Current Good Manufacturing Practices

Quality management system: Review on “Outsourcing”.

Posted on November 9, 2008. Filed under: CGMP, Introduction, pharmaceutical quality | Tags: Contract, OUTSOURCING, Quality management system |

QUALITY MANAGEMENT SYSTEMS 

Review on “Outsourcing”

Sunny Modi, Prof Manohar A Potdar
Poona College of Pharmacy, Bharati Vidyapeeth University, Pune, India

 

Keywords: Outsourcing, Contract, Contract giver, Contract acceptor, Responsibility.

 

Outsourcing is rapidly growing in the pharmaceutical industry. Most of the pharmaceutical industry outsource (contract) at least some activities or operations due to inadequate personnel, equipments, Analytical laboratories or due to any other reasons. In such cases regulatory authorities allow outsourcing or contracting services with the external party/supplier. Therefore outsourcing activity is more important and is carried out based on legal agreement between two parties i.e. organization (contract giver) and supplier (contract acceptor) and contains detailed and precise contractual specifications regarding data privacy and protection etc.

 

 

Outsourcing is the process of subcontracting to a supplier external to the organization an activity that is currently conducted in house.

Or

Outsourcing is the contracting of services or tasks to an external company.

          

 Outsourcing fits well with the” just-in-time (JIT)” concept of minimizing waste in a company’s operations. Outsourcing is the company’s activities which should allow it to minimize the effects of fluctuating revenues in what has become a more dynamic business environment. Outsourcing therefore allows the company to maintain a basic level of operations in core departments but expand or contract out in areas in which additional resources are required. This can be done on a project by project basis. Outsourcing reduces internal costs, reduces cycle time or improves quality because the companies have adequate technology and knowledge to perform certain tasks more efficiently than some companies can internally. Outsource companies possess better developed skills in the particular area and a reduced cost structure in comparison to the client companies.

 

There are three primary considerations that need to be addressed when identifying the “right” supplier for the organization:

(1) Does the supplier have the proper training to assist with the validation programme?

(2)  Does the supplier have adequate time to devote to the validation effort and are they willing to guarantee this contract?

(3)  Has the supplier actually participated in this type of work previously? Have they actually done this specific work, and if so, are they willing to provide references?

 

 

Assuming these three primary considerations are met, a fourth and extremely critical factor to consider is whether the supplier has the type of personality that will allow for effective integration into the project team. The supplier must be integrated into the overall cooperative partnership that is necessary for successful validation. The organization must  certain that the supplier has the necessary interpersonal skills to build and maintain the proper relationship for a long time.

 The contract giver must work closely with the supplier to ensure all the regulatory “bases” are covered.

 

Reasons for Outsourcing

Organizations that outsource are seeking to realize benefits or address the following issues:

·        Cost Savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through off shoring called “labor arbitrage” generated by the wage gap between industrialized and developing nations.

·        Cost Restructuring. Operating leverage is a measure that compares fixed costs to variable costs outsourcing changes the balance of this ratio by offering a move from variable to fixed cost and also by making variable costs more predictable.

·        Improve Quality. Achieve a step change in quality through contracting out the service with a new Service Level Agreement.

·        Knowledge. Access to intellectual property and wider experience and knowledge.

·        Contract. Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.

·        Operational Expertise. Access to operational best practice that would be to difficult or time consuming to develop in-house.

·        Staffing Issues. Access to a larger talent pool and a sustainable source of skills.

·        Capacity Management. An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier.

·        Catalyst for Change. An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change Agent in the process.

·        Reduce Time to Market. The acceleration of the development or production of a product through the additional capability brought by the supplier.

·        Co modification. The trend of standardizing business processes, IT Services and application services enabling businesses to intelligently buy at the right price. Allows a wide range of businesses access to services previously only available to large corporations.

·        Risk Management. An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation.

·        Time Zone. A sequential task can be done during normal day shift in different time zones – to make it seamlessly available 24×7. Same/similar can be done on a longer term between earth’s hemispheres of summer/winter.

 

Activities Mainly Outsourced:

 The list below shows the types of activities currently outsourced by many organizations are,

·        Manufacturing/Packaging of finished products

·        Validation services

·        Calibration activities

·        Analytical testing/Analytical method development etc. 

·        Auditing services

·        Other services i.e. security, pest control etc.

 

General guidelines for outsourcing: Based on USFDA guidelines outsourcing operations can be divided into three parts in terms of individual responsibilities.

 

(1) Contract Giver:

·   The contract giver is responsible for assessing the competence of the contract acceptor in successfully carrying out the work or tests required and for ensuring by means of the contract that the principles of GMP are followed.

·   A contract giver should assure him self that the contract acceptor has adequate premises, equipment, and staff with sufficient knowledge and experience, to carry out satisfactorily the work given to him. For this purpose the contract giver should carry out technical audit of the contract acceptor. This audit is required to be carried out before the activities are stared and at regular intervals thereafter. Audit reports should be issued and kept on record.

