Transcript Strategies for Sourcing FDA-Regulated Products and Components

Legal Strategies and Concerns in the Sourcing
of FDA-Regulated
Products, Components & Services
Keys to a Win-Win Relationship with Your CMO
Michael A. Swit, Esq.
Law Offices of Michael A. Swit
[email protected]
www.fdacounsel.com
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IBC’s 3RD International Conference
“Scaling Up from Bench to Clinic and Beyond –
Bioprocessing Strategies for Successful Commercialization”
August 14, 2002
Hilton San Diego Resort
San Diego, California
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Why Worry About FDA from a Legal
Perspective – it’s “Due Diligence”?
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FDA Compliance Can Make or Break a
Deal
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Recent Examples:
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Abbott/Alza Merger
Guilford/Gliatech Merger
When sourcing you become a “partner”
with your vendor -- their problems are
yours
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Why Worry...?
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FDA mandates you worry about your
vendor/partner’s compliance
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Poor Suppliers May Delay or Void an
Approval
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Active Pharmaceutical Ingredient (“API”)
Supplier
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Sponsor’s application will not be approved if deficiency
at API maker
Special tactics/concerns:
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be extremely careful with first-time suppliers
special concern -- if never used before, FDA
foreign inspection may delay approval process as
well
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Why Worry…?

FDA will make you worry …
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Poor Suppliers May Delay/Void
Approvals …
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Contract Manufacturers
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must be GMP compliant or FDA approval can be
refused
Special tactics/concerns
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tied directly into your application -- their changes
will trigger a regulatory duty that may require an
FDA filing/approval
may be high volume/low margin producers -pressure on production may lead to errors
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Why Worry…?
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FDA will make you worry …
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Supplier or component qualification -Required -- explicitly or implicitly
Drugs -- 21 CFR 211.22(a)
“…The quality control unit shall be responsible for
approving or rejecting drug products manufactured,
processed, packed or held under contract by another
company.”
 Devices -- 21 CFR 820.50
“Each manufacturer shall establish and maintain
procedures to ensure that all purchased or otherwise
received product and services conform to specified
requirements.”
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Why Worry…?
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FDA will make you worry …
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Supplier qualification -
Devices -- 21 CFR 820.50(a)(1) -Evaluation Duty
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applies to suppliers, contractors and consultants
-- evaluated as to ability to meet specified
requirements
must define the “type and extent of control” over
products, services, suppliers, contractors, and
consultants”
keep records of acceptable suppliers, contractors &
consultants
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Why Worry…?
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FDA will make you worry …
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Supplier qualification -
Devices -- 21 CFR 820.50(b) -- Purchasing
Data
Duty
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keep data that “clearly describe or reference the
specified requirements, including quality
requirements, for purchased or otherwise received
product and services.”
 Note: “product” includes components,
manufacturing materials, in-process devices,
finished devices and returned devices
[21 CFR 820.3(r)]
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Why Worry...?

FDA will make you worry …
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Supplier qualification -
Devices -- 21 CFR 820.50(b) -- Purchasing
Data
Duty
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Documents “shall include, where possible” an
agreement requiring a
supplier/contractor/consultant to notify the
manufacturer of changes “so that the
manufacturer may determine whether the changes
may affect the quality of a finished device.
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Why Worry...?
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FDA will make you worry …
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Supplier qualification -
Biologics -- 21 CFR 600.12(e) -- Records in
“divided” manufacturing
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each participating manufacturer shall furnish the “last”
manufacturer “all records relating to the manufacturing
operations performed by such manufacturer insofar as they
concern the safety, purity and potency of the lots of the
product involved
Tactics/concerns if you’re the “last” mfr. -
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defining the records needed re “safety, purity, and
potency” -- e.g., does that mean “effectiveness”?
be as specific as possible in the supply agreement
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Why Worry…?
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FDA Problems Can Be Hard to Fix
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FDA statutory and other powers against
violative companies/products may delay or
preclude a fix
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Inspection -- type will determine impact
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Seizure -- can be least intrusive
Injunction
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routine vs. directed
short vs. lengthy
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consent decrees -- e.g., Abbott
litigated orders
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Why Worry…?
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FDA Problems Can Be Hard to Fix ...
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Criminal Prosecution -
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The sins of your partner may visit upon you - The E-Ferol Case
does not technically preclude supply, but can be so
disruptive as to undermine the effectiveness of a
vendor
Application Integrity Program (AIP) -[formerly known as the “Alert List” or
“Fraud List”
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if your supplier is on it, can be a lengthy, very
subjective process for getting through
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Why Worry…?
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FDA Problems Can Be Hard to Fix ...
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Regulatory hurdles -- to cure a problem with
an approved product, may require FDA signoff depending on the nature of the problem.
Examples:
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Active pharmaceutical ingredient maker unable to
supply:
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Apparent Solution -- get a new one
Problem -- will require prior approval by the agency
and additional scientific data to support change
Best approach -- have two qualified as early as
possible
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Why Worry…?
