5 Key Questions About Quality Agreements

1. What Is a Quality Agreement, and What Should It Include?

As defined by the U.S. Food and Drug Administration (FDA), “A quality agreement is a comprehensive written agreement between parties involved in the contract manufacturing of drugs that defines and establishes each party’s manufacturing activities in terms of how each will comply with CGMP. In general, the quality agreement should clearly state which party — the owner or the contract facility or both — carries out specific CGMP activities.” ⁽¹⁾

A quality agreement (QAg), also known as a quality technical agreement (QTA) is a document that defines both specific quality parameters for a project and which party is responsible for the execution of those parameters. The level of detail may vary depending on the developmental stage of the project.

Any time any contractor – from a contract manufacturing organization (CMO) to a testing lab to a materials vendor – is used there should be a quality agreement. Items to address in a quality agreement include all aspects of a project that affect the identity, quality, safety, potency, and purity of a product. Additionally, include aspects that may affect the compliance status of either the contractor or client.

A good quality agreement:

• Clearly lays out who is responsible for which aspects of the statement of work in the master services agreement – the client or the contract giver.
• Specifies time windows (review of documents, reporting deviations, notifications, audits, etc.) and specifies business or calendar days.
• Has a clear Definitions section that leaves nothing to interpretation (e.g., specifies the difference between a critical, major and minor deviation).
• Describes a mechanism for amending the QAg, if necessary.
• Describes exactly what will be delivered or performed (e.g., Bulk drug substance or filled vials? Delivered to the client or the fill/finish CMO? Process development or tech transfer? QA certified copies or faxes?)

One of the most overlooked QAg sections recommended in the FDA guidance is the definitions section. It is critical that everyone knows what is meant by every term used in the quality agreement; especially when contracting with non-U.S. parties, terminology can vary widely. Include abbreviations and acronyms, and define documents – one person's batch record is another person's data sheet. Define “subcontracting” and if and when it is acceptable.

What to exclude from a quality agreement is also worth mentioning. Certain items that should never appear in a quality agreement include:

• General business terms and conditions.
• Pricing and escalator clauses.
• Forecasting.
• Delivery terms
• Confidentiality obligations
• Liability limitations.

The above items belong in the supply agreement. The quality agreement should be a separate document from the supply agreement but may be incorporated by reference. Quality agreements and supply agreements are two very different documents. If they are created as a single document, the reviewer list will include many individuals on each side of the fence that have no real reason or time to review issues unrelated to their area of expertise. There may be also be confidentiality issues – such as fees – that do not need to be shared with non-financial management functions.

2. Why Do You Need a Quality Agreement?

A quality agreement clarifies exactly what is expected of both parties, and who will be responsible for virtually all aspects of the project. It also identifies specific cost aspects (not costs, per se) of the project and may save time and money by doing so.

2.1 Regulatory Reasons

There are regulatory requirements for quality agreements. While not currently required by U.S. good manufacturing practices (GMPs) for pharmaceuticals, it is very likely they soon will be. In 2016, the FDA issued the guidance document “Contract Manufacturing Arrangements for Drugs: Quality Agreements.” Adding a quality agreement requirement to 21 CFR 211 would bring U.S. GMPs in line with European Union (EU) GMPs, and with the International Council for Harmonisation (ICH) guidelines that the FDA has accepted (see below).

Quality agreements are required by medical device regulations, 21 CFR 820.50 purchasing controls, as well as various quality standards such as those established by the International Organization for Standardization (ISO).

In early 2013, Chapter 7 of the EU GMPs was revised and retitled “Outsourced Activities” to make it more aligned with the ICH Q10 Pharmaceutical Quality System. The Principle of Chapter 7 reads, “Any activity covered by the GMP Guide that is outsourced should be appropriately defined, agreed and controlled in order to avoid misunderstandings which could result in a product or operation of unsatisfactory quality. There must be a written Contract between the Contract Giver and the Contract Acceptor which clearly establishes the duties of each party.” ⁽²⁾

Chapter 7 goes on to read “7.14: A Contract should be drawn up between the Contract Giver and the Contract Acceptor which specifies their respective responsibilities and communication processes relating to the outsourced activities…All arrangements for outsourced activities must be in accordance with regulations in force and the Marketing Authorization for the product concerned and agreed by both parties.”

