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Business of Contract Manufacturing 101

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Title: Business of Contract Manufacturing 101


1
  • Business of Contract Manufacturing 101
  • Saving Time Money Now in the Future
  • by Optimizing CMO / Sponsor Relationships
  • IQPC 7th Contract Manufacturing for
    Pharmaceuticals
  • November 27, 2007

Paul Woitach Managing Partner Pharmaceutical
Advisors LLC 316 Wall Street, 2nd
Floor Princeton, NJ 08540 609-688-1330 pwoitach_at_ph
armadvisors.com
2
Approach and Format
  • Provide a Toolkit Framework
  • Phase / Stage appropriate considerations
  • Consider Inputs Outputs
  • Templates / checklists
  • Socratic Approach
  • The key questions to help you know what you dont
    know
  • Every case is different knowing the questions
    can be more helpful that generic answers
  • Business Perspective
  • Highly technical issues butthese are business
    decisions!
  • Follow-Up Feedback
  • Customize discussion for your issues
  • Follow-Up Debrief

3
Contributing Advisors
  • From Our Advisors Development Commercialization
    Team
  • James Behling
  • Chemical Development, Searle
  • Thomas Crawford, PhD
  • Chemical Development, Pfizer, Pharm Dev,
    Millennium
  • Suggy Chrai, PhD
  • Formulation, Drug Product, BMS, Liposome Co, Mova
  • David Dresback, PhD
  • Pharm Sciences, Pfizer
  • Gary Elliott, PhD
  • Product Development, Salmedix
  • Kent Iverson
  • Biologics Development Mfg, Coulter, Corixa,
    Immunex, Genentech
  • Dennis Johnson
  • Quality, Eli Lilly
  • John McEntire, PhD
  • Analytical Operations, Bioreliance

4
How Was This Developed
  • Small Large Company Sponsor perspectives
  • Sourcing, Manufacturing Strategy Vendor
    Management projects
  • CMOs CROs Perspective
  • Operational, Commercial and Technical improvement
  • Individual white papers
  • Client projects
  • Years of experience and leadership

5
Advisors Functional Focus
Integrating Research, Development, Engineering
and Commercialization Expertise
Practical Quality Systems Regulatory
Portfolio Decisions, Due Diligence Valuation
Rapid, Interactive Expert Panels
Integrated Development View Linking
Regulatory, CMC, Tox, Clinical
Operational Input to Capital Plans
Resolve Issues Build Skills Chemistry,
Formulation Drug Delivery Safety Efficacy
ADME
Scale-up Sourcing Decisions
Supporting Development, Operations, Strategy and
Portfolio Management
6
Program Outline
  • Build-in Risk Management and Efficiency
  • Ensuring you have an Outsourcing Strategy
  • Link to overall strategy and internal resource
    considerations
  • Understanding Yourself and Your Requirements
  • Critical considerations often missed during early
    development
  • Project-Specific Clinical, Safety Other
    requirements
  • RFPs Contracting
  • Approaches to reduce your costs and maximize your
    leverage
  • Risk Mitigation to Avoid delays Cost and enable
    speed and success
  • Tips Best Practices

7
What Makes This Challenging?
  • You need to get it right the first time
  • Potential for manufacturers leverage
  • High switching costs
  • Very different than working with a captive
    facility
  • Less timing flexibility as captive facilities
    allow setting internal priorities as desired
    whether fully utilized or underutilized
  • CMOs focus on capacity as selling time in a
    schedule
  • CMOs less able to accommodate schedule changes
  • The CMOs revenues are the clients expenses
  • Increased cost associated with changes to plan
  • Scope change may create overtime hours and/or
    premium/penalty pricing
  • Potential mis-aligned incentives / conflicts of
    interest
  • CMOs benefit if a questionable lot is released
  • CMOs may not suffer if a program fails in the
    clinic
  • Some CMOs and/or their other clients may be
    competitors to the sponsor
  • Competition with respect to Intellectual Property
    and/or control of information
  • Dual-focus CMOs may exit the contract
    manufacturing business if their own drug
    development programs are successful
  • Allure of the trap of believing that there is a"
    Partnership
  • A CMO or CRO relationship is not a partnership
  • Risk and reward to each of the parties is not
    usually proportional

8
Framework for Proactively Managing Outsourcing
Risk Timelines
Understanding All Your Requirements
Company Strategic Context Link to company strategy Management support and awareness Realistic expectations and appropriate internal resources Integrated Development Planning Integrated Development Plans The right inputs to sourcing decisions
Selection
Well Planned Sourcing Selection Process Understanding of potential risks in a CMO relationship and have strategies tactics to mitigate Diligent CMO assessment selection Contract Structure Negotiation that balances rewards leverage
Execution
Program Relationship Management Planning maintenance of detailed project plans Proactive and Relentless Relationship Management Partner-like good-will, mutual respect professional interaction
9
Structured Process for Success
Sourcing Selection Process
Integrated Development Plans
Strategic Context
Boundaries
Clinical Safety
Requirements Vendor ID
Investment Strategy
Action Plan Key Indicators of Success
Drug Substance Drug Product
Screening RFP Selection
Strategic Skills
Regulatory and other
Negotiation Contracting Scope
Approval Regulatory
10
So What Does This Have to Do With Strategy?
  • Remember - Output is More than Material !
  • CMC Outsourcing delivers
  • Material
  • Technology
  • Registration Enabling Information
  • Make sure that you consider
  • What you should do now
  • What you can do now
  • What you do not want to do now
  • Unfortunately, most companies enter contract
    manufacturing relationships without being able to
    consider and plan for all thats needed

