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Pharmaceutical Manufacturing and Packing Sourcer

Setting Standards

With the 2013 revision of the EU’s Good Distribution Practice (GDP) guidelines, the management of outsourced activities has focused on the qualification of logistics service providers. The healthcare industry is now required to implement all changes to ensure full compliance, as well as maintain quality throughout the supply chain – including accepting responsibility for any activities outsourced to third-party vendors.

The intention of the new guidelines is to include the distribution processes in the overall flow of regulated tasks, ensuring supply chain integrity from drug production through to patient administration. However, this aim works under the assumption that the entire distribution chain is directly controlled by the manufacturer.

Logistics activities should be considered an extension of internal manufacturing processes. The transportation and distribution processes that are usually outsourced to external logistics partners must comply with both GDP and Good Manufacturing Practice (GMP) regulations. For example, Chapter 7 of the GDP guidelines on Contract operations is adapted from Chapter 7 of the GMP guidelines, and empowers the contract giver with the capacity to assess the competences of the contract acceptor through audits. Moreover, the contract acceptor should demonstrate that they possess adequate facilities and experience to carry out the contracted work safely and efficiently. Quality systems are extended to outsourced work to guarantee that the product delivered maintains its quality and integrity – including during storage and transportation.

Challenges Faced

The global healthcare industry is embracing new growth opportunities while facing an increasingly complex regulatory and legislative environment. At the same time, companies are making large strides in their supply chain performance – setting the sector up for future investment, growth and change.

While many healthcare manufacturers still rely primarily on their own initiative and resources to manage their logistics vendors, it is becoming increasingly evident that industry leaders reporting the most significant and sustained improvements are leveraging their providers, thereby freeing up resources and allowing companies to focus on their core life sciences competencies. Externalising logistics processes can enable efforts to be focused on adding value in-house, but it is important to preserve the efficiency and integrity of the entire supply chain.

On the other hand, understanding the complex nature of the logistics environment is no easy feat. It is characterised by fragmented operations with distinct entities in charge of different tasks, carrying varying levels of responsibilities. Moreover, it is common industry knowledge that service names and capabilities are not the same everywhere. Each country may require compliance with its own specific set of customs and security regulations.

There are still not enough logistics infrastructures – especially in developing countries – that can offer acceptable levels of visibility or access to cargo areas and customs zones due to legal restrictions or local regulations. Additionally, there is little knowledge or training provided regarding the most suitable shipping solutions and how to meet customers’ requirements.

Taking into account all of the key regulations that apply not just to European-based companies, but to all global organisations wishing to do business with Europe – besides those countries looking to the EU to set a standard for international distribution practices – it should not be assumed that most companies already have everything in place.

Outsourcing Responsibilities

The contract giver is responsible for all contracted activities. Choosing a partner capable of satisfying the shipper’s needs not only has an impact on the level of service, it is also essential for the patient’s health at the end of the supply chain. The following points should be taken into account:
  • The contract giver should familiarise themselves with the contract acceptor’s qualification process in order to guarantee that they have adequate premises, equipment and procedures in place, as well as competent personnel able to carry out the required work
  • A written agreement should exist between the contract giver and acceptor, clearly establishing the duties of each party
  • The contract acceptor should not pass to a third party any of the work entrusted to them under the agreement, without the prior evaluation and approval of the contract giver
  • Pre-audit monitoring of the contract acceptor should be carried out, and any changes to the outsourced activities will also demand similar checks. The audit frequency should be defined based on risk, depending on the nature of these activities 
Selecting a Logistics Partner

