Medical Device Purchasing Controls Challenges of Compliance in a World Market June, 2013 OMTEC - 2013 Quality Business Acceptance Activities 1
..FDA Across the Globe.. 2
..Warning Letters and FDA 483 update.. Warning Letters issued that included purchasing controls deficiencies: 2009 27--2010 29 2011 45 FDA 483 Observations 2011 Having a compliant process in Place (general) - 105 Evaluation of Suppliers 30 Selection of Suppliers 26 Define the Extent of Control 15 Establish Records of Suppliers 25 Purchasing Data - 40 23% Rise in Warning Letters issued to Foreign Companies in 2012 3
Globalization Global production of FDA-regulated products has quadrupled over the last decade and continues to grow. Today, FDA-regulated products originate from more than 150 countries, 130,000 importers and 300,000 foreign facilities. Fifty percent of fresh fruits, 20 percent of vegetables, and 80 percent of seafood consumed in America comes from abroad. Similarly, 40 percent of finished drugs come from overseas, and 80 percent of active ingredients manufacturers are located outside the US. Further, half of all medical devices are imported. The growth in imports has been rapid and promises to accelerate. Globalization has fundamentally altered the economic and security landscape and demands a major change in the way FDA fulfills its mission. Over the next decade, FDA will transform from a predominantly domestically-focused agency operating in a globalized economy to a modern public health regulatory agency fully prepared for a complex globalized regulatory environment. The agency is already working to increase transparency and accountability in the supply chain, developing better enforcement and regulatory tools, encouraging greater responsibility by industry, and enhancing collaboration with international regulatory counterparts and other third parties. As our world transforms and becomes increasingly globalized, it is vital that we come together as a global community in new, unprecedented, and even unexpected ways to build a public health safety net for consumers around the world. 2013 MidWest Process Innovation, LLC 4
History - Pre-Amble to QS Regulation - 1996 The failure to implement adequate purchasing controls has resulted in a significant number of recalls due to component failures Manufacturers must assess the capability of suppliers in ways other than just QC of incoming products & services Define the type and extent of control it will exercise over suppliers, contractors and consultants Product or services from sister facilities Certification with test data after establishing confidence Product quality cannot be inspected or tested into products or services..established during design controls FDA will not review supplier audit reports The no-change agreement Define an agreement between supplier and manufacturer Emphasis on objective evidence because of purchasing data that is generated because of compliance, agreements and acceptance activities Emphasis on the importance of purchasing controls and acceptance activities 2013 MidWest Process Innovation, LLC 5
For Example, The Heparin Incident The FDA was notified of an increase of adverse events and subsequent recalls of devices that were coated with contaminated heparin. After receipt of this information, the FDA launched an extensive investigation and linked the source of the heparin to a supplier and second-tier suppliers in China. Several companies who received heparin from this supplier were forced to recall products. The FDA released a notice to manufacturers and initial distributors of medical devices that may contain heparin or are heparin coated. In that document the Agency stated it is your responsibility under 21 CFR, Part 820.50 and 820.80 to have purchasing controls and acceptance activities in place that provide reasonable assurance of the safety and effectiveness of your device. 6
World-Wide Impact Guidance on the Control of Products and Services Obtained from Suppliers FINAL DOCUMENT Title: Guidance on the Control of Products and Services Obtained from Suppliers Authoring Group: GHTF Study Group 3 Endorsed by: The Global Harmonization Task Force Date: December 11, 2008 7
Purchasing Controls at Work 2013 MidWest Process Innovation, LLC 8
Purchasing Controls Functional Linkages Production & Process Controls Regulatory Auditing of QMS Purchasing Controls Acceptance Activities Corrective And Preventive Action Design Controls Document Controls and Quality Records 9
Purchasing Controls Business Acuity Production & Process Controls Regulatory Auditing of QMS Procurement Practices Acceptance Activities Corrective And Preventive Action Design Controls Document Controls and Quality Records 10
GHTF Scope of Applicability For the purposes of this document, a product or service is one which is purchased or otherwise obtained by the manufacturer. In addition, a supplier is anyone that is independent from the manufacturer s quality management system. This includes a supplier that may be part of the manufacturer s organization but operates under a separate quality management system. For example, if the supplier is not a part of the manufacturer s internal audit scope, then the supplier is under a separate quality management system and is considered an internal supplier. Corporations or companies that have corporate quality policies and procedures do not necessarily place all divisions or groups under the same quality management system. Therefore, one division or group can be an internal supplier to another division or group within the same corporation/company. Internal suppliers are to be controlled in a similar way as external suppliers are controlled. 11
