The Price of Dietary Supplement Contract Manufacturing

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Given the events of the past year, contract manufacturers in the supplement industry could be forgiven for asking if theirs is a glass half full or half empty. On one hand, they’ve never been more vital to the category, as a growing class of health-conscious consumers send global supplement sales skyrocketing up at a 50%-faster rate than those of over-the-counter-drugs during the 2009–2014 period, per market research firm Euromonitor.

On the other hand-and in no small part thanks to that vitality-contract manufacturers (CMs) are feeling much the same heat as their more-visible marketer partners when lapses in product quality, identity, or safety arise. And arise they have, prompting everyone from regulators at FDA and the FTC to attorneys general and even the Department of Justice to intensify their scrutiny of supplement brands-and, by extension, the manufacturers behind them.

Which got us thinking: What do CMs have to say about the state of the industry’s reputation, their contribution to it, and the rules that tie it all together-the supplement-industry current good manufacturing practices (cGMPs)? As Shaheen Majeed, marketing director, Sabinsa Corp. (East Windsor, NJ), puts it, “There are some very good companies making quality products and adhering to the GMPs, and there are others making abysmally bad ones that do nothing to comply.” Whether that signals a glass is half full or half empty, “It certainly has been an eventful year,” he says.

Current Events

Among the more notorious events in the U.S. was the sting operation led by New York State Attorney General Eric T. Schneiderman, which called into question the compositional authenticity of major supplement brands and led him and chief law-enforcement officers from 13 other states to demand a Congressional investigation into industry practices. Then there were the multiple warnings FDA issued to companies marketing pure powdered caffeine, for example, or products containing beta-methylphenethylamine (BMPEA), an amphetamine-like stimulant the agency doesn’t recognize as a dietary ingredient.

And don’t forget the steady drumbeat of news casting doubt upon the very wisdom of supplementation. While Eugene Ung, executive vice president, Best Formulations, (City of Industry, CA), thinks “it’s too early to tell if there will be a negative impact from this press,” industry members-even those who’ve heard the allegations before-remain on guard. Notes Marc Ullman, counsel, Rivkin Radler (Uniondale, NY), “The constant negative press remains concerning. To date, the supplement industry has been pretty ‘Teflon,’ but at some point, odds are something’s going to stick.”

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Shared Responsibility?

When it does, it’ll splatter on everyone’s pan, as adherence to GMPs is the responsibility of all links in the production chain. “The supplement cGMPs don’t differentiate between a contract manufacturer and a marketer/brand owner,” says Scott Langston, quality systems manager, Innovative Food Processors Inc. (IFP; Faribault, MN). As 21 CFR 111.1(a)-the section of the Code of Federal Regulations that spells out the guidelines in the U.S.-makes clear, “anyone who manufactures, packages, labels, or holds dietary supplements must follow the cGMPs,” he says.

But though all parties bear responsibility, they don’t all bear it equally. Just ask a CM.

“They rarely have their names on labels,” says Steve Mister, president and CEO, Council for Responsible Nutrition (CRN; Washington, DC), yet CMs “have a great deal of accountability for how quality supplements are produced.”

Some argue they have the lion’s share. As for why, credit-or blame-the outsize role that CMs now play in supplement production, as well as the fundamentals of contract manufacturing itself.

“As GMPs were phased in,” Mister explains, “we saw their position in the supply chain strengthen as many smaller firms recognized that their expertise lay in marketing products, not in manufacturing-leaving that task to sophisticated contract manufacturers who could aggressively implement the GMPs.”

Thus, responsibility for everything from raw-materials testing and supplier qualification to process documentation and records maintenance now often falls to the CM.

Leveling the Playing Field

This frustrates some in industry. “The CM is the natural link between the ingredient suppliers and the brand owners,” Ung says. “But suppliers and brands have their own GMP responsibilities.” He believes that as the GMPs began rolling out in 2007, “the burden sat squarely on the shoulders of the manufacturers.” Meanwhile, brand owners and ingredient suppliers “weren’t taking the GMPs as seriously, pointing to the CM as the one with the GMP responsibility,” he says.

It’s no surprise that “we didn’t think this was fair at all,” Ung continues. Neither did other CMs. As Majeed notes, “FDA’s final guidance for GMPs left ingredient quality and vetting of suppliers to the manufacturers, and we’ve seen the inevitable outcome in the form of a wide range of quality.” Not only does this redound to the detriment of the entire industry, he says; “it’s just not fair. It works against having a level playing field when the supply end has such an incredibly wide range of quality.”

