As a result of new regulations, the Food and Drug Administration (FDA) has greater authority to regulate drug manufacturers for failing to have adequate controls around supply chain management, including the authority to impose penalties. This authority is derived from new part 711 of the Food and Drug Administration Safety and Innovation Act, which was signed in 2012 to expand the FDA’s authorities and strengthen its ability to safeguard public health.

One of the first areas where this authority may be exercised is evidenced in guidance issued by the FDA in May 2013 relating to quality agreements for commercial manufacturing of active pharmaceutical ingredients, finished drug products, combination products, and biological drug products. One specific area covered in the guidance is that that there should be a separate quality agreement for (or one that is severable from) each commercial manufacturing agreement.

Although this is only a guidance document, companies that may engage a commercial manufacturer should consider the guidance when negotiating upcoming agreements as well as when revisiting form contract manufacturing agreements and related quality agreements that may not have been revised recently. As a result of this guidance, a number of provisions that were previously negotiated and included in manufacturing agreements should now be set forth directly in a quality agreement. The guidance specifically notes that quality agreements should include the following basic sections: purpose/scope, term and termination, dispute resolution, responsibilities, and change control and revisions.