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1.4. How To Select A Contract Manufacturer

1.4.1. List of Requirements
Begin any search by developing a list of requirements that a potential contractor must satisfy in order to be considered. Provide this list of requirements to the purchasing department. The most fortunate situation that can occur in the selection process is finding that the Purchasing Department is already employing a contract manufacturer with the capabilities to perform the required task.

Major technical points which should be raised and investigated in the process of selecting a contract manufacturer for a given product, or a range of product, are listed below:
·         Statutory clearance/licenses
·         Adequate and appropriate facilities for storage, handling, manufacturing and testing of raw/packing materials, in-process materials and finished products.
·         Competence and experience of employees directly/indirectly responsible for the manufacture.
·         Competence and experience of employees entrusted with the job of quality assurance/quality control
·         Previous experience of the manufacture in manufacturing similar products
·         System of documentation, and adherence to them, so as to comply with cGMP requirements. (McVean, D.E., 2007)

1.4.2. Referrals from Colleagues
After developing the list of requirements, begin your search by seeking referrals from colleagues in the industry. There is nothing better than obtaining a recommendation about a particular contract manufacturer from someone that has successfully used its services. You can question your colleagues about any idiosyncrasies they experienced with the operations of recommended contractors. These queries can also explore the degree of satisfaction experienced regarding the manufacturer’s compliance with mutually agreed upon requirements. Finally, an opinion can be obtained regarding the qualifications of the contractor’s personnel assigned to projects. Be sure to solicit information as to how those personnel interrelate with customers. (McVean, D.E., 2007)

1.4.3. Use of Information Sources
Contract manufacturers can be identified by their specialty through the use of commercial information sources[1,2] and by review of advertisements in trade journals.[3] Commercial information sources solicit profiles of contract manufacturers for their databases. Contract manufacturers usually advertise their services in journals having the widest circulation within an industry. Many of these journals print annual buyer’s, guides in which their advertisers are grouped according to the services they provide. The Internet is also a useful tool to identify contract manufacturers. Several sites are listed in the Reference section.[4] Trade Shows Trade shows provide excellent opportunities to seek out and meet contract manufacturers. Contract manufacturers operate exhibits where literature on their companies can be obtained for later evaluation. Talking with the exhibitor’s personnel provides an opportunity to conduct preliminary discussions with contractors about the services they offer. You can determine on the spot whether or not a particular contractor will be suitable for your project. Trade shows often feature speakers on topics concerned with contract manufacturing. Attend such programs to familiarize yourself with the intricacies of contract manufacturing. You will find that your notes and handouts from the speakers will contain the latest information on this subject. (McVean, D.E., 2007)

1.4.4. The Interview Process
Once you have identified a list of potential contractors, begin communicating with them by telephone. Table 1 provides suggested questions that can be used during interviews. Begin the interview by explaining that you are conducting a search for a contractor, and that they have been preliminarily identified as having the capability to meet the requirements of your upcoming project. Then, request them to send the most current information about themselves and their capabilities. To assure due diligence in your search, include at the conclusion of each interview a request for them to give you the names of any other contractors that they feel might be able to meet your requirements. Additional contractors identified in this manner should be contacted and interviewed, especially those who were suggested by more than one other company. (McVean, D.E., 2007)

1.4.5. ‘‘Very Good’’ vs. ‘‘Excellent’’ Contractors
A few contractors have reached the point of being identified as being ‘‘very good’’ at what they do. Once this status has been reached, their business usually increases and downtime decreases. However, the nature of a contractor’s business poses problems with advancing further in status, i.e., involvement with many customers, frequent changeovers of equipment, and production of many batches of a multiplicity of products. Advancing to the status of being ‘‘excellent’’ presents a unique challenge, because an ‘‘excellent’’ contractor is one that manages schedules so that time is allocated for concentration upon the nuances of any one process, smoothing out the rough edges, and achieving perfection. Your search should strive to identify the ‘‘excellent’’ contractors. (McVean, D.E., 2007)

Agenda for First Meeting with Selected Contractor
The final step in the process is to select one of the finalists and to request a meeting to discuss the project in greater detail.