11
Best Outsourcing Programs Consider Current and
Future Technical Requirements
  • Examples of Technical Considerations
  • Final Form
  • Interim and preferred synthesis technology
  • Interim and preferred drug product formulation
  • Anticipated synthetic or formulation changes
  • Changes to purity profile, how to qualify new
    impurities depending on stage of development 
  • How API salt or particle size or formulation can
    change bioavailability how to address in
    clinics
  • Process Development Optimization needs
  • Trade off between speed and process learning
  • How and when to achieve reproducibility of bulk
    form quality
  • Speed and process learning and technical risks
    vs. new/improved technology
  • Need for Demonstration of manufacturing including
    robustness scalability
  • Analytical Technology
  • Raws, Intermediates and in process controls,
    Methods for DS and DP
  • Process safety reaction engineering
  • Preferred Salt, polymorph, solvate what when
  • cGMP needs timing
  • Clinical and safety demands, GLP requirements and
    GMP material needs
  • Dosage form development demands

12
Ensuring an Appropriate Outsourcing Strategy
  • Context Link to overall strategy and internal
    resource considerations

13
Strategic Context
14
Corporate Requirements Why You Need Internal
Clarity Early
  • How Strategy choices influence your flexibility
  • Company and Program Requirements
  • Boundaries for choices
  • What to outsource impacts types of Vendors
  • Strategic skills and activities to not outsource
    influences types of Vendors and Scope of
    activities
  • When to build internal capability influences the
    types of Vendors, skills you need and knowledge
    transfer needed
  • Senior Management Commitment and Involvement
  • Links to development plans priorities affects
    the Workscope
  • Realistic expectations lead-times affects all
    outsourcing choices AND cost
  • Cash burn constraints affects choices and timing
  • Program and Project Requirements
  • When to outsource
  • Impact on development plan re trade-offs cost
    time
  • Impact on cash burn
  • How to manage it
  • Skills needed to effectively outsource
    gtgtgtResources cost time
  • Level of resources needed gtgtgtResources cost
    time
  • Risk investments
  • Investments in non-clinical activities that must
    be made before a key decision point is reached.
    These are required to keep program in continuous
    development mode.

15
Program Project Inputs to Consider
  • Development Strategy
  • Approval Strategy
  • Investment Strategy
  • Development Plan beyond IND
  • Technological Difficulty
  • Unique technology needs
  • Is it possible to leverage common vendors

