is also necessary to manufacture three validation batches .

When a business relationship functions well, there is normally no question of appointing an alternative supplier. Experience shows that for a contract giver, a contract acceptor is usually a good partner if it only communicates what is absolutely necessary (to the partnership, commission-oriented). That means an order is placed for a defined quantity and by defined deadline and the goods are delivered in qualitatively faultless condition on the agreed delivery date at the agreed price.

Definition of the demands on the contract acceptor

The contract giver's individual in-house departments set different priorities. So, a commercially and planning-oriented department responsible for purchasing and the assignment of contracts and compliance with the delivery dates makes its assessments based primarily on price and delivery reliability. In contrast, a department dealing with the assessment of contract manufacturers, specifically with audits and approval, will make an assessment based on GMP principles and according to appreciation of quality management issues. Thus, the contract giver must already define in-house the requirements on the contract acceptor in the run up to a product transfer. The contract manufacturer agreement has shown itself to be a beneficial tool for this type of definition. All requirements and arrangements between the contract giver and the contract acceptor should, therefore, be agreed in this contract before the start of production. (see chapter 5 Contract manufacturer agreement on page 16 and chapter 8 Framework contract for contract manufacture and quality control)

Handover of the necessary documents to the contract acceptor

The contract giver must hand over to the contract acceptor all documents that are relevant to the transfer of a preparation. On the one hand, the contract giver hands over a large part of its know-how about a preparation, however it is absolutely necessary for the contract acceptor to receive this information and results from the documents for assessment of its in-house manufacture, packaging and analysis. This includes the following documents primarily:

• Sections of the application file for marketing authorisation In particular, the contract acceptor needs the sections of the application file for marketing authorisation defining the detail of the manufacturing, packaging and analytical procedure with their instructions and specifications. Often, as the contract giver sees it, these are the only documents that enable the contract acceptor to compile manufacturing instructions.
• Manufacturing instructions and batch production records
  If the contract giver has already manufactured a preparation in-house, the relevant manufacturing instructions should be handed over to the contract acceptor. These manufacturing instructions contain both the detailed description of the manufacturing procedure and the setting parameters for the facilities and machines used. It is certainly helpful if the batch production records are also handed over or are able to be accessed. All deviations from the specifications and the notes by staff from the manufacturing area become apparent.
• Test procedures and test protocols
  As for the manufacturing instructions and records, the documents about analysis that are available to the contract giver in-house are needed in order to transfer the analysis of a preparation appropriately.
• Validation documents
  If the contract giver already has validation documents in-house, it is essential that these are handed over to the contract manufacturer. From these, the contract acceptor can see, for example, an assessment of the limits and setting specifications already determined for the facilities and machines. In addition, the critical processing steps will already have been determined and defined. Using the results that have already been determined, the contract acceptor is therefore able to compile the risk analysis and the validation protocol much more quickly.

Secrecy agreement

The contract giver hands over a large amount of know-how about a particular preparation to the contract acceptor. To prevent misuse of this data, the contract giver must draw up a contract with the contract manufacturer before handing over the documents. This contract is a secrecy agreement between the contract giver and the contract acceptor.

Carrying out an audit and approval of the contract acceptor

The contract giver must carry out an audit of the contract acceptor before the actual start of production. The contract giver must use this audit primarily to gain an idea of the contract acceptor's manufacturing operation and quality assurance system. All observations are documented in an audit report. The result of the audit and, if applicable, the approval of the contract acceptor form the conclusion to the report. (See chapter 6 Audits of contract manufacturers)

Approval of manufacturing instructions

A working change management system starts with the approval of the manufacturing instructions by the contract giver. This ensures that the contract giver is notified of all changes and deviations at an early stage. In addition, it guarantees that production is always carried out in accordance with valid manufacturing instructions approved by the contract giver. All changes must be communicated to the contract giver and documented in a new version of the manufacturing instructions.

Duties of the contract acceptor

The primary duty of the contract acceptor is to supply the quality desired by the contract giver as cheaply as possible by the agreed deadline. To satisfy these requirements, specific measures must be taken and agreements made.

