Establishing Pharmaceutical Compliance Standards Through Better Contract Management
Not a household name for most people, the U.S. Pharmacopeial Convention (USP) is a scientific nonprofit organization that sets standards for the identity, strength, quality, and purity of medicines and food ingredients manufactured, distributed, and consumed worldwide. In fact, USPs drug standards are enforced in the United States by the Food and Drug Administration and used in more than 140 countries.
Addressing the contract problem
While USP was familiar with setting standards for food and medicines, it needed help internally with improving and standardizing contract management. But in 2008, USP did not have a contract database in place and was facing several challenges.
First, inefficiency in authoring contracts was clear. At the time, contracts were being reviewed and handled manually and emailed to legal. Since there was no centralized database, managing templates being mandated by legal was impossible.
Second, contract approvals suffered. Since there was no contract manager, departments were relying on legal counsel to review all organizational contracts. A typical example of the contract inefficiency would be the following: HR drafts an agreement using an old template, then legal would point out that it’s outdated and they would need to start the process all over again.
Finally, there was no central repository for storing and managing contracts. As a result, USP employees were saving contract documents on different drives throughout the company. Contracts were also being auto-renewed with no alerts or reminders.
While all these challenges existed domestically, USP was expanding globally, working internationally through agreements with other pharmacopeias, as well as regulatory bodies, manufacturer associations and others. USP’s footprint was also becoming more global every year with the establishment of an international office in Switzerland, and offices and laboratories in Brazil, India, and China.
The Selection Process
Risks were clearly evident everywhere and lack of contract automation was making contract management difficult. A better way was needed to monitor and manage USP’s contracts on a global basis.
To remedy the contract issue, in 2008 USP spent an entire year evaluating their current contract processes before selecting a vendor. Initially the approach was to have an internal IT team develop a contract module, but they didn’t have sufficient time or resources to work on it.
By 2009, USP decided they wanted to go commercial, and began to ask colleagues and do research to find vendors for consideration. Several North American-based vendors were evaluated.
USP had a lot of conversations internally with the team to establish requirements. They spent approximately three months defining what they wanted, and then invited vendors to give demonstrations. They formed an internal evaluation team to review the on-site demos.
Since it’s hard to introduce a new tool when people are used to their own ways, USP wanted to pick the most user-friendly solution that would also facilitate workflow and approvals. Based on the thorough evaluation, USP determined that Determine had the most user-friendly interface and the functionality they were looking for in a contract management platform.
Kicking off the project, Determine had an implementation manager on-site to help USP. The USP team led by Julie Zhao, Senior Contracts Manager in Global Legal Affairs, let the implementation manager know their business requirements and approvals and workflow. She then helped gather specifics as needed. Within three months, the Determine CLM tool known today as SmartContracts®, was in place.
The first year, Determine’s CLM was only used at USP HQ for just new contracts. They did some uploading of contract data from spreadsheets. Expanding, they started rolling out CLM to India and China after a year, and had teams there enter contracts. They also hired local legal counsel at each site.
Using Determine Today
Involved from start to finish in CLM implementation, Ms. Zhao notes, “The centralized contract database is the biggest benefit USP has seen. We can now go into the system from anywhere, make addendums, amendments, and can draft from original documents. We are currently trying to make a database for each department.”
USP also built policies around compliance. They mandated throughout the company that contracts must be entered into the system. They have quality check-up meetings with each department to enforce policy. Some departments are really good and follow the rules. There are major consequences if policies are not followed.
There are currently (approximately) 1,000 contracts entered per year, but with international sites that number is increasing. Some of the key functionality focuses on solving their biggest problems including contract creation, template creation, approvals, automated alerts, reporting, and the use of third-party paper.
Determine SmartContracts is currently being used by every functional department at USP and handles all contracts for them. This encompasses a very wide group globally across the organization including IT, Facilities and Administration, Sales, Marketing, Science, and Government Grants. All these departments are also actively managing several types of agreements including corporate communication agreements, training agreements, sales agreements, QA audit agreements, and confidentiality agreements.
Over the past several years, Determine has played an active part in helping USP find new approaches to meet their contract management needs, from departmental requirements to enterprise-wide approaches. The next stage for USP is expanding the use of CLM by integrating eSignature approvals with the Determine platform.