FDA Issues Final Quality Agreement Guidance

By Jay W. Cormier –

After three years of considering public comments on the draft, in last Wednesday's Federal Register, FDA issued its final FDA Guidance for Industry regarding Contract Manufacturing Arrangements for Drugs: Quality Agreements.

With this Final Guidance, FDA has clarified its scope, specifically with respect to the parties to which it applies. For a detailed background on this matter, see our blog post regarding the draft guidance (here).

In brief, FDA expects that “owners” will enter into written quality agreements with “contract facilities” whereby the parties define and establish each party’s roles and responsibilities with respect to ensuring that drug substances and drug products are manufactured in accordance with current good manufacturing practice. These quality agreements ideally state which party engages in which activities, and which party has primary responsibility for fully complying with cGMPs under section 501(a)(2)(B) of the Act and 21 C.F.R. Parts 210, 211, and 600-680, as those regulations may apply to the specific product or substance involved.

Companies should be aware that FDA intends to review quality agreements during facility inspections, so FDA (and we) recommend that quality agreements be separate from other contracts between owners and contract facilities.

In the draft guidance, FDA defined an owner as any party that “introduces (or causes the introduction of a drug into interstate commerce.” As we noted in our earlier post, this definition was so broad it seemed highly unlikely that FDA actually intended the guidance to apply to all entities that would meet that definition (e.g., distributors). Not only did it seem illogical to require distributors or other down-stream “owners” to be responsible for certain non-delegable cGMP requirements such as product release, the effect would have been to nullify section 303(c) of the Act, which allows down-stream entities to rely on written product guarantees from up-stream manufacturers.

Therefore, it is reassuring that the Final Guidance takes a more measured approach. Under the Final Guidance, an “owner” for purposes of the guidance includes only “manufacturers of APIs, drug substances, in-process materials, finished drug products, including biological products, and combination products.” As with the draft, FDA excludes “retail pharmacies, drug stores, supermarkets, discount warehouse stores, or other retailers who purchase finished drug products to sell over the counter as a store brand” from the definition of an owner. The Final Guidance goes on to specifically state that it does not include “entities that engage in manufacturing related solely to drug distribution (e.g., distributors, brokers, private label distributors, own label distributors)” in the definition of an owner. FDA still encourages such entities to use quality agreements or the general concepts of quality agreements when it would be helpful for those entities to have such an agreement in place. In case there is any doubt, FDA states that its “focus [], however, is on the roles and manufacturing activities of the owner and contract facility.”

It is important to also note that, as FDA acknowledged in the draft guidance, FDA’s cGMP “regulations do not explicitly require Owners and Contracted Facilities to document their respective responsibilities in contract manufacturing arrangements.” The full quote in the draft guidance states:

Although the CGMP regulations do not explicitly require Owners and Contracted Facilities to document their respective responsibilities in contract manufacturing arrangements, the regulations do require that Quality Unit responsibilities and procedures be in writing (21 CFR 211.22(d)). FDA believes that implementing a written Quality Agreement facilitates compliance with § 211.22(d). Therefore, FDA recommends that Owners and Contracted Facilities establish a written Quality Agreement to record their respective responsibilities in contract manufacturing arrangements.

Interestingly, the Final Guidance plays this point less candidly, which is as disappointing as its original honesty was refreshing. In the Final Guidance, FDA states merely:

Implementing a written quality agreement can facilitate compliance with CGMP and, in particular, with 21 CFR 211.22(d), which states that quality unit activities and procedures should be in writing. FDA recommends that owners and contract facilities establish a written quality agreement to describe their respective CGMP-related roles, responsibilities, and activities in drug manufacturing.

To be clear for our readers, FDA’s original statement, and the implied statement in the Final Guidance are correct: there is no statutory or regulatory requirement for a quality agreement between owners and contract facilities. That being said, we have seen a significant increase in clients seeking assistance in writing and negotiating quality agreements between many different types of parties – it is clear that the use of quality agreements is both becoming standard industry practice and is useful in clarifying specific roles and responsibilities between parties. Such agreements can have both tangible and intangible benefits to all parties throughout the life of the relationship.