16
Broader Program or Considerations
Program Specific Considerations Program Specific Considerations Program Specific Considerations Program Specific Considerations
Development Strategy Approval Strategy Investment Strategy Tactics Post-IND
To Approval To POC To IND Other Fast Track / Accelerated Standard Staged Invest at-risk early to move faster later Postpone Investment in technology info Need for material small or large Need for non-GMP GMP Lead Times
Program AND Project Specific Considerations Program AND Project Specific Considerations Program AND Project Specific Considerations Program AND Project Specific Considerations
Technical Difficulty Unique Technology Needs Unique Technology Needs Leverage Vendors
Skills Timing Risk Implications for Safety Clinical Handling ( potent, energetic, low-dose ) Is technology suitable for use or is more development required? IP - Any freedom to operate issues Need to access IP to succeed? Need for know-how or technology to remove IP? Proprietary catalysts etc? Handling ( potent, energetic, low-dose ) Is technology suitable for use or is more development required? IP - Any freedom to operate issues Need to access IP to succeed? Need for know-how or technology to remove IP? Proprietary catalysts etc? Multiple projects Common Technologies
17
Development Strategy Alternatives -Different
Approaches to Managing Risk
Alternatives Development Implications
When Developing to Efficacy in Man Work to Get into man Worry less about restarts Delay process optimization, scale up tasks Consider minimizing early formulation development efforts Minimize analytical method validation Design stability programs on a cost per pull point basis to allow discontinuation and cost recovery
When Developing to Commercial Launch Work to Deliver the First Pill Sold Minimize restarts Dont delay process optimization Dont delay dosage form optimization Be more willing to incur process development validation cost earlier if efforts reduce risk long term May accelerate scale-up move to commercial vendor earlier if efficacy risks are reduced
18
Outsourcing Implications of Development Strategy
Alternatives
Alternatives Implications
To Registration Consideration of Commercial Supply Different development vendors vs. scale-up vs. commercial? Process data for scale-up Rate of investment in technology knowledge vs. scale-up Final process definition Knowledge transfer Ability of vendor to develop a process that will be transferred to other vendors Raw material strategies
To POC / Human Efficacy Data Potentially less need for investment in process data Ability of vendor to develop a process that will be transferred to other vendors Ability of vendor to tech transfer Some need for analytical validation and stability indicating methods
Other Varying need for analytical characterization, technology development Potentially less need for investment in process data
19
Outsourcing Implications of Approval Strategy
Alternatives
Alternatives Implications
Fast-Track / Accelerated Consideration of Commercial Supply Process data for scale-up Rate of investment in technology knowledge vs. scale-up Final process Knowledge transfer Limited tech-transfers Concurrent activities More at-risk investment Higher API cost in clinic Earlier attention to formulation Supply more critical Additional internal management Plan for analytical bottleneck Potential for pre NDA process validation Earlier planning for commercial supplier materials
Standard Approval Increased ability to postpone investment in technology
20
Outsourcing Implications of Investment Strategy
Alternatives
Alternatives Implications
Invest-at-Risk to ensure commercializable technology Increased initial cash burn rate Increases initial in-house demand for vendor management May need to repeat analytical tasks if API salt form or formulation, or DS/DP mfg process changes Plan DS synthesis to enable targeted changes without effecting entire synthesis choose earlier what to lock down
Develop DS DP suitable for exposure in humans to efficacy Delay investment in technology and information until efficacy data available Reduces initial cash burn rate Reduces initial in-house demand for vendor management May allow non-robust processes to be used for Phase III CTM mfg but may delay registration Increase risk of DS/DP process changes and hence attributes during or after efficacy trials Increases risk of need for clinical bridging studies should DP attributes change during clinical development
Invest in Inventory Ability to campaign Ability to realize batch-size cost benefits earlier Ability to do multiple sourcing earlier
21
Outsourcing Implications of Development Plan
Alternatives
Alternatives Implications
Need for small quantity quickly Requires suitable technology in place to deliver multi-kg Documentation less regulated but still critical Wider variety of facility choices May increase eventual need for tech transfer non-GMP material can be used for animal safety studies and drug development work. Key issue is whether or not it makes sense to prepare non-GMP material after initial lot.
Need for large quantity quickly Increases opportunity/need to ID Phase III/commercial vendor early Increases importance for early vendor compliance assessment Increases importance of early vendor commercial assessment
Need for non- GMP or GMP Can significantly increase speed and reduce cost of API mfg if non-GMP material can be used for toxicology and formulation development May increase risk of impurity profile changing between toxicology and CTM batches leading to bridging tox need
22
Outsourcing Implications of the Level of
Technology Difficulty
Alternatives Implications
Simple Internal skills still needed Analytical skills required same as complex Wider choice of vendors scale Shorter timeline Lower cost
Complex Variety of technical internal skills needed Potentially more limited choice of vendors or for multiple vendors Longer timelines Greater effort needed to manage impurity profile for CTM material. Challenge of scale up increases, increasing time technology risk Increased need for process safety management Compounded if BOTH DS DP have difficult technology
Developed Vendor choice more purely technology / hardware work processes driven Faster mfg process development timeline
Undeveloped Vendor choice depends on development AND technology capability Implications for Safety and Clinical results Slower mfg process development timeline
23
Outsourcing Implications of Unique Technology
Needs
Alternatives Implications Implications
High Potency / Exposure Management High Potency / Exposure Management More limited vendor choices More costly API If volume is low, single vendor for development commercial
High Chemical Reactivity i.e. Exo-Endothermic, High Pressure Hydrogenation Processes High Chemical Reactivity i.e. Exo-Endothermic, High Pressure Hydrogenation Processes Is new technology required? More limited vendor choices More costly API Greater scale up challenges
Biologics Biologics Expression systems IP Scale yield Product by process (hard to characterize equivalence)
Need for multiple dosage forms Need for multiple dosage forms Timing of formulation work Timing of / flexibility in salt selection Early experimentation Increased risk of need to show bioequivalence through additional PK, bridging tox or clinical studies
Novel Drug substance Technology/Issues i.e. Not Scalable Novel Drug substance Technology/Issues i.e. Not Scalable Early design of experiments Vendor capabilities Need for new chemistry / route ID capability
Novel Physical Pharmacy/Dosage Form Issues Novel Physical Pharmacy/Dosage Form Issues Timing of formulation work Flexibility in salt selection Tox clinical plan GRAS issues with regulatory agencies
Other Other Different development commercial vendors / more tech transfers? Need for and control of new IP to solve development problems
24
Leverage with Vendors
Alternatives Implications
Multiple Projects Ability of vendor to learn common platform and enable speed Potential convergent synthesis of APIs Location of facilities Other functions to consolidate at vendor (analytical development, sourcing, process safety mgmt.) Contracting and quality system costs Overall leverage potential and gt15-20 FTEs per year Allows priorities to be set within context of more than one project Ability for speed over data generation or visa versa Risk for approval may be reduced on follow-on projects Vendor changes Risk of overtax vendors technical capability sub-optimization
Level of investment in internal resources More efficient use of internal resources Ability to manage Knowledge transfer Cost time Still must do technology audit for each vendor
25
Need for Integration Across Functions

Clinical
DS
DP
Tox
QA
ANA
Current Trials
Future Trials
Process Safety Crystallization Analysis
Control of Impurities
Scalable Process
Pre-Formulation Outcome Resultant Risks
Vendor Selection / Location
Development of dosage form
Risk of need for Bridging studies
Outcome to Enable Clinical Studies
QA System SOPs
Baseline System to Manage CMOs
Data Package For filings
Time
26
Often Not Considered Until Too Late
  • Dont Forget - Integration of DS DP plans
  • DP can not be finalized if DS form is not
    finalized
  • DS form can not be finalized until DP
    requirements are understood
  • Timing for finalization of DS form and final DP
    must be linked and planned backwards
  • Goal would be to have final DS form and DP
    formulation for use in all phase 3 studies but
    variations to this will be fact-driven
  • If DP vendor is conducting salt selection work,
    DS vendor then depends on DP vendor to begin
    production!
  • Critical but often ignored because of the serial
    nature of the need for each in the clinic

27
Integration of DS DP Plans
  • Early
  • Analytical methods Characterization, Management
    of Impurities
  • Physical Chemical characterization as well as
    Analytical characterization
  • Salt Selection
  • Pre-Formulation
  • Chemistry supply to support Drug Product
    development
  • Avoid delay because DS or DP vendor has to wait
    for the other
  • Will raws be available to make what you need when
    you need it
  • Can be a bigger issue than commonly appreciated
  • Understanding and fixing Bioavability issues
    early
  • DP Timeline
  • Impact on Quantity of API needed
  • Avoids need for bridging clinical trials/PK/tox
  • Later
  • Feedback between DS DP Development
  • Avoid scope changes unrealistic demand to make
    up for lost time
  • Delays, Erosion of vendor relationship
  • Timing of Polymorph studies vs. risk
  • Will raws be available to make what you need when
    you need it

28
ButThe Reality
  • In a fast-moving and lean company, many of these
    issues can be beyond planning scope
  • Outsourcing challenges are typically
    under-estimated in clinical stage companies
  • Clinical progress drives the company anyway
  • Lack of experience
  • Assumption that its easy
  • Perception that it usually works out in the end
  • All of these issues must be within planning scope
    but smaller companies do not typically have all
    of the skills or experience internal to their
    organization, nor should they!

