How Have Dietary Supplement GMPs Affected Contract Manufacturing?
It’s been nearly a year since the final stage of dietary supplement Good Manufacturing Practices (GMPs) kicked in, for small companies with fewer than 20 employees. Companies of all sizes that manufacture, package, label, or hold dietary supplements must now operate under FDA’s GMP requirements for supplements.
For contract manufacturers prepared for such change, this hasn’t been alarming. “At GMP Labs, we have a culture that is founded on quality,” says Suhail Ishaq, president of GMP Laboratories of America Inc. (Anaheim, CA), which contract manufactures capsules, powders, tablets, and liquids. “GMPs are part of our DNA, as exemplified by our founder, Mo Ishaq, who [started the company] based on the principles of GMPs. Coming from the pharmaceutical field, he was familiar with GMPs far before most people in the dietary supplement industry became aware of them. Some companies have encountered difficulties in accommodating these [new GMP] requirements, as they are more strict than the previous regulatory framework set in place by DSHEA [the Dietary Supplement Health and Education Act].”
Inevitably, however, the GMPs have created some necessary, permanent changes for all in the way contract manufacturing works.
Thanks to the GMPs, contract manufacturers and their supplement marketer customers must work more closely together than ever before. Although contract manufacturers may often bear the direct brunt of GMP responsibility-depending on whether a supplement marketer packages, labels, or holds its own product-marketers share responsibility for ensuring their products are being produced in compliance.
“Contract manufacturers are working much closer with their customers,” says Eugene Ung, CEO of contract manufacturer Best Formulations (City of Industry, CA). The company is not only third-party GMP-certified by both the Natural Products Association (NPA) and NSF International (NSF), it has also been FDA drug-licensed since 2000. It manufactures soft gels, tablets, capsules, teas, powders, probiotics, and liquids.
“Both groups understand that responsibility needs to be shared, and this has helped us create stronger bonds with many of our customers,” agrees Steve Holtby, president and CEO of Soft Gel Technologies Inc. (Los Angeles).
This includes sharing information. “There is a lot of education flowing from the manufacturers to the customers to make sure everyone is on the same page,” says Ung. “We are now explaining issues like the need to use or increase overages, the differences between area percent and weight percent, testing methodologies, etc.”
Cooperation with ingredient suppliers has also risen. “We’ve often found the need to request more-extensive specifications and verification of results from raw-material suppliers,” says Holtby. “In cases where the raw-material manufacturer is unwilling to or cannot change its specifications, we often need to perform the extra testing ourselves, which both increases costs as well as turnaround time for our customers.”
“You simply can’t rely on a certificate of analysis (CoA) from a supplier anymore,” Ung points out.
Supplement companies have had to be understanding of how GMPs now affect costs and timing. Lead times and costs have increased due to enhanced incoming and outgoing testing requirements; higher traceability and documentation requirements; not to mention inflation in general, stemming from rising fuel and agricultural costs.
“Supplier pricing has increased noticeably during the post-GMP implementation era,” says Ishaq. “Manufacturing times have increased due to new quality-control test requirements, and staff are now more involved with providing and documenting details of our on-site quality systems due to increased documentation requirements.”
“Obviously, with the more stringent requirements of the GMPs, testing on a whole is more comprehensive and time-consuming than before,” says Holtby. “However, it is not just the effect of the GMPs themselves, but also other systems, such as California Proposition 65, that add to testing times and cost.”
To alleviate these spikes, contract manufacturers have been looking for efficiencies where they can. For instance, Ung says that Best Formulations has been trying to bring as much testing in house as possible to reduce turnaround times.
Customers are also trying to make adjustments on their end. “Pre-GMP, batch sizes were usually smaller so customers could control inventory better,” says Ung. “We have noticed recently that as several companies have begun to understand the true cost of GMPs, they have increased their batch sizes to help spread the cost of GMPs over a larger quantity. For example, if a customer orders 12 times per year, that’s 12 times that they have to receive that item into their system, do the product testing, verify CoAs, etc. These hidden costs can add up. If they can reduce the ordering to six times, or even three times per year, there can be significant cost savings, for both the manufacturer and the customer. Those savings can be shared, so it’s a win-win situation.”
On the whole, customers have been understanding that things like increased costs and lead times are necessary. “The majority of our customers are very understanding of the various price increases that the GMPs have directly or indirectly affected,” says Holtby.
“We’ve seen a shift in prioritizing quality over pricing in the past year,” agrees Ung. “During the pre-GMP period, there may be customers that were solely price driven. True quality concerns were way down on their list, and it was hard for us to compete solely on price because we had quality infrastructure and costs that other manufacturers did not have. Now, customers looking to be in industry on a long-term basis are seeking companies that have a strong commitment to quality.”
Despite what is hopefully enhanced communication between everyone in industry, there are still some areas where more clarity is needed.
