WHITE PAPER

By: Milton Boyer, Senior Vice President of Drug Product Manufacturing, AMRI

Discovery and Development API Manufacturing Drug Product Manufacturing

TRENDS IN QUALITY AGREEMENTS & COMMUNICATIONS: A CMO PERSPECTIVE

IntroductionOutsourcing of all phases of pharmaceutical biological development, and the manufacturing activities surrounding those, are on the rise. As drug pipelines shift toward more complex and specialized capability, quality agreements and the communication associated with the planning of these complex operations are needed to avoid non-compliance and the costly ramifications associated with non compliance. Simultaneously, there has been a dramatic increase in the number of official actions as measured by warning letters. These warning letters have showed that there is a more acute focus by the U.S. Food and Drug Administration (FDA) on the drug sponsor-CMO relationship. The agency has published a guidance formally defining roles and expectations of both drug sponsors and CMOs.

What is Driving the Adoption of OutsourcingA recent survey published in March 2015 showed that 80% of the respondents report an expectation for increased demand of outsourcing for the coming years, up from 50% just a few years ago.1 Some of the things driving the adoption of drug develop-ment manufacturing outsourcing are reduced time to market, an increase in virtual biotech models, big pharma’s shift away from in-house R&D activities, and to some extent, the shift to developing personalized medicine, which does not lend itself to in-house manufacturing.

Other forces driving an increase in outsourcing are that the operational costs associated with drug manufacturing and drug development are rising. At the same time there are controls placed on healthcare costs that have forced companies to look at different ways to bring products to market and streamline internal operations. As a result, outsourcing is being considered more now as a core strategy.

From the research and development side, the pressure to increase success rates are driving companies to look at combi-nations of what have traditionally been internal efforts combined with external resources. In addition, the outsourcing of biophar-maceutical manufacturing has been growing to the point where it is a common strategic decision for developers, going well beyond what had in the past been non-core activities to high-value and complex technical services.

A Rise in InspectionsThere has been a dramatic increase in the number of official actions as measured by warning letters, which has changed the regulatory landscape. The spectrum of inspection outcomes ranges from ‘no action required’ to ‘voluntary action’, meaning there are findings, but no product impact (See Figure 1). Products are still going to be approved, export licenses are going to be granted and there will be a formal establishment inspection report stating that VAI is the status. Official actions run the gamut from simply withholding an application to harsh enforcement activities. Withholding the applications and

requesting a meeting are designed to get the companies to take a voluntary response and remedy the problem without having a warning letter issued.

From 2007 through 2012, there was a dramatic rise in warn-ing letters, and from 2012 until 2015 there has been a slight decrease. Prior to 2012, the number of warning letters issued by the FDA was around 500. In 2012, the number went up to more than 1,500. The increases have been equated to the FDA receiving additional funding and a new Commissioner in 2012, who was devoting the funds to additional inspections and activi-ties and taking more aggressive actions to speed the issuance of warning letters. Since then, there has been a slight decrease from the peak in 2012 of a 12% to 14% reduction, a little more than a 25% reduction in 2014 possibly attributed to a decrease in funding, and discussion within the industry on behalf of Congress about the impact that some of these actions were having on drug shortages.

483s and a Responsibility for QualityToday, the FDA is forming an Office of Pharmaceutical Quality dedicated to focusing on product quality as it relates to manu-facturing. The FDA is looking at the relationships between drug sponsor and contract providers in a more detailed way, and the relationships will continue to receive more scrutiny.