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Products Liability
 Examples where a supplier caused the problem:
 Tryptophan -- raw material problem
 E-Ferol -- poor formulation
 Carbamazapine -- API process change
Securities Liability -- worst case, deal caves;
investors (i. e., their lawyers) sue
Economic disruption -- you can’t sell if they don’t
sell to you
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Keys to Preventing & Mitigating
Legal Problems with FDA-Regulated
Suppliers
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Contract Clauses
Audits
Surveillance between audits
Teamwork at the Buyer
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Preventing & Mitigating
Problems...
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Contract Clauses
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Buyer’s right to audit vendor (and vendor’s key
suppliers)
 without notice
 at any reasonable time during operations
 vendor to cooperate fully with audit
 access to records and personnel to be spelled
out
advance notice of changes in vendor’s processing - KEY -- so buyer can assess what regulatory
action it must take to keep its approval/submission
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current
Preventing & Mitigating
Problems...
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Contract Clauses ...
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Vendor to cooperate, at no additional expense, with
Buyer’s needs to take action to continue to comply
with FDA requirements (e.g., vendor to provide
data to support filing of supplements to make
changes to approved applications)
Vendor’s relations with FDA ...
 Provide copies of 483’s, EIRs
 prompt notice to buyer of initiation of FDA
inspections
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prompt transmission/notice to buyer of any FDA
regulatory correspondence or regulatory action 17
Preventing & Mitigating
Problems...
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Contract Clauses ...
Timely notice of other problems encountered by
vendor in its manufacturing process
 timely notice of any adverse reactions or complaints
reported to vendor
 Contractually articulated duty to comply with FDA
laws/regulations
 general
 specific -- examples
 providing certificates of analysis
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 testing to be done
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Preventing & Mitigating
Problems...
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Contract Clauses ...
Recalls -- duty to of vendor to cooperate with recalls
initiated by buyer (if applicable)
 representations, warranties, etc. about state of past
and present compliance with FDA legal/regulatory
reqs.
 Indemnification duty from vendor to buyer in event
of breach of any FDA-related reps or warranties
Audits -- the key to compliance
 no notice
 conduct like an FDA inspection
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Preventing & Mitigating
Problems...
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Audits ...
Audit team - should be interdisciplinary in training -Operations, QA, RA, QC
 should have an SOP for conducting
 Written follow-up -- give them a “483”
 essential
 get substantive replies from vendor
 What to stress - systems specific to your product/service being
provided to you by vendor
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 current FDA “hot buttons”
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Preventing & Mitigating
Problems ...
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Audits ...
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Re-audit promptly to confirm corrections
General Documents to review
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chronology of interactions with FDA and other regulatory
agencies (e.g., EMEA, HPB, if applicable)
all regulatory correspondence/filings between vendor and
FDA
minutes of meetings/phone calls with FDA
 company’s
 FDA’s (get via FOI if vendor doesn’t have)
Tip -- don’t rely just on what the company gives you;
seek independent sources of related documents (e.g.,
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under FOI)
Preventing & Mitigating
Problems ...
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“Surveillance” between audits -- keeping
an eye on your vendors
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Why?
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“Knowledge is Good” (Faber College motto; Animal House,
1978) -- to be in the best position to anticipate problems
To be able to initiate dialogue with vendor as soon as
possible after being alerted to a regulatory issue
How?
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Read the trade and general press -- e.g., see press release
from Schering on GMP problems
Keep track of FDA warning letters (subscribe to FDA email notification services)
FOI requests -- direct to FDA or via a third-party service
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Preventing & Mitigating
Problems...
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Surveillance ...
SCHERING-PLOUGH PROVIDES UPDATE ON MANUFACTURING ISSUES
AND FDA INSPECTIONS OF U.S. MANUFACTURING FACILITIES
KENILWORTH, N.J., June 22, 2001  Schering-Plough Corporation (NYSE:
SGP) today reported that the U.S. Food and Drug Administration (FDA) has
completed inspections conducted during May and June at the company’s
manufacturing facilities in Kenilworth and Union, New Jersey, and Las Piedras and
Manati, Puerto Rico, and has issued new inspection reports (Form FDA-483),
which cited some continuing and some additional deficiencies concerning
compliance with current Good Manufacturing Practices (cGMP). Depending on
when the Form FDA-483 was received, Schering-Plough has either responded to
or is in the process of responding to these observations and is continuing to
discuss these matters with FDA. The company cannot predict the outcome of
these issues or the timing of any resolution. [rest of release deleted]
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Preventing & Mitigating
Problems…
…the result…
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May 2002 -- $500,000,000 consent
decree by Schering
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Preventing & Mitigating
Problems ...
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Teamwork at the Buyer
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My old General Counsel’s nightmare -- “here’s the
supply contract, we need to sign it today, can you
look it over for any legal issues...?” My question:
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“Did you run it by RA, QA, QC?”
