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A Quality Agreement is a contract between a Sponsor and a Contract Manufacturer detailing the GMP responsibilities of each party and is used to assure the quality, safety and efficacy of the manufactured drug.  It is used for the contracted manufacture of human drugs, veterinary drugs, API’s, drug substances, in-process materials, and the drug component of combination drug/device products.  The Guidance does not apply to medicated feed, medical devices, dietary supplements or cellular/tissue based products.

  CMO Supplier Quality Agreements

A Quality Agreement is a contract between a Sponsor and a Contract Manufacturer detailing the GMP responsibilities of each party and is used to assure the quality, safety and efficacy of the manufactured drug.  It is used for the contracted manufacture of human drugs, veterinary drugs, API’s, drug substances, in-process materials, and the drug component of combination drug/device products.  The Guidance does not apply to medicated feed, medical devices, dietary supplements or cellular/tissue based products.

Quality Agreements have been in use within the drug industry for many years, primarily as a means of detailing quality responsibilities between the sponsor and the contract manufacturing firms.  Traditionally, these agreements have been custom-written by the individual companies and were therefore very diverse in their content and requirements. Regulatory direction has recently been issued to bring some clarity and consistency to these quality contracts. 

 On June 28, 2012, a draft of a revised EU GMP Chapter 7 entitled “Outsourced Activities” was issued.  The revised EU GMP chapter became effective January 31, 2013. In May, 2013, the FDA issued draft guidance for industry titled “Contract Manufacturing Arrangements for Drugs – Quality Agreements”.  After a three year “Out for Comments” status; the Guidance was finalized in November 2016.


 It is applicable to any contract organization involved in the manufacturing of a drug product.  “Manufacturing” includes the following activities:  formulation, fill and finish, chemical synthesis, cell culture and fermentation, including biological products, analytical testing and other laboratory service, packaging and labeling, and sterilization or terminal sterilization. The focus of the FDA guidance document is on manufacturing activities.  This does not include drug distribution organizations such as brokers, distributors, and private label distributors.  However, the FDA “encourages” these organizations to follow the guidance “as appropriate”. The FDA makes clear that its Guidance is applicable to commercial drug product – not clinical or developmental batch manufacture.  However, the FDA guidance does state that a Quality Agreement can be extremely valuable for contract development activities, though not explicitly required.  The EU GMP Chapter does not make this distinction, and therefore it can be assumed that Chapter 7 applies to all GMP batches – both investigational and commercial. 

Terminology used for Contract Partners

FDA Terminology:  The Guidance uses the terms “Owner” and “Contracted Facility” when referring to the sponsor and the contracted CMO.

EU Terminology:  The GMP chapter uses the terms “Contract Giver” and Contract Acceptor”.

The FDA’s use of the word “Owner” harks back to U.S. Product Liability Laws where accountability lies with the organization that “owns” the product introduced into commerce.  If you own the intellectual property, trademark, or the market license – you are the product owner to the FDA. The FDA guidance clarifies that the term “Owner” does not apply to retail pharmacies and other retailers that purchase drug products to sell.

Accountability  of Contract Partners

The FDA Guidance is clear that ultimate accountability for the drug product’s safety and efficacy lies with the product Owner.  To the FDA, contractors are an extension of the owner’s own facility.  It is illegal to outsource GMP accountability to the Contracted Facility as per the FD&C Act. It is also clear that the Contracted Facility must comply with all applicable GMP regulations.  After a GMP inspection of a Contracted Facility, the FDA could issue two Warning Letters – one to the Owner for violating GMP regulations, and one to the Contracted Facility for complicity.

The EU identifies the Contract Giver as having ultimate accountability for the product.

Quality Agreement

The FDA Guidance recommends that a written Quality Agreement be produced that defines the respective responsibilities of the Quality Units of each party involved in the GMP contract manufacture of a drug. The FDA Guidance emphasizes that a Quality Agreement is not a commercial or business agreement and does not cover business terms, confidentiality, pricing or cost issues, delivery times, and limits on liability or liquidated damages.  The EU GMP Chapter states that the Contract (Quality Agreement) shall specify the respective responsibilities and communication processes relating to the outsourced activities.

FDA – Recommended Sections

       Purpose / Scope

       Definitions / Terms

       Dispute Resolution


       Manufacturing Activities / Change Control

       Quality Agreement Life Cycle and Revisions

EU-Recommended Sections Assigning Responsibility

       Knowledge Management

       Technology Transfer

       Supply Chain


       Quality / Purchasing of Materials

       Testing / Releasing Materials

       Production and Quality Controls

QA Section 1 - Terms

The FDA suggests including a section defining the terms used in the Quality Agreement.  The Owner should consider using the terms and procedures used by the Contracted Facility rather than their own.  For example:  Batch Record, Performance Qualification Protocol, Raw Material, Internal Audit, etc. This will reduce the likelihood of misinterpretation and personal error during the manufacturing process. This section should provide specific terms and definitions related to the particular product involved, such as product/component specifications, batch numbering processes, expiration/ retest dating, etc.

