Correspondence: Stephen D. Sayre, Dykema Gossett PLLC, 10 South Wacker Drive, Suite 2300, Chicago, IL 606061, USA. Tel: +1 (312) 627 2131; Fax: +1 (312) 876 1155; E-mail: ssayre@dykema.com

¹is a member of Dykema concentrating his practice on products liability, business and chemical exposure toxic-tort litigation. A substantial portion of his practice is devoted to defending pharmaceutical and medical device manufacturers in mass tort and class action lawsuits involving allegedly defective products manufactured pursuant to commercial supply agreements.

²is a member of Dykema's Corporate Finance Department. Mr Sayre represents an API manufacturer located in The Peoples Republic of China and its US affiliate in corporate and commercial contracting matters.

Received 26 June 2007; Revised 26 June 2007; Published online 24 July 2007.

Abstract

US pharmaceutical manufacturers are increasingly requiring their active pharmaceutical ingredient (API) suppliers to sign quality agreements. This trend — if properly managed by finished-dosage manufacturers — should enable them to enhance the quality of their products without unduly burdening API suppliers. As many of these suppliers are now located in developing industrial countries, this trend will have a significant impact on global supply chains in the pharmaceutical industry. This paper, examining quality agreements from the vantage point of the contract lawyer, will discuss (1) the regulatory basis for requiring quality agreements, including recent changes prompting more finished-dosage manufacturers to require API suppliers to sign quality agreements, (2) hot-button issues in quality agreements and (3) best practices for drafting effective quality agreements. Because the authors are US lawyers, the paper is written from the perspective of US federal laws except where specific reference is made to the laws of other jurisdictions.