Basically, a contract manufacturer's core competency will cover a particular market segment in contract manufacturing. It may be a case of a contract manufacturer that has specialised in manufacturing particular dosage forms or offers several dosage forms in parallel. The market is very diverse regarding service scope. Hence, contract manufacturers with full-service offerings vary a great deal. This applies to the areas of development, specific technologies or also to competencies in the laboratory and microbiology areas.

The duties of the contract acceptor are compiled in figure 17.A-4:

Flexibility of a contract acceptor

The prerequisites for a contract acceptor on the market are an adequate supply of resources such as personnel, rooms and machines. A contract acceptor with available capacity has the advantage of being able to offer more flexibility and shorter delivery times. In contrast, a contract acceptor with a high percentage utilisation is in a more problematic position. On the one hand, the planning and business goal for a contract manufacturer is to have high utilisation of personnel and facilities, on the other hand, however, there is the risk of unsatisfied customers due to long delivery times. There is a latent risk that a contract giver will exclude this contract manufacturer already at the transfer stage of a preparation. Developments in the market, however, mean that the contract manufacturer is required to act differently. Contracts that used to be awarded in good time with long delivery times for a large number of items, preferably as campaigns, are no longer be found in this form very often. To satisfy these market demands, this flexibility is also required in addition to quality and price.

Full-service contract acceptor

Full-service is a form of service including procurement of the starting materials (excipients and active pharmaceutical ingredients) and packaging material (primary and secondary packaging material) through to analysis of the receipt and the finished product and to storage and the delivery to the customer. As already shown in the remit from the contract giver, in the run up to the first manufacture of a preparation, the detailed scope of a contract assigned should be agreed with the contract acceptor and defined in a contract.

Indeed, these days, a comprehensive full-service provided by a contract acceptor begins with a qualified consultation by the contract giver relating to its preparation or special problems.

Procurement and testing of starting materials

When assigning preparations to the contract manufacturer, the basic responsibility for the procurement part must be clarified. Two scenarios should clarify this:

One option is for the contract giver to purchase the starting materials directly. The contract giver investigates the starting materials on his premises and issues the approval by means of a label and certificate of analysis. In this case, the contract giver is responsible for supplier qualification, sampling and analysis. The only duty of the contract acceptor is usually then the examination on receipt intended as an identity test. The contract manufacturer must ensure that the sampling for the identity test takes place in an environment complying with GMP. The scope of the identity test should be specified in the contract manufacturer agreement.

If the contract manufacturer is responsible for the procurement of the starting materials, it should check whether the suppliers of excipients or active pharmaceutical ingredients or packaging material are already specified in the application file for marketing authorisation. A supplier is often specified, at least for the active pharmaceutical ingredient. In some application files, a second supplier is named in addition to the first. If suppliers are specified in the application file, it is mandatory to use the starting materials from this supplier. A change to a different supplier is not permissible. The contract giver is responsible for handing over this extract from the application file as part of the transfer to the contract manufacturer. If the supplier is already audited and approved by the contract manufacturer, then the certificate of analysis can be recognised and an identity test is sufficient. In contrast, if a supplier that has not yet been audited by the contract manufacturer is specified in the application file, as a rule, a complete analysis, independent of the certificate of analysis must be carried out on at least the first three receipts. Open discussion between contract giver and contract acceptor at an early stage about the responsibility for and apportioning of costs is advisable.

In practice, this means that, on the one hand, the contract acceptor is audited by the contract giver, whilst on the other hand, it must audit and approve its own suppliers. Since the costs of carrying this out are high in terms of personnel, the issue of cost distribution between contract giver and contract acceptor also arises.

In addition, the scope of the contract acceptor's sampling on his premises should be defined. It must always be ensured that the sampling is implemented in conformity with the requirements in the EU GMP Guideline (see chapter 14.A Sampling). An identity test pursuant to a limited inspection of a few containers according to a set formula only conforms to the state-of-the-art under certain conditions.

Analysis of products manufactured under contract

As part of the transfer of a preparation to a contract acceptor, in addition to the duties and responsibilities for the procurement and manufacturing area, the scope of the analysis must also be established. The analysis can take place either at the premises of the contract giver or of the contract acceptor. The contract analysis can also be confined to certain parts of the test scope.

