A Quality Eye on Suppliers
As global regulatory bodies take a harder line on quality issues, medical device OEMs and suppliers are being urged to stay out in front with robust auditing and quality systems.
Medical device manufacturers tempted to breathe a sigh of relief that predictions of an uptick in FDA warning letters pushing supplier quality haven’t proved true shouldn’t take the lull as a sign that the government has lost interest.
Kimberly A. Trautman, medical device quality systems expert for the FDA, told Medical Product Outsourcing that keeping the urgency level up when it comes to pre-market quality is one of her primary goals. The number of warning letters resulting from quality issues hasn’t increased over the past few years, but that doesn’t signal a lack of interest, she cautioned (see table on page 94).
Consultants are telling their clients to be vigilant in their vendor audits involving parts and services that rank high in risk stratification, but also to keep in mind that some quality issues can arise where you least expect them. The FDA’s focus on supplier quality is significant, they tell client companies.
“Nobody thought about lead paint,” pointed out Alan Schwartz, executive vice president of MDI Consultants in Great Neck, NY. The toy industry was rocked last year by recalls involving millions of toys made in China, many of which were found to contain high levels of toxic lead paint, and manufacturers in all industries heard it as a wake-up call. Not only did it raise caution about first- and second-tier suppliers in countries whose quality control regulations aren’t as stringent as those in the United States or Canada, but also about the specter of quality issues arising where they aren’t expected.
“Nobody thought about lead paint because we would not think of using [them] in the USA, and so looking for a paint that is unacceptable wouldn’t be part of a risk assessment,” Schwartz continued. “Then they run into an unexpected problem of major concern.”
The FDA’s expectations, set out in Sec. 820.50 of its Quality System Regulation, that manufacturers “shall establish and maintain procedures to ensure that all purchased or otherwise received product and services conform to specified requirements” are clear as far as what the FDA wants the results to be, but knowing how to attain those results remains a bit of a mystery.
How Good Is Good Enough?
The agency’s quality requirements and ISO 13485 standards demand that companies control suppliers’ quality but don’t provide guidance as to how that should be accomplished; Egan Cobbold, quality systems officer with Health Canada’s Medical Devices Bureau and chair of the Global Harmonization Task Force (GHTF) Study Group 3 (SG3), predicted that the guidance document the group expects to post for public comment in June will answer many of those questions.
The group’s SG3/N17, Quality Management Systems, Medical Devices—Guidance on the Control of Products and Services Obtained from Suppliers, has been awaited for months, and Cobbold said the final document is expected to be finalized and released by the end of 2008.
So sure is Cobbold of the clarity the guidance will bring that he predicted Health Canada will immediately require manufacturers in that country to adopt it.
“It’s written in collaboration with the industry, so it’s a balanced document,” Cobbold promised. “It satisfies both regulatory and industry interests.”
While many experts believe harmonization is the future of worldwide quality standards, cultural and political differences in interpretation will not be entirely erased. Schwartz, for one, predicted that too much harmony would spell too much relinquishing of authority for the FDA.
Cobbold acknowledged that satisfying both sides is a tall order, considering “many suppliers are providing basically finished devices, and [regulators] want the manufacturer to be responsible for the product even though [the company] buys it from a supplier overseas and sells it under their name.”
According to Elaine Messa, vice president of medical device quality systems and validation for Quintiles Consulting’s Regulatory and Quality Practice, based in Rockville, MD, the risk can be high when a company sells a product without full knowledge of what went into it.
“Look at the news—heparin, toys, pet food,” she said, listing recent product safety disasters to have hit US companies in recent months. “From a business perspective, what does a company face when they have an unsafe product? Recalls, damage to reputations, falling stock prices, possible legal liability. How can a company know if they’re doing enough to prevent supplier problems like this, and if their quality system is sufficiently strong?”
Messa and others believe the answer to that is in risk classification—the step on which quality systems stand or fall.
It’s a lesson the FDA’s Trautman emphasizes when she’s leading discussions on quality.
“The assurances [a company can have in its products] come from a balance of risk—when I teach it, I use a sliding-scale model,” she explained. “The amount of assurances you need from any type of purchased service or product comes from the risk that the product or service brings.”
Even if a company has a longstanding, trouble-free relationship with a vendor, that vendor shouldn’t escape surveillance.
“The FDA risk-prioritizes their inspections, and manufacturers should as well for their vendors,” said Brent Noblitt, co-founder and senior partner of Noblitt & Rueland in Irvine, CA. “Even if you have never experienced any problems to date [involving a part or service from a particular vendor], you should have some sort of process or procedure to determine the risk with regards to the product or your overall business, and while you may not look at that vendor as frequently as you would another, you can’t ignore it.”
A clean slate isn’t enough, said Judith Andrews, PhD, director, quality and compliance services for Medical Device Consultants, Inc. in North Attleboro, MA.
“Audits should address current problems and concentrate on the products supplied,” Andrews explained. “A clean audit of a subcontractor providing defective materials is clearly not an adequate audit.”
For many companies, particularly in today’s economic climate, it boils down to risk versus perceived return, and they take an unintended gamble.
“Not all companies look at quality assurance as a means of saving money—they look at it as an expense that does not generate income. They would try to keep their quality assurance department to a minimum,” according to Schwartz. “A good quality system does not get the acclaim when things go right, but they get the brunt of the problem when things go wrong. Diminishing the value of the quality assurance function for a company and reducing its effectiveness would surely end up costing a company a lot more than the cost of salaries and operating expenses.”
It’s Not Only What’s Found, But Who Finds It
Andrews stressed that supplier audits shouldn’t be left up to whoever can get them done.