So, who is ultimately accountable for product quality: the contract provider or the drug sponsor? The FDA guidance on quality agreements defines the “who” and “what” (See Figure 2). The “who” is the owner or the drug sponsor, and FDA refers to the party that introduces – or causes introduction of – the

NAINo Action Indicated

VAIVoluntary Action

Indicated

OAIOfficial Action

Indicated

No Findings or 483’s.May include recommended actions

483’s but no product impact. Products approvedExport lic grantedEIR issued with VAI statement

Withhold ApplicationRegulatory MeetingUntitled LetterWarning LetterSeizure Injunction Prosecution

FIGURE 1: INSPECTION OUTCOMES

FIGURE 2: DEFINING THE “WHO” AND “WHAT”

Who • Owner or Drug sponsor – FDA refers to the party that introduces (or causes the introduction of) a drug into interstate commerce as the Owner of the drug • Contracted facilities or CMO – FDA refers to all outside entities performing manufacturing operations for the product Owner as Contracted Facilities. What • Operations Contracted Facilities perform for Owners include • Formulation • Chemical synthesis • Cell culture and fermentation, including biological products • Analytical testing and other laboratory services • Packaging and labeling Primary Responsibilities • Owner is responsible for assuring that drugs introduced for interstate commerce are neither adulterated nor misbranded as a result of the actions of their selected Contracted Facilities. • Contracted Facilities must assure compliance with applicable cGMP for all services used to make a drug(s) for the Owner.

NAINo Action Indicated

VAIVoluntary Action

Indicated

OAIOfficial Action

Indicated

No Findings or 483’s.May include recommended actions

483’s but no product impact. Products approvedExport lic grantedEIR issued with VAI statement

Withhold ApplicationRegulatory MeetingUntitled LetterWarning LetterSeizure Injunction Prosecution

FIGURE 1: INSPECTION OUTCOMES

drug into commerce as the owner of the drug. Any outside entity performing manufacturing operations for the product owner is a contracted facility. So, those who take the drug to market are different than those that perform the manufacturing operations that bring the drug to market.

The “what” defines the operations that the CMO can provide for the drug sponsors, and these fall into five broad areas: formula-tion, synthesis, cell culture and fermentation – including large molecules – analytical testing and other laboratory services, and product packaging and labeling. The agency outlines the primary responsibilities of the owner with respect to each of the five areas to assure that the drug is not adulterated or mis-branded as a result of the CMO’s actions.

Real-World ExamplesConsider the real-life example of a warning letter issued to one company providing high quality analysis services in 2012. The firm had failed to validate the specificity of test procedures used to analyze finished product stability samples. The FDA stated that the method used to determine content of salicylic acid stability samples was not a stability indicating method, nor was it validated. The final comment was that the method may not allow detection of the presence of degradation products that may indicate deterioration of the drug product.

In response, the company told the FDA that this was not their method, but that of the client. The company claimed it informed its clients about the importance of validating methods, but the client had chosen not to validate the methods. But the FDA said it was this company’s responsibility to ensure that the test methods are validated. This exemplifies a CMO being held responsible for the sponsor’s actions, or lack thereof.

Quite the opposite occurred at one company specializing in dermatological products. It received a warning letter after an in-spection of one of its contract manufacturers, resulting in a 483 and a subsequent inspection. The warning letter stated that the quality control unit did not fulfill its responsibility, nor exercise its authority, to approve or reject all drug products manufactured, processed, packed or held under contract by another company.

The FDA told this company that it did not understand the regula-tory expectations of entering into contract relationships and that it was responsible for the quality of products coming through them. So, if a CMO has an issue, the drug sponsor is respon-sible for making sure that those issues are addressed.

The lesson here: regardless of who manufactures your products or the agreements in place, the sponsor is required to ensure that these products meet predefined specifications prior to distribution and are manufactured in accordance with the Act and its implementing regulations, including cGMP regulations for finished products. So, in the case of the first real-world example, the CMO is held accountable for the actions of the drug sponsor. In the second example, the drug sponsor is being held accountable for the actions of the CMO.

Costs of NoncomplianceThis increased scrutiny causes increased activities, and doing more increases costs (See Figure 3). This can create tension between the sponsor and CMO regarding who is going to ab-sorb those costs. The CMO can take a hard line and risk losing business. Or, they can proceed at risk, and as in the case of the first real-world example mentioned earlier, risk cGMP compli-ance and face official actions. Or they can do the work them-selves and absorb the cost, which will further pressure their margins and likely be precedent setting.