If analysis is carried out, on the premises of the contract acceptor, or if the contract acceptor sub-contracts part of the analysis to other laboratories, written provision must be made in a contract. Such arrangements are usually already defined in the contract manufacturer agreement. It is not an isolated case that a contract acceptor cannot carry out the complete analysis of a preparation in-house. This is always the case when specific control tests such as atomic absorption spectroscopy (AAS) or enzymology or vitamin determination are required, over and above the normal pharmacopoeia analysis. There is also an array of contract acceptors who do not have their own microbiology capability in-house and who outsource this to another external laboratory. It is not permitted to outsource an unlimited amount of control tests. The majority of the control tests must take place at the premises of the manufacturer. At this point, it should be pointed out that the relevant laboratory must be audited and approved and the competent authorities notified (see chapter 17.B Contract Analysis).

In line with the contract manufacturer agreement between a contract giver and contract acceptor, a contract in which all duties and responsibilities are established must also be drawn up with the laboratory. The contract giver must be notified in advance when analysis is assigned to a laboratory by a contract manufacturer at a later date.

If a control test is assigned to a contract acceptor, the exact scope of the analytical work for any development or validation batches and for later production batches must be defined. The contract acceptor must know at which point in the manufacture samples should be taken for analysis - for example, from the blended formulation prior to compression, or from the tablets.

To carry out the analysis commissioned, it is necessary for all documents and information to be handed over by the contract giver to the contract acceptor. This ensures that the analysis can be carried out in conformity with the marketing authorisation and all additional legal regulations.

One issue that is often neglected during the handover of information and documentation is the safety aspect. The contract acceptor must be able to assess the level of hazardousness of substances and materials correctly.

In the collaboration between a contract giver and a contract acceptor the responsibility for the release must be made absolutely clear. The responsibility of the contract giver usually relates to the release for the market. The contract acceptor in contrast can only use its release to confirm that a preparation or a medicinal product has been manufactured in accordance with the manufacturing instructions and inspected in accordance with the testing procedure. Therefore, the contract acceptor must inform the contract giver immediately if out of specification results occur.

Implementation of the contract giver's requirements

From the perspective of the contract giver, as a matter of principle, a qualitatively higher standard is expected of the contract acceptor, sometimes higher than that of the contract giver itself in-house. This means that the contract acceptor finds itself in the situation of implementing as many requirements from the audit and observations by the contract giver in the operation as possible. As a contract manufacturer is usually audited several times a month by contract givers, this inevitably results in numerous different observations and activities linked to them. Since each audit takes place separately, and many things in the audit are not predictable, one should at least be prepared for the standard topics. There are certain classic topics which are always asked again and again. It is, therefore, advisable to implement observations on these topics according to a list of priorities. It has proven to be advantageous to inform the contract giver regularly of the status of the activities that have already been implemented. (See chapter 6 Audits of contract manufacturers)

Manufacture and analysis in accordance with the
relevant instructions from the contract giver

The compilation of manufacturing and packaging instructions and of a testing procedure is usually based on the application file for marketing authorisation or, less frequently, on manufacturing instructions from the contract giver. This transfer documentation is transposed into a manufacturing and packaging instruction and a testing procedure that is typical of the contract acceptor.

The contract acceptor must ensure in the course of daily business that all deviations from the manufacturing and packaging instruction are communicated to the contract giver. The contract acceptor is not permitted to make any changes without the written authorisation to implement changes. This procedure forms part of a system of change control and should be specified in the contract manufacturer agreement as such. Since the contract acceptor is not the holder of the marketing authorisation, the decision regarding a deviation from a specification can only be taken by the contract giver. To ensure transparent documentation, there should be a brief written acceptance by the contract giver. This is absolutely necessary, since at a later date it will not be possible to clarify who specifically issued the authorisation of a change or deviation.

If, due to technical adjustments to the facilities and machines, the contract acceptor is not in a position to receive a preparation conforming to specification, there must also be a written authorisation from the contract giver to continue the manufacturing of the preparation.