“The GMPs have certainly presented a number of challenges to the industry, in the sense that different companies are interpreting the GMPs differently,” says Ung. “The GMPs are very gray. Some of our customers have interpreted the GMPs quite differently than we do, which results in standard operating procedures that may be contradictory, forcing us to have additional resources to honor their requests.”
For instance, because the GMPs don’t mandate what types of tests are required-only requiring that tests be validated-“testing is evolving depending on how companies are interpreting the GMPs,” he says.
However, he hopes, “As GMP compliance matures and there’s more agreement within the industry on what tests are accepted, I think we’ll see more drastic improvements in the testing systems, capabilities, and efficiencies. Once a standard is more or less set, then companies can begin to make that standard more efficient. As the regulatory climate matures, we hope that there will be more continuity in the way the GMPs are interpreted so most companies can operate their quality groups in similar manners.”
Moreover, Ung points out, FDA has some learning to do. “Even FDA officials have slight differences in how they are interpreting the regulations, which makes it a challenge to keep everyone compliant.”
Case in point, Ung describes a recent FDA audit of his company: “We are regularly visited by FDA, since we also have a drug license. In our last visit, FDA came in with two inspectors-one to do the drug audit, and the other to do the dietary supplement inspection. The experience was quite interesting, to say the least. It was obvious that FDA had a number of new hires who were learning on the job. Also, having both the drug and dietary supplement inspectors there at the same time was a little comical, as one inspector would interpret something completely differently from the other inspector.”
“We hope that as FDA progresses in auditing more manufacturers, and establishes clearer guidelines, it will make everyone’s job easier,” he adds.
FDA may still be ramping up the number of visits it pays to contract manufacturers, but in the meantime manufacturers can expect more inspections by its own customers. Best Formulations had more than 40 customer-related audits last year. “It takes substantial time and resources from both the manufacturer and the customer to conduct an on-site facility audit, but in the long run, it’s beneficial for both sides,” says Ung.
“For many of our customers, knowing that we are audited and approved regularly by respected organizations such as NSF or NPA provides a sufficient guarantee that we have the necessary processes in place,” says Holtby. (In addition to certification from NSF and NPA, the company has NSF’s GMP for Sport certification.) “However, we are finding that more and more of our customers prefer to perform their own audits of our company as well.”
“We have experienced increased customer scrutiny towards our overall manufacturing systems, including various product-quality testing requirements, and increasingly tighter product specifications, such as for material-sourcing requirements,” says Ishaq. “Customer-initiated audits are more common, as are requests for independent GMP certification.” GMP Laboratories holds GMP certification from NSF, as well as a drug-manufacturing license issued by the State of California Food and Drug Branch, and is FDA-registered as a drug establishment.
Budget depending, FDA’s goal is to increase the number of audits it performs. Sultana Haque, PhD, of NSF-certified ABH Nature’s Products Inc. (East Farmingdale, NY), which manufactures vitamins, chewables, and powder drink mixes, says FDA paid a visit last year, right after the small-company June 25 deadline kicked in. Haque says the visit lasted for five days, over two weeks, and went well. “I feel very confident for another surprise visit,” Sultana adds.
Yes, say all companies. “We have always viewed GMPs as having a positive evolutionary impact on the industry,” says Ishaq. “Simply put, the GMPs have provided a very rigorous framework to guide the industry and establish an even playing field for industry manufacturers in terms of quality and manufacturing practices. This is quite useful in defining what is and what isn’t okay for manufacturing supplements.”
GMPs will take the industry to higher levels, says Haque, who calls the regulations a proactive rather than a reactive approach to quality. “The GMPs help greatly in understanding total quality management, for both manufacturers and customers.”
Still, the challenges will definitely continue. “The biggest challenge is to maintain GMP compliance while dealing with increasing costs,” says Haque.
Ishaq agrees. “The increased regulations have upped the overhead cost of operations, which may adversely affect manufacturers during financially difficult times.”
But overall, business is good in the dietary supplement industry. In particular, the contract manufacturers we spoke with talk about increasing international business.
“Our business has grown nicely in the last year,” says Ung. “I think small to medium-sized business can easily achieve 5 to 15% growth for the next couple of years.”
Companies also continue to make improvements, to meet GMPs and beyond. GMP Laboratories has expanded its liquid-production capabilities to produce dietary supplement liquid blends in different types of packaging containers. Best Formulations is expanding its in-house testing equipment and capabilities as well as its V-Gel non-animal softgel production capacity; enhancing its powder filling to include the ability to do canisters; and possibly adding more tea manufacturing and another bottling line.
“We’re seeing a steady growth of heart- and weight-related supplements. The GMPs, as well as new dietary ingredient regulations, are slowing the influx of genuinely new products on the market. Instead, we’re seeing an increasing trend of formula complexes involving multiple ingredients that target specific health conditions.”-Steve Holtby, Soft Gel Technologies
“Some of the popular products we’ve seen increasing in the past several months are astaxanthin, prostate formulas, and tea products. CoQ10, fish oil, antioxidants, and probiotics are still going strong.”-Eugene Ung, Best Formulations