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    How to Select the Right Partners for Your Brand

    Selecting contract manufacturers and raw material suppliers will be among the most critical decisions your company can make.

    How to Select the Right Partners for Your Brand
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    Chris Lockwood, PhD, President, Lockwood, LLC10.03.16
    Ask dedicated dietary supplement consumers why their loyalties reside with one brand versus another, and the claim of “high quality” is bound to be among the top responses. Dig a little deeper to understand how consumers define quality, and you’ll almost certainly hear something like: “What’s on the label is what’s in the product.” However, in my experiences, too few dietary supplement companies invest in rigorous and valid analytical testing through Best By dating of their products.

    The consumer isn’t the only one who may be misinformed about what is in a product. Marketers themselves may be unaware of what made it into their finished product, or what didn’t. This is where a brand can get into serious trouble.

    Any company marketing a dietary supplement within the U.S. must adhere to the current Good Manufacturing Practices (cGMP) set forth within the FDA’s final rule (21 CFR 111) and all other regulatory requirements in order to ensure consumer safety. Yet, despite being six years into full implementation of the FDA’s final rule on the dietary supplement cGMPs, the industry is still ripe with non-compliance. For the consumer, that spells risk.

    While there are instances of poor quality being attributed to financial interests superseding those of consumers, the more common cause for cGMP violations is ignorance of the laws and an assumption that compliance is the responsibility of contract manufacturing partners.

    Whether you are in the early stages of launching a dietary supplement brand or are already in the game, it’s ultimately your company’s legal responsibility to adhere to the cGMPs. With your brand’s reputation at stake, and with legal and regulatory authorities targeting the dietary supplement industry, you’d be wise to stay ahead of the regulations and become a leader in quality. (See sidebar “An Industry On Notice.”)

    Selecting contract manufacturers and raw material suppliers is one of the most critical decisions you will make in this industry. Here are 12 tips intended to help you choose wisely and ultimately safeguard the quality of your products and the reputation of your brand.

    Tip 1: Hire a qualified GMP services firm.
    I’ve lost count of how many small companies and startups have contacted me for R&D or brand consulting over the past seven years that have had no internal quality control manager, no standard operating procedures, no specifications, no stability testing data, no Adverse Event Report accounting, and, therefore, no legitimate quality assurance (QA) or quality controls (QC).

    Each company assumed all cGMP compliance was being handled by its respective contract manufacturers. Since full cGMP compliance is neither cheap nor easily addressed by existing staff alone, I strongly recommend hiring a cGMP firm to serve as your company’s director of quality until you can find and train full-time staff to perform the lion’s share of the responsibilities.

    Your company will still need to assign a reasonably qualified employee to be a quality manager, but hiring an outside firm with cGMP expertise is by far your most cost-effective and efficient way to move toward full compliance. Even if you feel your company is doing a good job at being cGMP compliant, I still recommend paying for an audit so that you get an independent gauge of your quality shortcomings before the FDA shows up and does it for you.

    Tip 2: Hire a qualified industry attorney to draft a manufacturing and supply agreement.
    More than ever, brands need full visibility of everything that goes into the products they market. Thus, if a contract manufacturing partner refuses to sign an agreement that clearly defines product ownership, formulation and cost transparency, quality guarantees and corrective action, and out-of-spec and dispute resolution, then find another co-packer with which to do business.

    “In today’s regulatory environment, a manufacturing agreement with your contract manufacturer is absolutely essential,” said Alan Feldstein, Esq., an attorney of counsel with the law firm Collins Gann McCloskey & Barry PLLC, who has spent the last 20 years within the health and dietary supplements industry.

    In addition to clarifying respective duties and responsibilities, a supply agreement, according to Mr. Feldstein, “spells-out, in writing, who is responsible for complying and documenting the specific elements of the myriad of regulations that govern manufacturing; who is responsible for specific documents that will need to be in each party’s possession, showing compliance … and can clarify who may ultimately be financially responsible for any violations.”

