CMO Management Throughout the Lifecycle
Developing a process for working with providers
By Nelson M. Lugo
Contract manufacturing provides a clear competitive advantage to many biopharmaceutical and traditional pharmaceutical organizations that do not have the time, capacity and Resources to operate internal manufacturing activities. A vast majority of these firms do not have internal manufacturing capacity to produce the multitude of products expected in the market in the next decade. To this end, pharmaceutical firms must rely on and work closely with CMOs. Our primary objective in this article is to introduce the reader to the relationship lifecycle process and how those relationships are established and maintained. This process helps improve the overall performance and reliability of the supply chain program. It increases collaboration and improves relationship management practices with strategically important CMOs. For Amylin Pharmaceuticals, we use the designation of Contract Services Provider (or CSP), as the process is applicable across all providers of contract services, not just for CMOs. This includes contract organizations for clinical production through the development phase, as well as contract laboratory service providers.
The discussion will cover at the structures and governance attributes that will set the foundation of the CMO relationship, or in our case the CSP relationship lifecycle. It will introduce the concepts of Site Management Teams and Relationship Steering Committees. We will also look at the tools and templates vital to continued management of the organization.
The CSP Lifecycle process incorporates multiple stages that set the framework for continued relationship management. The steps and stages that will be covered include:
- The Stages
- The Teams
- Governance Process
- Stage 0 Plan
- Stage 1 Select
- Stage 2 Negotiate
- Stage 3 Implement
- Stage 4 Manage
- Expected Deliverables
As an introduction to the process, the relationship uses a single management framework for the lifecycle associated with Contract Manufacturing Organizations. Business Develop-ment, Legal, Operations, Product Development, and Quality worked together to create this framework. Consequently the Lifecycle is a superset of all of the associated pieces. No one project, product or CSP relationship will utilize all of the associated steps, templates, etc. Users of this Lifecycle need to treat it as it was intended: it is a guide, not a procedure. Managers who use this Lifecycle will need to apply their judgment as to how best to apply it to the unique needs of each related initiative. The steps within the Stages that are not relevant should be deleted from related project presentations. Similarly, content within the associated templates will need to be used with discretion. Users of the process need to provide feedback on the framework, its steps, templates, etc., to enable ongoing improvement and evolution.
Golden standards need to be selected to add to the guidance provided by this presentation and the associated templates. Figure 1 outlines the CSP Lifecycle stages. The details within each individual Stage shown are important to each stage but will not be analyzed here as they are beyond the scope of this general discussion.
Stage 0 is the organizational stage for the Portfolio management of the CSPs, with particular emphasis on the initiation of CSP selection activities and teams. Stage 1 incorporates the selection process of a new CSP (or the evaluation of whether an existing CSP can provide new services). At Stage 2 we begin to define the relationship between the company and a CSP. The negotiations of the legal agreements and contracts are preformed, as is the development of quality agreements. In Stage 3 implementation and qualification of the new services begins. Development of a Joint Services Document (JSD) is initiated here. We will discuss JSDs in more detail later in this article. The final cornerstone of our CSP structure is Stage 4 where the ongoing CSP management process continues throughout the relationship lifecycle.
One of the key components to ensure that the process is successful is organizational buy-in and acceptance. Without a clear commitment by all internal parties involved, the process will not take root or if started remain sustainable. Ownership and influence by the appropriate company leads is critical for success. For this reason the CSP Lifecycle has been organized around five teams (see Figure 2).
First, the CMC Portfolio Team will maintain the long-range CSP plan for Product Development activities and will initiate and guide related CSP selection activities. They also maintain a time-phased view of Product Development’s CSP requirements. These are based on the current product development pipeline, for example related compounds, delivery technologies, packaging configurations, etc. In addition, capacity requirements are investigated as well as schedule and resource plans for all of the associated deliverables. The Master Services, Development and Feasibility Agreements, Requests for Proposals, complex Work Orders, Joint Services/Development Agreements are managed in the process. Third party CSP alliance plans are reviewed. These include three- or four-year plans for each CSP based on the company’s requirements and the CSP’s performance (flexibility, lead times, quality, cost, skills, etc.). Finally the CMC Portfolio Team will review and approve the recommendations of (Product Development) CSP Selection Teams.
The Operations Portfolio Team will maintain the long-range CSP plan for Commercial Operations and will initiate and guide those related CSP selection activities in the commercial space. This team maintains a time-phased view of the sponsor’s commercial product presentation for both clinical and commercial supply CSP requirements. The team’s guidelines are based on the commercial supply plans and the late-stage product development pipeline for related compounds, delivery technologies, and packaging configurations. They are also interested in capacity requirements and the schedule and resource plans for all of the associated deliverables. Here Supply and Quality Agreements, Requests for Proposals (RFP) and Joint Services Documents are reviewed. As with the CMC Portfolio Team the Operations Team is also interested in any third party CSP alliance plans, three- or four-year plans for each CSP based on the sponsor’s requirements and the CSP’s performance (capacity, lead times, quality, cost, skills, etc.). The Operations Portfolio Team reviews and approves the recommendations of (Operations) CSP Selection Teams.
