Supplier and Contractor Quality Management in Pharmaceuticals

Supplier and Contractor Quality Management

Suppliers (also referred to as vendors) provide goods or services to another organization. Pharmaceutical products are created to improve the health of patients; the pharmaceutical manufacturer is responsible for ensuring that all of its suppliers contribute to product quality.

In Figure 18.1, the pharmaceutical manufacturer has five suppliers: the raw material manufacturer provides chemicals or biologics that become part of the batches of drugs; the filter manufacturer provides filters that are used in the manufacturing process; the vial manufacturer makes the containers for the product; the sterilization contractor sterilizes the vials before they are received at the pharmaceutical manufacturer; and the contract laboratory performs some of the release tests that determine whether the product meets its predetermined specifications. The pharmaceutical manufacturer is a supplier to the distributor, and the distributor is a supplier to the pharmacies that supply drug products to the patients who need them.

Pharmaceutical good manufacturing practices (GMP) vary in the level of detail used to describe the ways that pharmaceutical manufacturers should ensure that their 
suppliers contribute to the quality of the products they create, but they also have some similarities. In Chapter 7 of the European Union (EU) GMP, Contract Manufacture and Analysis, the responsibilities of the contract giver and contract acceptor are defined for subcontracted manufacturing and testing. ICH Q7 addresses controls for contract manufacturers in Section 16, communication of supplier information to customers in Section 17.6, and complaint handling in section 17.7. Q7 indicates in Section 7.11 that manufacturers should evaluate the suppliers of critical materials, where “critical” is a parameter that “must be controlled within predetermined criteria to ensure that the active pharmaceutical ingredients (API) meet its specification.” FDA GMP require that the quality unit (QU) be “responsible for approving or rejecting drug products manufactured, processed, packed, or held under contract by another company” [21 CFR 211.22(a)].

ISO/IEC 17025:2005, General requirements for the competence of testing and calibration laboratories, provides requirements for the competence of these suppliers to perform tests and/or calibrations. If testing and calibration laboratories comply with ISO/IEC 17025, their quality management system (QMS) will also meet the requirements of ISO 9001, Quality management systems—Requirements. The unique aspects of this ISO standard regarding supplier competence include:

Providing appropriate supervision when using staff to perform tasks while training

Qualifying personnel based on their education, training, and experience, including demonstration of skills required for the position

Ensuring that personnel have knowledge of the technology used for manufacturing the items tested and the defects or degradations that may occur during service

In general, pharmaceutical manufacturers develop requirements for their finished product and for the materials they use to manufacture the product. They select suppliers who meet those requirements after evaluating them by conducting on-site audits or surveys. For contract manufacturing and testing, manufacturers develop a written contract to document the agreements between the manufacturer and subcontractor. They monitor the quality of the products and services received, and ensure that the quality requirements are fulfilled over multiple receipts of the products and services. Manufacturers may certify a raw material supplier that has consistently met requirements and whose own quality systems have proven to be in control, and thus be able to reduce the testing of the incoming raw materials. They ensure that the supply chain is reliable as close to the original source of the material as possible.


Suppliers of raw materials, components, and contract services need to meet requirements for the product or service they provide to the pharmaceutical organization. When a pharmaceutical product is being developed, specifications are written to define the quality characteristics that must be met for raw materials and components that are used in the manufacture of the product. Contracted services such as manufacturing, testing, and sterilization have defined requirements to ensure that their activities support product quality.

When written specifications or requirements are available for a purchased material or contracted service, the supplier must meet these requirements. The specifications are developed to ensure that the final product will have the safety, identity, strength, quality, and purity as designed. Two different aspects of contracts are purchasing requirements and quality requirements.

Purchasing requirements, often defined in a purchase order or purchase agreement, that need to be considered include:

Minimum order quantities

Lead times for filling orders after they are placed

Batch sizes

Price and payment terms

Liability and insurance

Confidentiality requirements


Quality requirements include:

Quality attributes as defined in written specifications

Permission to periodically audit the supplier

Preapproval of subcontracting to other suppliers

Preapproval of changes to the product or service

Shipment methods (if they could impact quality, such as refrigeration, overnight delivery)

Packaging materials (for example, tamper-proof, temperature maintenance and monitoring, humidity control through desiccant packs, prevention of contamination)

Length of time to retain documentation related to manufacturing or provision of services

Communication and investigation of nonconformances that may impact the product or services provided

Identification of material (labeling)

Documentation of testing results

Quality agreements may also be known as technical agreements or supplier quality agreements, or another term may be used. Some pharmaceutical companies may require services, for raw materials that are critical to product quality (for example, excipients), for single-sourced materials, for custom materials, or for materials for which they would like to reduce testing upon receipt.