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Test Early and Often

Until that field levels, CMs say to test early-and often. Steve Holtby, president and CEO, Soft Gel Technologies Inc. (Commerce, CA), has also witnessed the disinclination of some ingredient distributors to conduct even minimal baseline testing-“in which case, we’d perform or arrange for the testing ourselves.” That increases the challenge of supplier qualification “because raw-ingredient suppliers aren’t held to the same regulations as supplement manufacturers,” he says.

The question he believes industry must ask is how much responsibility the CM should assume for testing. “Some contract manufacturers still rely almost solely on the supplier’s stated results on a certificate of analysis,” he says. “However, it’s vital that contract manufacturers develop their own protocol for testing and qualifying individual batches of raw materials, as they carry a good chunk of end-product responsibility.”

As for the brand marketer’s burden, “Ultimately, the one with the name on the bottle-the seller-bears the responsibility to ensure that the product being sold meets label claims and is safe,” Ung says. “The seller is responsible to have their own quality systems in place to verify that the manufacturer is compliant. Gone are the days when sellers would simply say, ‘Ask the manufacturer. They made it.’”

Exercising Accountability

Ung contends that this is a sign of industry’s evolution. As FDA continues to bring more guidance actions against branded companies, “it’s become clear to brand owners that they indeed have accountability in the GMP regulatory process,” he says. So what further advice would he and other CMs share with their brand-owner partners?

Ung suggests that marketers “develop product specifications, take quality agreements seriously, and understand that CMs aren’t trying to shift responsibility, but are trying to be clear on the expectations so that everyone’s on the same page.”

Majeed beseeches brands “to understand that a quality product requires investment”-an easy point to forget when focusing on the bottom line.

“Talk to your CM about the claims you’re looking to make, labeling issues, what ingredients you’d like, and why they’re important to you. Get a competent legal opinion about marketing claims that can be made, and be wary of saving a few dollars by using generic,” he says, adding that doing so can weaken product quality and infringe upon patents.

Also read: What Does Contract Manufacturing Dietary Supplements Cost?

Holtby stresses transparency and frequent auditing of CMs-“at least annually, if not more often. Some of our customers require us to undergo periodic internal and third-party audits to confirm GMP compliance.” Far from bristling at this, CMs should welcome their customers’ engagement. “Not only can you learn from audits, but they allow customers to see directly what is and isn’t being done properly.”

He also encourages brand partners to inspect batch records and ingredient certificates of analysis, and he doesn’t mind when they inquire about testing procedures. “More marketers are now documenting their own requirements for testing protocols,” he says. “A contract manufacturer that communicates with the marketer and is open about procedures has a huge advantage, as doing so takes guesswork and liability out of the GMP-responsibility equation.”

Nevertheless, Ung reminds brand owners that testing and quality assurance aren’t free. “These are costs that are important for building trust with the consumer,” he says. And notwithstanding the inevitable inefficiencies that come with any regulated production process, “We work with our vendors and customers on a continual basis to open the lines of communication to try to work out these inefficiencies.”

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Cleaning Their Own House

To Holtby, the keyword is proactive. CMs should clue their partners in to the importance of the GMPs’ stipulations. What’s more, “It’s important to have formal training programs in place to ensure that your own personnel have a thorough knowledge of GMPs and SOPs and follow them.” As for recordkeeping, documentation, certifications: it’s a given that they all “need to be maintained for traceability,” he says.

IFP’s Langston says his company “has had a robust supplier-qualification and assurance program in place for some time” and “walks our brand-owner customers through a standard quality agreement to ensure alignment of expectations on the quality standards that apply to the product at hand.” The earlier they start that alignment, he says, “the easier it is for both parties to qualify the product and share in their commitment to regulatory requirements.”

And if either party has any questions, industry organizations are there to help. “Initiatives such as the SIDI Work Group are important in creating voluntary guidelines for industry to support standards across the entire supply chain,” Langston says. “As members of CRN, we’re actively engaged in setting these guidelines and are looking forward to wide adaptation, which will significantly streamline the ingredient-qualification process.”

So maybe the glass is more than half full. Ung seems to think so. “It’s certainly fairer today than in 2007,” he says of the balance of GMP responsibility. “Companies in this industry for the long term have a reputation to protect and consumers to grow, so there’s a vested interest in doing the right thing and working together.” That’s a full glass we’ll take.

Also read:

What Does Contract Manufacturing Dietary Supplements Cost?

Should FDA’s Dietary Supplement GMPs Include Ingredient Suppliers?

Suppliers and Manufacturers Must Cooperate in Regulatory Compliance

Dietary Supplements and FDA Compliance: A 2015 Update on GMPs and 483s