Existence of quality assurance activities

The contract acceptor must have a suitable in-house quality assurance system. This includes the following quality assurance measures:

• Training programmes and personnel training (see chapter 2 Personnel)
• Validation (see chapter 7 Process Validation)
• Qualification (see chapter 6 Qualification)
• Cleaning validation (see chapter 8 Cleaning Validation)
• SOP system (see chapter 15 Documentation)
• Plant hygiene (clothing, cleaning, etc.)
  (see chapter 11.A Sanitation)
• Change management (change control, internal and external complaints, see chapter 19.C Change control )
• Quality assurance instruction manual (see chapter 1 Quality Management)

The contract acceptor must produce corresponding SOPs for all topics mentioned and provide evidence that these topics have already been integrated into daily operations.

Contract manufacturer agreement

With a contract manufacturer agreement, it is always an explosive issue where sections containing legal content are concerned. These often cause marked delays until a definitive version of the contract can be drawn up between contract giver and contract acceptor. A further hurdle is added if the contract giver and contract acceptor each already possess model contracts that must be merged into one common contract. Each contract must contain certain succinct titles. These are primarily the arrangements which define the detail of the manufacture and analysis. It is particularly important to note the responsibility of the contract acceptor and the contract giver agreed in respect to the procurement, manufacture and analysis or release of the medicinal product to the market.

In addition, other arrangements should be made relating to the purchase of starting materials (active pharmaceutical ingredients and excipients, primary and secondary packaging material) and their approval. The transfer of a preparation from one contract acceptor to another contract acceptor (sub-manufacturer) creates an exception in the formulation of the contract.

Legal principles

The contract manufacturer agreement is not a document that is voluntarily agreed between a contract giver and a contract acceptor, but is a requirement from the EU GMP Guideline. It is automatically a matter of a complex set of topics that is discussed and reviewed as part of supplier audits and the GMP inspection by the respective authorities in individual countries (see figure 17.A-5).

5.2 Minimum requirements

• Lay down of Responsibilities
  This refers both to responsibility in manufacture and packaging and to quality control and problems of a pharmaceutical-technical nature. The responsible persons should be listed by name and respective function with specimen signatures, if possible in an appendix to the contract.
• Scope of the contract acceptor's duties
  This involves the agreement of the responsibilities for production, packaging, quality control and procurement. Since this part can sometimes turn out to be very large, it is advisable to define the duties and activities in an appendix along the lines of the list of signatures. The advantage of this is that if there are changes, only the appendices have to be adapted, rather than the whole contract. In this way, both parties are spared a lot of administrative effort, since it is no longer necessary to review each individual page and the focus can be placed simply on the appendices.
• Responsibility for the release for dispatch and for sale
• Documentation
  Here it should be specified, which documents and records must be handed over by the contract acceptor to the contract giver after manufacturing is concluded. The retention of documentation (including the operating procedures) should also be agreed.
• Production site
  Specifying a location prevents production of a preparation being changed to a sub-manufacturer without the contract giver being informed.
• Preparations
  Listing in an appendix lends itself here too, as only one appendix will need to be adapted in the event of additions.
• Prices and delivery dates
• Compliance with the legal provisions
• Agreements relating to additional analysis of starting materials
• Development batches
  In particular, this section must describe the risk of a defective batch in the development and improvement phase.
• Liability
  It often requires a lot of time to find a solution to this issue that is acceptable to both parties.
• Audits
  The timing, frequency and scope of the audits should be established here.
• Retention samples
  The responsibility for the storage of the retention samples of manufactured goods, starting materials and packaging material should be established. The scope of the sampling for retention samples during routine production should also be established.
• Transport
  The responsibilities during transport (potentially of starting materials from the contract giver to the contract acceptor and finished products from contract acceptor to contract giver) should be clearly defined.
• Measures plan in the event of complaints
• Release of artwork
  Since the contract acceptor is not responsible for the content on the printed packaging material, all artwork must be approved by the contract giver.
• Duty to supply information in the event of deviations
  The contract acceptor must inform the contract giver in the event of deviations from specifications and arrangements.
• Regular review of the contract
  The interval between reviews of the contract should not exceed 2 years.
• Changing a supplier
  The contract acceptor must be informed if there is a change of supplier of starting materials or packaging material that is provided by the contract giver. This is important in that the contract acceptor often includes the permitted supplier or manufacturer in the manufacturing instructions or formulation.
• Conformity of the manufacturing instructions
  The contract giver is obliged to check and sign the contract acceptor's manufacturing instructions.