29
Symptoms of the Planning Problem
  • Dangerous Assumptions We Hear
  • We dont need to think about that because were
    going to license out in Phase II
  • Our licensing partner will worry about that
  • Lets just get GMP material for everything
  • Were going to use GLP material
  • Well get a consultant to write the CMC section
    when the time comes
  • Were starting to work on our Quality Manual
  • Its too early to be thinking about a Quality
    Agreement its just development work

30
Senior Management View of the Timeline
Preclinical
Phase I
License?
Phase II
Phase II
Phase III
Launch
API
Drug Product
DP Activities
API Activities
31
The View You Will See
Nomination
PhI
PhII
PhIII
NDA/MAA
Approval
Evolving
API
Drug Product
Demand
API/DP
Launch
Enabling Technology Supply Manufacturer
API/DP
Technology/Supplies
RM
API
DP
PhIII Supplies
DP Technology
API Technology
API Activities
Raw Materials
Demand
Enabling
DP Activities
32
It Pays to Engage Senior Management
  • Ensure Clarity on
  • Boundaries for choices
  • What to outsource
  • Strategic skills and activities to not outsource
  • When to build internal capability
  • Senior Management Commitment and Involvement
  • Links to development plans priorities
  • Realistic expectations lead-times
  • Cash burn constraints
  • When to outsource
  • Impact on development plan
  • Impact on cash burn
  • How to manage it
  • Skills needed to effectively outsource
  • Level of resources needed

33
Understanding Your Requirements A Key to Managing
Risk
  • Critical considerations often missed during
    early development

34
Requirements - The Good News
  • If youve done the work in the previous section
    well, defining Technical requirements should be
    easy
  • But dont forget to consider some of the
    execution requirements essential to success

35
In Addition to the Technical Output
  • Define
  • Processes you need
  • What decisions to make and when
  • Data you will need
  • To make decisions before outsourcing
  • To acquire as an output of outsourced activity
  • Timelines
  • Your timeline
  • Related timelines
  • Ways to ensure and incorporate innovation
  • Internally
  • Within the vendor

36
Remember - Output is More than Material
  • CMC delivers
  • Material
  • Technology
  • Registration Enabling Information
  • Make sure that you consider
  • What you should do now
  • What you can do now
  • What you do not want to do now

37
Early Definition of Info Needs
  • Remember, you are buying chemistry, product AND
    information
  • Dont lose site of info needed for PAI,
    Technology Transfers, Registration
  • Know what information you need to build on your
    process and when
  • Establish a documentation system for all
    contractors
  • Specify what you want and how you want it
    documented
  • Beyond just batch tickets
  • Development reports with raw data archiving
  • Helps you plan whether the resources will be
    available to get all the analytical work done
    that you will need
  • Enable building a Development Report as you go to
    avoid going back
  • Demonstrate professionalism and competence to
    contractors and your regulatory team
  • Lower Costs and Avoid Rework / Wasted Effort

38
Process Data Understanding
  • Affects ability to manage in an outsourced
    environment
  • Enables informed decisions on key trade-offs
  • Speed of Phase I supply required
  • Costlier, slower scale-up process development
  • Early investment in analytics technology is
    possible
  • Slower initial supply
  • Do you know enough to bet on doing all DP work
    under GMP or should you be doing some work with
    non-GMP material?
  • Requires Technology info, Supply Demand info
  • Scale and Quantity definition for your vendor so
    they can help you
  • When to seek multiple runs at given scale
  • When to race to scale-up
  • How to apply simulation technologies
  • How to determine ROI
  • Inputs needed to make these decisions
  • Do you know when you need to lock the process for
    ICH? (ICH stability studies are registration
    enabling stability studies done for defined times
    at specified conditions)
  • Failure Mode Effects Analysis (FMEA)
  • Ability to learn from failures
  • Analytical needs, timing, resource consumption

39
Development Reports
  • Consider as a deliverable, a requirement for the
    contractor to deliver detailed development,
    analytical, and production report
  • What was tried, results, and evolution of the
    procedure, linked to notebook records and
    preliminary reports. 
  • You then have a good record of what works and
    doesn't work
  • How the synthesis and analytical procedures
    evolved into a manufacturing process and quality
    control test methods.