FDA Position Manufacturers are required to have procedures to ensure all purchased or otherwise received product and services conform to their specified requirements. A lack of adequate control over purchases has resulted in a significant number of recalls due to component failures. FDA is not regulating component suppliers, therefore the purchasing control requirements should provide manufacturers with additional assurance that only acceptable components are used to manufacture finished devices. 12
FDA Position - From the QSR Manual If a component is manufactured in the same or proximal facility, and produced for use in finished medical devices, then the component is considered part of the production of the finished devices and is subject to the applicable requirements of the GMP requirements. If the component is manufactured in a separate plant owned by the finished device manufacturer, then the manufacturer has flexibility in handling the quality assurance activities related to the control of components. One satisfactory approach is to have the plant that builds the components operate in full GMP compliance. Under this arrangement, the plant which does the final device assembly would still be responsible for ascertaining that the quality and integrity of incoming components have not been damaged during shipment. Alternately, the component manufacturing plant may not fully comply with Quality System regulation. Then the plant that does final assembly should handle the acceptance of these components with the same degree of control as if the components were purchased from an outside supplier. 13
FDA Inspection Focus Purchasing Controls Verify that the firm's written procedures include requirements, including quality requirements, that suppliers, contractors and consultants must meet. Verify that the firm evaluates and selects potential suppliers, contractors and consultants on the basis of their ability to meet the specified requirements. Verify that the type and extent of control needed over the product, suppliers, services, contractors and consultants has been defined and is based on the evaluation results. Verify that there are records of acceptable suppliers, contractors and consultants. Verify that the firm has written, approved, and specified requirements, including quality requirements, for purchased or otherwise received products and services. Where possible, the approved purchasing documents should include an agreement that the suppliers, contractors and consultants will notify the manufacturer of any changes in the product or service. Manufacturers must evaluate these changes to determine whether they affect the quality of their finished devices. Use of Risk Management to make documented decisions 14
Purchasing Controls: GHTF Guidance - Overview Planning During the planning and execution of product realization for a new or existing medical device the manufacturer identifies products or services to be obtained from a supplier. In establishing the controls for product and services obtained from suppliers, it is expected that planning activities initiate the process. The output of this activity may be in the form of design and development plans, quality plans, purchasing plans, etc., as defined in the manufacturer s QMS. Planning provides the direction for establishing the extent of controls for product and services obtained from suppliers. These plans are typically documented and approved, as part of the QMS. 15
Design Controls Planning Design Transfer Concept Feasibility Purchasing Controls ----------------------------- Strategic Sourcing Manufacturing Commercialization Components Manufacturing Materials In Process Devices Consulting Advice and Guidance Finished Devices (Contract Manufacturer) Raw Materials Contract Services Testing Laboratory Calibration Services Validation Consultant Processing (Contract Manufacturer) Pest Control Company Sterilization Services 16
Purchasing Controls: GHTF Guidance - Overview Planning Examples of Objective Evidence Identification of products and services Specifications, part requirements, procedures, work instructions Name and contact Information of potential suppliers Documented list of risks identified Documented process / product controls for manufacturer and supplier Design Plan Risk Management Policy Requirements Review 17
Purchasing Controls: GHTF Guidance - Overview Selection of Potential Suppliers When selecting potential suppliers the manufacturer should investigate their business and operational capability, which may include technological capability, to ensure that the supplier can provide the necessary quality, safety, performance and reliability of the products and services Supplier business capability - A potential supplier s business conduct, practices, reputation and financial viability may provide useful information about the business capabilities of that supplier Supplier operational capability - The operational capability should be investigated to determine whether the supplier is able or willing to adapt and respond to performance indicators required by the manufacturer, such as lead times, on-time delivery, response time, etc. 18
Purchasing Controls Evaluation and Selection Each manufacturer shall establish and maintain the requirements, including quality requirements, that must be met.. Evaluate Define Establish» Selection» Qualification of Process and System Controls» Certification of Work Product and / or Service» Approval Supplier Evaluation Criteria Suppliers Contractors Consultants 19
Purchasing Controls: GHTF Guidance - Overview Selection of Potential Suppliers Examples of Objective Evidence Technological and operational capabilities, logistics, quality, technical risks Selection criteria for potential suppliers, decision rationale Requirements Review 20
