Guest Column | July 3, 2018

Individual Or Pooled cGMP Audits — How To Choose The Right Format

By Hal Craig, founder, Trout Creek Consulting, LLC


On-site cGMP audits are an important part of creating and maintaining a compliant, reliable, and secure supply chain that safely provides high-quality clinical and commercial drug products when and where needed. An important auditing decision is whether to use an individual or pooled audit. For clarity, an individual audit is when one drug marketer sponsors its own audit of a supplier. A pooled, joint, or shared audit is when either (1) multiple drug marketers sponsor an audit of a supplier for their collective use or (2) drug marketers purchase an audit report previously prepared by a third-party auditor, analogous to purchasing a market research study. Pooled audits have gained popularity in recent years, given the potential for both lower audit costs for drug marketers and fewer audits for the suppliers to host. As discussed below, drug marketers should consider using a mix of individual and pooled audits, depending on the situation.

When Should You Consider An Individual Audit?

Adding A New Product Or A New Supplier

An individual audit should be considered when you are creating a supply chain for a new product or adding a new key supplier to the supply chain for an existing product. This is especially important for development-stage to midsize drug marketers during the CDMO, drug substance/custom synthesis supplier, and 3PL (third-party logistics) selection processes. Unlike Big Pharma/Big Biotech, with their more diversified portfolios and existing broad supplier networks, development-stage to midsize drug marketers are betting all or much of the company on the clinical and commercial supply chain for a new product. This supply chain may consist of suppliers they have never — or not recently — worked with. It is important to development-stage to midsize drug marketers to both know and be known by their audit team and that the audit team knows the strengths and weaknesses of the drug marketer and its technology that the supplier will have to offset. The development-stage to midsize drug marketer is looking for the comfort and confidence of having its audit team say about the supplier “They’ve got this” or “They’ve got this if we provide help with x and y.” These smaller drug marketers probably face several funding rounds and certainly face regulatory reviews. They want the confidence that there are no supply chain issues and that they have found the right supply chain partners to help solve technical and schedule challenges. Note that the audit team is typically two or three people who could be employees or consultants retained by the drug marketer.

When you are creating a supply chain for a new product or adding a new key supplier to an existing supply chain, there are at least four layers to the audit of a potential new CDMO, drug substance/custom synthesis supplier, 3PL, or other key supplier:

  • The first layer is a general cGMP quality systems audit. If controlled substances are involved, there’s an audit for DEA compliance, too. If the supplier has moderate to major cGMP compliance issues or even a number of minor issues, the development-stage to midsize drug marketer typically does not have the capability or appetite to manage a cGMP-challenged supplier. This first layer includes drilling down into the supplier’s quality and operating metrics, manufacturing deviations, customer complaints, and CAPAs (corrective and preventive actions). In addition to checking compliance, the perspective here is to understand the capabilities, responsiveness, culture, and commitment of the people and management at the supplier. The goal is to determine if there is a fit between the drug marketer and the supplier.
  • The second layer involves asking questions specific to the services and products that will be provided to the drug marketer. Some of these questions will be compliance-related and some will be of a technical, logistic, or other nature.
  • The third layer assesses where there will be agreement and disagreement in future quality, and potentially supply, agreement negotiations.
  • The fourth layer continues to build good working relationships between the drug marketer and the supplier, certainly between their respective quality units, and perhaps other functions as well.

All these layers lead to the “They’ve got this,” “They’ve got this if we provide help with x and y,” or “They don’t have this” assessment by the drug marketer about the key supplier. It would be difficult for a pooled audit to accomplish all four layers.

Using Unique, Perhaps Non-Compendial, Ingredients And Associated Processing

If the drug product uses off-the-shelf, widely used, standard grades of excipients, packaging components, and other raw materials, then a supply chain risk assessment may find that a satisfactory supplier qualification questionnaire combined with a pooled audit is fine. With unique, perhaps non-compendial ingredients, and special ingredient processing, an individual audit is needed to ensure cGMP (and DEA, if relevant) compliance, discuss and understand the specifics of the ingredient or process, build relationships, and decide if “They’ve got this.” Also, with unique ingredients and associated processing, a pooled audit report may not be available for purchase and it may be difficult to find an audit co-sponsor in a timely manner.

Evaluating Supplier Readiness And For Cause Audits

Readiness audits before an FDA pre-approval inspection and for cause audits due to a batch failure, recall, or other quality issue are by definition product-specific and therefore merit individual cGMP audits. Additionally, the unexpected and urgent nature of a for cause audit will likely logistically limit the use of a pooled audit unless the supplier has a systemic issue that has simultaneously impacted multiple drug marketers.

When Should A Pooled Audit Be Considered?

For Off-The-Shelf, Widely Used Products And Services

In this situation, there really isn’t anything proprietary to the drug marketer other than its use of, volume purchased, and price paid for the product or service. That is, details about the quality systems at the supplier do not involve technology or intellectual property of the drug marketer. There is a high probability of a recent pooled audit report existing or being able to find a co-sponsor for a pooled audit.

Conducting Routine Oversight Of An Existing Qualified Supplier

This can be a general audit of a supplier’s quality systems. This can also be a general and product/service-specific audit with the product/service specific items redacted from all but the drug marketer who is purchasing that product or service. If the supplier provides widely used products or services, a pooled audit report could be available for purchase. If this is a routine annual audit, there’s certainly time to find an audit co-sponsor.

Screening Of Potential Suppliers

A pooled audit report may exist for a potential supplier. In addition, a number of suppliers will provide redacted versions of FDA inspection reports if there have been FDA inspections.

Final Thoughts

On-site cGMP audits are vitally important to creating and maintaining an effective, high-integrity supply chain. These audits can provide valuable insights, beyond cGMP compliance, that help drug marketers make good supply chain decisions. Drug marketers should use a mix of individual and pooled audits as appropriate. Audits with multilayer goals, involving significant drug marketer proprietary and competitive information, where urgency is required, or where the supplier would provide a relatively unique product or service lend themselves to individual audits. I’ll close with some advice on inspecting suppliers of capital equipment that a senior manager in a very successful business (and my second-level supervisor at the time) gave me early in my career: “If you think you need to go see them, go. I’d rather pay for a plane ticket than have a big problem.” That same advice works for drug supply chains.

About The Author:

Hal Craig is the founder of Trout Creek Consulting, LLC, a strategy and life science supply chain consultancy focused on solving CMC, outsourcing, strategy, and technical challenges. Clients include venture-backed, family-owned, private equity-owned, and publicly traded companies. Mr. Craig serves on the Physical Sciences Investment Advisory Committee of Ben Franklin Technology Partners of Southeastern Pennsylvania. He has a BSChE from the University of California, Berkeley and an MBA from the University of Michigan. He can be reached at

Disclaimer: This article is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subjects. Accordingly, this article does not constitute legal, accounting, tax, investment, consulting, or other professional advice or services. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. In no event will Trout Creek Consulting, LLC or the author be held liable in any way to the reader or anyone else for any decision or action taken based on this information, or for any direct, indirect, consequential, special, or other damages claimed by the reader or anyone else based on this information.