·   A contract giver may only use the contract manufacturer, packer or analytical services as approved in the registration dossier.

·   A contract giver shall not authorise a contract acceptor to commence manufacturing, packing, testing of a medicine, until he has assured himself, and authorised by him, that all necessary master documents and/or specifications, generated by contract acceptor for use in his own facility, are in accordance with the particulars contained in contract giver, master documentations and registration dossier.

·   The contract giver should provide the contract acceptor with all the information necessary to carry out the contracted operations correctly in accordance with the marketing authorisation and any other legal requirement.

·   The contract giver should ensure that the contract acceptor has fully aware of any problems associated with the product, work, or tests that might pose a hazard to premises, equipment, personnel, other materials or other product.

·   The contract giver should ensure that all provided products and materials delivered by contract acceptor comply with their specifications or that the product has been released by the authorised person(s). 

    

(2) Contract Acceptor:

· The contract acceptor must have adequate premises, equipments, knowledge and experience and competence personnel to carry out satisfactorily the work ordered by the contract giver. Contract manufacturer can only be undertaken by manufacturer who holds a manufacturing authorisation.

· The contract acceptor should not pass to third party any of the work entrusted to him under the contract without the contract acceptor givers prior evaluation and approval of the arrangements. Arrangements made between the contract acceptor and any third party should ensure that the manufacturing and analytical information is made available in the same way as between the original contract giver and contract acceptor.

· The contract acceptor should refrain from any activity that may adversely affect the quality of the product manufactured and/or analysed by contract giver.

· The contract acceptor should ensure that all products or materials delivered to him are suitable to their intended use.

· If a contract acceptor supplies materials, the contract giver should specify the quality required in the specifications/master document.

    

(3) Contract:

· The contract should be drawn up between the contract giver and the contract acceptor specifies their respective responsibilities relating to the manufacture and control of the product. Technical aspects of the contract should be drawn up by competent persons suitably knowledgeable in pharmaceutical technology, analysis and GMP. All arrangements for production and analysis must be in accordance with the marketing authorisation and agreed by both parties.

· The contract should specify the way in which authorised person releasing the batch for sale ensures that each batch has been manufactured in, and checked for compliance with the requirements of the marketing authorisation.

· The contract should describe clearly who is responsible for purchasing, testing and releasing materials and for undertaking production and quality control, including in process controls and who has responsibility for sampling and analysis. In case of contract analysis the contract should state whether or not the contract acceptor should take samples at the premises of the manufacturer.

· Manufacturing, analytical or any other records and reference samples should be kept or be available to, contract giver. Any records relevant to assessing the quality of a product in the event of complaints or suspected defect must be accessible and specified in the defect/recall procedure of the contract giver.

· The contract should describe the handling of the starting materials, intermediates, bulk products or finished products, if they are rejected. It should also describe the processing of information if the contract analysis shows that the tested product must be rejected.  

          

Contract finalization

At the heart of every outsourcing deal is a contractual agreement that defines how the sponsor and the supplier will work together. This is a legally binding document and is core to the governance of the relationship. There are three significant dates that each party signs up to the contract signature date, the effective date when the contract terms become active and a service commencement date when the supplier will take over the services.

 

Conclusions:

This article gives the idea of the outsourcing operations and benefits of the outsourcing services based on FDA audit questionnaire or any other regulatory requirements and selection of the supplier. Outsourcing is the new pathways for the organization to carry out his business by means of more efficient, effective, and cost-competitiveness based on rising customer expectations, dwindling pipeline for the new blockbusters, ever-increasing regulatory burden, reducing the cycle times, and minimizing the time to market. So, the need for contracting with an outside supplier has become necessary business strategy for the pharmaceutical industry. After the initial evaluation of the supplier, the successful contract validation will enable both parties to achieve the economic benefits desired.

 

 References:

(1)  Draft Guidance for industry, “Quality system approach to pharmaceutical current good manufacturing practice regulation”, September 2004, pharmaceutical CGMPs.

(2)   U.S.Food and Drug Administration Centre for Drug Evaluation and Research, “21 Code of Federal Regulations Parts 210 and 211”.

(3)  Validation of Pharmaceutical Processes, Third Edition, by James Agalloco and rederick J. Carleton.

(4)  Validation in Contract Manufacturing by Dilip M. Parikh, Maryland, U.S.A.

(5)   Anu Linna, Mirka Korhonen, et. al., “Developing a tool for the preparation of GMP audit of pharmaceutical contract manufacturer”.

(6)  D. Smith, The effect of outsourcing on the pharmaceutical – fine chemical industry relationship, Pharm. Technol. 24 (Suppl. 8) (2000) 52–56.

(7)  Juan’s Quality Planning & Analysis for Enterprise Quality, Fifth Edition by Joseph M.Juran, Tata McGraw Hill.

(8)  A.D. Bardhan and C. Kroll, The New Wave of Outsourcing (2003).

(9)  Mark Kobayashi-Hillary. 2004. (2nd ed 2005) Outsourcing to India. ISBN 3-540-23943-X.

 

 

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