The introduction of a third-party supplier starts with a selection process, which identifies:
  • The type of GMP service to supply
  • Description of minimum activities that the supplier will be able to carry out
  • Evaluation of the entity’s capacity to perform such a service, in addition to understanding the options and the supplier’s capability
  • Description of minimal requirements in terms of quality (ISO certification, basic procedural system, years of experience in the sector)
Pre-qualification activities may include:
  • Confidential disclosure agreement
  • Third-party assessment tool with a risk assessment matrix tool and a vendor’s survey
  • Pre-audit
Companies should also have an understanding of exactly what they require from their prospective partner, and should ask the following questions:
  • Has the entire supply chain been mapped thoroughly, including transfer points?
  • What types of transport will be required?
  • How long and under what conditions will the cargo need to be held?
  • What is the validation status of the logistics provider’s fleet/containers for active cooling, or that of their packaging for passive solutions?
  • Is there access to cold storage at hubs/airports?
  • In terms of temperature requirements, what tracking and temperature download systems are available?
  • What stability parameters are in place?
  • Have the benefits of regional versus global partners been considered?
  • Would total load release be more efficient compared to partial shipments?
  • Is an absolute or standard process offered, or can bespoke specifications be agreed?
  • Are direct shipments as opposed to hub transfers possible, and if the latter is the chosen option, does the logistics provider have an adequate understanding of hub operations?
  • Is the equipment adequate and appropriate? What is the size/age of their fleet? Are their loading docks and seals sufficient for the job?
  • Has the quality of their validation, as well as their quality systems and procedures, been considered?
  • If the vendor’s fleet is non-qualified, will they work with you to validate it? Will they dedicate specific units to your products?
  • What training is available for drivers, handlers and warehouse staff? What level of experience is offered?
  • What service and maintenance processes are offered? What about cleaning and contamination control?
  • Are alarms and other security measures in place?
  • What kind or response network is available in the event of deviations in the chain, lost shipments, recalls and so on?
  • What emergency plans are in place?
In addition to the above, under GMP 7 there exists a requirement for written service and quality contracts to be established for any activity likely to have an impact on GDP-related activities. This will define the criteria for managing outsourced activities that may have a direct impact on product quality and level of service.

Audits, Inspections and Self-Assessment

At this stage, the contract giver must audit or otherwise assess the contract acceptor. Due diligence audits are necessary to evaluate the quality systems and controls needed for compliance with applicable GMP/GDP regulations and standards. The scope of the audit may depend on certifications with reference to GMP/GDP guidelines, other items defined in the quality agreement, the nature of the contractor and the level of outsourced activities.

For both parties, this is likely to result in an increase in audits. For those logistics providers without sufficient licences and quality agreement resources, it may present a major challenge.

Each contractor should also detail their vendor’s management approach, taking into consideration the regulatory requirements as well as its own internal operating model.

Driving Supply

The revisions to the EU's GDP guidelines have been designed to reflect the complex nature of supply chains in the 21st century. To a certain extent, supporting industries like transportation or logistics have been identified as vital targets for meeting the standards set.

Vendor management programmes have the capacity to drive a company’s supply chain to the next level in terms of efficiency and savings. They combine global consolidation with worldwide shipment visibility between and across continents. To ensure growth in the global market, universal standards must be created to ensure seamless compliance between jurisdictions. Collaboration allows groups to bring their competences together and integrate their operations through strong alliances, avoiding the duplication of one another’s efforts and, as a consequence, maximising their own results.

Every stakeholder has a responsibility to communicate, clarify and promote relationships between all active supply chain partners for the ultimate benefit of patients. The mutual objective is the development of a transparent, highly traceable, safe and secure supply chain environment that acknowledges the need for continuous improvements in all areas of business. Partners recognising their role and shared responsibilities will always be in a better position to reach a level of excellence. Future success does not rest on the local peculiarities of one jurisdiction, but rather on how well these individual requirements interlink to ensure that local innovation can have a truly global impact.

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Maria D’Orazio holds the position of Global Head of Cold Chain Logistics at Novartis Vaccines, leading multi-regional projects and with an active involvement in international distribution process strategies, promoting best practices and reconciling local market needs with global initiatives. She specialises in the design, qualification and implementation of temperature-controlled cold chain transportation programmes. With 14 years’ prior experience at Bristol-Myers Squibb, Maria has covered different roles with a common focus on increasing responsibility within the supply chain. A member of the PDA’s European Pharmaceutical Cold Chain Interest Group since 2010, she has also been a speaker at international congresses on supply, cold chain storage and distribution.
Maria D’Orazio
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