According to ISO/IEC 17025, when laboratories review contracts when preparing to test or calibrate for a potential customer, the review should include:

Clearly defined and understood requirements (including the methods to be used)

Determination of whether the laboratory has the capability and resources needed (including personnel skills and expertise)

Selection of the appropriate test and/or calibration method

Once the supplier has been identified and the quality agreement has been approved by the supplier and manufacturer, the manufacturer starts receiving the supplier’s products or services. The supplier should be evaluated by audit or survey and by trending information about receipt of product or services provided. In addition, changes to the supplied product or service should be monitored to ensure that the changes do not impact product quality. To improve the likelihood that a supplier will provide products or services that meet requirements, the supplier can be qualified or certified.

In the FDA guidance Quality Systems Approach to Pharmaceutical CGMP Regulations, issued in September 2006, FDA recommends periodic auditing of suppliers based on a risk assessment. Suppliers who provide active pharmaceutical ingredients (APIs), which are an important component of product quality, would be audited more frequently than a manufacturer of sodium chloride. The API manufacturer’s quality systems should be thoroughly examined to ensure that they can reliably provide an API that meets the pharmaceutical manufacturer’s specifications.

If the pharmaceutical manufacturer accepts the test results on the certificate of analysis (COA) from the API manufacturer and does not perform full analytical tests itself, the pharmaceutical manufacturer should evaluate the API release testing processes during the audit of the API manufacturer. In addition, if the pharmaceutical manufacturer accepts the supplier’s COA for test results, the pharmaceutical manufacturer should, at a minimum, perform an identity test for each receipt of material.

Additional assurance that a critical supplier, such as a contract manufacturer for an API, will be able to meet requirements can be achieved by the pharmaceutical manufacturer placing a person-in-the-plant at the contract manufacturer to observe manufacturing and/or to review batch records and test results on site. A person-in-the- plant will be able to work in a timely manner with the contract manufacturer on any issues that may arise during manufacturing or testing.


Suppliers must be evaluated periodically, and the primary way of performing the evaluation is an on-site audit. Some suppliers who have many customers charge a fee to permit an audit to be conducted at their facility, or they offer one day when multiple customers can perform audits at the same time to minimize the time the supplier spends hosting audits. Suppliers such as contract laboratories may be audited once a week because they have so many customers, which requires a large amount of resources to support the audits and respond to audit observations.

An audit of a supplier should be performed by a qualified auditor. The auditor performs the audit against specific requirements, such as specifications for the product, the quality agreement, and any applicable regulatory requirements for the type of supplier being audited. Suppliers of pharmaceutical manufacturers may not be subject to pharmaceutical GMP regulations themselves. Some suppliers may be ISO 9001 certified, which provides some assurance of understanding of quality; others may have few controls in place to assure quality. The auditor should work with the supplier to ensure that the supplier has sufficient quality management systems in place so that their product or services will meet requirements.

After an audit is performed of a supplier, the pharmaceutical manufacturer provides the supplier with an audit report. The audit report summarizes the results of the audit, including any nonconformances (observations) from the requirements against which the supplier was audited. Typically, a response to the audit observations is requested within a month from the report issuance. The supplier is requested to respond with corrective action plans for the observations. When the audit response is received, the pharmaceutical manufacturer reviews the response to determine whether the corrective action plans adequately address the observations. If the supplier refuses to respond or to take action on critical observations, the pharmaceutical manufacturer has to determine a path forward. The supplier may need to be replaced with one who will cooperate with efforts to ensure that the items or services supplied to the pharmaceutical manufacturer meet the specifications.


An alternative method to an on-site audit for evaluation of a supplier is a written quality system survey. Surveys may be used to evaluate suppliers whose products are a low risk to pharmaceutical product quality, or to monitor suppliers’ quality systems in years when on-site audits are not performed. The survey contains questions about the quality systems that the supplier has implemented to ensure that their products or services meet requirements. Surveys can be customized based on the type of supplier: calibration suppliers, raw material manufacturers, or packaging materials manufacturers. The manufacturer sends the survey to the supplier and requests completion in a timely fashion. The manufacturer reviews the response to ensure that quality systems are implemented. If the supplier is not FDA regulated or ISO certified, the manufacturer will need to carefully evaluate the survey response to ensure that the minimum quality system elements are implemented.

