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Contract manufacturing and GMPs: What does quality cost?

Contract manufacturing and GMPs: What does quality cost?
Today’s contract manufacturers have a bigger role to play in your success than ever before. GMP requirements mandate enhanced ingredient-testing protocols that add to the burden of rolling out new products. Here's why it's worth the price.

Contract manufacturers are a vital link in the chain of consumer packaged goods in the nutrition world. From supplements to beverages, contract manufacturers help entrepreneurs bring products to life—without the overhead or the headaches.

The latest way that contract manufacturers are helping bring products to market is by staying abreast of Good Manufacturing Practice (GMP) regulations.

“This isn’t like the old days where you called somebody up and said you need 50,000 vitamin C tablets and you need them next Thursday. This is a whole new world,” said Mark LeDoux, chairman and CEO of Natural Alternatives International, a contract manufacturer in San Marcos, Calif. “GMPs stand for a lot of things, and one of them is Get More Paper. If you didn’t have it written down, it didn’t happen.”

All that paperwork is not for nothing. It’s to help vouchsafe the quality of nutritional ingredients. In today’s global supply world, it’s more important than ever to check and double-check to ensure that what’s on the label is what’s in the bottle. And that comes with a price.

“It costs quite a bit more to be GMP certified,” said Shabbir Akand, vice president of sales and marketing at NHK laboratories, based in Santa Fe Springs, Calif. “Testing costs have to be passed on to the unit cost of a product. It could be a 20 percent jump because of required testing.”

Shelf-life testing and rising costs

An example of the testing that’s now the rules of the road, Akand said, is shelf-life testing. Previously, there was no formal way of providing an expiration date on the bottom of the bottle of supplements. FDA now requires contract manufacturers to show stability data.

“That’s one of the toughest ones. Shelf-life testing is costly—whether you do it in an accelerated fashion with a stability chamber that modifies humidity and temperatures to mimic a time frame, or whether you do it in real-time,” said Akand. “Clients today ask why they have to pay for it when there didn’t seem to be a problem with it before. They don’t understand the testing that’s now required. This is where the little guy more than a big guy feels it. If someone is only buying or selling 1,000 bottles a year, this is quite a big cost on a unit cost [basis].”

The cost issue is seconded by Shaheen Majeed, marketing director at Sabinsa, a contract manufacturer and supplier with facilities in India, Utah and New Jersey. “Today everything is required to be tested so prices have gone up,” he said. “We’re spending more time not just justifying the price per thousand bottles, but telling clients it’s part of GMPs. It’s the biggest thing we’re facing today, and customers don’t get that.”

A strategy to cope with rising costs is volume buying of ingredients. This “can spread the cost of testing for incoming raw materials across a broader base,” said David Wood, CEO of Captek Softgels International, based in Cerritos, Calif. “Larger production batch sizes can minimize the cost per thousand bottle on finished material bulk testing.”

The costs and benefits of contract manufacturing


The story with a Certificate of Analysis was summed up by Ronald Reagan: Trust, but verify. The FDA does not mandate a specific test to verify ingredient identity, just that you have to have one, and that it be appropriate for its use.

“Your test doesn’t have to be the same for every ingredient, but it has to say why you chose this test for that ingredient,” counsels attorney Marc Ullman of the New York law firm Ullman, Shapiro and Ullman. “If you tell the FDA that you got a C of A from my supplier in China and that’s my identity verification, that doesn’t work anymore.”

“If that’s all you’ve got, you’ve just given the federal prosecutor Exhibit A in your prosecution,” seconds LeDoux. “C of A’s are nice to have, pleasant to read, and worthless in terms of identity validation. You must identify materials. How you do that is up to you—wet chemistry, nuclear magnetic resonance imaging, infrared spectrometry—something.”

“The question to the manufacturer is how to do it—either front-end testing or take a chance to test the finished product,” said Akand. “There are costs either way.”

LeDoux said that FDA Warning Letters have all been consistent. Primary points of failure include a failure to set up master batch records, failure to do inbound testing and failure to test the finished product.

“If you’re going to make a cake you have to know what’s in it. What’s the recipe?” said LeDoux. “You made cookies, did you check to make sure people won’t get heartburn somewhere? That’s what the agency is checking.”

Adulteration liability

Another factor that’s pushing prices up is the issue of adulterated ingredients. So-called economically motivated adulteration happens all too often. You know it’s happening to you if you get a deal on an ingredient that’s maybe 40 or 50 percent less expensive than other bids.

“Adulterants or contaminants coming from overseas is definitely an issue,” said Akand. “We ourselves have a protocol to test for adulterants or contaminants to look for. FDA has a basic list for raw materials to make sure products are free from adulterants or contaminants. And all manufacturers have to have insurance.”

“It becomes our problem because once we make it for a marketing company, even if we don’t know if it’s a steroid, that’s still our responsibility,” said Majeed. “It’s both a burden and a responsibility.”

Contract manufacturers ought to now be expert in everything from document preparation to testing. But the responsibility—and liability—does not rest solely with the contract manufacturer.

“I’m always amazed when I discover that a customer has no procedures in place for incoming finished product receipt and approval,” said Lisa J. Clark, vice president of business development at Captek. “Many are not doing independent outside testing, they are not tracing lots to customer or distribution—it’s an important component if a recall becomes necessary.”

Going beyond GMPs

Responsible contract manufacturers have long served the responsible dietary supplement industry with quality manufacturing protocols. Many contract manufacturers were already abiding by GMPs, from the likes of third-party certifiers  like NSF or NPA, long before the FDA came out with its official rules. That was a tidy marketing angle—that they were GMP-compliant before it was cool to be GMP-compliant. Now that everybody has to be up to snuff on GMPs, these contract manufacturers are looking at ways to stay a step ahead of the competition.

For NHK Labs, it means providing clients with regulatory and market trends to help them be prepared and grow their business. Examples include information on how to get registered in other countries, how to navigate the specter of an enhanced NDI protocol system courtesy of the FDA, or answering questions about the latest issue du jour: dry labbing.

Captek offers full dossiers for submission to regulatory agencies around the world, with a particular expertise in helping export products to Canada.

For others, pre-mixes or custom formulations give partners something to work with. Sabinsa’s new bi-layer tablet system provides an aesthetically pleasing way to combine ingredients, as well as a range of premixes that combine nutrients with different release profiles.

So whether you’re a marketer with a ready-made idea and just need someone to actually produce your product that passes the shifting goalposts of regulatory mandates, or are looking for a partner to provide you with a turnkey innovation that you can call your own, today’s contract manufacturers can get you to stand out in the market like never before. 

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