3. Contract Manufacturing Agreement

To mitigate the business risks related to the contract manufacturing, it is recommended to put in place a Contract Manufacturing Agreement. This contract is a country dependent document that considered the local laws governing standard contract manufacturing agreements.

Under the Contract Manufacturing Agreement, the CM is compensated on the basis of recovery of the fully-loaded costs of manufacture, plus a margin (user defined). The agreement assumes, that as between the parties, the principal owns all intellectual property rights relating to the products and the manufacturing process.

The document includes, as standard, an allocation of risks between the parties that is consistent with that found in a typical contract manufacturing relationship, as well as an obligation on the client to indemnify the contractor for any loss or damage arising out of the performance of the manufacturing activities.

3.1 Content of Contract Manufacturing Agreement

The following items are to be established and have to be part of the Contract Manufacturing Agreement:

• Purpose and background,
• Terms an termination,
• Products to be manufactured and specific requirements applicable to the manufacturing process,
• Budgeting, payment and reconciliation mechanisms,
• Territory,
• Purchase of production materials,
• Termination assistance,
• Sub-contracting and assignment rights,
• Provisions relating to notices,
• Dispute resolution, jurisdiction and arbitration,
• Other provisions (e.g. confidentiality, force majeure).

4. The Key elements in GMP Contract Manufacturing

In addition to the business general requirements to be considered between the CG and the CM presented in the previous chapter, the compliance to cGMP is an additional necessary condition to pharmaceutical contract manufacturing practice, as prescribed by chapter 7 “Outsourced activities” of the EU GMP. To ensure for marketing authorisation, the CG and the CM must adhere to cGMP regulation to ensure their products to be commercialized.

Choosing a CM that adheres of cGMP rules may be the solution to avoid unfavourable outcomes presented in chapter 3.

Among other things, the following aspects have to be considered as key elements regarding the contract manufacturing:

• Quality Agreement
• Adherence to manufacturing process
• Suppler Audit
• Release of manufactured product
• Documentation and archive
• Cleaning Validation
• Change control

These key elements must be clearly defined, agreed and controlled in order to avoid misunderstanding which could result in a product of unsatisfactory quality. The next sections describe in more details these key elements.

4.1 Quality Agreement

The Quality Agreement specifies the minimum requirements that will apply to the contractual partner’s quality management system and defines rights and obligations with respect to the quality assurance of any products to be supplied.

The Quality Agreement should describe clearly who undertakes each step of the outsourced activity, e.g. knowledge management, technology transfer, supply chain, subcontracting, quality and purchasing of materials, testing and releasing materials, undertaking production and quality controls (including in-process controls, sampling and analysis).

Furthermore, the Quality Agreement should permit the CG to audit outsourced activities, performed by the CM or his mutually agreed subcontractors

4.2 Adherence to manufacturing process

The basic principle is to assure the quality, potency, identity and safety of products to protect both the consumer and the manufacturer. Therefore, adherence to manufacturing process is extremely important to guarantee the above-mentioned characteristics and to ensure the CM to enable its production to supply in time its consumers. Adherence to manufacturing process includes:

• Manufacturing time,
• Amount of material produced,
• Capacity of utilization
• Overall equipment effectiveness
• Schedule of production
• Availability of the system

4.3 Supplier Audit

As subcontractor, the CM will be audited by the CG. The goal of this supplier audit is to check, if the CM perform the manufacturing activity according to the quality standard defined in the Quality agreement.

One common way to carry out an audit is to check the adequacy of any procedures following to a checklist submitted by the CG.

• Review past audits, note indications of possible problem areas and items, if any, that were identified for corrective action in a previous audit.
• A checklist is to be used with a notebook into which detailed entries can be made during the audit.
• At least three production batches should be selected for thorough analysis to include:
  
  1. traceability of all components or materials used in the subject batches,
  2. documentation of raw material or component, in-process, and finished goods testing for the subject product batches,
  3. warehousing and distribution records as they would relate to a possible recall.

4.4 Release manufactured product

Batch release of manufactured products is a necessary requirement to ensure high quality for use, sale, supply or export. Batch release testing expertise includes chemical, physical and biological testing.

The batch release for commercial use has to be performed by the CG. The Quality Management System of the CG must clearly state the way that the Qualified Person certifying each batch of product for release exercises his full responsibility.

4.5 Documentation and archives

Documentation is the key to GMP compliance and ensures traceability of all development, manufacturing, and testing activities. Documentation provides the route for auditors to assess the overall quality of operations within a company and the final product.

All records related to the outsourced activities, e.g. manufacturing, analytical and distribution records, and reference samples, should be kept by, or be available to, the Contract Giver. Any records relevant to assessing the quality of a product in the event of complaints or a suspected defect or to investigating in the case of a suspected falsified product must be accessible and specified in the relevant procedures of the Contract Giver.

4.6 Cleaning validation

Du to the fact that CMs use usually multipurpose facility and equipment, the cleaning is a critical aspect in the frame of contract manufacturing activities. Cleaning validation may be a burning point difficult to satisfied both CG and CM partners. In any case the efficacy of the cleaning has to be demonstrated by the CM and a plan for cleaning validation has to be discussed and agreed. This document should contain the following elements:

• Assess equipment and products,
• Evaluate the impacts of the other manufacturing processes on the contracted process. If the contracted process is covered and already validated under bracketing then no further validation is required,
• Determine an appropriate cleaning agent and method,
• Decide what residue(s) (including cleaning agents), are to be tested for based on solubility, toxicity, etc. and document rational behind decision,
• Determine acceptance criteria for the residue(s) (including cleaning agents),
• Develop sampling methods, e.g. swab or/and rince methods to remove the residues,
• Develop analytical methods for detection of the nature of the residues from swab or/and rince methods, e.g. visual residues, carbon organic total, HPLC methods,
• Compile and approve validation protocol,
• Perform validation studies in accordance with protocol,
• Compile and approve a validation report documenting studies, conclusions and recommendations.

4.7 Changes control process

Many critical areas are generally satisfactorily fully covered by the client company and the contractor manufacturers.

When choosing a contractor, the client company is focused on and has resolved the different important items, as outlined in the previous chapters. After being established, the contract between the client company and the contractor might last months and years. A risk that is few mentioned in the several articles on the contract manufacturing arises through the changes.

It makes sense to classify the changes either as minor or as major and to establish a strategy to implement the changes in a right way. For example, the minor changes can be implemented on a customer notification basis, but the major changes have to be previously preapproved by the CG, before implementation.

The pictures 2 and 3 present the different situations and change controls at CG. Presented as decision trees, the two pictures help to understand the complexity of any change proposed either by CG or by CM.