Strategies and Concerns in the Sourcing of FDA-Regulated Products, Components & Services Michael A. Swit, Esq. Law Offices of Michael A. Swit 539 Samuel

Strategies and Concerns in the Sourcing of FDA-RegulatedProducts, Components &

Services

Michael A. Swit, Esq.Law Offices of Michael A. Swit

539 Samuel Ct., Suite 229Encinitas, California 92024

760-815-4762 ♦ 760-454-2979 (fax)[email protected]

FDACounsel.com

BIO 2001

Procurement and Supply Chain ManagementSeminar

Monday, June 25, 2001

San Diego Marriott Hotel and Marina

San Diego, California

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Why Worry About FDA Compliance?

FDA Compliance Can Make or Break a Deal Recent Examples:

Abbott/Alza Merger Guilford/Gliatech Merger

When sourcing you become a “partner” with your vendor -- their problems are yours

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Why Worry...?

FDA mandates you worry about your vendor/partner’s compliance Poor Suppliers May Delay or Void

an Approval Active Pharmaceutical Ingredient (“API”)

Supplier Sponsor’s application will not be approved if

deficiency at API maker

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Why Worry? Poor Suppliers May Delay or Void

an Approval … Active Pharmaceutical Ingredient (“API”)

Supplier …. Special tactics/concerns:

be extremely careful with first-time suppliers

special concern -- if never used before, FDA foreign inspection may delay approval process as well

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Why Worry…?

FDA will make you worry … Poor Suppliers May Delay/Void

Approvals ... Clinical researchers

sponsor’s application may not be approved -- data may be excluded

if discovered post-approval, can lead to formal withdrawal of the approval

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Why Worry?


Approvals ... Clinical researchers …

Special tactics/concerns area of high interest today due to 1999 gene

therapy death @ U. of Penn. & problems at other major clinical research centers (e.g., Duke, U. of Colo.)

sponsors can not avoid FDA liability via contract -- have to have systems in place to ensure compliance

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Why Worry…?


Approvals … Contract Manufacturers

must be GMP compliant or FDA approval can be refused

Special tactics/concerns tied directly into your application -- their

changes will trigger a regulatory duty that may require an FDA filing/approval

may be high volume/low margin producers -- pressure on production may lead to errors

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Why Worry…?

FDA will make you worry … Supplier or component

qualification -- Required -- explicitly or implicitly

Drugs -- 21 CFR 211.22(a)“…The quality control unit shall be responsible for approving or rejecting drug products manufactured, processed, packed or held under contract by another company.”

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Why Worry?

FDA will make you worry … Supplier or component

qualification -- Required -- explicitly or implicitly …

Devices -- 21 CFR 820.50 “Each manufacturer shall establish and maintain procedures to ensure that all purchased or otherwise received product and services conform to specified requirements.”

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Why Worry…?

FDA will make you worry … Supplier qualification …

Devices -- 21 CFR 820.50(a)(1) -- Evaluation Duty

applies to suppliers, contractors and consultants-- evaluated as to abililty to meet specified requirements

must define the “type and extent of control” over products, services, suppliers, contractors, and consultants”

keep records of acceptable suppliers, contractors & consultants

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Why Worry…? FDA will make you worry …

Supplier qualification … Devices -- 21 CFR 820.50(b) -- Purchasing

Data Duty keep data that “clearly describe or reference the

specified requirements, including quality requirements, for purchased or otherwise received product and services.”

Note: “product” includes components, manufacturing materials, in-process devices, finished devices and returned devices [21 CFR 820.3(r)]

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Why Worry...?


Devices -- 21 CFR 820.50(b) -- Purchasing Data Duty

Documents “shall include, where possible” an agreement requiring a supplier/contractor/consultant to notify the manufacturer of changes “so that the manufacturer may determine whether the changes may affect the quality of a finished device.

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Why Worry...?


Biologics -- 21 CFR 600.12(e) -- Records in “divided” manufacturing

each participating manufacturer shall furnish the “last” manufacturer “all records relating to the manufacturing operations performed by such manufacturer insofar as they concern the safety, purity and potency of the lots of the product involved

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Why Worry?