1.5. Developing A Contract:-
In many respects this term is a misnomer in the sense that a formal ‘contract’ may seldom exist. An order placed by one party upon another may constitute a legally binding contract. The ‘CONTRACT’ could be constructed as having a legal meaning in terms of a legally binding document. It may by deemed, in certain circumstance and in certain countries, therefore to be unacceptable and legal representative of both the principle manufacturer and customer, in addition to agreeing the contents, must decide what force in law the document is to have if the word contract is used. The use of the phrase ‘TECHNICAL AGREEMENT’ may be more acceptable to each party.(Shah, D.H., 2000)

1.5.1. Commercial Discussion
Initial contract may be at commercial levels, preferably with the involvement of technical personnel, to assess the viability of pursuing the use of particular principal manufacturer. At this stage, confidentiality or secrecy agreements should be established. Technical matters should also be discussed to ensure that the principal manufacturer’s technical staff are aware of new products and are able to make an assessment of the technical feasibility of the project. This technical assessment must be taken into consideration when commercial assessment is made.(Shah, D.H., 2000)

Commercial agreements include:
·         Exact definition of the products and activities that are to be given to the principle manufacturer
·         Financial responsibility for the supply of starting and packaging products
·         Financial responsibility for the cost of rejection, losses, rework and failures
·         Financial responsibility for destruction of waste and rejects with consideration of any environmental aspects
·         Terms and condition for payment
·         The basis of price revision
·         Financial standing of the principle manufacturer and customer with commercial references taken up
·         Assurances that the principle manufacturer continuously complies with ‘good business practises’ and relevant  legislation
·         Arbitration arrangements on commercial and technical issues
·         Insurance provisions
·         Product liability responsibilities
·         Access to the customer to the principal manufacturer’s premises
·         Stock levels to be held by the principal manufacturer
·         Planning, forecasting and lead time arrangements
·         Underwriting by the customer of the stock purchased and held by the principal manufacturer specifically for the customer’s work, if the work should cease
·         The period for which any agrraments will run and the arrangements for the their termination

1.5.2. Confidential Agreements:-
For the commercial well being of both parties, it is advisable to enter into legally binding agreements on matters of secrecy or confidentially. Such agreements serve to provide assurances, under law, that commercially sensitive information, which is the property of the principal manufacturer and not in the public domain, is protected. They should contain detailed information on technical responsibilities and quality matters relevant only to actual manufacture and/ or assembly.(Shah, D.H., 2000)

The principal manufacturer may also need to protect certain aspects of their customer’s operation. In particular, confidentiality of other customer’s work on the principal manufacturer’s site may come into question. For any principal manufacturer, this is a difficult area to address and it is worthwhile establishing with any customer, their views on the possibility of competitors, who may be using the principal manufacturer seeing their process.(Shah, D.H., 2000)

1.5.3. Transfer of information
Having established commercial contract and with a formal secrecy/confidentially agreements in place, technical information that is specific to the products under discussion needs to be transferred from the customer’s technical department to the principal manufacturer. It is not sufficient for the customer alone to make a judgement about the principal manufacturer’s ability to carry out processes other than to agree that they are not acceptable. In order that the principal manufacturer can make a valued judgement about their own ability to carry out satisfactorily the manufacture and/ or assembly, technical information is needed and this must include as much information as possible about the process. This will also enable trials to be carried out if necessary. It may be that acceptance of the principal manufacturer becomes dependent upon the satisfactory outcome of such trial production. initial basic information will include:
·         A copy of the marketing authorization if the process details contained therein are relevant to the principal manufacturer carrying out the process. The principal manufacturer’s qualified person should have this information at some point.
·         Master batch formula, method and intermediate bulk product specification to enable the principal manufacturer to ensure that the process is viable in their plant. At this stage the principal manufacturer will identify what new equipment needs to be purchased and agree whether or not this cost is to be adjustable into the price.
·         Starting materials specifications if the principal manufacturer is to purchase these.
·         Methods of in-process and intermediate bulk testing to enable the principal manufacturer to ensure that quality control can be carried out with their equipment and to be included into the cost price.
·         Master packaging , assembly and finished product specifications
·         Packaging materials specifications including text copy.
·         Delivery acceptance criteria for both starting and packaging materials supplied by the customer.
·         Special storage, handling and cleaning information.(Shah, D.H., 2000)

1.5.4. Technical Agreement:-
Having established the acceptability of the principal manufacturer, the customer and him must established the exact responsibilities of each party and state these in a formal agreement signed by representatives of all parties concerned. The customer and principal manufacture should each appoint competent representative (quality assurance or production).  In doing this, they should consider and state the person (s) responsible as relevant to the operation to be undertaken by each party. (Shah, D.H., 2000)

General Consideration:-
The following areas need to be addressed and stated:
The responsibility of the “Qualified persons” in the customer’s and the principle manufacturer’s organization
·         Assurance that the principal manufacturer continuously complies with ‘good pharmaceutical practices’ and relevant legislation
·         Provision of reasonable  access by the customer to the principal manufacturer’s premises
·         Arrangement for change or amendments to the technical aspects of  the agreement
·         Channel of communication
·         Statement of assurance that the principal manufacturer will not undertake processes or activities that could jeopardize the quality of the product
·         Supply of any relevant information following an official inspection of the principal manufacturer’s premises that could impact upon the supply of product.(Shah, D.H., 2000)