In some cases, the survey is sent to the supplier as part of the initial approval of the supplier with the purchase agreement and quality agreement, before the supplier is approved for use. Many suppliers who are frequently requested to complete surveys for their customers have prepared documents that describe their quality systems to minimize their time spent completing surveys. These documents are sent to the pharmaceutical manufacturer in place of a survey response. The pharmaceutical manufacturer can accept the quality system document in place of a response to the quality systems survey if it addresses the required information in the survey.


In addition to evaluating suppliers periodically, the pharmaceutical manufacturer needs to ensure that any changes made by the supplier are evaluated before implementation, if possible, to prevent potential impact to the drug product. The quality agreement between the supplier and manufacturer should include a section that makes it clear to the supplier that any changes that could potentially impact the supplied item or service should be preapproved by the pharmaceutical manufacturer.

For example, if a rubber stopper supplier changes the formulation of the silicone coating applied to the stoppers to prevent them from sticking together, the pharmaceutical manufacturer should be provided with some samples to test with the drug product to ensure that the silicone coating does not interact with the drug. The pharmaceutical manufacturer should be provided with adequate time to test the stoppers before the change is implemented at the stopper supplier’s facility. If a contract laboratory changes to a new instrument using a state-of-the-art technology to perform a test, the contract laboratory should work with the pharmaceutical manufacturer to ensure that the test result is the same as before the instrument was upgraded.

If a change is made by the supplier, but the pharmaceutical manufacturer is not given advance notice, an unanticipated product impact may result in deviations, investigations, and retroactive analysis of product implications. If product was released before the impact was known, the change may lead to a product recall and possible adverse impact to patient health. The supplier should clearly understand that changes need to be preapproved by the pharmaceutical manufacturer.


FDA guidance Quality Systems Approach to Pharmaceutical CGMP Regulations recommends that data for acceptance and rejection of materials be trended to evaluate supplier performance. If 0.1% of a supplier’s batches received by the pharmaceutical manufacturer were rejected over the past year, and the frequency of rejection is increasing, it is time to address the issue with the supplier. If occasional noncritical issues arise between audits of the supplier, they can be addressed at the time of the next audit. When an auditor is preparing for a periodic audit of a supplier, the auditor should obtain the trended acceptance and rejection data to determine whether any issues should be addressed during the audit. If a quality issue such as contamination is observed in incoming material, a for-cause audit should be scheduled at the supplier as soon as possible. In addition, the supplier should work with the pharmaceutical manufacturer to communicate how the investigation is progressing toward the root cause of the contamination, and what corrective actions will be implemented to ensure that future receipts of the material are not contaminated.


Pharmaceutical manufacturers have several options for categorizing a supplier after the supplier meets the requirements for approval. The pharmaceutical manufacturer can maintain a list of approved suppliers and those that have been evaluated as not meeting requirements for approval. The pharmaceutical manufacturer can also choose to take extra steps to certify a high-performing supplier in order to document that the supplier understands the pharmaceutical manufacturer’s requirements and has the quality systems in place to ensure that they will meet or exceed the pharmaceutical manufacturer’s requirements.

Certification usually entails building a partnership between the supplier and pharmaceutical manufacturer. In addition to normal approval steps, according to the Supplier Management Handbook (Bosse 2004), certification requires the supplier to document the process control details to show how critical parameters are controlled to deliver the desired result. Statistical process control, process capability, and process reliability analysis can contribute to control of critical parameters. The review for certification should include cost, quality, delivery, technical support, and management attitude over an extended period of time. After the certification is approved by both the supplier and the pharmaceutical manufacturer, the supplier is recognized to celebrate the new status of the supplier. Finally, the supplier’s performance is monitored to ensure that the certification can be maintained.


One aspect of supplier quality management that has received more attention in recent years is the identification of the supply chain and the pharmaceutical manufacturer’s responsibility for ensuring the quality of materials used in drug products. The heparin contamination that originated with pig intestine processing in China demonstrated the complexity in tracing the supply chain and ensuring quality at each hand-off.

The pharmaceutical manufacturer should do its best to determine the original source of the materials used in its drug products, and should evaluate the quality systems of the manufacturers in the supply chain as far back as they can. The pharmaceutical manufacturer is responsible for ensuring the safety, identity, strength, quality, and purity of its products as designed, and evaluation of its suppliers plays a critical role in fulfilling this responsibility

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