A model contract for contract manufacture is shown in chapter 8 Framework contract for contract manufacture and quality control.

Compilation of a secrecy agreement

The contract acceptor normally receives from the contract giver a secrecy agreement for signature as part of a request for a transfer of a preparation. With this signature the contract acceptor assures the contract giver that all information will be treated as confidential. This means that the contract acceptor is not permitted to hand over these documents to a third party without the consent of the contract giver.

In addition, the secrecy agreement determines what will happen to the contract giver's documents if the manufacturing order is not awarded.

Time needed

At this point, it should be pointed out again, in particular, the amount of time needed to compile a contract manufacturer agreement, since it is essential to consider the compilation of the contract when planning deadlines for a transfer of a preparation. The amount of time needed can be between several weeks and several months, depending on whether the contract giver or the contract acceptor already have model contracts or whether a new agreement needs to be created. Experience shows that the section on liability and warranty requires a lot of time particularly. The reason for this is that policy in the event of consequential loss with a preparation on the market should clearly be established between a contract giver and a contract acceptor. More and more contract givers are also demanding special payments when delivery dates are exceeded because of the contract acceptor.

The representatives from the supervisory authorities place great value on the fact that the contract is signed, thereby regulating all responsibilities, before manufacture starts. This applies in the same way to the manufacture of the validation batches, since these may also be added to the products for sale in some cases.

Contract manufacturer agreements for audits

The experience with numerous supplier audits and official inspections on the premises of a contract acceptor clearly shows a change in the topic of the contracts and basic conditions that have been agreed between a contract giver and contract acceptor. As part of supplier audits, it is a fixed part of the program that the contract manufacturer agreements are also looked at and changes are discussed if necessary. As part of the inspection by the authorities, attention is paid in particular to all agreements regarding the responsibilities of the contract giver and the contract acceptor and the sequence of the deadline agreements. The contract giver and the contract acceptor must also ensure that the responsible persons named in the contract really are still employed in the respective company. Many contract manufacturer agreements often have weaknesses at precisely this point, since the contract is not regularly updated. It is, therefore, strongly recommended, that the contracts are reviewed on a regular basis.

Audits of contract manufacturers

It is a requirement from the EU GMP Guideline that a contract giver carries out audits of a contract acceptor. According to this guideline, the contract giver is obliged to inspect the contract acceptor's facility. This is necessary, since otherwise it is not possible for the contract giver to evaluate the competency of the contract acceptor. These audits are often carried out with 2-3 auditors and usually last 1-3 days.

Frequency of audits

Regular audits ensure that firstly a regular contact can be cultivated between the contact persons in each company and secondly the personnel and technological changes and all problems the contract acceptor has on his premises with a preparation can be discussed. However, many years of experience of dealing with customers and audits shows that not all contract givers fulfil this routine obligation.

With regard to the time intervals at which audits of a contract acceptor are carried out, contract givers can be roughly classified into four groups:

• Group 1: annually
• Group 2: every 2 years
• Group 3: every 3-5 years
• Group 4: sporadically

The contract givers belonging to the fourth group are those who carry out an audit when an inspection by the respective regional authorities is pending. The philosophy of these companies is that the experiences from day to day business are more important than the survey of one day as part of an audit. At this point, it should be pointed out again that this contravenes current pharma law. Therefore, in such cases, the contract acceptor must take on the roll of the consultant and indicate this deficiency to the contract giver.

Several limiting factors should be mentioned, which practice has shown make regular auditing of a contract acceptor difficult.

• Many contract givers work with numerous different contract acceptors. This can be due to the company philosophy or because different dosage forms are manufactured by different contract acceptors. All these contract acceptors must be regularly audited.
• The capacity of the auditors is often limited, since staff from the manufacture, purchasing, laboratory and quality assurance departments carry out the audits. The day to day business is left virtually undone during the audit. A rapidly rising level of complaints about one or more preparations with a contract acceptor must be dealt with immediately by the contract giver. If daily business shows that there are no problems with product quality or deviations, it is not necessary to carry out an audit at short notice.