Purchasing Controls: GHTF Guidance - Overview Supplier Evaluation and Acceptance There is a process by which the manufacturer evaluates that the selected potential supplier is actually capable of supplying product or service in accordance with the manufacturer s requirements The extent of evaluation and acceptance activity performed should be in proportion to the identified risk of the procured product, and/or services, on the safety and effectiveness/performance of the final product. 21
Purchasing Controls Evaluation & Criteria..on the basis of the supplier s ability to meet specified requirements, including quality requirements. This evaluation shall be documented. System Quality Management System with Commitment Business Management with a solid Financial Baseline Process 21 CFR, Parts 820 and / or 211 ISO 13485 : 2003 ISO 9001 : 2008 Product Performance Standards developed during design controls Customer s Requirements / Acceptance Criteria Service e.g. Calibration Contractors, Contract Sterilization Customer s Requirements / Acceptance Criteria 22
Purchasing Controls: GHTF Guidance - Overview Supplier Evaluation and Acceptance Examples of Objective Evidence Documented evaluation and selection criteria Documented initial agreements Documents and records Documented decision and rationale Certifications Risk Management 23
Purchasing Controls: GHTF Guidance - Overview Finalization of Controls This section provides guidance for the finalization of the controls that are mutually agreed upon by the manufacturer and the supplier. Determining the extent and degree of controls, as well as defining clear lines of responsibilities, should be defined by the manufacturer. As a result of the supplier evaluation and acceptance, the controls need to be finalized in the planning process 24
Purchasing Controls: GHTF Guidance - Overview Finalization of Controls The manufacturer should agree with the supplier on their individual responsibilities and deliverables. This needs to be captured in the agreements between the manufacturer and supplier Regulatory requirements call for processes to be validated where the resulting output cannot be verified by subsequent monitoring or measurement. Regardless of who actually performs the process validation it is the manufacturer s responsibility to ensure that the validation is properly performed The manufacturer and the supplier should have an agreed upon process for evaluating any changes to a validated process and for determining when re-validation should be performed and documented. 25
Purchasing Controls: GHTF Guidance - Overview Finalization of Controls Examples of Objective Evidence Contracts No Change Agreement Purchase orders Acceptance Procedures Purchasing Requirements Specifications and Requirements Records of review and acceptance / rejection 26
Purchasing Controls: GHTF Guidance - Overview Delivery, Measurement and Monitoring In this phase the accepted supplier will deliver products/service according to the agreed arrangements and these products will be used by the manufacturer in the product realization process. Within the product realization process the manufacturer will establish checkpoints to monitor the supplier s performance to ensure that customer and regulatory requirements continue to be met. Typically these activities consist of: Receiving product/service Carrying out acceptance activities (e.g. inspection or test, review certificates of conformity/analysis) Conducting measurement and monitoring Analyzing data using valid statistical techniques 27
Purchasing Controls: GHTF Guidance - Overview Delivery, Measurement and Monitoring Examples of Objective Evidence Receiving Records Inspection Records Acceptance Records Records of Results of any analysis of data Records of Corrections Records of Corrective Actions risk based Supplier Report Card Formal Agreements with criteria for success Certifications with substance 28
Purchasing Controls: GHTF Guidance - Overview Feedback and Communication Provisions should be in place for the manufacturer to inform the supplier of whether the manufacturer s expectations are being met. Feedback should be both positive and negative. The manufacturer should ensure that there are effective lines of communication open to both parties to discuss problems/complaints or other matters. It is important that trust be developed between parties so that any problems can be resolved quickly in a cooperative way. When problems are identified and corrected there should be a determination as to whether feedback for a successful correction is necessary, or whether feedback is given on an ongoing basis. If a corrective action or preventive action (CAPA) is initiated to a supplier, additional feedback and communication may be necessary. As part of this action, the manufacturer may need to re-evaluate the continued suitability of the supplier. 29
Purchasing Controls: GHTF Guidance - Overview Feedback and Communication Examples of Objective Evidence Manufacturer and Supplier correspondence Documentation and Records of corrections, corrective and preventive actions Supplier Report Card Requirements Review Metrics are reviewed and successfully met 30
Scenarios 2013 MidWest Process Innovation, LLC All rights reserved and no copies w/o 31
