Ask most business leaders what they lie awake at night and think about and I suspect most will answer customers, sales and cash flow. I wonder how many toss and turn worrying about suppliers.

Get the right supply chain and it can supercharge your products and your business. Get it wrong and your entire world can collapse. To avoid that calamity we have vendor oversight. That innocuous phrase that can mean success or failure; the difference between protecting patients and putting them in harm’s way.

Vendors are a risk. In very simple terms, when you appoint a vendor, you are putting your trust in someone else’s hands. More importantly, you are putting your patients’ safety in the hands of someone else.

Take for example the major recall of heparin in March 2008. An increase in the number of recorded adverse reactions, including deaths, following an injection of heparin, led to a major FDA investigation.

The investigation led back to an API manufacturer in China. The FDA identified a contaminant that had been missed using the usual analysis procedures. The substance in question was an oversulfated derivative of chondroitin sulfate (OSCS). As this is not a naturally occurring molecule, it costs a lot less to produce and procure than natural derivatives.

The investigation concluded it is possible that the contamination was a consequence of cost-cutting initiatives and a shortage of suitable pigs in China. Furthermore, the FDA found several breaches in compliance and contamination of heparin further down the supply chain, relating to inadequate processing and testing.

Lives were lost. Lives were destroyed. Companies failed. All because of failures in supply chain and the apparent lack of vendor oversight. The impacts rippled across the industry. Other producers of heparin became legally obliged to introduce new test methods and conduct further risk assessments. For a period there was a worldwide shortage of this vital product.

Examples like this make you think. Behind all the qualification and routine audits, the technical and commercial agreements, comes the cold hard reality; poor vendor oversight can cost lives.

This reality has always been there. It presents real challenges to quality professionals. Those challenges are only getting bigger. The pharmaceutical supply chain heavily relies upon vendors, regardless of the size or span of the organisation. With the demand for medicines rising. With products becoming ever more complex, there is one overarching trend. Supply chains are growing increasingly complex.

With the above in mind, let us now go back to basics. Vendors can include:

  • Manufacturers of APIs, excipients and raw materials
  • Manufacturing and packaging contractors
  • Contract laboratories
  • Packaging component manufacturers
  • Service and software providers
  • Consultants

The bigger the supply chain, the bigger the risk. This is especially the case for large, multinational businesses. The manufacturer of a product is held legally accountable for meeting regulatory standards. That organisation is held responsible for the sourcing of vendors. It is their responsibility to ensure they are operating within, and in compliance to, industry regulations.

In large organisations vendors can consist of a multitude of suppliers. Having and checking against predetermined criteria is essential. It is vital to maintain high standards and consistency.

Health authorities clearly expect companies to evaluate all suppliers in line with regulatory standards. Most importantly is the need to show robust evidence of that evaluation, backed up with risk assessments and a documented consideration of key issues. Short cuts are the road to ruin.

Vendor oversight does not stop with the initial qualification. Standards cannot slip once someone is appointed. The need for vigilance is constant. How you oversee your specific vendors will be informed by regulatory standards but also your own commercial policies and professional opinion – however, you would be well advised to follow Quality Risk Management principles. No two vendors are alike.

With the rigour also comes the need to be mindful of competing interests and conflicting priorities. Selecting and overseeing vendors will be shaped by the old maxim of the Project Management Triangle: you can only pick two out of cheap vs fast vs good. If you want a supplier to be good, you often have to compromise on speed or price. Getting used to that reality will help to avoid frustrations and problems down the line.

Vendor oversight is not limited to the manufacturing environment. It also applies, perhaps even more so, in the world of wholesaling and distribution. One key risk to wholesalers when using suppliers, is falsified medicines entering the supply chain. This is in an age where falsified medicines are becoming increasingly sophisticated in a burgeoning marketplace.

Huge campaigns have been launched in recent times by the MHRA, highlighting just how many falsified medicines are out there and how hard they are to spot. The more vendors you use; the longer the supply chain; the harder it is to pinpoint where falsified products can potentially enter the supply chain. The importance of vendor oversight cannot be understated: knowing and trusting your vendors is what protects patient safety and your business.

In line with promoting oversight, the MHRA are due to implement some key changes to further minimise potential risks. In 2019, all products will be required to contain a unique identifier (a 2D data matrix code and human readable information) to be placed on medical products that can be scanned at fixed points along the supply chain. Also, tamper evident features will need be included on packaging. In other words, traceability, accountability and responsibility are key.

That is a lot to consider. What are the key issues that really must stick and play on your mind when thinking about vendor oversight? Firstly, focus on the bigger picture and the reality of outsourcing. You are placing your patients’ lives and your company’s life in the hands of a third party. Secondly, vendor oversight is not a short-lived experience when you are looking to qualify and appoint a third party provider. Vendor oversight is for the long-term. Do not be intimidated by this reality. With responsibility comes opportunities. Some of the world’s most successful companies know the key to success is having the best possible supply chains.


This article is published in the Oversight edition of Quasar.