Whichever end of the spectrum is chosen, the expectations are evolving towards spreading the accountability. No longer is the risk solely with one side or the other for non-approvals. As a CMO, the agency expects the location to perform the work retain accountability. These costs are real, and if they are not shared, service providers may start walking away from clients unwilling to cover these costs.

Communication is KeyCommunication is a top issue for both sponsors and CMOs. As a result, quality agreements are significantly important to both parties, and the FDA is paying closer attention to contract relationships (See Figure 4). Sponsors should expect questions during inspections about how their companies are making sure the CMOs are actually being monitored.

In essence, the FDA is putting industry on notice that relation-ships are going to get more attention. Specifically, quality agreements and communication mechanisms are going to receive more scrutiny.

The continuing lesson for FDA-regulated companies is that the FDA is fully-engaged, and highly-fo-cused, on enforcement activities. Movement from 483 to Warning Letter and beyond is much swifter than in past years. For these companies an FDA inspection is in your future – it is a matter of when, not if, FDA will walk through your doors. The costs of remediating compliance after the fact far exceeds the incremental spend for personnel, systems remediation and consultants in an ongoing manner. Understanding the environment suggests non compliance has a huge negative impact on your business’ bottom line.

FIGURE 3: NON COMPLIANCE IS COSTLY

ConsentDecrees 483’s

WarningLetters

No Added Value(Urban Legend Compliance)

Good Compliance

*Non-Compliance CFR Over Compliance* Code of Federal Regulations -

establishes what is to be done but not how to do it

Weekly Process Review & Quarterly Business Reviews

Contract provider only dispositions product and provides documents and data to Sponsor for review (i.e. electronic portal)Sponsor releases product for shipment and to marketSponsor should not release to market without review of all complaints, deviations, investigations, etc.Process is reviewed, as much as possible, in real time through final release(s)Overall process is reviewed afterwards for trends, field complaints, AE, etc.

FIGURE 4: EXAMPLE COMMUNICATION PLAN - CONSTANT AND FLUID

Ongoing Data Review (Complaints, Deviations, Investigations, AE, etc. Trends etc.)

Batch or service

Completed

Contract Provider

issues data to Sponsor

SponsorReview of

Data

Formal Release to Sponsor

Sponsor Release to Market

Weekly Process Review & Quarterly Business Reviews

Contract provider only dispositions product and provides documents and data to Sponsor for review (i.e. electronic portal)Sponsor releases product for shipment and to marketSponsor should not release to market without review of all complaints, deviations, investigations, etc.Process is reviewed, as much as possible, in real time through final release(s)Overall process is reviewed afterwards for trends, field complaints, AE, etc.

FIGURE 4: EXAMPLE COMMUNICATION PLAN - CONSTANT AND FLUID

Ongoing Data Review (Complaints, Deviations, Investigations, AE, etc. Trends etc.)

Batch or service

Completed

Contract Provider

issues data to Sponsor

SponsorReview of

Data

Formal Release to Sponsor

Sponsor Release to Market

cont. on back page

Ultimately, drug makers are responsible for the quality of their product, whether that product is the drug product, the drug substance, or the contract service that produced the products. Investigators are looking for more transparency between the two parties and delineate the responsibilities of the applicant holder and the CMO. The applicant holder should share the appropriate sections of their drug applications with the contract firms to avoid misunderstandings and facilitate site compliance.

This can be rare, however, with CMOs who may also be work-ing for competitors. This is because in many cases, this is the sponsor’s valuable intellectual property and they are reluctant to share. In turn, on the CMO side, the sponsor should have access to other clients’ audit findings. This can be a touchy situ-ation for CMOs because they have confidentiality agreements with each of their clients, and sharing data with another client from an audit may be pushing the envelope.

