Transcript Strategies for Sourcing FDA-Regulated Products and Components

Legal and Regulatory Concerns in
the Sourcing of FDA-Regulated
Products, Components & Services
Part 2 – The Contract and Related Legal
Strategies
Michael A. Swit, Esq.
Law Offices of Michael A. Swit
539 Samuel Ct., Suite 229
Encinitas, California 92024
760-815-4762 ♦ 760-454-2979 (fax)
[email protected]
FDACounsel.com
Center for Professional Advancement
In-House Seminar
Vendor & Supplier Qualification
Siemens
Concord, California
January 29, 2004
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Keys to Preventing & Mitigating
Problems with FDA-Regulated
Suppliers
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Contract Clauses
Audits
Surveillance between audits
Teamwork at the Buyer
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THE CONTRACT – Defining
Your Regulatory Duties
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Establishes rights and obligations
of both parties
Written document that reflects oral
agreement
The basis for any remedial action
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Drafting The Contract
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Should be written in language you
understand
Should set forth all the conditions
of the contract that are important
RECOGNIZE -- FDA regulations
control/impact many contracting
issues
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Contract Issues For Medical
Devices And Components
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Drafting a 510(k) contract
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List of parties
Who sets product specifications
Product release
Compliance with QSR
Compliance with Federal Food, Drug, and
Cosmetic Act
Responsibility for vendor audits
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Medical Device Contract
Issues …
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Drafting a 510(k) contract …
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Right to audit without notice or with short
notice
Notification of change in components or
manufacturing process
Penalties and/or remedies for
nonperformance
Notification of FDA inspection, including
providing FDA 483 and responses
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Medical Device Contract
Issues …
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Drafting a 510(k) contract …
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Termination notification -- usually two
years
Price
Price adjustments based on cost, volume,
new regulatory requirements
Authority to order recall and cost allocation
of recall
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Medical Device Contract
Issues …
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Drafting a 510(k) contract …
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Arbitration clause
Notification provision
Intellectual property handling
Confidentiality
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Medical Device Contract
Issues …
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Drafting the PMA Agreement
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Who is responsible for clinical study data
Who is responsible for submitting IDE to
FDA or determination that submission of
IDE to FDA is not necessary
Who will submit PMA
Who will respond to agency questions on
PMA
Publication of data – how handled
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Preventing & Mitigating
Problems...
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A Look at Specific Contract Clauses
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Buyer’s right to audit vendor (and vendor’s
key suppliers)
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without notice
at any reasonable time during operations
vendor to cooperate fully with audit
access to records and personnel to be spelled
out
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Preventing & Mitigating
Problems …
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Specific Contract Clauses …
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advance notice of changes in vendor’s
processing -- KEY -- so buyer can assess
what regulatory action it must take to keep
its approval/submission current
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Preventing & Mitigating
Problems...
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Specific 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)
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Preventing & Mitigating
Problems …
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Specific Contract Clauses ...
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Vendor’s relations with FDA ...
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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 other
regulatory action
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Preventing & Mitigating
Problems...
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Specific Contract Clauses ...
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Timely notice of other problems
encountered by vendor in its
manufacturing process
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Example: problems in making similar
products for others – duty to notify you
timely notice of any adverse reactions or
complaints reported to vendor
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Preventing & Mitigating
Problems …
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Specific Contract Clauses ...
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Contractually articulated duty to comply
with FDA laws/regulations
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general
specific -- examples
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providing certificates of analysis
testing to be done
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Preventing & Mitigating
Problems...
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Contract Clauses ...
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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.
♦♦ “continuing Food & Drug Guarantee” –
insulates downstream buyer – but is very
limited – just bars criminal prosecution
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Preventing & Mitigating
Problems...
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Contract Clauses ...
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Indemnification duty from vendor to
buyer in event of breach of any FDArelated reps or warranties
IDE Related – if delegate to a CRO, must
specify in contract what duties are
delegated
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Problem – really doesn’t insulate you from
liability
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Preventing & Mitigating
Problems...
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Contract Clauses ... If you want it to
happen … or not happen
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Write it into the contract
The contract can be a management tool
Tension – time/expense vs. value of
contract
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Partial answer – specific terms and
conditions aimed at FDA compliance issues in
P.O. or otherwise
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Preventing & Mitigating
Problems …
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Audits -- the key to compliance
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No notice (ideal world?)
Conduct like an FDA inspection
Audit team -
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should be interdisciplinary in training -Operations, QA, RA, QC
should have an SOP for conducting
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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
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Preventing & Mitigating
Problems …
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Audits ...
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General Documents to review …
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minutes of meetings/phone calls with FDA
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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., under FOI)
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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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“Knowlege 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
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Preventing & Mitigating
Problems …
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“Surveillance” between audits -keeping an eye on your vendors …
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How?
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Read the trade and general press
Keep track of FDA warning letters (subscribe
to FDA e-mail notification services)
FOI requests -- direct to FDA or via a thirdparty service
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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 reply:
“Did you run it by RA, QA, QC?”
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Specific Problems…A few
unique ones….
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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
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When needed: whenever studies of any sort
are farmed out
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?
Call, e-mail, fax or write:
Michael A. Swit, Esq.
Law Offices of Michael A. Swit
539 Samuel Ct., Suite 229
Encinitas, California 92024
760-815-4762 ♦ 760-454-2979 (fax)
[email protected]
http://www.fdacounsel.com
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About the speaker ...
Michael A. Swit has extensive experience in all aspects of FDA regulation with a particular emphasis on
drugs and medical device regulation. In addition to his regulatory law experience, Mr. Swit also
served 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 publishing company. Before starting FDACounsel.com, he was with Heller Ehrman from
May 2001 to May 2003, and also 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, serving on the Editorial Board of the Food & Drug Law Journal, and editing a guide to the
generic drug approval process, Getting Your Generic Drug Approved, published by WBII. Mr. Swit
holds an A.B., magna cum laude, with high honors in history, in 1979, from Bowdoin College, and
earned his law degree from Emory University in 1982. He is a member of the California, Virginia
and District of Columbia bars.
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