Hahn Law Firm

Aren't We Done Negotiating? What's This "Quality Agreement" of Which You Speak?

     Quality Agreements (QA's) are those legally binding documents that set out in considerable detail each party's responsibility for various activities in a regulated life sciences environment. Typically, QAs are left to last, once all the commercial agreements are signed, sealed and delivered. Once those commercial agreements are signed and celebrated, the parties may feel like they've completed their deal. They are ready to move away from negotiating, lawyers and exchanging red-lines. They are ready to actually do what they've promised each other they'd do in the commercial documents. They are ready to make products, profits and technology. So those highly technical (and perhaps tedious) QAs may seem superfluous. Not so.
     QAs are an essential part of a contractual relationship in the life sciences world. The FDA considers contractors an "extension of the manufacturer's own facility." Thus, both parties are responsible for ensuring that products are not adulterated or misbranded. With respect to contract manufacturing, both parties must work together to establish and maintain quality oversight of contracted operations and the materials produced under contract. This is where the QA comes in. Indeed, QA's are so essential that failure to have one can result a warning letter from the FDA. This is true even though there is no actual legal requirement to have a QA. Here's what the FDA had to say in one warning letter:

"Your firm failed to establish a quality plan defining the quality practices, resources, and activities relevant to devices that are designed and manufactured, as required by 21 CFR 820.20(d). Specifically, your firm has not established a quality agreement with the contract manufacturer of the EZ Spacer nebulizer devices. The responsibilities between FCS and the contractor have not been clearly defined. Additionally, a similar observation was made regarding your failure to establish a quality agreement with your contract manufacturer of the drug[.]"

     Helpfully, the FDA has issued draft guidance on contract manufacturing arrangements for drugs. This FDA guidance expressly applies to human drugs, veterinary drugs, certain combination products, biological and biotechnology products, finished products, active pharmaceutical ingredients (APIs or drug substances, or their intermediates), and drug constituents of combination drug/device products. While the guidance expressly does not cover the following types of products: Type A medicated articles and medicated feed, medical devices, dietary supplements, or certain human tissues intended for transplantation; this statement shouldn't be construed to mean that QAs are not important in these latter contexts. While this blog article focuses on QAs for the former products and not the latter, dietary supplements are subject to cGMP requirements and so the guidance can be a guideline for QAs related to dietary supplements and nutraceuticals as well.

     When are QAs necessary? Every time a contractor or contract manufacturing organization is used there should be a QA in place. Some of these situations are:

  • Third party manufacturer of finished dosage form or device or any part of these
  • Contract packaging facility (finish packaging) 
  • API supplier
  • Excipient supplier
  • Contract stability storage facility
  • Contract testing facility
  • Contract research organization
  • Warehousing arrangement 


     Should the QA be an integral part of the commercial agreement? 
No. While critical to the business relationship, the QA should be a separate document or at least severable (such as being and exhibit) from commercial contracts. The FDA does not routinely request or review business s agreements on inspection but it routinely requests and reviews evidence of Quality Agreements or the lack thereof. Having the QA separate avoids sharing the commercial terms with the FDA.

    What should be included in the QA? The QA should define each party's roles and responsibilities and track the basic subparts of the applicable cGMP regulations (such as 21 CFR parts 210, 211, 600-680, 1271).  One common practice is to include a table listing the various cGMP requirements and who is responsible for each of them.  It should have the following sections:

  • Purpose/Scope
  • Term, including effective date and termination clause, which will be at least as long as the underlying commercial agreement and/or the shelf life of the product
  • Dispute Resolution
  • Responsibilities, including communication mechanisms & key contacts
  • QA change control and revisions

In addition, it should include, as applicable, the following provisions:

  • the product covered by the QA
  • definitions - which will align to the FDA's definitions when available or to the contract facilities terms and SOP's to help avoid mistakes
  • change control, including subcontractors
  • documentation retention
  • laboratory controls
  • materials management
  • facility and equipment location and validation
  • maintenance, qualification and validation
  • storage and transport
  • label printing
  • release
  • cGMP audits
  • reporting and investigating deviations and out-of-specification results
  • responsibility for documenting steps in the manufacturing process
  • responsibilities for method validation
  • responsibility for data integrity in laboratory records and test results
  • responsibility for facilities and equipment maintenance and upkeep

     What shouldn't be included in the QA? Commercial terms are best left to the commercial agreements. So the following clauses do not belong in the QA:

  • general business terms and conditions
  • milestone payments
  • licenses
  • warranties
  • pricing and price adjustment
  • purchase orders and forecasting
  • delivery terms
  • liability limitations
  • indemnification
  • liquidated damages

     Who should review the QA? The quality units of each party are instrumental in the preparation and review of QAs. These units are best suited to understand all the applicable cGMP's, SOP's and other requirements of the relationship. Legal counsel may be engaged to review the QA at least once for consistency with the underlying commercial agreements and other issues of legal or regulatory concern.

     Does one size fit all? No. Different suppliers / contractors have different obligations. For instance, an API supplier has different obligations than a contract packager. An NDA/ANDA holder that is also the finished dose contract manufacturer has different obligations than a contract manufacturer who does not own the NDA/ANDA. While templates are useful tools, one template will not work for all situations. A good approach is to develop several template QAs tailored to the applicable situation.

     Different jurisdictions may have different requirements. This article focuses on the US FDA and requirements in the US. If other regions of the world are involved in the work, then the applicable guidelines of these regions should be considered, for instance, the EMEA requirements may be applicable. The ICH also has guidelines which are predominately adopted by the FDA.

Top Ten Relationship-Building Tips Learned as In-H...
Should I sign that CDA?

Related Posts