40
RFPs Contracting
  • Approaches to reduce your costs and maximize your
    leverage

41
Sourcing Selection Process
Step Actions Issues Actions Issues Actions Issues Actions Issues
1 Outsourcing Strategy Corporate Requirements Program Requirements
2 Integrated Development Plans Clinical Drug Substance Drug Product Drug Safety
3 Program Project Requirements Development considerations Clinical Regulatory filing strategy Commercial considerations Project requirements Establish selection criteria
4 Vendor ID Initial Screen Long List Pre-screen / Initial paper screen Reduce to short list 4-10 Request for info (RFI) on areas of interest Detailed Phone screen
5 Request for Proposal (RFP) Candidates for RFP Execute CDA Finalize RFP Issue RFP Quality Agreement Receive Proposals Share desired TCs
6 Screen Selection Assemble and Analyze responses Phone interviews Summarize Ratings against criteria Narrow down to top 2-3 potential suppliers
7 Final Selection Remote / Paper Quality Audit Initial site visit Criteria for QA Audit Detailed business evaluation Tech Trans Package Prelim. negotiation
8 Final Negotiations Contracting Contingency Plans Identify Quality Agreement issues Finalize Workscope Finalize price Confirm Team QA Audi Sign-off Quality Agreement Sign-Off PO/Final sign off
9 Kick-off Tech Transfer
42
Begin to Identify Vendors
  • Create Long List
  • Capabilities
  • Capacity
  • Location
  • Reputation
  • Information Resources
  • Sourcing Consultants
  • Trade-Shows Conferences
  • AAPS, Informex, Interphex, Chemspec, CPhI,
    Contract Pharma, IQPC, etc.

43
Build a Living List of Preferred Vendors
  • Document and refresh findings on candidates as
    you generate long lists and screen down to short
    lists
  • Lack of fit today may not apply to the next
    project
  • Reduce search time later
  • Decide what you will share and what stays
    internal
  • Compile for various functions i.e. DS DP etc.
  • This knowledge often walks out the door when
    employees or key consultants move on

44
Summary of Initial Critical Screening
  • The initial screening of candidates is largely
    document review and telephone interview
  • Limited travel and time investment if you have
    good access to prospects
  • The more detailed screening involves travel and
    much more time
  • Contract negotiations should be with no less than
    two candidates in parallel until a contract has
    been executed with the selected vendor
  • Maintain both leverage and a contingency option
  • Ideally a general business agreement (master
    service agreement in place with 1-3 CMOs for each
    discipline that allow more rapid initiation of
    projects if there is enough work for this type of
    strategy.
  • Be certain to plan appropriate lead-time for
    contract negotiation, as this activity can take
    several months or more

45
Construct The RFP
  • Workscope
  • Requirements
  • Terms Conditions
  • Quality Agreement

46
Keep in Mind The Other Side of the Desk
  • Vendors Need
  • To understand required scope
  • Size of project and resource utilization
  • To understand their risk
  • Taking on a project with more scope that visible
  • Appropriate level of hand holding
  • Impediments to meeting timeline
  • Fit with their skills and schedule
  • Ifs and thens are needed in their proposed
    scope, if they are uncomfortable with the
    perceived risk
  • Where go-no-go steps help them manage risk
  • Transparency / Ability to put project in overall
    program context
  • Vendor does not need to know the therapeutic
    target or precisely the development timeline but
    some knowledge is helpful
  • Gives insight to the vendor to help them help you
  • Cocktail Napkin TIPS Cost Your Money and Time!

47
Cost of Poorly Defined RFPs
  • Poorly defined RFPs and Technical Packages
  • Add cost
  • Add time
  • Risks processing proposals for unneeded work
  • Risk selection of the wrong vendor
  • Risk re-work
  • Risk un-necessary work
  • Reduce vendor choices in the future

48
RFP Package
  • The RFP should be structured to
  • Enable objective and complete comparison of the
    candidates
  • Expedite the development of a contract
  • The RFP and CMO response should be complete
    enough to provide the basis for Workscope,
    pricing and terms of the contract.
  • The Quality Agreement (CMOs, or response to
    yours) enable assessment of vendor Quality
    policies and practices and operating basis
  • Sometimes challenging to accomplish early but
    push for it
  • Draft Quality Agreement or Key Quality points

49
RFP Contents DP DS
  • Brief description of your company (optional)
  • Brief description of the product (along with
    Material Safety Data Sheet and handling
    instructions)
  • Overall project objectives and timeline
  • Detailed scope for vendors portion of the
    project
  • Process description with flow chart and bill of
    materials
  • In-process and product test methods and target
    specifications
  • What will be delivered to vendor and by when
  • What the vendor is expected to deliver back and
    when
  • Desired pricing structure (i.e., fixed price
    versus time and materials, mass unit price versus
    batch price, etc.)
  • Requests for information, including
  • Financial status of the company and description
    of pharmaceutical development and
    commercialization programs, if any.
  • Confirmation of absence of conflicts of interest
  • References
  • Manufacturing success rate
  • RFP response instructions (due date for
    submission of response, name and address of
    person to whom the responses should be directed,
    etc.)

50
Tech Transfer Package DP DS
  • Package Elements
  • Technology
  • Raw Material specs vendors
  • Unit Operations as practiced
  • Mass Balance as complete as possible
  • General safety and environmental
  • Analytical Requirements
  • Proposed specs for API
  • Useful for make vs. buy decisions
  • Gives vendor an adequate view
  • Help them understand their risk
  • Typically big ROI can avoid cost/risk premiums
  • Reduces ifs and thens in their proposed scope
  • Avoids excessive go-no-go steps
  • Enable Efficient Credible Interaction and
    Decisions

51
The Quality Agreement
  • The Quality Agreement is a contract which
    describes the roles and responsibilities of the
    sponsor and the CMO in terms of compliance with
    regulatory guidelines
  • Successful companies approach Quality Agreements
    in a phase appropriate fashion, considering that
    CMOs have many clients.