QA Section 2 - Product Release

In the U.S., the FDA Guidance makes clear that the Owner’s Quality Unit is responsible for final release of the finished goods for commercial distribution.  This is required by 21 CFR 211.22(a).  The Quality Unit of the Contracted Facility is responsible for releasing product from its own operations.  In Europe, under the revised GMP Chapter 7, the Contract Giver can outsource the final product release/rejection of finished goods for distribution.  This may be performed by the QP (Qualified Person) of the Contract Acceptor.

QA Section 3 - Communication Plan

This section details expectations for both verbal communication (meetings, teleconferences, project meetings) and written correspondence (project updates, meeting minutes) between the Owner and Contracted Facility.  The plan should specify contact names and contact information for both parties.

QA Section 4 - Documentation

The Quality Agreement should detail procedures for how the Owner will review and approve documentation relating to the product, such as batch records, specifications, validation documents, investigation reports, etc. The Contracted Facility should have a documentation control system to initiate, review, revise, approve, obsolete and archive all GMP documentation. The Quality Agreement should also detail how documentation records (including e-records) shall be made available for immediate retrieval and how copies will be controlled. The EU GMP Chapter 7 requires that Contract Giver SOPs should identify the types of records required to be kept by the Contract Giver.  (It is implied that these records should be the original documents).  The Quality Agreement should detail the requirements for the Certificate of Analysis by the Contracted Facility.

QA Section 5 – Technology Transfer

The FDA Guidance states that the Quality Agreement shall detail how Owners will transfer knowledge to the Contracted Facility – including any Application commitments that have been made. The EU GMP Chapter states specifically that the Quality Agreement shall describe the responsibility for Technology Transfer from the Contract Giver to the Contract Acceptor. The EU Contract Giver shall provide all info and knowledge necessary to carry out the contracted operations correctly and in line with both regulatory and Marketing Authorization.  It will include any hazard issues associated with the product.

QA Section 6 – Materials Management

Raw materials must be purchased using an agreed upon supply chain. This section of the Quality Agreement should indicate who is responsible for setting specifications for raw materials; auditing, qualifying, and monitoring suppliers of those materials; and conducting required sampling and testing. The FDA Guidance states that the contracted manufacturing facility should be responsible for monitoring incoming ingredients and materials to ensure they are from approved sources using the agreed supply chain. Responsibility for inventory management, labeling, label printing, and label reconciliation should be defined in the Quality Agreement. The responsibility for storage of materials and storage conditions is included in this section. The Quality Agreement should define responsibilities for product storage and transport.  This includes the monitoring or validation of shipping conditions. The FDA Guidance does not specifically require that Quality Agreements need to be set up between the Owner and Contracted Facility suppliers.   

QA Section 7 – Facilities & Equipment

This section should identify the specific site(s) at which manufacturing operations will be performed.  The Quality Agreement should also indicate which party will be responsible for carrying out validation, qualification, and maintenance activities for any relevant equipment systems or utilities. Responsibility should be assigned for environmental monitoring or room classification maintenance. May consider the inclusion of the contract facility’s established processes and procedures (i.e. SOP listing) in Quality Agreement.

QA Section 8 - Good Manufacturing Practice

The FDA Guidance emphasizes that although the Quality Agreement is a means to define GMP responsibilities between the Owner and the Contracted Facility; both parties have a shared responsibility for ensuring that drugs introduced into interstate commerce are not adulterated or misbranded. Drug companies and CMOs alike must take the necessary steps to assure drug quality, safety and efficacy through Good Manufacturing Practice. Agreement will specify that all services provided by the Contracted Facility (including laboratories) will comply with cGMPs, as well as any applicable regulations from local (state and district) authorities. One common method for specifying GMP responsibilities in a Quality Agreement is to use the Grid Approach (see example GMP Grid on next slide).

GMP Responsibility Grid Example




Laboratory Controls:

Have appropriate specifications and test procedures for the Product which are consistent with the applicable approved filing and/or compendial




Storage and Distribution:

Have systems for controlling quarantined, rejected or recalled materials.          




Validation / Qualification:

Qualify as necessary all critical systems and equipment used for the manufacture and control of Product (Installation Qualification (IQ), Operational Qualification (OQ), and/or Performance Qualification (PQ)).


Right to Audit:

Client has the right to audit Supplier’s facilities and systems and

review documents as they relate to the manufacture of Product.              



 QA Section 9 – Laboratory Controls

The FDA Guidance states that the Quality Unit of each party in a Quality Agreement should have lab facilities available to it for testing and approving of drug product. Quality Agreement should describe the procedure for communication of all lab test results to the Owner for evaluation and consideration for product release. QA should describe controls over sampling and testing samples. Both the Owner and the Contracted Facility have the responsibility that test methods are validated and have been transferred properly between labs. It is the responsibility of the contract lab that equipment is properly validated, calibrated and maintained in a controlled state.   Responsibility is assigned in the Quality Agreement for the storage and routine testing of stability and reserve samples. Responsibility is assigned for the investigation of deviations, discrepancies, failures and OOS results in the contract lab. The EU Chapter does not specifically describe laboratory controls.

QA Section 10 - Change Control

The FDA Guidance states that any changes made by the Contracted Facility should be communicated in writing to the Owner for review and approval.  This includes changes to materials, process, test methods, specifications, equipment, shipping methods, etc.. 

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