Sources of conflicts following CMO selection
Assuming the appropriate CMO was selected on the basis of manufacturing capacity, process development, and GMP experience,
and was followed by a compliance audit, the potential sources of conflict can be associated with the four broad steps in an
outsourced project: business terms, technology transfer and development, project management, and compliance. An efficient
contractual strategy can preemptively manage conflicts before they arise and can ensure that expectations, resources, and
deliverables are understood mutually and can be allocated as required during project development (4–5). The specific needs
of the project are often not definable before the project is initiated, so a contractual strategy that is both flexible and
binding offers advantages over contractual approaches that attempt to cover the entire scope of the project, from development
to GMP production, under a single technical agreement contract. Because the technical agreement cannot take into account all
the eventualities of the project, it is inherently less flexible for the evolution of the project, and hence more likely to
give rise to conflicts. A more flexible approach is to divide the contract into three distinct portions: the master service
agreement (MSA), the project agreement (PA), and the quality agreement (QA). These agreements will reflect details outlined
in the initial project quotation.
Business-term tools Quotation
The quotation should not only serve as a starting point for the selection of an appropriate CMO, but should also be used subsequently
as a reference map throughout the lifetime of an outsourced project. It should contain detailed information with respect to
price, duration, start dates, development strategies, and deliverables based on the available information provided to the
CMO. In the early phases of biologics process development and manufacturing projects, it is typical to define only the delivery
date and estimated target amounts of GMP material. The sponsor then expects the CMO to offer a development strategy that meets
the sponsor's deliverable requirements. As the development portion is variable from product to product, the quotation should
be detailed enough for the sponsor to evaluate the CMO's proposal, and yet be flexible enough to provide pricing and timing
outlines that vary with the project's complexity. Quotations that offer this degree of transparency will help educate first-time,
early-phase biopharmaceutical developers in terms of the time dependencies of various development steps. A Gantt chart can
further highlight which steps are of variable duration (e.g., fermentation development), which are fixed in duration (e.g.,
GMP batch release), and what the time and cost requirements for each step to budget and plan. As a conflict-resolution tool,
the quotation should provide sufficient information to allow a mutual understanding of pricing policy for additional work.
For example, the quotation should include the cost and timelines associated with the transfer of a well-defined process as
well as a per month, full-time-employee, or batch price for additional, optional optimization work, or other alternatives
discussed at the point the CMO is chosen.
Master service agreement
Discussions on the MSA should be initiated in parallel to the quotation. The purpose of an MSA is to lay out the legal contractual
framework between the two parties, thereby allowing each party to protect their respective interests. The agreement should
cover aspects that are not related to the technical deliverables of the project, including the legal responsibilities of each
party with respect to the performance of service, data, reporting, material, intellectual property, licenses, third-party
intellectual property, payment terms, warranties, duration, termination, confidentiality, insurance, indemnities, limitation
of liabilities, and governing law. It should not include project details and quality matters, which will be respectively addressed
in the PA and the QA. Separating contractual terms into these instruments allows the parties to put in place the terms in
a stepwise fashion, designating the appropriate persons for each negotiation. The legal experts from both parties should agree
on the legal clauses stated in the MSA, while the project managers independently move forward on the technical aspects of
the project based on development results in a scientifically sound manner. This contract, once signed, initiates the start
of the project as specified in the project agreements.
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