    Lastly, Mr. Feldstein recommended that such agreements delineate, “who has the authority to make changes to ingredients and formulations, who is responsible for identity testing, sourcing of raw materials, audits of the manufacturing process, and how each step is documented.”

    Tip 3: Continuously qualify your contract manufacturers and suppliers.
    “Year after year, one of the most commonly cited cGMP violations observed during an FDA audit of a brand is the complete absence of vendor qualification,” said Jasmina Kanazir, ASQ CQA, a regulatory compliance consultant and president of Obvium Q, LLC, a cGMP consulting firm.

    According to Ms. Kanazir, brands are repeatedly found to lack the standard operating procedures for qualifying and re-qualifying contract manufacturers and raw materials, or the documentation and follow-up to show that qualification procedures have been performed. But even before sending in a quality auditor to qualify a contract manufacturer or supplier, Ms. Kanazir suggested that you ask to review the company’s standard operating procedures.

    “A contract manufacturer or supplier that has created an extensive number of SOPs to accommodate different exceptions for different customers indicates that the company doesn’t have their own cGMP ‘identity,’” said Ms. Kanazir. “Instead, companies that have standardized procedures, processes and documents usually indicates a level of cGMP system maturity, and a clear goal of regulatory compliance for the company.”

    She also suggested you ask to receive samples of a contract manufacturer’s master manufacturing records, finished product specifications, and an accounting of the company’s product complaints and follow-up over the past three years.

    “Unfortunately, even after nine years since the FDA’s final rule was published, inadequate master manufacturing records, product specs, and a record of the corrective actions taken to address product complaints, returns, reworks, and reprocessing, are the most common mistakes that are observed when the FDA audits a manufacturer,” said Ms. Kanazir.

    Tip 4: Qualify and use third-party analytical laboratories.
    It’s a good sign when a contract manufacturer invests in an in-house or affiliate laboratory to provide analytical services for such things as raw material identification, microbiological testing, or performing many of the finished product and stability specification tests.

    However, there’s an inherent conflict of interest within such a relationship. Thus, if you’re going to use a contract manufacturer’s in-house laboratory services, then qualify and re-qualify the lab as you would a raw material or contract manufacturer. Validate the lab’s findings against other third-party laboratories that you’ve qualified. Even after you’ve vetted the lab, establish a randomized testing schedule whereby the results of the contract manufacturer’s lab are regularly double-checked and the results shared with your co-packer. If a contract manufacturer strongly encourages you against using other labs, or refuses to accept the results of other qualified laboratories, then you should look for a different contract manufacturing partner.

    Tip 5: Ensure ingredient and finished product validation procedures that protect your brand.
    “Quality in, quality out,” said Noreen Hobayan, MS, senior quality manager, Glanbia Nutritionals. “Every ingredient has to be traceable back to the original source and tested for identity, purity and potency using a scientifically valid method. Every final product must be tested using valid methods to ensure all ingredients are present at the specified and declared levels all the way through expiration dating.”

    As a brand, it’s your responsibility to maintain your own ingredient, finished product and stability testing specifications (if you include “Best By” dating on your labeling) for every ingredient and every product you market. Your contract manufacturer has the same responsibilities, with the added requirement that everything it does must ensure your specifications are met.

    For example, contract manufacturers that validate or release ingredients or finished products based upon analytical results using infrared spectroscopy (FTIR or NIR), organoleptic methods, and micros alone are generally not to be trusted. A quality-first contract manufacturing partner may indeed utilize IR, and most definitely will perform organoleptics and micro testing, but the IR testing will only be one of a battery of analytical methods to validate a material or finished product.

    A contract manufacturer with only a few qualified suppliers per ingredient should raise red flags. With the implementation of the Food Safety Modernization Act and the recent actions of the Attorney General, Ms. Hobayan said to expect “far more emphasis placed on adulteration prevention and on foreign supplier controls. Firms importing ingredients from other countries will have a greater responsibility to verify the quality and safety of the products they import.”

