A New Paradigm to Lower the Risk of Vendor Qualification.

When FDA inspected a Heparin supplier, Shanghai No. 1 Biochemical & Pharmaceutical Co. Ltd., they thought they were seeing the real plant.  It turned out that it was only a show facility.  The real plant was a shadow plant located somewhere else. 

The US-FDA Warning Letter later stated, “The inspection revealed that the facility was not manufacturing, and did not appear to have ever manufactured, Heparin Sodium USP (or heparin sodium) for the U.S. market."

This case is similar to Baxter Pharmaceutical's experience with their Heparin supplier in 2008.  The result of that deception was that hundreds of patients suffered life-threatening reactions like severe hypotension, low blood pressure and over 80 people died.

As of today there are more than 150 wrongful death cases filed against Baxter.  The cost of defending itself in those suits in legal fees and employee time is high to say the least.  Even if Baxter were to win all those cases, they would lose.  The effort of an integrated supplier compliance program now seems small in hindsight. 

Could this happen to you? How do you protect the quality of your product?  What are FDA's expectations for supplier qualification?  The Heparin experience shows that even an extreme onsite inspection won't necessarily reveal severe quality problems.  How does one confirm that the supplier plant that you are inspecting is actually the one that supplies your company?

Some things to watch for, according to FDA, include discrepancies in date (e.g., compare when the materials arrived versus when production and testing were done) and if the facility happens to be “renovating” or “not manufacturing the day” you are there for your audit. You have to see the product being manufactured in action. You can also ask to see batch records and other documentation as proof the factory is indeed operational. 

Does this solve the Show and Shadow supplier danger?  No.  Clearly it's not a full solution.  And the fact is there is no sure solution. 

It's very difficult to detect someone who is determined to commit fraud.  You as a buyer need to be sure that you have located the actual production facility.  Fortunately these instances are rare, and most suppliers at least try to produce a quality product. 

But this incident shows how critical a supplier's quality program can be.  The message is that even intensive on-site audits cannot find major vendor problems.  'Show and Shadow' is just an extreme example.

Although FDA's suggestions are certainly valuable, they and all the other responses to the increasing concerns over vendor quality all seem to say one thing:  more intensive audits.  More intensive audits, of course, mean higher costs.  And as we have seen even an intensive audit isn't guaranteed to find all the problems at a supplier.  The problem is that audits are only a snapshot; a surface skim at a point in time. 

Any pharmaceutical or medical device plant is a very complex place.  Unless you plan to take up residence at the vendor you have no chance to understand the true nature of these operations.  And what company in today's cost-cutting climate has the resources to do that? 

Keep in mind that an audit costs more than what you pay for your auditors to investigate the vendor.  The vendor has to spend their time escorting the auditors around, digging out records, and following up on action items.  Guess who has to cover that cost.  The assumption today is that a BETTER audit means a LONGER audit.  There has to be another way.

What's needed is a new paradigm for vendor qualification; a tool that can drill deeply into the vendor's operation at low cost; something that can provide a more lasting measure of the vendor's performance than simply an audit.

The answer is to take a deeper dive into a more revealing view of the vendor's guts than happens in most audits.  Next time, "Measuring Your Vendors Employees".