Ensuring the integrity and quality of the biopharmaceutical supply chain has never been more difficult for life sciences companies
or more scrutinized by regulators. With globalization, the path that products take from source materials to consumers has
grown increasingly complex. Many companies now must manage more relationships than ever with third parties, many of which
operate in jurisdictions with weak regulatory systems. And as drug prices increase and supply chains become more complex,
suppliers have more economic incentives and more opportunities to substitute ingredients or take shortcuts.
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.
THE CONSEQUENCES OF POOR SUPPLIER QUALITY MANAGEMENT
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