For Life Science Professionals


Elements of Effective Quality Agreements
by Steven Sharf, President and Principal Consultant, GMP Concepts

Aug 14, 2013 | Free Downloads | email | Print

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Note: The views expressed in this article are those of the author and do not necessarily represent those of his or her employer, GxP Lifeline, its editor or MasterControl Inc.
A quality agreement is a contract between two parties that defines the role of each in the manufacture, packaging, testing, holding, and/or distribution of product to the marketplace.

Many GxP professionals are already familiar with the expectation of FDA and the requirement in the EU to have quality agreements with third parties and suppliers.  Throughout this article, I will define what a quality agreement is, when one is needed, the 24 basics that factor into this critical document, and some things to avoid when drafting one.  Finally, I will discuss alternate means of communicating quality expectations when a supplier will not agree to enter into a full quality agreement. 

What is a quality agreement?

A quality agreement is a contract between two parties that defines the role of each in the manufacture, packaging, testing, holding, and/or distribution of product to the marketplace.  It is through this document that both the sponsor (contract giver) and the contractor (contract receiver) know such things as who is responsible for investigating complaints; who is responsible for initiating a recall; what is the expectation for completing investigations; who is responsible for releasing material; and who are the key contacts within each organization when a quality issue arises.  While there are many elements to a robust quality agreement, I feel the most important is defining the role of each company in communicating change.  The quality agreement should be very clear as to the types of changes that require notification (this would apply to contractor-driven changes as well as those initiated by the sponsor), the timeframes for communicating and implementing changes, and the required approvals for change.  The amount of detail that goes into a quality agreement will be dependent on the companies involved (mainly on the sponsor’s requirements), the type of work being performed and the relationship between the sponsor and the contractor.

When do you need a quality agreement?

It is a requirement in Chapter 7 of Volume 4 of the EU regulations that there be a written contract in place defining the responsibilities of each party when contracting out services.  In the U.S., while there is no explicit requirement for a quality agreement on the pharma side, multiple sections of 21CFR Part 211 and Part 820 (for medical devices) make references to the need for having a document that clearly delineates responsibilities.  Also, I would hesitate to tell a regulator when they ask for it that there is no requirement to have a quality agreement…good luck with that one.  Your organization should have multiple templates for quality agreements since each type of agreement can and should be different.  You will not require the same things of a contract manufacturer that you will of a contract warehouse or a contract laboratory, nor should you.  I would have (separate) templates in my organization for use with contract manufacturers; contract packagers; contract warehouse and distribution centers; and contract laboratories.  I would also have templates for my active ingredient (API) suppliers; primary printed component suppliers (labels, inserts, outserts); packaging components (bottles and caps); and excipient suppliers.  Finally, for my lower risk suppliers, I would have a document in place (not as extensive as a formal quality agreement) that discusses notification of change.  It is important to note that the quality agreement should be in place prior to any third-party manufacturing or releasing any material on behalf of your company.  This should be part of your due diligence work when identifying a potential new third party. 

Note: there are organizations out there that will include quality requirements within their supply/purchase agreements.  I caution against using one of these because often, supply/purchase agreements are meant to dictate different terms between two parties than those laid out in a quality agreement.  Your expectations should be detailed in the quality agreement, not simply veiled references to quality (as is the case with most supply/purchase agreements that I have seen with quality requirements in them).  I will say, though, that should you decide within your organization not to have separate agreements and discuss quality in the supply/purchase agreement, be sure that the quality department gets the appropriate buy-in.  Also, if your company decides to have a separate quality agreement but still makes references to quality in the supply/purchasing agreement, make sure the expectations in the two documents are the same and do not contradict each other.  The safest way to do this is to have the supply/purchase agreement simply point to the quality agreement for quality-related matters.  So now that we have decided all our contract third parties, our API, excipient, package component, and printed component suppliers will require formal quality agreements, let’s talk about the major components of these documents.

What are the elements of a robust quality agreement?

Let’s review the elements of a good quality agreement.  Remember, the quality agreement is designed to provide for the roles of the sponsor and the contractor.  Keeping that in mind, the better quality agreements I have seen include some form of the following 24 elements. Remember, each template you have for each type of agreement will have many of these elements and some will not have them all. Your organization should consider the applicability of these elements when drafting a quality agreement. 

