Supplier Audits Or Bust: Six Keys To Pharma Audit Success

By KR Karu, pharmaceutical industry solution director, Sparta Systems

Supply chain integrity is necessary to a pharmaceutical company’s success. When dealing with a multitude of suppliers spanning several geographies, manufacturing issues can arise if proper protocols are not in place. Specific challenges include product purity, regulatory compliance, safety, cost containment and quality assurance.

Audit processes are an integral component of supply chain management. Conducting an effective audit empowers pharmaceutical companies and their suppliers to raise performance levels and strengthen relationships while improving patient-care quality. The mutual benefits of a successful audit include:

• Supply chain continuity and reliability;
• Cost reductions;
• Improved risk management;
• Global visibility; and,
• Enhanced customer satisfaction.

Agreement Does Not Guarantee Compliance

Formal contracts and quality agreements play an important role in ensuring compliance, collaboration and efficiency, but alone do not guarantee supply chain integrity. These documentation examples do play a key role in providing a reference point to resolve specific issues, but do not assure the integrity and purity of the supply chain. Supply chain execution may or may not comply with industry best practices and supplier audits are vital to pharmaceutical companies, suppliers and patients.

Outsourcing Has Its Benefits, But Can Be Tricky

As in many other industries, pharmaceutical companies strategically outsource some or all manufacturing of products or product precursors. Outside suppliers can offer a host of benefits. For example, a supplier may have a dedicated manufacturing plant for key products or components where the speed of production is quicker and product line changeovers can be virtually seamless. In this case, partnering with a supplier creates time and cost saving, which allows a company to remain focused on its core competencies. The decision to outsource frees up company resources, and allocations to marketing, research or other business needs are increased.

Outsourcing also presents some challenges. Consider these questions when evaluating a supplier:

• What is the supplier’s quality management system and how do you ensure it is being followed?
• What is the supply chain to the supplier and how complex is it?
• Is the supplier adhering to good manufacturing practices?
• Is the supplier adhering to all regulatory requirements?
• Who makes decisions throughout the manufacturing process and on what bases are the decisions made?
• What CAPA system is in place and how well does it operate?
• Will the supplier provide sufficient capacity, reliability and product purity?
• Does the supplier have an internal or external audit process, and if so, who is responsible for those audits?
• Is there a well-defined process for managing change and approval of changes?

For pharmaceutical companies, the consequences of recalls and poor supply chain integrity are serious. For example, FDA-initiated product recalls rose 69.5 percent from 2007 (5,585) to 2012 (9,469). As a result, supply chain processes have come under increased scrutiny and companies are liable for mistakes made by suppliers under this business arrangement.

The Six Keys to Pharmaceutical Audit Success

1. Plan: Assign auditors, define audit scope and objectives, review previous audit results and build an audit template. This initial step will ensure a successful audit by anticipating adequate staffing and resources.
2. Schedule: Handle all calendar and workload aspects of the audit and incorporate the strategic use of reminder and tracking systems. Scheduling guarantees that the right people and resources are in the proper place at the right time.
3. Perform Audit: Document findings and objective evidence, address any discrepancies and manage and communicate any needed changes, as recommendations and CAPAs often arise. The ultimate benefit to all parties comes from meticulous attention to detail and thorough execution of this step.
4. Report: Provide a formal audit report with appropriate trends and metrics analysis. Reports that are written and organized well allow all parties to understand and benefit from the audit process. Significant attention should be given to the quantity and type of data collected, report formatting and diversity of readership. This can make the difference between an audit report that is unclear and cumbersome versus one that is inviting, clear and helpful. Effective communication is key.
5. Action Tasks: Manage risk factors and an effective and efficient CAPA process. Any lack of follow-through creates major deficiency and liability. Action tasks must be ascribed top priority.
6. Close-Out: Ensure all action items are addressed, responses are captured and sign-offs are received. This final step assures nothing has been overlooked, guaranteeing audit integrity.

How a Pharmaceutical Company Benefits

The audit process has many benefits for the pharmaceutical company. Audits verify whether the correct standard operating procedures are being followed. Additionally, audits check for quality agreement compliance and chemical purchase specification adherence. They elucidate key details that these documents do not routinely cover and can alert the pharmaceutical company to any supplier deficiencies at an early stage, and by implication, any supplier-to-supplier deficiencies.

When a pharmaceutical company builds an audit process, it has the opportunity to create a consistent format. When a pharmaceutical company sends in different auditing groups such as accounting, IT systems, HR, engineering or materials, each of those groups can access the shared supplier information. This streamlines all audits with multiple suppliers by eliminating duplication of effort. Audit steps and reporting formats acquire a uniform and consistent appearance, making everyone’s job easier, faster and more efficient.

Last, but certainly not least, every pharmaceutical company realizes its responsibility and liability. Pharmaceutical products are personal to the user. They are used within or in conjunction with a patient’s body and failures here can have the gravest consequences. Audits help identify and correct minor issues before major issues develop. This can mean the difference between a simple internal process correction versus human injury, legal liability and financial loss.

Pharmaceutical Suppliers Also Benefit

Pharmaceutical companies and suppliers mutually benefit from the auditing process. On one hand, audit data sharing and standardizations can reduce the staff time and expense associated with multiple audits from multiple pharmaceutical companies. On the other hand, supplier reputation can be strengthened via a history of audit cooperation and successful results.

Audits can help suppliers better understand strengths and areas of opportunity. Suppliers can incorporate those insights into processes and thereby become best in class. This strengthens the partner-supplier relationship and enhances the supplier’s marketplace standing.

Audits Should Be On a Global Scale

Implementing a global audit process is a daunting task but the advantages of performing a successful, effective audit are reflected in the reduced risk and cost faced by the company as production continues to move forward.

First, a global audit process enables companies to address risk areas effectively. Audits involve inspections of data, processes, metrics and onsite equipment across the supply chain. Critical suppliers are better managed within this close working relationship. The audit process allows risk area deficiencies to be addressed as they are encountered.

Second, a global audit process ensures regulatory compliance. Format consistency congruent with regulatory requirements and internal standards can be built into the audit process. Simply knowing something is being measured or tracked focuses attention and encourages continuous improvement.

Third, a global audit process reduces costs. Identifying and addressing problems upstream is cheaper than reacting to issues as they arise. Cost reductions increase as audit areas expand. Time and materials wasted can never be regained. The global process enables for more streamlined audit and audit follow-up communications. Multiple or inconsistent sources of information can create confusion and lack of unity throughout the organization. A central voice saves time and money.

Fourth, a global audit process increases visibility. Audit data can be shared cross-functionally throughout the organization allowing for various departments to integrate data into systems more quickly and consistently and informs executive leadership with facts and figures as crucial decisions are made.

Any audit process is better than no audit process. Effectively addressing risk areas, assuring regulatory compliance, reducing costs and enhancing visibility are the four main reasons to establish a global audit process. The global audit process maximizes the benefit throughout the organization.