FDA will make you worry … Supplier qualification --

Biologics -- 21 CFR 600.12(e) -- Records in “divided” manufacturing …

Tactics/concerns if you’re the “last” mfr. -- defining the records needed re “safety,

purity, and potency” -- e.g., does that mean “effectiveness”?

be as specific as possible in the supply agreement

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Why Worry…? FDA will make you worry ...

Receipt of Components -- Procedures Drugs --

21 CFR 211.84 -- Testing and Approval or rejection of components, drug product contaniers, and closures

number to be tested will depend on … “the past quality history of the supplier”

testing can be avoided if:For drug components:

** vendor supplies a Certificate of Analysis showing test results + you do at least one specific identity test** buyer must establishe reliability of supplier’s analyses via “appropriate validation … at appropriate intervals”

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Why Worry…?

FDA will make you worry ... Receipt of Components -- Procedures

Drugs -- testing can be avoided if:

For container/closure systems --** vendor supplies a Certificate of

Testing + does visual ID on the container/closure systems

** buyer establishes reliability of supplier’s testing via “appropriate validation of the supplier’s test results at appropriate intervals”

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Why Worry…? FDA will make you worry ...

Receipt of Components -- Procedures Devices -- 21 CFR 820.80(b) --

must have procedures for accepting incoming product tested, inspected or otherwise verified to meet

specified requirements acceptance or rejection must be documented

nonconforming product -- must notify 3rd party manufacturers -- arguably, there must be an investigation

Tactics/concerns -- having leverage to make the manufacturer do such an investigation

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Why Worry…?

FDA Problems Can Be Hard to Fix FDA statutory and other powers

against violative companies/products may delay or preclude a fix

Inspection -- type will determine impact routine vs. directed short vs. lengthy

Seizure -- can be least intrusive Injunction

consent decrees -- e.g., Abbott litigated orders

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Why Worry…? FDA Problems Can Be Hard to Fix ...

Criminal Prosecution -- The sins of your partner may visit upon you --

The E-Ferol Case does not technically preclude supply, but can be so

disruptive as to undermine the effectiveness of a vendor

Application Integrity Program (AIP) -- [formerly known as the “Alert List” or “Fraud List”

if your supplier is on it, can be a lengthy, very subjective process for getting through

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Why Worry…?

FDA Problems Can Be Hard to Fix ... Regulatory hurdles -- to cure a problem

with an approved product, may require FDA sign-off depending on the nature of

the problem.ExamplesExamples

Active pharmaceutical ingredient maker unable to supply:

Apparent Solution -- get a new one Problem -- will require prior approval by the agency

and additional scientific data to support change Best approach -- have two qualified as early as

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Why Worry…?

Products Liability Examples where a supplier caused the

problem: Tryptophan -- raw material problem E-Ferol -- poor formulation Carbamazapine -- API process change

Securities Liability -- worst case, deal caves; investors (i. e., their lawyers) sue

Economic disruption -- you can’t sell if they don’t sell to you

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Keys to Preventing & Mitigating Problems with FDA-Regulated

Suppliers

Contract Clauses Audits Surveillance between audits Teamwork at the Buyer

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Preventing & Mitigating Problems...

Contract Clauses Buyer’s right to audit vendor (and

vendor’s key suppliers) without notice at any reasonable time during operations vendor to cooperate fully with audit access to records and personnel to be

spelled out

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Preventing & Mitigating Problems …

Contract Clauses … advance notice of changes in

vendor’s processing -- KEY -- so buyer can assess what regulatory action it must take to keep its approval/submission current

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Contract Clauses ... Vendor to cooperate, at no additional

expense, with Buyer’s needs to take action to continue to comply with FDA requirements (e.g., vendor to provide data to support filing of supplements to make changes to approved applications)

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Contract Clauses ... Vendor’s relations with FDA ...