52
Quality Agreement Contents
  • Clients right to audit (frequency, scope,
    notification, trigger points, etc.)
  • Product release procedure
  • Specifications, raw material testing and release,
    etc.
  • CMOs release to client (documentation)
  • Clients final release (required documents and
    disclosures)
  • Change control (limits of CMOs obligations and
    Clients rights)
  • Other notifications and interactions with
    regulatory agencies (limits of the parties
    obligations and rights)
  • Product recall (Limits of the parties obligations
    and rights)
  • Investigations (Limits of parties obligations and
    rights)

53
Avoid Inadequate Quality Agreement Specificity
  • Examples of Inadequate Quality Agreement
    Specificity
  • Raw Materials
  • Change in impurity provide because vendor
    switched RM supplier
  • Communications of Deviations Investigations
  • Delayed investigation of unexplained variation
    cost 750K to fix
  • Metabolic conditions ( low DO2) and RM changes
    altered fermentation
  • In each the vendor was operating within its
    agreement
  • Documentation to support filings
  • Inadequate documentation resulted in re-work
  • Vendor was meeting specs agreed to
  • Company had not thought through filing
    requirements
  • Lack of site specific and product specific
    post-run data check lists
  • Does not provide what you need
  • Cost and delay of back and forth
  • Taxes your scarce resources and busts timeline
  • Not Spelling Things Out Can Create Big Risks Later

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ButAvoid Excessive Quality Agreement Specificity
  • Examples of Excessive Quality Agreement
    Specificity
  • Issuing the quality agreement too early
  • Risk too much quality and cost built in
  • Leave some flexibility in how supplier achieves
    what you need to be cost effective
  • Using the same quality agreement for
  • Development agreements
  • CTM supply agreements
  • Commercial supply agreements
  • Strike the Right Balance

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Quality Agreement Balance
  • Define WHAT you need but allow the vendor to
    propose HOW
  • Avoid unnecessary rigor and scope
  • Allow for vendors systems
  • Consider how Quality Agreements differ for CTM,
    development work and for commercial supply
  • Careful about applying consultant templates
  • QA audit team resource level
  • Operational AND Quality considerations
  • Consider ability to manage ongoing
  • What some can manage, others can not
  • One of the Key Elements You Should Control

56
Screening Selection Common Pitfalls
  • Incomplete criteria
  • Inconsistent application of criteria
  • In screening companies, sponsors often fail to
    put vendor capabilities in the broader context.

57
Vendor Capabilities in a Broader Context
  • The vendor can scale up on time but
  • Will the way they scale-up processes be easily
    transferable to another facility?
  • Or are they best at scaling up for their
    equipment?
  • Does their scale-up plan favor use of their
    technology
  • To what stage can development vendor support your
    needs?
  • Do you know when you need to lock the process for
    ICH?
  • If needed, do you know when you need to confirm
    and qualify a commercial CMO?
  • Less Tech transfers can be better but know the
    trade-offs
  • Will there end up being internal tech transfers?
  • Very Few One Stop Shops
  • Work Back from Launch and know what you need, when

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Response to Flexibility Expectations
  • The best vendors dont have much flexibility
  • Be wary vendors offering too much flexibility!
  • Important to understand how they will act when
    things go wrong
  • Only certainty is that things will go wrong
  • Plan with contracting and scheduling lead times
  • Add 3- 6 months more or contractor identification
    and selection
  • Build in scheduling lead-times for when problems
    occur
  • Build in iterations for to-be-demonstrated
    technology
  • Understand where theres leverage and where the
    vendors situation can affect you
  • Need to consider the vendor in context of your
    future needs beyond just this project
  • Only way to maintain leverage is to understand
  • your future plans

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Criteria
  • Business
  • Business Strategy / Strength
  • Financial health stability
  • Conflicts of interest
  • Response to RFP negotiating style
  • Technical
  • Capacity / Scale
  • Overall Capability
  • Project Specific Technical Capability
  • Experience
  • Proprietary Technology / Tech Transfer
  • Regulatory History
  • Location
  • Cost
  • Other

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Examples of Elements of the Criteria
  • Capacity / Scale
  • Must have sufficient capacity to supply immediate
    need
  • Larger scale needed? Y/N
  • Commercial capacity and experience needed/ Y/N
  • Overall Capability
  • Route finding ID
  • Process design
  • Clinical supply
  • Commercial supply
  • Process development
  • Method development
  • Stability testing
  • Release testing
  • Tech Transfer ( in and out)
  • Should have experience with updating the CMC part
    of an IND and/ support of materials to be
    prepared for client pre-IND meetings
  • Must be responsive and quality driven
  • Project Specific Technical Capability
  • candidates experience with similar projects
  • facilities and equipment

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Examples of Elements of the Criteria (cont.)
  • Quality
  • If required, must operate to cGMP,and been
    favorably inspected by FDA/ EMEA
  • Regulatory history ( Understand 483s, consent
    decrees if any, and resolution)
  • Must have appropriate Quality unit
  • Understand ability to source of all raw materials
  • Must have sufficient analytical resources
  • Should have capabilities/FDA approval in
    import/export processes of material for clinical
    trials/ commercialization between US and EU
  • Should have an Approved Vendor Qualification
    Program
  • Location
  • Proximity
  • Multiple sites
  • Internal tech transfer
  • Proprietary technology/tech transfer
  • Does vendor propose to use proprietary technology
    and what is impact on royalty rate burden or
    ability to transfer process or qualify back-up
    vendor
  • Cost
  • Visible
  • Additional
  • Other
  • Must be adequately capitalized

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Business Area Evaluation
  • The key issues to uncover and assess include
  • financial stability
  • conflicts of interest
  • compatible business processes
  • acceptance of target financial terms
  • The following data and interactions are useful in
    this evaluation
  • SEC filings, credit reports, Annual Reports,
    analyst coverage of the company, proprietary
    databases
  • Response to Request for Proposal, contract
    negotiation
  • Business/Quality/Regulatory/Technical profile.