Types of audits

If a contract giver carries out an audit of a contract acceptor, as part of the preparation, the priority of the audit can be defined. Using three types of audit as examples, the basic possible differences can be shown (see chapter 18.B Inspection procedures):

• System audit
• Procedure or process audit
• Product audit

System audit

During a system audit a verification of the contract acceptor's whole QM/QA system is carried out primarily. A priority of the audit is compliance with the legal requirements. A classic system audit includes the whole process method of a medicinal product from the delivery of the starting materials to the storage of the final product. Depending on the size of the operation, these audits can last 1-3 days. Depending on the contract giver, this audit is carried out by 1-3 auditors.

Procedure or process audit

In a procedure or process audit, operational concerns are of prime importance. Here, one tries to follow the production run method with a previously defined preparation. The main focus of the audit is all documentation including the log books, records of environmental conditions, batch production records and cleaning records, and the qualification and validation documentation.

Product audit

A product audit involves reviewing whether the arrangements forming the basis for the contract manufacturer agreement are being kept to. This audit is usually carried out with a particular preparation.

Main audit priorities

Many contract givers send out special questionnaires as part of the preparation for a supplier audit, often using these to ascertain the priorities. It is then up to the contract acceptor to prepare these topics correspondingly. If a contract giver does not send out a questionnaire, it has proven to be an advantage to ask for a consultation about the content. Various chapters from the EU GMP Guideline usually form the basis for this. Figure 17.A-9 refers to typical topics and questions which are broached as part of an audit. However, there is no guarantee of completeness, since some contract givers like to review and test particular product-specific topics.

Result of an audit

The contract giver usually compiles an audit report. This audit report is often a completed questionnaire or a checklist. Some contract givers, however, write out the audit report in full. The report then contains the observations made by the contract giver about the contract acceptor. These observations can be classified into different categories, such as high risk, medium risk and low risk. In each case, the contract giver is expected to edit and add comments to the observations. Depending on the company, the contract acceptor is given a deadline of 4-8 weeks to do this. This audit report also includes the evaluation by the contract acceptor, which can be at one of three different levels:

• Not Approved Supplier: this concerns a contract acceptor that cannot be approved.
• Qualified Supplier: an audit was carried out of a contract acceptor with rectifiable deficiencies
• Certified Supplier: an audit of a contract acceptor with no deficiencies was carried out.

How does a contract acceptor prepare for an audit?

The correct preparation for an audit consists of examining the observations from previous audits. It is not possible for all contract givers to implement all observations at short notice. Many observations will be out of place with the philosophy of a company, however other topics can be implemented with little effort. The contract acceptor should compile a list of priorities from all the audits that have been carried out on his premises over a certain time and, in a structured manner, start with the implementation of the most important observations. It is certainly advantageous if, after the audit report has been received, there is a regular written status report from the contract manufacturer to the contract giver. This should continue until the audit report is completely implemented.

Carrying out follow-up audits

Today it is the state-of-the-art that the contract giver allows the contract acceptor a certain time to implement and comment on the observations. Some companies, particularly the larger ones, carry out another audit of the contract acceptor at his premises when this time has expired. This is a so-called follow-up audit. This audit only considers the results of the implementation of the observations from the first audit.

Positive spin offs of audits

Audits are time-consuming and costly for the contract giver and for the contract acceptor. They are nevertheless worthwhile. Certain topics can be agreed and decided more quickly and simply through shorter official means. Moreover, it is only possible for a contract giver to compare the contract acceptor to other contract manufacturers once an audit of a contract acceptor has been carried out. In addition, it is always possible to use suggestions for the contract giver's own operation, enabling an audit to be considered as cost-saving consulting. For a contract acceptor, the large number of audits carried out on his premises means he is in a more secure position when dealing with the contract giver and in the site specification regarding its own competitiveness.