    Ms. Kanazir predicted that increased circumspection of imported materials will cause a ripple effect throughout the industry. “Expect something of a ‘purge’ within the supply chain, which will likely create material shortages and finished product orders going unfulfilled by contract manufacturers who don’t currently have a robust vendor qualification process in place,” she said.

    Tip 6: Only use suppliers and contract manufacturers that provide full transparency.
    “The relationship between a brand and its contract manufacturer should be no different than if the manufacturer were simply the operations arm of the private label brand,” said Ms. Kanazir. For a brand and its R&D team to make the most educated decisions on a formulation, for example, they need their contract manufacturer to provide full line-item visibility to the concentration and supplier of each ingredient, and cost contribution for each ingredient and packaging component, as well as any other manufacturing or analytical costs. Co-packers that refuse to provide such visibility, or that try to hide costs and won’t provide thorough transparency, should be avoided.

    Tip 7: Ask for copies of recent FDA inspections and all third-party cGMP audit reports.
    Glanbia Nutritionals has invested in using third-party certification agencies such as SQF and NSF to demonstrate the company’s adherence to cGMPs, said Ms. Hobayan. Such certifications, as well as others such as NPA, USP or TGA, require annual audits of a company’s quality compliance. A company’s investment in such third-party testing is a good sign that they’ll be a strong contract manufacturing partner for your brand. A review of inspections, as well as the co-packer’s corrective action documents can provide some much-needed insight into how well that company may handle your brand’s quality.

    Tip 8: Perform unannounced site inspections on your contract manufacturer.
    Since the FDA isn’t going to call a contract manufacturer or supplier and schedule an audit inspection at an agreed upon day and time, neither should you. If you’re in the market for a new contract manufacturer or want to check up on an existing co-packer, I recommend stopping by for an unannounced tour of the facility.

    If you’re not a current customer, be prepared to show some credentials and possibly even sign a non-disclosure agreement before you’re taken seriously enough for a co-packer to allocate resources toward your request. It’s always best to bring along someone who’s qualified to evaluate cGMP compliance, but even if that isn’t possible you can still gather valuable insight.

    “When you go to the facility,” Ms. Hobayan advised, “look for obvious cGMP red flags. Does the facility appear unclean and warehouse disorganized, and are the employees that come in contact with products following good hygiene practices?”

    Tip 9: Avoid contract manufacturers that depend heavily upon temporary staffing or have high employee turnover.
    It’s not uncommon to find that many contract manufacturers employ up to 80-90% of their total staff in the form of temporary labor. Though a co-packer will likely claim that temporary labor provides cost efficiencies that they pass along to their customers, your brand will pay for it in the form of inconsistent quality.

    Whereas there are some labor positions that can be filled by temporary services, in my experience, repeatedly having to train new staff will adversely impact quality. Therefore, avoid using a contract manufacturer whose temporary staffing constitutes more than about 15-20% of its overall workforce, and also avoid co-packers that appear to have a high employee turnover within their full-time staff. A high turnover rate is usually characteristic of a poor work environment, which almost always affects product quality.

    Tip 10: Ask for the qualifications and experience of the company’s process engineers.
    Far too few companies within the dietary supplement industry recruit or employ qualified process engineers that possess the requisite skills that straddle both R&D and operational sides of the fence. Most commonly, a contract manufacturer may have one or more members of its team who are the go-to facilities technicians who help improve production inefficiencies that are seen as slowing down the line and affecting operational costs.

    However, a truly competent contract manufacturing partner will also possess the expertise necessary to work with your brand’s R&D or quality team to improve product stability, reduce the dependence upon overages to meet label claims, and beneficially impact the bioavailability or consumer experience of your product.