Scenario for Discussion Company X has 784 suppliers, including 450 suppliers of components, raw materials and assemblies to the manufacturing operation. 267 suppliers ship-to-stock. Noteworthy points for all suppliers concerning the verification of purchased products and supplier management are: Suppliers are audited only when defectives exceed acceptable limits. A certificate of conformance must accompany all shipped components, assemblies and raw materials. Inspections of all incoming components, assemblies and raw materials are limited to a check for damage, quantity and identification. Incoming defects are trended yearly during management review. Incoming defects that correlate to manufacturing issues are trended every six months during staff meetings Suppliers are added to the Approved Supplier List primarily for cost and delivery reasons. About 37 new suppliers are added yearly. Suppliers enter the critical supplier category based upon availability and unique nature of the product and dollars spent with the supplier each year. Supervisors can purchase off-the-shelf products, e.g. manufacturing materials, with a credit card or a standard purchase order. Suppliers to Company X will not commonly sign no change agreements to keep costs down and assure quick turn-around times Supplier appreciation day is held annually at the local country club. Speeches are made and awards are given for lowest team and individual scores. There is an open bar until the restaurant / bar closes. 2013 MidWest Process Innovation, LLC All rights reserved and no copies w/o 32
Quality Review Board Supplier-Related Issues Cross Functional Group of Process Representatives Risk Management Foundation Decision arena Defectives/Improvement Decision-makers Ramifications/Impact Supplier Related Issues Non-conforming Product Audit Findings CAPA Supplier non-conformances Process Adjustments Out-of-Calibration Issues 33
Case Study Scenarios / Solutions / Lessons Learned We re a manufacturer of Class I medical devices and our company President wants to start manufacturing Class II Medical Devices. Our present suppliers say that they re up to it. Historically, we have accepted ISO 9001:2008 Certification as the ticket to being included on our Approved Supplier List. I m not sure this will work anymore? 34
Case Study Scenarios / Solutions / Lessons Learned I m the Quality Manager and my company started e-sourcing a few years ago. The Purchasing Department takes bids every year from existing as well as potential suppliers. Quality questions are asked but, frankly, its all about reducing costs and pricing. After the bidding is done, we re given a list of qualified suppliers to put on the approved supplier list. We haven t done an audit or any quality / regulatory evaluations..these suppliers have already been qualified. I always feel like the bad guy when they don t meet our quality requirements. Purchasing says..just work with them. I report to Operations 35
Case Study Scenarios / Solutions / Lessons Learned It happened again..various component suppliers continue to make metal components to the wrong revision level. The PO states one revision and the latest drawing states the right revision (level). 36
Purchasing Controls No Change Agreement Supplier & Customer Acceptance Activities Relationships Supplier Customer Evaluation Monitoring Unacceptable Score CAPA Approved Supplier List Supplier Report Card Acceptable Score vs. Unacceptable Score Increased Incoming Inspection No Change Agreement Supplier will not sign same Specified Requirements Validation / Revalidation Ship-to-Stock More Frequent Audits Purchase Order Requirements Heightened Inspection Ship-to-Stock 37
Purchasing Controls: Scenario Last year Company X decided to have contractors in China and India make components, assemble, package and sterilize their Class II Medical Devices ( and all under the same roof ). Historically, these devices were manufactured on site and sterilized by a United States-based contractor. Both overseas contractors were certified to ISO 13485:2003 and registered with the FDA. Because these medical devices had a long history of low defects and minimal complaints Company X decided to try and save money by having this product line made overseas. When drawing up the agreements neither contractor would sign the no change agreement clause in order to give their purchasing agents the flexibility to buy in bulk from various world-wide suppliers. The rationale was that specifications would remain the same. After all, as long as you meet specification in the end, who cares what it s made of! Processes at these companies were not re-validated because they have the exact same machines as we do. Three months of direct shipments were then realized. Defects went up and customer complaints started to pour into the US-Based company. 38
Purchasing Controls: Warning Letter Excerpts No information was provided to assure that any of your firm s internal practices or upstream sources (e.g., suppliers) that may have been involved in the contamination of the 19 lots produced has been identified and removed from your supply chain. Please include in your written response to this letter a copy of all investigations that may have been conducted after the inspection, the root cause of the contamination, and the corrective actions implemented to prevent recurrence. Also include the list of the other upstream suppliers for all of the contaminated lots. 39
Purchasing Controls: Warning Letter Excerpts You should take prompt action to correct the violations addressed in this letter. Failure to promptly correct these violations may result in regulatory action being initiated by the Food and Drug Administration without further notice. These actions include, but are not limited to, seizure, injunction, and/or civil money penalties. Also, federal agencies are advised of the issuance of all Warning Letters about devices so that they may take this information into account when considering the award of contracts. Additionally, pre-market approval applications for Class III devices to which the Quality System regulation deviations are reasonably related will not be approved until the violations have been corrected. Requests for Certificates to Foreign Governments will not be granted until the violations related to the subject devices have been corrected 40
Purchasing Controls: Warning Letter Excerpts Failure to maintain records of acceptable suppliers and consultants, as required by 21 CFR 820.50(a)(3). For example, your firm's purchasing controls procedure, SOP XYZ requires all purchased materials used for or in production to be purchased from the Approved Vendors List. The Establishment Inspection disclosed there were four vendors from whom you purchased materials, who were not included on your Approved Supplier List. 41