SOP for assigning manufacturing contracts

  

Framework contract for contract manufacture
and quality control

The following framework contract is concluded between:

Contract giver [Company, exact address]
- hereafter referred to as CG -

and

Contract acceptor [Company, address of the plant]
- hereafter referred to as CA -

§ 1 Principles

1. CA is the holder of a manufacturing authorisation and is insofar liable for supervision by the competent authority. It observes the legal drug product provisions, the recognised pharmaceutical regulations and ensures compliance with the principles of good manufacturing practice in accordance with the EU GMP Guideline over the whole term of the contract. The observation of further instructions going beyond these should be established between CG and CA separately in writing.

2. CA is not permitted to transfer the execution of its contractual obligations to a third party without the written agreement of the CG.

3. CA communicates to the CG subsequent, fundamental changes to the rooms and facilities relevant to the subject of the contract immediately. The CA indicates to the CG without delay the suspension, the withdrawal or the retraction of the manufacturing authorisation and the voluntary surrender of the same during the term of the contract.

4. CA grants the CG access to the rooms and facilities relevant to the subject of the contract and makes documentation relevant to the subject of the contract available for it to inspect.

5. The relevant contact persons for the subject of the contract from the CG and the CA are listed in Appendix 1. The contract partners should indicate subsequent changes without delay.

§ 2 Subject of the contract

1. The subject of this contract is the manufacture and quality control of the medicinal product and dosage form listed in Appendix 2, hereafter referred to as contract manufactured products.

2. The batch size and labelling, the processing of the order and all commercial agreements, such as prices, delivery conditions/transfer of perils are established in separate, batch-related supply contracts according to the model in Appendix 3.

3. A supply contract results from the written placing of an order by the CG with the specifications of the contract manufactured products according to paragraph (1) and the specifications according to paragraph (2) and the written order confirmation from the CA.

§ 3 Starting materials and packaging materials

1. The specifications and permissible manufacturers/suppliers of the starting materials and packaging material to be processed by the CA are established in Appendix 4. Subsequent changes require the written agreement of both parties.

2. Responsibility for the procurement, quality control and release of starting materials and packaging materials is established in the supply contracts in accordance with § 2 (2).

3. In the event that the CG provides to the CA the starting materials or packaging materials to be processed, the CG also provides the corresponding batch-related certificate of quality. The CA must always carry out a container identity and labelling inspection and an external integrity check. Additional quality controls to be carried out by the CA should be agreed in the respective supply contract. The costs of transportation from the CG to the CA and of the transport insurance linked to the provision of the starting materials and packaging materials is absorbed by the CG. The CG takes over the responsibility for guaranteeing the quality of the starting materials and packaging materials during transportation to the CA. The starting materials and packaging materials provided by the CG can only be used to manufacture the contract manufactured products as part of the contract.

4. If the CA provides starting materials or packaging materials itself, it is responsible for the proper verification of their quality on the basis of the specifications in Appendix 3. It ensures that the starting materials or packaging materials are only be purchased from qualified manufacturers or suppliers. The costs of the qualification are borne by the CG. If the CA conducts the quality control on the basis of its own specifications, it is liable for ensuring that the methods correspond to the state of the scientific and technical knowledge and are validated. If the CG provides testing standards, the responsibility for their suitability lies with the CG.

5. The print release of printed materials is always on the basis of the artwork approved by the CG.

6. The CA is responsible for carrying out sampling and storage of retention samples of the starting materials.

§ 4 Manufacture and quality control of the contract manufactured products/retention samples

1. Manufacture and quality control of the contract manufactured products is carried out on the basis of manufacturing instructions and test procedures to be compiled by the CA. To this end, the CG surrenders to the CA the required submittals, if applicable the extracts from the application file for marketing authorisation, in the form of manufacturing formula and testing standard. Each newly compiled or changed manufacturing or testing procedure should be approved by CG and CA jointly.

2. The CA guarantees that the applied manufacturing and analytical procedures employed are validated and the facilities used are qualified. The costs for the necessary validation work are borne by the CG.

3. The CA draws up a manufacturing and test report for each batch on the basis of the directions in accordance with §1. The CG is authorised to see the originals of the manufacturing and test protocols and to have copies made of them.

4. All deviations from the manufacturing or testing procedure should be documented in the manufacturing and test protocol. The CA informs the CG promptly of any deviation which could possibly affect product quality or process reliability. Possible measures are established in mutual agreements.