Need SOPs for handling of contracts for FDAregulated commodities/services
 identify key contract clauses in advance
 ensure sufficient time for review
 involve all key players in review and comment on
contracts (RA, QA, QC, Operations, Purchasing,
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etc.)
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Specific Procurement
Problems
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Imported Components
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FDA powers to stop questionable imports is
much greater than for identical problem
presented by a domestic manufacturer
Reason -- § 801 of the Federal Food, Drug, and
Cosmetic Act gives FDA power to block an import if
the product “appears” to be adulterated or
misbranded
 Action can occur without physical examination
 Example -- bulk APIs going through the New York
District Office in late 2000 and early 2001 were all
detained pending proof they are not counterfeit,
adulterated or misbranded -- without physical
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Specific Problems ...
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Imported Components ...
 Foreign suppliers are harder to sue
 Tryptophan -- Showa Denko allegedly dodged
responsibility for medical syndrome due to being
off-shore
 Sulzer -- foreign parent company allegedly refuses
to provide any financial support to its subsidiary
(ruptured breast implants)
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Specific Problems …
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Unusual events impacting supplies
-- FDA will try to work with you;
examples
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Phillips Petroleum Plant explosion -sole source for Marlex -- decreased
availability of container/closure
systems
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Specific Problems ...
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API’s (Active Pharmaceutical
Ingredients)
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many are foreign sourced -- thus less frequently
inspected by FDA -- puts audit onus on you
still subject to all FDA rules -- while API makers
technically do not have to meet GMP, there is a
fairly stringent ICH guidance
make sure contract has API maker notify you of
changes to process, etc. that need to be in the
DMF and that FDA has been notified
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Specific Problems ...
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Labels/Labeling
 label errors are prime cause of recalls
 CMO printer must have clear, written
procedures on handling of labels, especially if
not dedicated to you exclusively
 intake controls have to be well-documented,
trained and validated
 change control procedures -- even for changes
not being submitted for FDA approval -- are
essential
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Specific Problems ...
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Back-up Manufacturing Plant
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When needed: whenever manufacturing
is contracted out for IND or approved
Example: Lilly – 7/18/02 public
announcement on 2nd Quarter results and
plant problems not being cured until 2003
What clause says: lets non-mfg. party
seek a backup contractor under
appropriate circumstances (e.g., Lilly had
GMP problems holding up NDA approvals)
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Specific Problems…A few
unique ones….
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Who Owns the Data
 When needed: whenever studies of any sort
are farmed out
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Example: Client has major study done at
University; contract is ambiguous on
who controls the data, although clear
client can use in FDA product approval
filing
What clause says: makes clear who owns
both raw data and results and the right to
authorize publications and references
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Specific Problems…A few
unique ones….
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Copies of Data Generated by Contract Labs
 When needed: whenever testing is
contracted out for IND or approved products
 Example: Oread
 What clause says: obligates the contract
lab to maintain raw data, reports, etcs. and
provide a copy in event of insolvency; also
could require creation of an extra archival
copy of data.
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Questions?
Write, call or e-mail:
Michael A. Swit, Esq.
Law Offices of Michael A. Swit
539 Samuel Ct.
Encinitas, CA 92024
760-815-4762 -- fax: 760-454-2979
[email protected]
www.fdacounsel.com
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About your speaker …
Michael A. Swit has over 19 years of experience addressing critical FDA legal and regulatory
issues. His vast and varied experience, which he is now providing as a solo practitioner, includes
serving for three and a half years as vice president and general counsel of Pharmaceutical
Resources, Inc. (PRI) a prominent generic drug company and, thus, brings an industry and
commercial perspective to his representation of FDA-regulated companies. While at PRI from
1990 to late 1993, Mr. Swit spearheaded the company’s defense of multiple grand jury
investigations, other federal and state proceedings, and securities litigation stemming from the
acts of prior management. Mr. Swit then served from 1994 to 1998 as CEO of Washington
Business Information, Inc. (WBII) a premier publisher of FDA regulatory newsletters and other
specialty information products for the FDA-regulated community. From May 2001 to May 2003,
Mr. Swit was special counsel in the FDA Law Practice Group in the San Diego office of Heller
Ehrman White & McAuliffe. Before that, he was twice in private practice with McKenna &
Cuneo, from 1988 to 1990 and, most recently, from 1999 to 2001, first in that firm’s D.C. office
and most recently, in its San Diego office. He first practiced FDA regulatory law with the D.C.
office of Burditt & Radzius from 1984 to 1988. Mr. Swit has taught and written on a wide variety
of subjects relating to FDA law including, since 1989, co-directing a three-day intensive course
on the generic drug approval process and editing a guide to the generic drug approval process,
Getting Your Generic Drug Approved. He is a member of the California, Virginia and District of
Columbia bars, an avid hockey, basketball and baseball fan (and ex-player), and the father of
triplet sons, born Feb. 29, 1996, and is married to Vera Caccioppoli, an accomplished creative
writer, artist, and business and personal coach.
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