Own-Label Distributors and Contract Manufacturers: A Complex Relationship Requiring Mutual Support

The increasing reliance on contracted services by both large and small marketing dietary supplement companies has created challenges in understanding and meeting both individual and mutual responsibilities. Working together to understand and meet those responsibilities goes a long way to achieving success for each party in terms of reliability of service, uninterrupted supply of high-quality product, a sustainable and profitable business relationship and avoidance of potential FDA issues.

The Challenge

Contract manufacturing organizations commonly agree to take care of most needs related to supplying product to a client company, including assuming responsibilities for full compliance with 21 CFR 111—current good manufacturing practices (cGMPs) for dietary supplement products. This is especially true when the client company wants the contract manufacturer to provide a turnkey operation. This often is understood by the product owner, referred to by FDA as an own-label distributor, to mean that the own-label distributor has no responsibilities and that responsibility for cGMP compliance rests solely with the contract manufacturer. That is a serious misunderstanding!

Not only does such a relationship fail to meet the needs of each party, it also fails to satisfy FDA’s requirement for proper oversight by the own-label distributor. FDA is on record repeatedly stating in warning letters to own-label distributors of dietary supplement products that “although your firm may contract out certain dietary supplement manufacturing operations, it cannot contract out its ultimate responsibility to ensure that the dietary supplements it places into commerce (or causes to be placed into commerce) are not adulterated for failure to comply with dietary supplement cGMP requirements." FDA also advises own-label distributors that “your firm has an overarching and ultimate responsibility to ensure that all phases of the production of those products are in compliance with dietary supplement cGMP requirements found under 21 CFR Part 111."

The question raised is how can the requirements of the own-label distributor, contract manufacturer and FDA be met in a reasonable and manageable way?

Meeting the Challenge

It is suggested that the key elements of meeting the needs of all parties are 1) qualification of the contract manufacturer, 2) appropriate approvals of key documents, and 3) ongoing monitoring of the contract manufacturer by the own-label distributor. (As discussed in previous INSIDER magazine articles, a quality agreement also provides significant benefits.)

Qualification of the Contract Manufacturer

An effective approach to qualifying a contract manufacturer includes the following:

• A self-assessment cGMP compliance questionnaire. While helpful, FDA has stated that the use of such a questionnaire alone is inadequate.

• An initial qualification audit of the contract manufacturer’s state of compliance with 21 CFR 111. If the own-label distributor has experienced and qualified quality assurance (QA) staff, those resources can be used. If not, a qualified third-party auditor must be used.

• Qualifying the contract manufacturer’s certificate of analysis (CoA) by comparison with data from independent parallel testing. Ideally, this comparison of data should be done for three lots initially and minimally repeated for at least one lot of each formulation annually. More frequent qualification of CoA data may be appropriate based on high production levels.

• Establishing evidence of ongoing monitoring of the contract manufacturer by the own-label distributor.

• Requalifying the contract manufacturer as appropriate based upon ongoing history of satisfactory results for all of the above elements.

Approval of Key Documents

This is an area of considerable discussion and sometimes disagreement between own-label distributors and their contract manufacturers. Insight into what is appropriate should be based on prudent and technical judgement concerning who should be the responsible party. It is necessary to consider questions such as, “Where does the expertise and technical knowledge reside, and who is the appropriate originator and ‘owner’ of the document?" Answering these questions will help resolve which documents may be developed and approved by only one of the parties, and which documents need to be developed and approved based on close collaboration, agreement and approval by both parties. This will also ensure that the needs of both the own-label distributor and the contract manufacturer will be met in a responsible manner.

Click the following link for an infographic detailing key manufacturing document author and approver examples.

The FDA Perspective

A third consideration requires understanding FDA’s expectations. Insight into this is gleaned from observations in FDA warning letters to own-label distributors. Observations commonly included comments such as master manufacturing/packaging records (MMRs/MPRs) and/or batch production/packaging records (BPRs), and specifications that are either non-existent or are missing appropriate content. This also may mean that documents were missing required own-label distributor QA unit approval. The frequency with which FDA makes such observations suggests where the effort on document approval should be focused. FDA warning letters to own-label distributors for the 12-month period ending in mid-January 2016 revealed that the above three categories were at the top of the list and accounted for 47.1 percent of all observations (18.4 percent for MMRs/MPRs and BPRs, 17.2 percent for specifications [(all types)] and 11.5 percent for quality unit responsibilities).

Oversight and Ongoing Monitoring of the Contract Manufacturer

In addition to creating properly approved documents, establishing good oversight practices and meeting FDA expectations demands that the own-label distributor implement a program for ongoing monitoring of the contract manufacturer’s operations. Such a program must provide evidence at the own-label distributor’s offices that product manufacturing and packaging is continuing as intended. To see an infographic with guidelines on monitoring documentation, click the text link.

Following this guidance will benefit both the own-label distributor and the contract manufacturer. Knowledge and expertise from both will be incorporated into key documents and procedures, ensuring product design and quality will be achieved in a formalized manner and on a continuing basis. Documented evidence will be in place, allowing ongoing confirmation by both parties that the responsibilities of each are being properly executed. Such documentation—along with contract manufacturer qualification and proper document approval—also will provide adequate evidence to FDA, should it be needed, that the own-label distributor is exercising proper oversight of its contract manufacturer.

Bruce D. Elsner is a senior consultant for the EAS Consulting Group LLC (easconsultinggroup.com) in Alexandria, Virginia. His background includes 28 years of technical support and quality assurance roles in three Fortune 500 corporations producing pharmaceuticals and personal care products. Since then, he has done private and contract consulting for the past 20 years helping companies in the over- the- counter (OTC) drug and dietary supplement industries with auditing, cGMP (current good manufacturing practice) training, quality systems improvement and working through compliance issues with FDA.