James R. Darnell, Jr.

Monitoring the supply chain is much more than simply testing the quality of raw materials or components. As all companies know, the US FDA expects sponsor companies to see that their contract manufacturing organizations (CMOs) are cGMP compliant, but with contract facilities often located far away and having complicated supply chains of their own, the challenge can be daunting. What is perhaps less well known is that you must also adequately monitor your third-party logistics and distribution providers. When those providers are the final link in the cold chain, effective monitoring is critically important. But because a typical cold chain involves moving a product through multiple storage locations and forms of transportation, which often include multiple flights, ground vehicles, and staging areas, monitoring these suppliers presents its own unique challenges.

Meanwhile, regulators in many parts of the world, recognizing the increased vulnerabilities in the medical product supply chain, have stepped up their joint efforts at prevention and enforcement through increased information sharing, the leveraging of third-party auditors, and harmonization as referenced in the International Conference on Harmonization guideline Q10 Pharmaceutical Quality System. In the US, the FDA has recently embarked on an ambitious supply chain safety initiative that includes, among other things, developing good importer practices, launching a Secure Supply Chain pilot program, setting out a foundation for a track-and-trace system, dedicating a larger portion of its resources to international inspections (opening offices in China, India, Latin America, and Europe), increasing domestic inspections, and increasing enforcement. Faced with this new emphasis on regulation and enforcement of supply chain security, biopharmaceutical companies would be well advised to re-examine their current practices in managing supplier quality.

Organizations that lack the resources, requisite capabilities, or determination to rigorously manage supplier quality may increasingly find themselves subject to the pitfalls of lax oversight. At the extreme, we have recently seen CMOs that have "show" factories where the product is purportedly manufactured when in fact it is being supplied by a "shadow" factory without the knowledge of the sponsor company. The sponsor's inadequate audit of the show factory finds nothing wrong, and the supplier continues to supply product from another location. Somewhat less blatantly, a supplier may move material from its initial place of production to a non-GMP compliant factory to save money, without notifying the sponsor company.

Suppliers also may change their own suppliers of raw materials used to manufacture drug substance or other critical materials. For example, a supplier of vials might alter its manufacturing process, which in turn could lead to problems of glass breakage and contamination. If the sponsor has no mechanism in place for monitoring such changes, quality problems are difficult to anticipate and pinpoint.

Lax oversight also may result in a decline in compliance over time. Because the supplier's quality performance has not been adequately or consistently tracked and measured, the sponsor company fails to notice when the supplier's compliance begins to trend downward. Quality problems that could have been prevented are instead allowed to fester until they eventually affect the quality of the sponsor's product. Sound quality supplier management also can save suppliers from themselves, helping them avoid regulatory actions—and helping the sponsor ensure an unhindered supply of needed materials or services.

The consequences of poor supplier quality management can be profound. In addition to exposing companies to enormous financial liability and reputational damage, defective products can cause unquantifiable human tragedy in harmed patients. Valuable product also can be wasted or lost, resulting in unreliable supply to market, lost revenue, regulatory action, and the high costs of finding and fixing problems.

Despite the potentially catastrophic consequences of poor supplier quality management, many organizations neglect it. In some cases, they may lack adequate human and technical resources to adequately monitor their suppliers. In other cases, they may monitor suppliers but neglect to follow up on concerns. Or, despite having an entire department dedicated to supplier quality, as in some large companies, a particular site still may not have received adequate attention. In other cases, the company may not have established clear and standard operating procedures (SOPs) and organizational mechanisms for supplier quality monitoring.