1.6. Working With A Contract Manufacturer
Finally the agreement should be approved, and the technical responsibilities accepted, by each party concerned with the agreement, preferably signed by the person responsible for quality in both the customer’s and principal manufacturer’s organization.(Shah, D.H., 2000)
Master Production Batch Information:-
·         Purchase and supply of starting materials
·         Sampling, testing and release of starting materials
·         Artwork for the text copy
·         Purchase and supply of  packaging materials
·         Sampling, testing and release for use of packaging material

·         Bulk manufacture
·         Sampling, testing and release of bulk product
·         Assembly of the finished pack
·         Sampling and testing of finished produc
·         Control and supply of information
·         Control and supply of samples
·         Finished product release
·         Transports and distribution
·         Complaints and recall
·         Safety information
·         Sub contracting
·         Miscellaneous responsibilities.

1.7. Regulatory Issues

1.7.1. Status of a Contract Manufacturer
From a regulatory standpoint, Regulatory agencies do not differentiate a contract manufacturer from any other manufacturer under their jurisdiction. A contract manufacturer must comply with the same federal, state, and local regulations as would any other manufacturer. In the United States, prior approval must be obtained from the U.S. Food and Drug Administration (FDA) before a contractor can be used as either the primary or alternative manufacturer for a registered pharmaceutical product. Even though a contractor is being used, the contracting company still retains primary responsibility for assuring that the contract manufacturer complies with all of the commitments that were included in the product’s registration and with all aspects of current good manufacturing practices (cGMPs). (McVean, D.E., 2007)

1.7.2. Inspections
Regulatory agencies inspect contract manufacturers on a regular basis to ensure that these manufacturers are in compliance with cGMPs. In the United States, all reports of inspections by regulatory agencies are available to anyone through freedom of information. Any company contemplating the use of a contract manufacturer should review the regulatory history of all companies under consideration as part of the selection process. Likewise, client companies, as part of their contractual relationship, should have a contractual requirement that the contractor notify them should there be an inspection involving their product, or should there be any adverse findings from any inspection which would affect the continued supply of their product by that manufacturer. (McVean, D.E., 2007)

1.7.3. Pre-Approval Inspections
Regulatory Agencies also conduct pre-approval inspections as part of the process of review of registration documentation. Prior to a pre-approval inspection, the client and the contractor should review all documentation that will be reviewed during the inspection. Clients should also assure themselves that the contractor is, indeed, in compliance with cGMPs. (McVean, D.E., 2007)

1.7.4. International Considerations
If the client is marketing the product internationally, the client should provide the contract manufacturer with copies of the regulatory requirements that might affect the client’s product in all countries in which the product is being marketed. A contractor cannot be held responsible for compliance with regulations with which the contractor is unfamiliar. (McVean, D.E., 2007)

1.7.5. Master Files
A contract manufacturer should be willing to provide its clients with authorization to permit the regulatory authorities to reference the facilities master file that the contractor maintains in the archives of the regulatory authority. Or, if a facilities master file is not an appropriate vehicle for a particular type of registration, the contractor should provide sufficient information about its processes and procedures to enable a client to satisfy the requirements for manufacturing information in its application for the registration of its product. Although it is convenient to be able to use contractor-supplied information in the preparation of an application for registration of a product, the client must always completely review that information to ensure that, from a regulatory viewpoint, control of the product has not been inadvertently transferred to the contractor. (McVean, D.E., 2007)

1.7.6. Dedicated Equipment
In some situations, the regulatory agency will require that dedicated equipment be used in manufacturing activities. Should this requirement be imposed, many contractors require the client to purchase this equipment. This becomes another initial expense that must be added to the total cost of using a contract manufacturer. (McVean, D.E., 2007)

1.7.7. Common Regulatory Theme
Regardless if the product is a ‘‘traditional’’ pharmaceutical or is a product of biotechnology, one common regulatory theme is always present. That is, the company employing a contractor retains responsibility for the product being manufactured and for ensuring that the contractor remains in compliance with the terms of the license and with cGMPs. (McVean, D.E., 2007)

1.7.8. History of Contractor’s Relations with Regulatory Agencies
Finally, before working with any contract manufacturer, potential clients must be assured that the contractor has a satisfactory history of cooperation with regulatory authorities. This type of information can be obtained from a review of several establishment investigation reports (available through freedom of information in the United States) involving that contractor. (McVean, D.E., 2007)

1.7.9. Cooperation with Regulatory Agencies
Should a contractor regularly take an adversarial stance when dealing with regulatory authorities, there is more at stake than just defending that contractor’s position. That contractor is potentially placing the continued production of the client’s products in jeopardy especially if the dispute involves processes or procedures related to those products. For that reason alone, a potential client should not select that particular contractor for their project. (McVean, D.E., 2007)



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