Impact of cGMP on Supply Chain

Increased globalization, outsourcing, and expansion into nontraditional, or emerging, markets for product research, development, manufacturing, and distribution has put a spotlight on an extended network of supply-chain participants. A growing list of so-called unsafe products, including certain foods, toys, and more recently, active pharmaceutical ingredients and raw materials, originating in China and India has emphasized the need for increased supplier and material qualification and auditing. The focus is on quality control and regulatory compliance, an area of increasing concern for life-sciences companies as well as for the agencies responsible for ensuring the safety and efficacy of medications consumed by a global population.

There is growing discussion regarding the use of cGMP as companies become more global and supply chains become more complex. To ensure compliance, the focus on cGMP processes and procedures needs to take into account all activities and participants engaged in the transformation and distribution of materials as they move from origin to point of final consumption.

BE AWARE OF INCREASED REGULATORY OVERSIGHT

US agencies, including FDA, are not alone in their growing concern and awareness of the issues related to product safety and efficacy. Agencies in emerging markets, such as China's State Food and Drug Administration, are also increasing their oversight and requiring cGMP practices for the manufacture of all products that are destined for human consumption. Chinese officials are taking advantage of FDA's technical assistance, provided by the FDA offices established there in 2008, to ensure that their export-related regulations are in compliance with US and European standards, compiling facility audits where necessary.

Despite these remedial actions, there is still much room for improvement, in particular in the chain of custody as materials and components move through an increasing number of contract research organization and contract manufacturing organization facilities. Recognition that the marketing authorization holder, or brand owner, of the product retains responsibility for its products has provided the need for a more collaborative environment across these operations, with increased oversight of activities at outsourced locations. In many cases, however, the logistics component of this supply-chain network is not included in the development of Service Level Agreements between all supply-chain participants, leading to, at times, variations in interpretation of standard operating procedures (SOPs).

Unlike traditional markets, with mature storage and distribution infrastructure in place between key origin and destination points, many emerging markets are challenged with providing logistics resources, in some cases relying on nontraditional equipment and modes of transportation, such as bicycles or horses. Global networks of integrated carriers do not always extend to the point of manufacture and must rely on transportation partners, thereby incurring a high level of variation with regard to material handling and storage facilities. This Achilles heel of the global supply chain, so to speak, should not be ignored. Unless there is stringent specification and compliance in place for product storage, handling, and transportation, the risk of product contamination and cross-contamination is unacceptably high. There are additional risks tied to variations in temperature, humidity, and vibration that must be monitored and controlled.

There is increased concern from FDA and other global regulatory bodies related to supplier qualification and monitoring as well as cold-chain and cool-chain compliance. There are also instances where FDA can issue a Warning Letter to a manufacturer for lack of monitoring and control of suppliers, especially when there is evidence of nonconformance to required procedures and it is shown that the company took no action. Such regulatory oversight is now being enforced across a broader spectrum of the supply chain.

KEEP THE LARGER IMPACT IN MIND

If these factors are ignored, the end user of the product—the patient—can be put at risk. In addition to the impact of compliance violations (i.e., regulatory citations, observations) having a high level of risk across an extended global network increases the likelihood of a supply-chain disruption. The ability to thoroughly investigate a product quality issue is severely compromised if the chain of custody is too variable or not understood by the sponsor company, or manufacturer.

For instance, a stockout can be caused if there is a disruption in the flow of goods to the point of demand. Carriers and forwarders are crucial in ensuring that global trade compliance is adhered to and that there are no delays caused by misinterpretation of documentation or lack of sufficient information. The impact of a stockout due to inability to supply—for either logistics or regulatory compliance reasons—should not be underestimated. In addition to the financial considerations (which can be considerable), reputational risk and market perception have a high price. In certain cases, it is impossible to recover and some brands have suffered as a result.

PLAN AHEAD

The product life cycle for most life-sciences products is long, thereby providing adequate time to develop a detailed strategy for product introduction, manufacturing, and distribution. The ideal time to think about an end-to-end product supply chain is during product research and development (R&D). The ability to ensure quality product delivery to the end user is as much a part of the product as any aspect of development.

Evaluating and selecting suppliers of ingredients and components should be done holistically. Questions to ask include, Is this supplier able to support our needs for increased supply? If not, what alternatives should be considered to ensure a sustainable product—at the detailed bill-of-material level?

Including a supply-chain component in the company's market and commercialization strategy makes it possible to identify areas of risk and concern up front and facilitate any needed remedial action. This process should involve a team approach to ensure that all appropriate participants are included in the planning and implementation stages of development. In addition to scientists and product development specialists who understand the go-to-market strategy, the team should include:

• Sourcing personnel to identify alternative suppliers for single or sole source materials, while working closely with strategic suppliers to assist them in developing capabilities to meet projected demand.

• Quality and regulatory compliance personnel to incorporate a quality-by-design approach. Quality progams need to take into account product level quality not only for the components and finished product, but also for material handling equipment, packaging, and cross-contamination concerns. Inclusion of quality assurance and compliance personnel at the R&D stage will enable development of guidelines that can be used throughout the product life cycle.

• Packaging experts for product protection. They can ensure that storage, handling, and packaging requirements are formalized and incorporated into the product master file and supplier master file. Special handling requirements should be included in SOPs as well as in all product labeling and documentation. Language and literacy requirements across the extended supply network should be taken into account as well.

• Risk-management, legal and finance experts to identify, qualify, and quantify risk factors. Participation by legal counsel and financial personnel can facilitate the development of a strategy that takes into account global trade legislation, including but not limited to rules of origin, denied parties, the Sarbanes–Oxley Act of 2002, the Foreign Corrupt Practices Act, and foreign currency rates of exchange. Legislation should be incorporated into contractual terms and conditions for suppliers, distributors, and end users.

• Logistics and trade compliance personnel to consider modes of transportation across origin and destination pairs. Logistics includes many players—be sure to understand the weakest link in the chain and plan for potential problems.

There are additional packaging and distribution considerations to keep in mind when considering the product life cycle and its supply-chain. For example:

• Consider and provide protective packaging and monitoring devices for products that move through highly variable environments.

• Define a cold-chain compliance program that takes into account seasonal variations across the possible trade lane configurations.

• Consider locations where product could be exposed to hazards (e.g., the runway at an airport) during trans-shipment points across the network and implement mitigation strategies and controls.

• Become informed about product-level literature required for global customs and trade compliance. Product definition and classification has a large impact on rates of duty and tariffs, as well as on foreign customs inspections. Unforseen delays could take weeks or months to resolve, resulting in product degradation and, in some cases, total loss.

• Understand the impact of shipping and transportation prior to a weekend or during a holiday period and build these factors into guidelines and SOPs.

• Consider weather, including potential natural disasters, and have contingency plans in place to provide direction to logistics providers to enable them to make alternative arrangements. Cost should not be a reason to put product at risk.

COMMUNICATE, UPDATE, MONITOR

A plan is only as the good as its execution. When a product is approved for manufacturing and commercialization, planning documents should be reviewed to identify any changes and be adjusted accordingly. Detailed SOPs should be communicated to all participants, from suppliers of raw materials and components (and their supply-chain partners) to providers of packaging, storage, and distribution services.

A simple set of dashboard metrics should be developed and agreed upon, providing a framework for ongoing monitoring and control. Regular communication and adjustments will assist in fine-tuning the initial product-level planning and execution framework, thereby facilitating an environment of continuous improvement. The stakes—that is, patient safety—are high and so product planning must be equally thorough and stringent.

Carla Reed is a principal at Tunnell Consulting, carla.reed@tunnellconsulting.com.