5. The CA is responsible for ensuring that manufacturing/test procedures and records are retained at least six years.

6. The CA is responsible for ensuring that retention samples from every batch manufactured are retained at least six years.

§ 5 Release of the contract manufactured products

1. The responsibility for the release is established in the supply contracts.

2. If the release of the batch is carried out by the CG, the CA provides the duly signed manufacturing and test report.

§ 6 Complaints/recalls of the contract manufactured products

1. CG and CA inform one another without delay about any complaints about, and batch recalls of, the contract manufactured products, and the starting materials and packaging materials used for them, that he becomes aware of. This applies to external notices and also internal information that arises, e.g. during processing or storage of the contract manufactured products and starting materials and packaging materials.

2. The CG and CA aid one another when reviewing the complaints and determining the required measures.

§ 7 Confidentiality

1. CG and CA undertake not to disclose the mutually communicated experiences and information about the manufacture and quality control of the contract manufactured products. They take all measures required to prevent a third party discovering and utilising them. Staff and employees should be sworn to secrecy, insofar as this is not already required by their work contract.

2. The contact partners will use the knowledge gained through the contract only for the purpose of the contract and on completion of the contract, will no longer make use of it without the explicit consent of the other party - not even in a modified form.

3. The contract partners will return documents, that they each will have received from the other in connection with the manufacture and quality control of the contract manufactured products on completion of the contractual relationship, to the information provider without delay, if it has not otherwise expressly been agreed contractually or if strict legal reasons oppose delivery.

4. The confidentiality obligation does not apply to the data that already counts as state-of-the-art, public and therefore no longer protected.

§ 9 Waiver of recourse

1. If, after processing, the CG launches the subject of the contract for sale as a finished medicinal product and loss or damage under the pharmaceutical liability insurance occurs, that can be traced to a deficiency in the area of responsibility of the CA, the CG asserts waiver of recourse.

2. The CG is aware that this waiver of recourse requires the agreement of its insurer. The CG will solicit this agreement and pass it on to the CA for information.

§ 10 Final provisions

1. The contract enters into force upon signature by both contract partners and is valid initially until [enter date]. It is extended automatically by [enter time limit] each time, if it is not cancelled with a time limit of [enter time limit] by one of the contract partners.

2. The cancellation must be notified in writing by registered mail/with advice of receipt.

3. Changes and supplements to this contract and its appendices are by mutual agreement and should be in writing.

4. If one or more provisions of this contract is, or becomes, ineffective, the validity of the other provisions is not affected by this. The invalid provision is replaced as soon as possible by another provision, that comes closest to the economic content of the ineffective provision. The same applies for possible loopholes of this contract.

5. Place of fulfilment is [enter location], Jurisdiction is [enter location]

.......
Location, date Location, date

.......
Signature of the contract giver Signature of the contract acceptor

Appendices
Appendix 1 Contact persons from the CG and the CA
Appendix 2 Contract manufactured products
Appendix 3 Model for a supply contract
Appendix 4 Specifications for starting materials and packaging materials

Appendix 1 
on the framework contract for contract manufacture and quality control

Between CG [name, location] and CA [name, location)]
on [date of basic agreement]

Version: valid from
page [no.] of [number of pages]

Contact persons from the contract giver and contract acceptor

.......
Location, date Location, date

.......
Signature of the contract giver Signature of the contract acceptor

Appendix 2 
on the framework contract for contract manufacture and quality control

Between CG [name, location] and CA [name, location)]
on [date of basic agreement]

Version: valid from:
page [no.] of [number of pages]

Contract manufactured products

.......
Location, date Location, date

.......
Signature of the contract giver Signature of the contract acceptor

Appendix 3 
on the framework contract for contract manufacture and quality control

Between CG [name, location] and CA [name, location)]
on [date of basic agreement]

Version: valid from:
page [no.] of [number of pages]

Model for a supply contract
Supply contract based on the framework contract between CG [name, location] and CA [name, location)] on [date of basic agreement]

.......
Location, date Location, date

.......
Signature of the contract giver Signature of the contract acceptor

Appendix 4 
on the framework contract for contract manufacture and quality control

Specifications

.......
Location, date Location, date

.......
Signature of the contract giver Signature of the contract acceptor