“[Audits] should be done by competent individuals who know the product and any current product problems,” she said. Further, supplier audits “should be done by different individuals over time. Sending the same people to perform the audits year after year is not likely to uncover new issues.”
Schwartz said companies that take their vendor quality too lightly, or view it as money not well spent, are not adequately protecting their interests. The use of sales representatives or company officers to perform vendor audits is not the way to assure that vendors could meet the product specifications.
“Many small companies don’t have the time and money to travel to vendors, so they have to decide which of their vendors is critical and require an audit and which ones would not need to be audited. The FDA is writing up companies during inspections for not qualifying their vendors,” he explained, “especially if the FDA can track problems back to the vendor. So companies can get themselves into hot water by not adequately auditing and/or controlling their vendors.”
Messa ranked selection of the person performing an audit as critical to the validity of the process. She identified three key elements in ensuring supplier quality—appropriate risk classification of the supplier, the actual audit and correcting deficiencies—and said having a knowledgeable, objective auditor makes a big difference in the quality of the audit.
“When you look at how you want to approach your audit, you want people who are trained and objective and who conduct a comprehensive audit, not just a checklist,” she noted. “Some companies we see will send in their quality engineer to do an audit, but that is someone involved with the product and is, therefore, less objective than you might want.”
As the industry feels its way through establishing standards and guidance for conducting supplier audits, Messa said it’s important to keep in mind that in terms of audits and oversight, all vendors are not created equal. Spending huge amounts of time and money to audit a low-risk vendor in China with the same intensity as a higher-risk supplier in Massachusetts indicates more effort needs to go into stratification.
“A lot of the guidance that’s emerging talks about the type of controls and extent of controls to have over your suppliers, and it’s good to keep in mind that you don’t have to treat each supplier equally,” she said. “We’re seeing companies that have not adequately risk-stratified their suppliers and are trying to treat them all equally, and hence they’re not auditing according to schedule.”
Looking Beyond First-Tier Suppliers
“A lot of companies get a purchase order and think they’re done, and [they] don’t really consider the ramification of that part or service down the road,” said Noblitt. But structuring a purchase agreement that goes beyond numbers of units and prices allows an organization to consider more far-reaching quality issues such as design control, corrective and preventive action (CAPA), etc.
“Many times, companies are looking to get on the market as soon as possible, and that’s just the real world,” he added. “So how do you go about making sure the finished product you have is a quality product now and in the future?”
Due diligence before selecting a supplier, a well-thought-out purchase agreement and purchasing/vendor controls can go a long way in that regard, the experts said.
“When selecting [suppliers], stay objective,” Messa advised. “One thing we recommend you do is identify the risks through your design control process and then set up the criteria you want before you go to the supplier, not after.”
And how does that supplier manage its own suppliers?
“You want to look at your quality agreement as your contract—what changes do I need to be notified of, including changes in my suppliers’ sourcing,” Messa said. “We are running into that problem more frequently—the issue of the suppliers’ suppliers.
“A subcontractor who is subcontracting out…frequently, that’s just something manufacturers have to deal with,” she continued. “But the important thing is assuring through your auditing that your subcontractor has quality assurances in place and that they’re appropriate.”
A third- or fourth-tier supplier’s quality assurances may not be as visible as your own, but they are no less critical, Messa said. “You need to assure that your supplier is applying the same criteria when managing those subs,” she added.
Experts are in agreement that the industry is still reacting to supplier quality issues in far greater proportion to the effort put forth to prevent those issues.
“Notified bodies and the FDA are requiring greater control of outsourced materials and components by medical device manufacturers,” Andrews said, but “there are still companies that wait for problems before taking actions concerning supplier quality.”
One reason companies spend so much time reacting rather than preventing is the speed with which the industry has globalized, the FDA’s Trautman said.
“Manufacturers’ chain of control is more stretched, and that is manifesting in product problems,” she explained. “Regulators are identifying problems [that result] because our industry has grown globally, and it has grown so quickly that we’re still reacting.”
Global Market, World View on Quality
Companies are balancing quality and safety with competition and compliance, and they can’t afford to let anything fall. Manufacturers with established quality systems that have worked well for US suppliers don’t necessarily translate to other countries; but to stay competitive and get in the market swiftly as technology changes, they must learn to adapt and step up supplier oversight in places where the American expectations of quality haven’t become standard operating procedure.
In a move to head off trouble before it reaches US shores, the FDA sought and has obtained approval from the State Department to establish eight full-time positions at US diplomatic posts in China. The agency is awaiting authorization from the Chinese government.
“In an age when a border is not a barrier, the globalized economy demands nothing less than heightened regulatory interoperability, information exchange and cooperation, especially on product quality and enforcement matters,” said FDA Deputy Commissioner for International and Special Programs Murray M. Lumpkin, MD.
While to date, FDA demands for better supplier auditing haven’t translated into an increase in warning letters, the specter of FDA regulators auditing a company’s quality, perhaps followed by warning letters, seizures or even jail, has the industry’s attention.
And look for even more guidance. With its N17 paper, touted as a guidepost to complying with ISO and FDA demands that companies control suppliers’ quality, the GHTF SG3 is preparing to go farther down the path, developing guidance for companies struggling to correct or replace their existing CAPA systems to align with ISO and FDA regulations.
The GHTF’s Cobbold said SG3 has given itself about two years to create and publish guidance for CAPA, but at this point, “we’re still trying to figure out what we want to achieve with it.”
Consultants are urging their clients to bring their quality systems to a level that will bear scrutiny and to work closely with vendors to set up programs for supplier development, which would let vendors know their customers’ expectations and bridge cultural misunderstandings.
“Your name is on that product—you are responsible for that product,” Schwartz said that he reminds client companies when he talks about the importance of attention to quality systems. “The FDA and the consumer will go after you, so you have to control your product.”