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Quality/Regulatory Evaluation
  • The key issues to uncover and assess include
  • ability and willingness of vendor to agree and
    meet regulatory requirements
  • past or current conflicts with regulatory
    agencies
  • willingness of CMO to agree to the terms of the
    Quality Agreement
  • The following data and interactions are useful in
    this evaluation
  • a QA audit of the CMOs operation
  • response to the Quality Agreement
  • FDA inspections, etc.

64
Technical Evaluation
  • The key issues to uncover and assess include
  • Ability and willingness of vendor to meet the
    technical objectives of the project (batch size,
    scale, minimal process changes, etc.)
  • Willingness of vendor to adapt standard
    procedures to client needs within reason
  • Use caution when hearing Our SOPs require that
    we must do it this way
  • Understand that you are one of many clients
  • Freedom to use IP and production technology to
    qualify secondary vendors and/or to use in other
    projects
  • The following data and interactions are useful in
    this evaluation
  • A list of, and/or data from, similar projects
    performed by the vendor.
  • Success in moving such similar projects to
    commercial approval or to next step
  • Equipment lists and information regarding the
    technical qualifications of the vendors staff
  • Information regarding the CMOs production success
    rate

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Summary of Initial Critical Screening
  • The initial screening of candidates is largely
    document review and telephone interview
  • Limited travel and time investment if you have
    good access to prospects
  • The more detailed screening involves travel and
    much more time
  • Contract negotiations should be with no less than
    two candidates in parallel until a contract has
    been executed with the selected vendor
  • Maintain both leverage and a contingency option
  • Ideally a general business agreement (master
    service agreement in place with 1-3 CMOs for each
    discipline that allow more rapid initiation of
    projects if there is enough work for this type of
    strategy.
  • Be certain to plan appropriate lead-time for
    contract negotiation, as this activity can take
    several months or more

66
Decision Matrix
67
Contracting and Negotiations
  • The contract structure is a critical determinant
    of the balance of leverage in a contract
    manufacturing relationship.
  • Negotiation is part of relationship management,
    and should be considered part of the selection
    process, not a formality
  • Behavior demonstrated during negotiation of
    challenging aspects of the contract is a good
    indication of how the other party will behave
    during challenging points in the relationship.
  • Successful negotiation often depends on
  • a clear understanding of each organizations
    situation and needs
  • shared objectives
  • consistent messages from one organization to the
    other across all points of contact
  • mutual agreement and compliance that official
    communication and decision making will be
    conducted through agreed upon processes and
    point(s) of contact
  • Goodwill and trust are critical to productivity
    of inter-organizational relationships.
  • Often contentious negotiations are not contained
    and impact the project team members perceptions
    of the other party.

68
Contract Structure
  • Contract structure is a common source of conflict
    and delay
  • Often do not anticipate the future needs as the
    project progresses
  • Contracts established to support early
    development supply cover activities through the
    production and delivery of the first GMP lot(s).
  • Future clinical supply cost is often not
    addressed, even though it will be needed if the
    project is successful, risking hold-up
  • Contract manufacturing is a very challenging and
    often lumpy business, hence expect CMOs to seek
    short-run profit maximization

69
Plan to Maintain Leverage
  • Future issues can be avoided by anticipating
    needs and building them into contract terms
  • Provision for future supply and/or additional
    projects
  • Consider separation of development/CTM from
    commercial contracts to facilitate negotiations
    and simplify earlier contracts
  • The right of the client to all IP and know how
    required to produce the product
  • Rights to process and analytical methods and
    technology
  • The right of the client to transfer the
    production technology and qualify other sites to
    produce the product
  • Payment obligations that are triggered by
    acceptance of deliverables (i.e., reports, QA
    release, etc.)
  • Pricing terms that establish a common motivation
  • Fixed pricing on each segment of the project as
    its scope becomes well defined (i.e., both
    parties are motivated to complete the work in a
    timely fashion)
  • Bonus payments for development and demonstration
    of specific process yields, which in turn tie to
    lower unit pricing for product supply
  • Terms which delineate the obligations of the
    parties in terms of communication and
    interactions, including arbitration

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Master Services Agreement Concept
  • The future needs of a project cannot be fully
    anticipated at the outset of a project
  • A Master Services Agreement, provides
    flexibility
  • General terms of the relationship between the
    parties
  • Scope of Segments of the project(s) can be
    described,
  • Can provide a basis for amendments combine
    refined or new scope and already agreed pricing
    structures

71
Managing Contracting Risk
  • Examples Tips

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Managing Contracting Risk Costs
  • Costs
  • Risk of surprise should decrease as project
    progresses
  • A step past which cost increases can not be
    passed on except for unforeseen and unavoidable
    technical issues is not unreasonable

73
Managing Contracting Risk Scope Change Orders
  • Have specificity on how you will manage the SCO
    process
  • Ensure that risk is not transferred to you where
    not warranted and to avoid 11th hour hold-up
  • Approval should be obtained for any scope change
  • Be specific in order to make sure that you are
    not paying for avoidable technical or other
    avoidable errors
  • Deviation investigation and reports should not
    constitute a scope change
  • If vendor signals the possibility of required
    revisions to scope, or need for unplanned process
    development work, consider having that work
    charged on a transparent time and materials basis
    with the ability to review and cancel on 30 days
    notice.

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Managing Contracting Risks Timing
  • Timing
  • Carrot
  • Concessions or incentives as a reward for on-time
    delivery OR early delivery only if you realize a
    benefit as well
  • Stick
  • Penalty fees in general are a common practice and
    not unreasonable to include
  • Acceptable high-end penalty fees for late
    delivery would likely not exceed 25-30 of
    processing fees in the worst case

75
Managing Contracting Risk People
  • You may want specific vendor team members
    identified if there are people that you deem
    critical to success of the project.
  • This can also be addressed to a degree through
    the responsibility matrix showing decision rights
    and responsibilities for various decisions and
    actions.