  • Calibration of equipment and maintenance of facilities
  • Batch documentation
    • What do you require with each receipt of material?
    • Who keeps original documentation?
    • Do you require that you review records before material is sent
  • Change Control
    • Is your approval required before a change is implemented?
    • What is your timeline for notification of changes?
  • Deviations/Out of Specifications (OOSs)
    • Do all lab OOSs – confirmed and unconfirmed - require notification?
    • What is the timeframe for reporting OOS results?
    • Do both companies agree on what is considered a deviation?
    • How are critical deviations defined?
  • Field Alerts/Recalls
    • Who is responsible for agency notification?
    • Are both companies aligned as to what is considered day zero for field alerts?
  • Material Inspection/Testing/Release
    • Who approves and releases raw materials, package components, and finished product?
    • Who is responsible for compendia changes?
    • Are in-process testing expectations clear?
    • Do both companies have the same acceptable quality level (AQL) limits and defect classifications in place?
  • Labeling Controls
    • Who approves artwork?
    • Who releases labels?
  • Rejected Materials
    • Physical segregation of product
    • Handling in-process rejects
  • Complaint Handling
    • Who is responsible for reporting complaints
    • Timeframe for reporting
    • Adverse event reporting
    • Who maintains complaint files?
  • Annual Product Review/Product Quality Review (APR/PQR) Inputs
    • How is the data collected?
    • How is the data presented?
    • What are the timeframes for providing data?
  • Audits/Inspections
    • Is there a caveat that allows for the sponsor to audit the contractor/supplier?
    • Do you require notification of a regulatory audit occurring at the supplier/contractor’s site?
  • Specifications
    • Who establishes specifications?
    • What are the requirements for notification of a change in specifications?
  • Subcontracting
    • Should not be allowed unless explicitly permitted in the quality agreement
  • Dispute Resolution
    • Is there an escalation process for sponsor/contractor disagreement?
  • Technical Transfer
    • Who is required to approved tech transfer protocols and reports?
    • Who is responsible for the original data?
  • Validation/Qualification
    • Who approves protocols and reports?
    • Who is responsible for validation and qualification activities?
    • Who retains validation and qualification documentation?
  • Warehousing and Distribution
    • Does the contractor/supplier have adequate systems to support field actions?
  • Record Retention
    • Who retains originals?
    • How are they stored?
    • How long do you require storage of records?
    • How are electronic documents handled?
  • Retention Samples
    • What samples will be retained and for how long?
    • How are samples collected?
  • Reprocessing/Reworking
    • Is this permitted for the given material/product?
    • How is it documented?
    • Do rework/reprocess activities require approval by your firm before the contractor/supplier moves forward?
  • Supplier Qualification
    • Who is responsible for qualifying and monitoring suppliers?
    • Notification requirements for major/critical audit observations
    • Can reduced testing be performed?
  • Stability
    • Who is responsible for stability studies?
    • How many samples are retained for stability testing?
  • Contact List
    • Who are the primary contacts for specific issues?
    • How is this updated?
  • Responsibility Matrix
    • A clear table delineating responsibilities as outlined in the agreement

Things to avoid when pursuing/drafting quality agreements

When entering into any agreement of this sort, there are always things to look out for.  Make sure none of the requirements in your quality agreement conflict with any language or requirements of other agreements your company may have in place with the particular third party/supplier.  Be wary of making very broad and overarching statements, such as a requirement that you (the sponsor) review and approve ALL changes at the third party/supplier for your product.  Often this is not only unnecessary but also impractical.  Your audits of the third party/supplier should indicate how changes are handled within their quality system.  Be certain that whatever topics you have discussed in the body of the agreement are in concert with your responsibility matrix.  Stay away from vague language and avoid phrases like timely, may, and should; these will most certainly lead to problems in the future.  Do not require that 15 people approve the agreement when in reality three or four signatures may be all you need.  This will only slow down the review and approval process.  Finally, it is critical that if you have a third party/supplier provide materials/services to multiple sites, each site signs off on the agreement.

What if you can’t get your third party/supplier to sign the full quality agreement?

I will start by saying that any third party who refuses to sign your agreement should likely not be a third party providing material to your company.  These agreements are critical to the relationship and quality of product you will be receiving.  The notion of an ‘alternate means of communicating quality expectations’ should be reserved for suppliers identified as ‘non-critical.’  For suppliers where pharma is not their main business or your volumes are very low, don't push it.  I am a firm believer that the only thing you really MUST know about are changes that could affect your material.  In these circumstances, be very clear with the supplier of the changes you want to be notified of and memorialize this requirement in a ‘Change Agreement’ where the supplier knows when they need to notify you and you are aware and comfortable with what you will be notified of.  A good reference document for the types of changes you may require notification for is the IPEC Significant Change Guide.

Quality agreements are an essential piece of the relationship between your company and your third parties and suppliers.  These documents should be robust and in the case of non-critical excipients, sensible.  Be sure that your program for quality agreements includes a review cycle (typically annually with your product APR/PQR) as well as provisions for making changes during the interim period (between review cycles). 

Steven Sharf, President of GMP Concepts has spent almost 20 years in the world of pharmaceutical quality.  He has worked for some of the biggest pharma companies out there and recently decided to hang his own shingle as the President of GMP Concepts.  The company was started on the premise that common sense and compliance should not be held as mutually exclusive terms.  Steve graduated from Wagner College with a B.S. in Chemistry and is currently serving as chairman of the Certified Pharmaceutical GMP Professional exam for the American Society for Quality.  Steve currently resides in Springfield, NJ and has passions that include his niece and nephew, a straight ball off the tee, and his beloved Red Sox.  Contact Steven at or by phone at (973) 467-3330. GMP Concepts’ website is found at

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