The CSP Steering Committee is one of the core and more influential teams in the CSP relationship process. They approve CSP implementation plans. The team oversees the relationship through senior management oversight from the sponsor and CSP. It reviews the performance plan on an on-going basis via quarterly (or at a minimum bi-annual) meetings. Company and CSP performance metrics are agreed upon, carefully reviewed and discussed at the scheduled meetings.
The CSP Governance and Selection Teams are organized around specific CSP selection initiatives (see Figure 3). The CSP Implementation Teams manage the implementation and qualification of the new CSP service(s). The CSP Management Teams manage the ongoing CSP relationship and related services. These teams will be cross-functional and cross-enterprise with sponsor and CSP employees involved on an on-going basis. The sponsor’s Site Manager will be selected in our Stage 3, Implement phase. Typically the Site Manager for the CSP will lead the Implementation Team. The Site Manager will work with the associated functional organizations to identify Core and Extended Team members. The Core Team meets as needed to monitor the performance and related activities of the CSP. The Extended Team members will contribute on an as needed basis.
Note that the composition of CSP Management Teams will vary. Most CSP Management Core Teams will have one or more individuals representing cross-functional disciplines from the sponsor, including CSP site management, Technology/Science (for Product Development CSPs), Quality, Supply Operations / Capacity Management and Service Scheduling. Additional disciplines will be represented on the Core or Extended Teams on an as needed basis. These may include Regulatory, Technology / Science (for Operations CSPs), and Information Technology. The sponsor’s Site Manager will be responsible for the associated planning and communication activities, interaction with various sponsor functions and the CSP Steering Committee and timely involvement of Extended Team members.
There are two relatively new types of documents that are intended to fulfill a significant role in the CSP Lifecycle. The first of those are Terms Sheets. They are used to facilitate a meaningful and rapid negotiation of contractual terms prior to their codification in the associated legal agreements. The Terms Sheets are used for Master Services Agreements, Development Agreements, Feasibility Agreements, Testing and Services Agreements, Supply Agreements, and Quality Agreements. They play a pivotal role in getting through the legal obstacle course of terms and conditions to the final agreed form.
Joint Services Documents (JSDs) are used to define the day-to-day working relationships required to implement the CSP services. The key requirements will be contained in the aforementioned agreements > “The What”. The means by which the key requirements will be implemented will be defined in the JSDs > “The How”. It takes us through the process of who, what, when, etc. It captures the process details, metrics definitions, the CSP’s and the sponsor’s contacts and related roles and responsibilities for both parties. Some key details will be copied from the agreements into the JSD for efficient and regular access and use. The JSD is a living document agreed upon by the sponsor and the CSP that facilitates the implementation of the Commercial Supply and Quality Agreements (the legally binding documents). Different companies refer to this instrument under varying names; some use the term, “Manufacturing Requirements Document” (MRD) or “Joint Services Agreement (JSA).” A recent article referred to a similar document as a Joint Operating Procedure (JOP)1. Some companies do not like to use the word “Agreement,” as it may be construed as legally binding.
The goal of this document is to coordinate and manage the exchange of information, the movement of materials and documents, the resolution of issues, and the ongoing evaluation of performance of the CSP. The purpose of this JSD is to explain how the company and CSP will work together to manage the logistics of the relationship. This document is intended to serve as a reference manual (or playbook) that describes the specifics around who, what, when, and how of the day-to-day interactions. The JSD is written recognizing that both parties will want to regularly review the document to ensure that it is keeping current with business needs and conditions. The Site Management Team owns the JSD and will be responsible for updating the document. In the event of conflict between the JSD and the Commercial Supply or Quality Agreements, the Agreements shall prevail over the terms of the JSD.
JSDs will enable the sponsor to utilize a two-tiered structure for working agreements with CSPs. First, the Business Contract and/or Supply Agreements are legal and binding documents. They address financial, ownership, and critical strategic issues. Amendments often require lengthy, difficult negotiation and executive signatures. The purpose is to manage the business risk and to protect each partner’s intellectual property, financial, and market interests. The Joint Services Documents/ Agreements, on the other hand, address the logistical issues of the relationship: organization, communications, issue resolution, etc. These agreements are easily amended as required, with some sections delegated to middle or junior managers. Again, the overall purpose is to facilitate and manage the day-to-day interaction between business partners.
Firms will continue to approach and use outsourcing organizations to expedite internal programs and to handle ongoing commercial needs. The approach and relationship is simply not as clear as a “fee for services.” It’s a partnership and it needs to be recognized as such from the beginning and managed appropriately throughout the lifecycle of the relationship. For it to succeed it must be fully embraced by both parties. The CSP Lifecycle Process is another tool to achieve that success.
1 Todd Applebaum; Getting the Most from Your CMO Relationships: A Life Cycle Approach, International BioPharm, July 2006