What happens when a drug product produced by a contract firm under the sponsor’s oversight is found to be non-cGMP compli-ant? FDA says both parties are responsible for ensuring that the drug product is made under cGMP control. If the contract manufacturing site gets a warning letter because the drug product is adulterated or misbranded, the sponsor will also be held accountable by the FDA.

The Elements of a Quality AgreementThe FDA Guidance for Industry states that owners and contract facilities can draw on quality management principles to carry out complicated processes of contract drug manufacturing by defining, establishing, and documenting the responsibilities of all parties involved. This is not mandatory; however, the agency strongly recommends this.

Both non compliance and over compliance are costly. Receiving a 483, a warning letter, and consent decrees push costs up. On the other side, if there is no added value, costs can rise there as well.

So it is very important that quality agreements define what good compliance is going to be between both parties. The elements of a quality agreement include two areas: responsibilities and change control.

The agency has provided templates to help determine the responsibilities, such as who is responsible for providing facili-ties and equipment, maintaining equipment, providing materials, and who will take responsibility for documentation.

With respect to change control, define the level of change, especially for the drug sponsor. When do I need to be simply notified, when do I need to insist on a prior review, and when do I need to insist on having prior approval before making this change? Changes may be made regarding materials, locations, the process, and additional products that are being brought into the facility.

Focusing on when the parties need to be notified is also an important element of change control. The agency wants to see specific communication plans between the two parties specifically as it relates to feedback loops, field complaints, and adverse events.

The agency also wants to see if the communication plans in the quality agreements are in sync with the sponsor requirement for notification. In other words, if the sponsor has a requirement to notify the agency within a certain amount of days, they want to make sure that the contract provider does not have a require-ment that falls outside of that window.

Another item in the agreement is ensuring that the drug sponsor has representatives available during the inspection to address technical questions about how and when events were commu-nicated. Finally, the agency wants to see that when neither party has the expertise that they are willing to bring in an outside expert.

As a contract provider, AMRI has shown its quality agreement to the FDA, which includes how we release product to our spon-sor and how the sponsor releases to the market. AMRI does not release to the market, nor does the sponsor, without a formal and thorough review of everything that we have done for them, including complaints, deviations, and investigation. This pro-cess, as much as possible, happens in real time. Finally, this overall process has feedback mechanisms that are reviewed afterwards to identify trends.

Going forward, CMOs should expect to share more with inspec-tors and clients. Inspectors reviewing quality agreements want to see policies, may select a few of your top clients, and ensure that their audits are being used for gap analysis and vulner-abilities. This is new for many CMOs because internal audits have typically been off-limits for sharing, but there will be more requests for this.

In addition, clients want greater and immediate transparency. They want to know of, and participate in, all investigations.

SummaryOutsourcing is increasing in all activities. Regulatory agencies are focused on the relationship between the contract provider and the drug owner, and both parties have to take responsibility in the relationship: the application holder is being held respon-sible for the contract providers and contract providers are being held responsible for the transparency and deliverables back to the sponsor. Agencies are using the quality agreement as primary evidence that strong communication channels are in place.

The cost of non compliance is high for both sides. The delays to the market for the drug sponsor, and the decreased inflow of projects for the contract providers, are those situations neither wants or can tolerate. CMOs have to accept that there is a dual expectation, that we are responsible for our site compliance, and regarding our clients, our quality is their quality.

References1. 2015 Annual Outsourcing Survey, Contract Pharma (2015), http://www.contractpharma.com/contents/view_outsourcing-survey/2015-05-13/2015-annual-outsourcing-survey/

Company Name: Albany Molecular Research, Inc. (AMRI)Headquarters Address: 26 Corporate Circle, Albany, NY 12203Phone: 1.518.512.2000 Email: clientservice@amriglobal.comWebsite: www.amriglobal.com