On May 28, 2013, the Food and Drug Administration (FDA) published a draft guidance entitled “Contract Manufacturing Arrangements for Drugs: Quality Agreements.”¹ The draft guidance describes FDA’s views on defining, establishing and documenting the responsibilities of parties that are involved in the contract manufacturing of drugs that are subject to current good manufacturing practices (cGMPs). In the draft guidance, FDA recommends that such parties — referred to as “Owners” and “Contracted Facilities” — utilize quality agreements to assure drug quality, safety and efficacy. FDA is expected to finalize the guidance later this year. ²

Background
Companies are responsible for ensuring that the drugs they introduce into interstate commerce are not adulterated or misbranded as a result of the acts or omissions of their selected contract manufacturing organizations (CMOs).³ Similarly, CMOs must assure compliance with cGMPs for all manufacturing, testing or other support operations they undertake.⁴ In the draft guidance, FDA emphasizes that because the agency “considers contractors an ‘extension of the manufacturer’s own facility,’ both Owners and Contracted Facilities are responsible for ensuring that their products are not adulterated or misbranded.”⁵

The mutual responsibility of drug companies and CMOs to assure drug quality arises initially from the new drug application (NDA) process. Among other things, an NDA for a new drug must include “a full description of the methods used in, and the facilities and controls used for, the manufacture, processing, and packaging of such drug.”⁶ This means that an NDA must include “the name and address of each manufacturer of the drug product,” including “each contract facility involved in the manufacture, processing, packaging, or testing of the drug product and identification of the operation performed by each contract facility.”⁷ NDA approval is premised in part on FDA’s determination that the “methods to be used in, and the facilities and controls used for, the manufacture, processing, packing, or holding of the drug substance or the drug product . . . comply with the current good manufacturing practice regulations.”⁸ To inform this determination, FDA may conduct a preapproval inspection of any CMO facility where the drug is to be manufactured.⁹ After approval, if the CMO does not manufacture the drug in a manner that ensures the drug’s identity, strength, quality and purity, then FDA may withdraw its approval of the NDA.¹⁰

Other provisions of the Federal Food, Drug, and Cosmetic Act (FD&C Act) require that drug companies and CMOs “work together to establish and maintain quality oversight of contracted manufacturing operations and the materials produced under contracted manufacturing arrangements.”¹¹ Under Section 501(a)(2)(B), a drug is deemed to be adulterated if “the methods used in, or the facilities or controls used for, its manufacture, processing, packing, or holding do not conform to or are not operated or administered in conformity with current good manufacturing practice to assure that such drug meets the requirements . . . as to safety and has the identity and strength, and meets the quality and purity characteristics, which it purports or is represented to possess.”

The most recent amendment to the FD&C Act states that, for purposes of Section 501(a)(2)(B), “current good manufacturing practice” means “the implementation of oversight and controls over the manufacture of drugs to ensure quality, including managing the risk of and establishing the safety of raw materials, materials used in the manufacturing of drugs, and finished drug products.”¹² Drug companies and CMOs alike must take the necessary steps to assure drug quality, safety and efficacy.¹³

The Draft Guidance
The draft guidance emphasizes that drug companies and CMOs can mitigate the risk associated with contract manufacturing arrangements by entering into robust quality agreements. FDA acknowledges that “the CGMP regulations do not explicitly require Owners and Contracted Facilities to document their respective responsibilities in contract manufacturing arrangements,” but then states that cGMP regulations require (1) drug companies to “be responsible for approving or rejecting drug products manufactured, processed, packed, or held under contract by another company” and (2) CMOs to comply with cGMPs “applicable to the operations in which [the CMO] is engaged.”¹⁴ According to the draft guidance, “implementing a written Quality Agreement facilitates compliance” with these cGMP requirements.¹⁵ The practical effect of FDA’s current thinking is that the agency, in most circumstances, will view the absence of a quality agreement — or the presence of an inadequate quality agreement — to be tantamount to a violation of cGMPs.¹⁶

The draft guidance describes in detail the elements of a robust quality agreement. A quality agreement “is a comprehensive written agreement that defines and establishes the obligations and responsibilities of the Quality Units of each of the parties involved in the contract manufacturing of drugs subject to CGMP.”¹⁷ The elements of a quality agreement “should track the basic subparts of the CGMP regulations . . . to ensure coverage of all applicable CGMP responsibilities.”¹⁸ The “most critical elements” of a quality agreement, according to the draft guidance, are the sections covering (1) drug company and CMO responsibilities and (2) change control.

With regard to drug company and CMO responsibilities, the draft guidance provides that a robust quality agreement will include sections that discuss the following:

• Quality Unit responsibilities: This section “should define in detail the CGMP responsibilities of each party. . . . In particular, this section . . . should be clear with respect to product release. Owners are ultimately responsible for approving or rejecting drug products manufactured, processed, packed, or held under contract by another company.”¹⁹
• Facilities and equipment: This section should (1) “identify the specific site(s) at which manufacturing operations will be performed” and (2) “indicate which party will be responsible for carrying out validation, qualification, and maintenance activities for any relevant equipment or equipment systems.”²⁰
• Materials management: This section “should indicate who is responsible for setting specifications for raw materials; auditing, qualifying, and monitoring suppliers of those materials; and conducting required sampling and testing.”²¹
• Product-specific terms: This section should “provide specific terms related to the particular product or products involved,” including product/component specifications; defined manufacturing operations, including batch numbering processes; responsibilities for expiration/retest dating, storage and shipment, and lot disposition; and the like.²²
• Laboratory controls: This section should address the “adequate laboratory facilities” that the drug company and CMO Quality Units each should have “available to them for testing and approval (or rejection) of drug products” and include “[p]rocedures delineating controls over sampling and testing samples.”²³
• Documentation: This section “should indicate procedures for the Owner to review and approve documents and any changes thereto.” It also should “specify how records and documentation required by the applicable CGMP regulations will be made available for immediate retrieval, and how copies will be made and maintained under a certification or controlled copy procedure.”²⁴