Quality agreements are also specified in ICH quality documents. ICH Q7, 16.12, reads "There should be a written and approved contract or formal agreement between a company and its contractors that defines in detail the GMP responsibilities, including the quality measures, of each party." ⁽³⁾

And in ICH Q10, 2.7, “The pharmaceutical quality system, including the management responsibilities described in this section, extends to the oversight and review of outsourced activities...Responsibilities for quality-related activities of the contract giver and contract acceptor should be specified in a written agreement.” ⁽⁴⁾

To ensure nothing is left out, a QAg may be organized in the same sequence as the Part 211 subparts:

1. General
2. Organization and Personnel
3. Buildings and Facilities
4. Control of Components
5. Production and Process Controls
6. Packaging and Labeling
7. Holding and Distribution
8. Laboratory Controls
9. Records and Reports
10. Returned Product / Complaints ⁽⁵⁾

The titles of each section may be adjusted to suit the circumstances, and topics in each section will have more specific detail than the regulations. Topics that should be included in the general category include change control (this can also be a separate category), arbitration (dispute resolution), debarment certification, etc. The remaining headings should address heading-specific issues, such as “Organization and Personnel” should address training requirements and responsibilities, quality assurance unit (QAU), etc..

2.2 Day-to-Day Reasons

One of many important details of quality agreements is time windows. If a CMO wants a turnaround of five days for review of a master batch record (MBR), that might be reasonable, as there is no data to review. However, if the CMO wants a turnaround of five days for review of an executed batch production record (BPR), in most instances that is not reasonable. There is simply too much data to review to be able to do a thorough job in five days.

Another example: if the quality agreement reads “batch record review, five days” ask for clarification. Is this an MBR or a BPR? Is it five business days or five calendar days? These are details that can make a huge difference.

3. Where Are Quality Agreements Needed?

There is a misconception that quality agreements are only required for the use of CMOs operating in a different regulatory environment. Not so – any outsourcing contract arrangement should have an associated quality agreement, including arrangements between different divisions of the same company, regardless of the physical location of any of the parties involved.

Quality agreements are specifically required by the EU and the FDA; if doing business in another region, it’s a good idea to implement a quality agreement even if it is not a regulatory requirement.

4. When Is a Quality Agreement Needed?

The quality agreement should be drafted and mutually accepted by the CMO/contractor and the client before the supply agreement, to ensure identification of all fee-for-service items and any capability limitations. Neither party should take anything for granted.

A formal corporate policy document or the quality manual should clearly indicate the types of vendors and services that will require a quality agreement. Any time a CMO/contractor is used there should be a quality agreement. A quality agreement should be in place with all vendors of critical materials, and is also recommended for vendors of large quantities, e.g., methyl cellulose for capsules, column resins, etc.

5. Who Should Prepare, Review and Approve a Quality Agreement?

Quality agreements should be prepared by both parties' quality assurance (QA) functions, with the involvement of relevant operational personnel, such as manufacturing and lab personnel. They should be approved by both parties' QA function and both parties' operations department. The legal department may or may not be involved in the quality agreement. Involving the legal department in the preparation phase would help ensure that the quality agreement corresponds with the supply agreement; however, it can delay execution of the quality agreement if the legal department wants to add unnecessary legal verbiage that does not belong in a quality agreement.

A tabulated version of the QAg is usually the easiest format. As illustrated in the table below, headers generally contain the following:

Those that need to know the content of the quality agreement in order to do their job should be included in review of the agreement, including business development, project leader(s), and legal (to ensure congruence with supply agreement).

In summary, quality agreements can save a great deal of time and money by preventing misunderstandings between contract givers and contractors, but only if they are timely, thorough, and have input from all affected operational units.

Sources:

1. Contract Manufacturing Arrangements for Drugs: Quality Agreements Guidance for Industry, U.S. Food and Drug Administration, November 2016.
2. EU Guidelines for Good Manufacturing Practice for Medicinal Products for Human and Veterinary Use, Chapter 7: Outsourced Activities, European Commission, June 2012.
3. ICH: Q7: Good manufacturing practice for active pharmaceutical ingredients, European Medicines Agency, November 2000.
4. ICH: Q10: Pharmaceutical quality system, European Medicines Agency, last updated May 28, 2014.
5. CFR – Code of Federal Regulations Title 21, Part 211, Food and Drug Administration Department of Health and Human Services, revised as of April 1, 2020.