For this week’s guidance, Dr. D is going to dive into the rapidly expanding world of contract manufacturers (CMs). For those readers not living in a cave, outsourcing manufacturing operations has been accepted as routine part of the product life-cycle process. Device manufacturers are constantly weighing their options; build in-house versus outsourcing to CMs. The need to outsource is especially true for the growing field of virtual device manufacturers popping up not only in the United States but around the globe. That being said, the fundamental questions that need to be asked are:

• What are the traits of a good CM? 
• What is the selection process? 
• What is FDA’s or the notified body’s involvement? 
• What about location? 

The doctor is an extremely big fan of the word “probity” (look-it-up); and strongly suggests that the selection process of a qualified CM commence with selecting CMs that exhibit the elements associated with this word. That being said; Dr. D hopes you enjoy this week’s guidance. 

What are the traits of a good CM?

For starters, the CM selected must offer a competitive price; otherwise, what is the purpose of outsourcing. If a Net Present Value (NPV) analysis does not support the move to a CM, your organization should not make the move. Additionally, the following elements need to be considered as traits requiring consideration during the initial CM evaluation process: Responsiveness; 

• Technology; 
• Experience within the medical device industry; 
• Appropriately staffed; 
• Positive Dun and Bradstreet rating; 
• State-of-the-art technology to support manufacturing; 
• Evidence that equipment being properly maintained and calibrated; 
• Protection of IP; 
• Approach to process validation; 
• Facility access; 
• Ability to meet delivery schedules; 
• Current ISO certification (ISO 13485:2003 or 2012); 
• Current FDA registration; 
• Willingness to sign a quality agreement (including a no-change agreement); 
• No pending regulatory actions (i.e., warning letters, unresolved Form 483s and/or Major notified body non-conformances); and 
• Quality, Quality, and more Quality! 

What is the selection process?

Folks, sometimes you just have to bite the proverbial bullet, get off your duffs and actually visit potential suppliers. Considering the amount of trust being placed into the hands of a CM, the CM should be considered a critical supplier and the appropriate level of risk executed during the selection process. Dr. D strongly suggests that the selection process begin with a cross-functional team visiting a potential CM candidate. Why a cross-functional team? Because, the engineering folks, the purchasing folks, the manufacturing folks, regulatory folks, and the quality folks, each have different perspectives in regards to what is required and what is acceptable for CMs. If you do not have a team, send in a qualified 3rd-party to assess the CM or even better, call Dr. D. Furthermore, prior to the initial visit, organizations should send a questionnaire and non-disclosure agreement (NDA) to potential CMs. Based on the answers received (refer to previous section) and the willingness to sign a NDA, you may be able to quickly reduce the number of candidates. Moreover, once you have received initial information from the supplier: (a) the questionnaire; (b) a signed NDA; (c) a favorable D & B report; (d) evidence of a current FDA registration; and (e) evidence of a current quality management system (QMS) certificate “from a recognized notified body” it should be time to schedule the visit.

Finally, if the initial assessment team decides that a CM has the potential to meet your organization’s manufacturing needs, the next step is to have the supplier quality folks or an acceptable third-party provider perform a more intrusive audit. Can you say rubber gloves? Dr. D does not recommend proceeding with contracts, purchase orders, or quality agreements until QA puts their stamp of approval on the CM. What is FDA’s or the notified body’s involvement? If product is being manufactured for eventual sale and distribution in the U.S. market place, especially Class II and Class III products, the CM can expect a visit from our friends at FDA. In fact, the moving of a manufacturing line to another location (CM or not) requires FDA notification. For a Class III line (PMA), FDA review and approval is mandatory. Similar regulatory requirements exist outside of the U.S. (i.e., Canada, Japan, EU etc.) so Health Canada, PMDA in Japan, and of course your notified body is going to require notification; and because notified body’s get paid for their services, you can plan on an audit of the CM, by your notified body. Although by no means a requirement, it will save establishments a little bit of coin by selecting a CM that shares your notified body, when it comes to the annual costs associated with surveillance and certification audits.

What about location?

Location, location, location! Dr. D’s preference would be to keep the CM work stateside. If organizations take the time and do their homework, there are viable CM options in the U.S., even on the expensive left coast. However, if the decision is made to outsource outside of the United States, there are options in Mexico, Costa Rica, El Salvador, Honduras, Nicaragua, and Guatemala, maybe even in Belize and Panama (Dr. D’s not sure but why not mention all seven of the Central American republics just in case). Selecting a CM in Mexico or Central America will be an easier supply chain to manage versus Asia. It will also help companies save on their travel budget should visits become necessary; and because of little or minor changes to time zones, make conference calls more practical. 

However, Asia has its advantages too. If the volumes are expected to be really, really, really, high; significant cost savings can be realized in manufacturing in China, India, Vietnam, Thailand, Malaysia, etc. Conversely, the protection of IP may present a significant challenge as well as managing an extended supply chain.

Takeaways

For this week’s guidance, the doctor will leave the readers with two takeaways. One – choose your CM wisely. CMs will become an integral part of your organization’s supply chain and as such, a valued partner. However, if quality issues are prevalent and the outsourced product is racking up MDRs and vigilance reports, do not be afraid to make a change. Two – because of the need to mitigate all risks associated with the manufacture of medical devices that are safe and effective, you need to visit your CMs. In fact, you should be auditing your CMs at least annually.

In closing, thank you again for joining Dr. D and I hope you find value in the guidance provided. Until the next installment of DG – cheers from Dr. D. and best wishes for continued professional success. 

References:

1. Code of Federal Regulation. (2013, April). Title 21 Part 820: Quality system regulation. Washington, D.C.: U. S. Government Printing Office. 
2. Devine, C. (2011). Devine guidance for complying with the FDA’s quality system regulation – 21 CFR, Part 820. Charleston, SC: Amazon.