Auditing a contract manufacturer: Essential for both parties

A company that only markets, sells and distributes a product to the consuming public is a common supplement business model. These “own label distributors” that use different providers at different stages of the supply chain are just one example of numerous company types that exist within the industry. Regardless of who completes the manufacturing, packaging, holding or distributing of these products, the own label distributor must ensure the contracted party (contract manufacturer) is capable of delivering the product as specified. That is just good business sense. Additionally, the preamble to the regulations on GMPs (good manufacturing practices) for dietary supplements and the Food Safety Modernization Act (FSMA) mandates the recipient of these services (brand owner or own label distributor) have knowledge of the products’ quality. This means contract manufacturers are or should be hosting numerous audits of their contract manufacturers’ operations. These assessments include ensuring the manufacturer is properly registered and implementing appropriate GMPs for production of the goods intended to be sold. FDA’s position is the company whose name is on the bottle is responsible (or co-responsible) for the performance of the company that is manufacturing, packaging, storing or distributing the products. A critical step in this determination is the audit.

FDA does not issue certificates of compliance to any company regarding any manufacturer’s performance against GMPs. Nor does FDA recognize a third-party cGMP “certification” as evidence of compliance with the regulations; having such a certification cannot be used in lieu of auditing a manufacturer and is not considered sufficient “qualification” of that vendor. The responsibility for the performance of the contract manufacturer remains with the label owner, and that means routine auditing. Moreover, attempting to implement agreement-type language, whether in a stand-alone document or as part of service contract—which effectively reassigns regulatory obligations of the contract manufacturer to the client to avoid scrutiny or added costs for certain compliance practices—is not legal.

A good contract manufacturer appreciates efficient and frequent audits. Audits are integral to the partnership, not a “value added” portion of the business. The efficiency of an audit rests on the ability of the auditor to get to the heart of the issue without needing to see multiple examples of the same kind of issue. Indicators found by simply reviewing the standard operating procedures (SOPs) can be affirmed through documentation review; only one example is needed to affirm the suspicions that arose during the “paper” evaluation of the operation.

An auditor must be qualified to evaluate a contract manufacturer’s performance against existing regulations. That skillset and knowledge base is critical to the outcome from the brand owner’s perspective, and is equally important to the contract manufacturer. Contract manufacturers appreciate the efficiency, the lack of nonsense and genuine suggestions for improvements. Conformance with regulations is the requirement, and auditors should focus exclusively on that. It is not appropriate to insist on additional requirements, apart from those required by regulations, but it is appropriate to ensure every aspect of the regulations as they are written is affirmed by both parties. The critical elements for successful audits include selection of the auditing party, understanding the specific operations being performed by the contract manufacturers and their specific regulatory obligations, and routine follow-up to ensure activities of the contract manufacturer are at least equal to the last successful audit.

The output of these audits should be considered useful to both parties. The contract manufacturer is now aware of any issues while the brand owner has continued the process of fulfilling its own contractual obligations with FDA. The time spent over the course of the business relationship, if the qualifications are met by the audit, auditor, audit intent and audit performance, is highly valuable for both parties in meeting their individual GMPs and safety obligations.

Looking to know more about the regulatory responsibilities of a contract manufacturing partnership? Join us for the "Managing Quality in a Contract Manufacturing Partnership" workshop on Saturday, Nov. 10, at SupplySide West 2018. This workshop is underwritten by Sora Laboratories.

And for additional information on FSMA timelines and rules along with current data on FDA’s enforcement efforts and findings, join us for the "Are You Prepared for a FSMA Audit?" workshop on Thursday, Nov. 8. This workshop is underwritten by Venable.

As chief operating officer, Jim Lassiter oversees all consulting operations at Ingredient Identity. He has more than four decades of experience in quality control (QC), and government and regulatory affairs throughout the pharmaceutical, dietary supplement and natural product industries with organizations such as Nutrilite, Robinson Pharma, Irwin Naturals, Chromadex, the American Herbal Products Association (AHPA) and the Council for Responsible Nutrition (CRN). Lassiter has served on numerous industry and trade boards.