    If a contract manufacturer doesn’t employ such process engineers, then make certain your co-packer’s R&D and operational teams possess the necessary skillsets to provide the same level of service and support. For example, Ms. Hobayan explained that at Glanbia “our scientists consider many factors, including ingredient interactions, processing conditions and stability. Our process engineers can validate the process to ensure we can achieve the same results every time we produce a batch.”

    Tip 11: Choose a contract manufacturer that supports your innovation needs.
    Even if you consider yourself the world’s best formulator and researcher, it’s still a wise decision to work with a contract manufacturer that is staffed with scientists capable of serving as an extension of your brand’s own R&D team. Two caveats, though. First, if a co-packer claims to be able to provide turnkey formulations, then that manufacturer should also be expected to provide the substantiation materials required under FDA and FTC guidelines for structure/function claims and to support the product’s effective and safe use.

    Second, ask that the scientists and product development staff of your contract manufacturer aren’t providing the same such support to your direct competitors. The latter may be difficult to ensure if your contract manufacturer is relatively small and has many customers within the same industry, or if it has its own private label that competes against your brand. However, even if such potential conflicts do exist, ask how your contract manufacturer can ensure that ideas you provide that are specific to your brand’s projects won’t cross-pollinate into its own brand, or other brands you compete against.

    Tip 12: Choose partners thatsupport trade and research associations.
    Ask a potential contract manufacturer if it is an active member of the Council for Responsible Nutrition (CRN), Natural Products Association (NPA), United Natural Products Alliance (UNPA), American Botanical Council (ABC) or the American Herbal Products Association (AHPA).

    Does the contract manufacturer support dietary supplement safety and efficacy research, or is the co-packer a supporter of the International Society Of Sports Nutrition (ISSN) or similar associations specific to the advancement of dietary supplement research? Contract manufacturers and suppliers that aren’t actively supporting trade groups, research and dietary supplement research associations aren’t contributing to the growth and legitimacy of the industry.

    An Industry On Notice
    Dietary supplements are firmly in the spotlight of regulators and enforcement agencies.

    In March, U.S. Attorney General Loretta Lynch delivered a televised address that was critical of dietary supplements, particularly of products and companies that compete within the sports nutrition category. She cited specific examples of criminal charges brought against at least one company to highlight her message: The Department of Justice will begin taking serious action against companies that fail to follow consumer protection laws.

    This occurred after New York Attorney General (AG) Eric Schneiderman publicly accused four of the industry’s largest retailers—GNC, Target, Walmart and Walgreens—of selling adulterated botanical ingredients. Each retailer received a cease-and-desist letter that demanded they immediately discontinue selling the specific products that the AG’s office deemed a consumer safety issue. With less fanfare, the manufacturers of the products in question received subpoenas demanding full disclosure of their quality control procedures.
    These events occurred on the heels of considerable focus at hearings of the U.S. Senate Special Committee on Aging where Senator Claire McCaskill (D-MO) communicated her desire to see increased enforcement against the dietary supplement industry. 

    In response to marketplace demand, the FDA created the Office of Dietary Supplement Programs in late 2015, which effectively raised the profile of dietary supplements within the agency and allows for greater government resources to be allocated to focus on the dietary supplement industry.

    Additionally, a coalition of state AGs has since formed, with a stated objective to target dietary supplement companies, and the FDA is requesting a $109.5 million increase above its 2015 funding for the Food Safety Modernization Act—a bill that was signed into law in 2010, but has yet to be fully implemented because of a lack of funding.

    These recent events should cause all brands and contract manufacturers to take notice. A brand’s best chance to survive, and thrive, will be to stay ahead of the regulations and navigate alongside companies that are already at the forefront of quality assurance.



    Chris Lockwood is president of Lockwood, LLC, a consulting and innovations firm based out of the Salt Lake City, UT, area. He may be contacted at Chris@DrChrisLockwood.com, by phone at 805-279-3581, or through his company website (www.DrChrisLockwood.com). 
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