With regard to change control, the draft guidance states that “[c]hanges may be initiated by either party for many reasons and should be discussed and addressed in the Quality Agreement.” In particular, quality agreements should provide that the CMO must give notice of changes related to, among other things, raw materials and their suppliers, establishment locations, and manufacturing processes. Likewise, quality agreements should require both the drug company and the CMO to notify the other of certain events that may initiate changes, like investigations into manufacturing deviations, new product claims, or customer complaints. Finally, quality agreements should identify “the types of changes for which Owner review and approval must be obtained before implementation and those changes that can be implemented with notification only.”²⁵

Although FDA recommends throughout the draft guidance that drug companies and CMOs “implement written Quality Agreements as a tool to delineate responsibilities and assure the quality, safety, and effectiveness of drug products,”²⁶ the agency tempers that recommendation with two caveats. First, drug companies are not relieved of their responsibility to ensure the quality and safety of the drugs they introduce into the marketplace simply because a quality agreement allocates responsibility for a particular activity to a CMO. Second, quality agreements do not exempt CMOs from complying with cGMPs related to the operations they perform, regardless of whether the quality agreement specifically discusses those cGMP requirements.²⁷ In sum, both drug companies and CMOs must work together to ensure the quality, safety and effectiveness of drug products. 

References

1. FDA, Draft Guidance for Industry, Contract Manufacturing Arrangements for Drugs: Quality Agreements (May 2013), available at http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/Guidances/ucm064971.htm [hereinafter Draft Guidance].
2. FDA currently is accepting public comments on the draft guidance. To be considered for any final version of the guidance, comments must be submitted by July 29, 2013. See FDA, Notice, Draft Guidance for Industry on Contract Manufacturing Arrangements for Drugs: Quality Agreements; Availability, 78 Fed. Reg. 31,943, 31,943 (May 28, 2013).
3. See Federal Food, Drug, and Cosmetic Act (FD&C Act) § 301(a).
4. See 21 C.F.R. § 210.2(b).
5. Draft Guidance § III.A.
6. FD&C Act § 505(b)(1)(D).
7. 21 C.F.R. § 314.50(d)(1)(ii)(a)-(b).
8. Id. § 314.125(b)(13).
9. See id. § 314.125(b)(12).
10. See id. § 314.150(b)(2).
11. Draft Guidance § III.A.
12. See id. § 501, amended by Food and Drug Administration Safety and Innovation Act, Pub. L. 112-144, tit. VII, § 711 (2012); see also Draft Guidance § III.A.
13. Cf. Warning Letter from Paul J. Teitell, District Director, Cincinnati District, FDA, to Charles J. Kubicki, Owner, Pristine Bay, LLC d/b/a Vianda (Apr. 26, 2013) (stating that “a firm that contracts with other firms to conduct certain dietary supplement manufacturing, packaging, and labeling operations for it is responsible for ensuring that the dietary supplement is not adulterated for failure to comply with dietary supplement CGMP requirements, regardless of who actually performs the dietary supplement CGMP operations”); Warning Letter from Kirk Sooter, District Director, Philadelphia District, FDA, to Judy A. Hannan, President, Entrenet Nutritionals, Inc. (May 8, 2013) (stating that dietary supplement company cannot “contract out its ultimate responsibility to ensure that the dietary supplement it places into commerce … is not adulterated for failure to comply with dietary supplement CGMP requirements”).
14. Draft Guidance § IV (citing 21 C.F.R. §§ 210.0(b) & 211.22(d)).
15. Draft Guidance § IV.
16. See id. § IV.A (stating that during inspections “FDA routinely requests and reviews evidence of Quality Agreements (or the lack of Quality Agreements)”).
17. Id. § IV.A.
18. Id. § IV.B. Accordingly, FDA believes that most quality agreements will contain the following sections: purpose/scope; terms, including effective date and termination clause; dispute resolution; responsibilities, including communication mechanisms and contacts; and change control and revisions. See id.
19. Id. § IV.B.1.a.; see also id. (stating that final product release of finished goods for distribution “cannot be delegated to a Contracted Facility under the CGMP regulations or any terms of the Quality Agreement”).
20. Id. § IV.B.1.b.
21. Id. § IV.B.1.c.
22. Id. § IV.B.1.d.
23. Id. § IV.B.1.e.
24. Id. § IV.B.1.f.
25. Id. § IV.B.2.
26. Id. § V.
27. See id. § V.A.

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Kyle Sampson is a partner in the Washington, D.C. office of Hunton & Williams LLP (www.hunton.com) and a member of
the Firm’s Food and Drug Practice. He can be reached at ksampson@hunton.com.