Purchasing Controls: Warning Letter Excerpts Your firm receives Certification from your tubing supplier that required specifications for the tubing material are met, but no verification has been done of this Certification. Your response to this observation appears to be adequate. We add, however, that your firm should verify the Certificates from your suppliers for the specifications of incoming devices and/or components that you determine to be significant, not just the of the tubing material. Your firm receives a Certificate of Conformance from your supplier of but does not verify the Certificate. Your response to this observation appears to be adequate. We add, however, that in your purchasing control of the supplier, your firm should be including some assurance that the process validation of molding is adequate 42
Purchasing Controls: Warning Letter Excerpts Failure to establish and maintain adequate procedures for acceptance of incoming product to include the inspection, testing, or other verification that the incoming product conforms to specified requirements, as required by 21 CFR 820.80(b). For example, you do not review quality testing records for incoming raw materials and components to ensure that the results of the tests meet established specifications. In addition, it appears that acceptance or rejection is not documented. 43
Purchasing Controls: Warning Letter Excerpts You lack written procedures and documented purchasing controls, as required by 21 CFR 820.50, specifically supplier requirements, evaluation activities, and other controls exercised over incoming materials and products. You lack written procedures to control and document incoming acceptance activities, as required by 21 CFR 820.80(b). Specifically, your firm failed to maintain procedures until after the issue was raised by our Investigator for incoming acceptance activities which would include inspections, tests, or otherwise verified as conforming to specified requirements. 44
Purchasing Controls: Field Reporting Requirements FDA Contract Sterilizer / Contract Manufacturer Because the finished device manufacturer is ultimately responsible for the safety and effectiveness of the device and therefore the contractor's activities, serious deficiencies found at a contractor s establishment will indicate consideration of regulatory action against the finished device manufacturer. Copies of Warning Letters issued to a contract sterilizer or contract manufacturer of finished devices should be sent to the finished device manufacturer with appropriate redaction. A copy should also be sent to the home FDA district office of the finished device manufacturer. These documents should be used as a basis for the next scheduled inspection of the finished device manufacturer. When a possible health hazard situation exists due to the contractors operation; or an administrative or legal action is contemplated against a contract sterilizer or contract manufacturer of finished devices, the home FDA district offices of all finished device manufacturers utilizing that contractor should schedule an immediate follow-up inspection at all affected device manufacturers 45
From the FDA Purchasing Controls: Concluding Statements With the FDA s focus on purchasing controls, the following is clear: The bar is being raised quickly FDA does not see this as a new requirement and expects medical device manufacturers to conduct remediation, (where required), within aggressive timelines. Finished good manufacturers that do not take the issue seriously are likely to face regulatory action. Where remediation is required, utilize a risk management approach to prioritize work, but not to eliminate work. Manufacturers cannot risk-manage away the regulatory requirements. Develop a detailed Supplier Quality Agreement that accounts for the manufacturer s quality system requirements and clearly defines the manufacturer s and supplier s area of responsibility. Purchase orders are not enough. Suppliers should not necessarily wait for direction from their customers in this area. There is no simple answer. Collaboration between manufacturers and suppliers is critical to success; ideally costs should also be shared. The effort required to come into full compliance can be significant depending upon the number of products a manufacturer has on the market, the complexity of the processes that are outsourced, and the depth of the supply chain. The time to act is now. Manufacturers and suppliers who heed to regulatory compliance requirements avoid regulatory action, improve business outcomes, and most important, decrease patient safety issues. 46
Purchasing Controls Linkages Revisited Records and Data Acceptance Activities Quality Audits Design CAPA Production & Process Controls Purchasing Controls Quality Systems Compliance Business Acuity 2013 MidWest Process Innovation, LLC Risk Management 47
Thank you John Gagliardi MidWest Process Innovation, LLC 7736 Woodside Court, Maineville, OH 45039 www.midwestprocessinnovation.com JGAGL777@One.Net Cellular Telephone: 513-315-9820 Office Telephone and Fax: 513-573-0085 PROFESSIONAL NOTICE: This response represents, to the best of my judgment how the device, drug, submission or process should be regulated and / or controlled, solely based upon a review of the information that has been provided. This communication is consistent with a professional opinion that represents my best judgment at this time but does not necessarily represent the formal position of regulatory authorities nor does it bind or otherwise obligate or commit my company to the views expressed. 2013 MidWest Process Innovation, LLC 48