The Importance of Supplier Oversight

1. The Importance of Supplier Oversight November 7, 2011 Lisa McClintock Director of Supplier Quality

2. Not if, but when… May 7, 200780 children die in Haiti due to contaminated glycerin in acetaminophen syrup

3. Complex and Insecure Supply Chains have Consequences: Tainted Glycerin ~ 100 Deaths • 2. CNSC Fortune Way (Beijing, China) • Removes mfg name from CofA and replaces with own • Translates to English • No testing • 3. Rasfer International (Barcelona, Spain) • Removes mfg name from CofA and replaces with own • No testing • 4. Medicom Business Group (Panama) • Changes expiration date • No testing 2 3 1 4 5 • 5. Social Security Administration (Panama) • No testing • Manufactures cough medicine using tainted glycerin • 1. Taixing Glycerin Factory (Hengxiang, China) • Chemical plant not inspected by SFDALabeled Glycerin, USP • Symbol means glycerin substitute • CofA reads 99.5% pure

4. Illicit Activity is Present and Threatens the Safety of Medicines $1000 Counterfeit DVDs Illegal drugs Counterfeit medicine $10,000 $100,000 $1,000,000 • The criminal element is present, active, and business savvy • ‘Benign’ consumer actions may have tragic consequences

5. Supply Chain Security – Protecting Patients from Economically Motivated Adulteration “Companies that sell contaminated products because of loose supply chain oversight need to face serious penalties and cannot excuse themselves by blaming their suppliers.” Dr. Margaret Hamburg, Commissioner, FDA

6. Working from the Source, We Must Strengthen Each of The Links In Our Supply Chain • Know the Source • Original manufacturer • Demand total supply chain transparency • Raise Expectations • Require tamper evidence • Distributors • Perform Quality system audits • At Our dock • Photo library inspections • Adulteration screening for at risk materials • Melamine screening

7. Supplier Qualification and Monitoring • Physical site audits • Frequency based on risk • Quality Agreement execution and oversight • Define Requirements • Change Notification • Monitoring • Supplier Audits • Quarterly (Nonconformances by supplier and material) • Quarterly Scorecards

8. Embracing the Idea that Our ‘Shop Floor’ Begins with Our Raw Material Suppliers Know your supplier!

9. The Entire Raw Material Supplier Base is Segmented Annually via The 9-block Approach • Supplier Relationship Management Activities • Spend more time with your preferred suppliers • Marginal → Up or Out plans documented in CAPAs Supplier location on 9-block drives cross-functional actions

10. Every Patient, Every Time Supplier Quality makes certain that our suppliers reliably provide quality raw materials so that manufacturing can produce vital medicines for our patients worldwide. • Oversight (Audits) • Expectations (Quality Agreements) • Supply Chain Security (Tamper evidence, Adulteration screening) • Operations (Investigations and CAPAs, Supplier Changes) • Performance Management (Quarterly Scorecards, Business Meetings) • Continuous Improvement (Kaizen Events, Op Ex Projects) Patient safety should never be a competitive advantage.

11. Thank You!