76
Managing Contracting Risk Termination
  • If vendor is fairly busy, the opportunity cost of
    their capacity is high.
  • Want to avoid situation where it may be possible
    for them to bump you and then use best efforts
    to catch-up in a later slot and not be penalized.
  • Vendor will seek to reduce their risk in the
    event of non-delivery and reduce their risk in
    the event of cancellation by you.
  • Penalty fees in general are a common practice and
    not unreasonable to include.
  • Can explore balancing trade-offs in acceptance of
    some level of termination fee responsibility as a
    quid-pro-quo for their accepting some equitable
    penalties for non-delivery based on things that
    they should be able to anticipate or control to
    help ensure alignment of incentives.
  • It is usually advisable, to avoid forcing payment
    of fees from a vendor
  • Identify a win-win which maximizes the outcome
    for you that can gain back time
  • If something fails, it is almost always faster to
    recoup at contractor than to start process over
    with someone else.
  • Have the contractor provide raw materials for
    another batch
  • Have contractor bump someone else in order to
    slot your work ahead.
  • If vendor actions resulted in loss of batch, the
    vendor could be required to redo the batch at
    their cost.
  • If vendorattributable delays resulted in a
    significant timeline impact and caused you to
    have work done at a different vendor, Raw
    Materials could be provided at the original
    Vendors expense or the finished material could
    be provided for the cost of materials alone
    without charging you the processing fee.

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Managing Contracting Risk Quality Agreement -
Manufacturing
  • Manufacturing
  • Depending on specific observations or concerns,
    some client companies like to make clear about
    what will NOT be manufactured, processed,
    packaged or stored in the same facilities
  • beta lactam and cephalosporin antibiotics,
    certain potent hormones, cytotoxic compounds,
    highly potent drugs, biological preparations or
    non pharmaceutical chemicals
  • shall make Client aware of the presence of any
    potentially hazardous products. Mutual agreement
    is required between the two parties as to
    adequate storage. Any regulatory restrictions
    regarding storage of different types of products
    shall be adhered to.
  • Documentation and Review of Manufacturing Records
  • Include right to have batch records sent to you
    on request.
  • This complete documentation must be readily
    accessible for review and inspection by XXXX
    and/or regulatory authorities upon request.

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Managing Contracting Risk Quality Agreement -
Sub-Contractors
  • Sub Contractors
  • Proof of Acceptability should be mutually agreed
    to.
  • The analytical vendors should be audited by the
    contractor. 
  • The contractor should maintain audit records.
  • If the contractor is using a vendor that has not
    been audited before by the vendor consider being
    involved in that audit process.

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Managing Contracting Risk Quality Agreements
Control of Materials Testing
  • Control of Raw Materials
  • Confirm process for handling Client supplied
    materials
  • Specifications and Testing Methodology
  • It is not uncommon for Specifications to include
    procedure to ensure mutual consent of changes
  • Testing of PRODUCT
  • Consider reserving the right to inspect and/or
    test all batches of the subject product(s)
    produced prior to release and distribution.
  • This is not advisable as a matter of course but
    you may not want to give up the right to do so.

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Managing Contracting Risk Quality Agreement -
Retention Samples
  • Confirm number of years for delivered products
    and number of years for critical raws.
  • 5 1 could be OK for a one-off development
    project
  • If you expect to continue in the clinic or to
    make more, the time should be longer.
  • Including that the samples will be sent to you or
    to a 3rd party on request and sent to you after
    the defined period.
  • Consider doubling the amounts shown, in case you
    want to consider a tech transfer to another
    facility or other needs.

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Managing Contracting Risk Quality Agreement -
Complains and Investigations
  • Complaints Handling
  • Advisable to specify turnaround time to receive
    oral and written results of investigation. 30
    days usually not unreasonable.
  • Would be fair to commit to rapid ( 1 day )
    turnaround for providing complaint files to
    contractor if needed during FDA inspection.
  • Failure to Meet Specifications - Investigations
  • 24 hour turnaround is typically acceptable.
  • A "Significant Deviation" is any
    out-of-specification result and/or any
    manufacturing, packaging, labeling or testing
    deviation that may affect the quality, safety or
    efficacy of the product(s).
  • Reprocessing should always be considered a
    significant deviation.
  • All deviations should be investigated and fully
    documented
  • This documentation will be retained as part of
    the batch documentation for the batch affected.
  • You may wish to reserve the right to request
    additional or more in-depth investigation of the
    deviation by the vendor when deemed necessary.
  • Require approval in writing (fax confirmation is
    acceptable) for any deviation impacting
    compendial status or regulatory filing.

82
Managing Contracting Risk Quality Agreement -
Roles Responsibility List
  • Should be discussed in detail, given resources
    client has in place to manage the vendor
  • Suggest that rather than simply an X, the
    categories be changed to a choice of
    Draft/Approve, Approve, Final Approval, and
    Perform/Approve, Support.

83
Managing Execution the Relationship
  • Risk Mitigation to Avoid delays
  • Enable speed and success

84
Execution Managing the Relationship
  • Success enablers
  • Well considered specificity
  • Realistic expectations of timing
  • Adequate internal resources
  • Experienced management
  • Sufficient manpower for vendor guidance oversight
  • The right resources at the vendor
  • Proactive management metrics
  • Sound Quality Agreement
  • Many of these factors are set long before
    kick-off and Much of it you can control

85
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