Provide copies of 483’s, EIRs prompt notice to buyer of initiation of

FDA inspections prompt transmission/notice to buyer of

any FDA regulatory correspondence or other regulatory action

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Contract Clauses ... Timely notice of other problems

encountered by vendor in its manufacturing process

timely notice of any adverse reactions or complaints reported to vendor

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Contract Clauses ... Contractually articulated duty to

comply with FDA laws/regulations general specific -- examples

providing certificates of analysis testing to be done

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Contract Clauses ... Recalls -- duty to of vendor to cooperate

with recalls initiated by buyer (if applicable)

representations, warranties, etc. about state of past and present compliance with FDA legal/regulatory reqs.

Indemnification duty from vendor to buyer in event of breach of any FDA-related reps or warranties

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Audits -- the key to compliance

No notice (ideal world?) Conduct like an FDA inspection Audit team --

should be interdisciplinary in training -- Operations, QA, RA, QC

should have an SOP for conducting

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Audits ... Written follow-up -- give them a

“483” essential get substantive replies from vendor

What to stress -- systems specific to your product/service

being provided to you by vendor current FDA “hot buttons”

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Preventing & Mitigating Problems ...

Audits ... Re-audit promptly to confirm

corrections General Documents to review

chronology of interactions with FDA and other regulatory agencies (e.g., EMEA, HPB, if applicable)

all regulatory correspondence/filings between vendor and FDA

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Audits ... General Documents to review …

minutes of meetings/phone calls with FDA company’s FDA’s (get via FOI if vendor doesn’t have)

Tip -- don’t rely just on what the company gives you; seek independent sources of related documents (e.g., under FOI)

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“Surveillance” between audits -- keeping an eye on your vendors Why?

“Knowlege is Good” (Faber College motto; Animal House, 1978) -- to be in the best position to anticipate problems

To be able to initiate dialogue with vendor as soon as possible after being alerted to a regulatory issue

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“Surveillance” between audits -- keeping an eye on your vendors … How?

Read the trade and general press Keep track of FDA warning letters (subscribe

to FDA e-mail notification services) FOI requests -- direct to FDA or via a third-

party service

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Teamwork at the Buyer My old General Counsel’s nightmare

-- “here’s the supply contract, we need to sign it today, can you look it over for any legal issues...?”

My reply:“Did you run it by RA, QA, QC?”

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Specific Procurement Problems

Imported Components FDA powers to stop questionable imports is

much greater than for identical problem presented by a domestic manufacturer

Reason -- § 801 of the Federal Food, Drug, and Cosmetic Act gives FDA power to block an import if the product “appears” to be adulterated or misbranded

Action can occur without physical examination Example -- bulk APIs going through the New York

District Office in past half year have all been detained pending proof they are not counterfeit, adulterated or misbranded -- without physical examination.

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Specific Problems ...

Imported Components ... Foreign suppliers are harder to sue

Tryptophan -- Showa Denko allegedly dodged responsibility for medical syndrome due to being off-shore

Sulzer -- foreign parent company allegedly refuses to provide any financial support to its subsidiary (ruptured breast implants)

Unusual events impacting supplies -- FDA will try to work with you; examples Phillips Petroleum Plant explosion -- sole

source for Marlex -- decreased availability of container/closure systems

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Clinical Studies if you’re the sponsor, need deep “down

stream” audit systems and contract controls relative to:

CRO’s Investigators --

don’t forget to check the FDA list of disqualified investigators

IRB’s -- a critical focus today of concerns -- can invalidate data -- PROBLEM -- you may not have a contractual relationship -- insist upon one

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API’s (Active Pharmaceutical Ingredients) many are foreign sourced -- thus less frequently

inspected by FDA -- puts audit onus on you still subject to all FDA rules -- while API makers

technically do not have to meet GMP, there is a fairly stringent ICH guidance

make sure contract has API maker notify you of changes to process, etc. that need to be in the DMF and that FDA has been notified

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Labels/Labeling label errors are prime cause of recalls your printer must have clear, written

procedures on handling of labels, especially if not dedicated to you exclusively

intake controls have to be well-documented, trained and validated

change control procedures -- even for changes not being submitted for FDA approval -- are essential

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Questions?

Call, e-mail, fax or write:

Michael A. Swit, Esq.Law Offices of Michael A. Swit

539 Samuel Ct., Suite 229Encinitas, California 92024

760-815-4762 ♦ 760-454-2979 (fax)[email protected]

http://www.fdacounsel.com

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