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Implementation of the ACVM Act: Regulatory changes

2 Manufacturing regulations

In brief, NZFSA proposes to make regulations that will:

• apply obligations consistent with the principles of responsible manufacturing to all manufacturers of agricultural compounds and veterinary medicines (see list below under heading 2.3 “Proposed regulatory regime”). These obligations are all existing requirements in the ACVM Standard for Good Manufacturing Practice and the ACVM guidelines for labelling and advertising, but they will be new for manufacturers of products that are exempt from registration.

• change the regulatory mechanism for the formal recognition of manufacturers of certain classes of agricultural compounds. This is not a material change; the only parties that would require formal recognition are those that are already required to be approved as manufacturers.

• set criteria for determining whether products manufactured overseas should be authorised for import, sale, and use in New Zealand.

• create a statutory requirement for all manufacturers of agricultural compounds to have an operating plan that describes how product will be manufactured and assessed as meeting specifications. This is a change in terminology, but as the expectation to have a documented manufacturing plan is not new, the statutory requirement should be no more onerous for manufacturers of registered products than what has always been expected. It will be a new requirement for manufacturers of products that are exempt from registration.

• impose a formal compliance programme on every manufacturer who has to be recognised by NZFSA under section 62 and have an operating plan approved under section 28. This will be new for most manufacturers of agricultural compound products; it is already the case for veterinary medicine manufacturers (see reference to Good Manufacturing Practice below) and manufacturers of restricted sale/restricted use vertebrate toxic agent products.

• administratively link manufacturers to the products being produced.

2.1 Use of terminology and definitions

The below terms and definitions are relevant to NZFSA’s manufacturing proposals. Some are currently in use while others are proposed because existing terminology would be inappropriate or confusing under the intended reformed scheme for administrating the ACVM Act. Where necessary, some of the terms may be applied in regulations.

Acceptable manufacturer means an overseas-based person/entity for whom there is sufficient evidence (other than an NZFSA assessment) to conclude that they are acceptable and, consequently, that products manufactured by them can be authorised for import, sale, and use (see heading 2.3.2 “Overseas manufacturers” for further information).

ACVM product class refers to the following broad classes of agricultural compounds:

• veterinary medicines

• agricultural chemicals

• oral nutritional compounds

• fertilisers, and

• vertebrate toxic agents.

Approved manufacturer means a manufacturer that holds a current NZFSA approval as a person/entity recognised to manufacture a particular class of agricultural compound.

Approved operating plan means an operating plan approved by NZFSA under section 28 of the ACVM Act.

Authorisation is a term introduced by the ACVM Amendment Bill. It refers to the designations that NZFSA can give to a person or product, including registration, exemption, and provisional registration. These authorisations are required to import, manufacture, sell or use agricultural compounds.

Distribute means to send an agricultural compound that has been manufactured for sale to wholesalers, retailers and/or end users; and includes transport and storage in any intermediate step to the end user. Distribution has a corresponding meaning.

Good Manufacturing Practice (GMP) refers specifically to the approval issued by NZFSA for manufacturers of veterinary medicines. The term has this specific meaning in the current international manufacturing standard, and NZFSA will use GMP only in that context.

Label in relation to any agricultural compound or any container used to contain an agricultural compound, means any written, pictorial, or other descriptive matter under which the trade name product is sold and which purports to give some information about the agricultural compound or veterinary medicine. This includes any information provided with the product at the time it is distributed/supplied. This definition is consistent with the ACVM Act, and explains it further.

Manufacture, in relation to any agricultural compound, includes: acquiring materials, making up, preparing, producing or processing, and assessing the agricultural compound for release; packing and labelling for the purposes of sale. The term relates to any part of the process from manufacture of active ingredients to manufacture of the end-use formulation. NZFSA proposes that “manufacturing” also includes the storage and transport under the direct control of the manufacturer.

Manufacturing operating plan means the minimum required documented description of a manufacturing process, either in general or as it refers to the manufacture of a specific agricultural compound, substance or product. Operating plans are the statutory definition of the Site Master File prepared by the manufacturer. Such files contain specific information about the quality assurance, the production and/or quality control of the manufacturing operations carried out at the named site and any closely integrated operations at adjacent and nearby buildings.

Responsible manufacture means having a quality assurance system in place when manufacturing any agricultural compound. Responsible manufacturing is fundamentally about ensuring that products are what they are supposed to be. GMP is a sub-set of responsible manufacture, relating specifically to manufacture of veterinary medicines by NZFSA approved manufacturers.

Sale includes barter, and also includes offering, exposing, or attempting to sell, or having in possession for sale, or sending or delivering for sale, or causing or allowing to be sold, offered, or exposed for sale; and also includes delivering or disposing of by way of gift, loan or otherwise; and giving or distributing, in the course of business, as a sample or otherwise, without charge (ref: section 2 of the ACVM Act).

2.2 Current regulatory regime

Agricultural compound and veterinary medicine products are manufactured to meet specifications that have been set by NZFSA. In many cases, NZFSA also officially approves the products. Regulatory control of manufacture is needed for a number of reasons. For example, consumers expect that products with official authorisation are fit for purpose and appropriate to use. Also, products could be destined for export to jurisdictions that require certain controls on manufacturing as a prerequisite assurance that the products meet their specifications.

2.2.1 Regulatory control of manufacture by product class

Regulatory control varies with the class of product being manufactured.

Veterinary medicines

The registration of all veterinary medicines is dependent on NZFSA approval of New Zealand manufacturers under the Good Manufacturing Practices (GMP) for Veterinary Medicines scheme. The scheme is linked to the conditions of registration for veterinary medicines, because a product cannot be registered unless the manufacturer has GMP approval. The approval does not have a specific statutory basis, but is linked to the conditions of registration of the products being manufactured.

Manufacturers of registered veterinary medicines in New Zealand are subject to formal compliance programmes with entry audits and regular verification audits (every two years) to support renewals (every three years) of their GMP approvals. The ACVM Standard for Good Manufacturing Practice is used as the basis for the programmes. NZFSA increases the frequency of audits if confidence in a manufacturer’s level of compliance is compromised. NZFSA maintains a separate list of manufacturers who have current GMP approval.

The ACVM Standard for Good Manufacturing Practice is aligned with and strongly influenced by international standards (see section 2.2.3 “International agreements” for further details on this).

Veterinary medicine products that are exempt from registration are not subject to any significant manufacturing requirements.

NZFSA does not approve manufacturers of active pharmaceutical ingredients, which leaves it to them to manage the quality of the ingredient. There is pressure on New Zealand to introduce formal approval for these manufacturers to meet international trends, including a changing requirement in the NZ/EU Mutual Recognition Agreement for GMP.

NZFSA considers that current arrangements for veterinary medicines are not well-suited to accommodate the increasing tendency for parties to be involved in contract manufacturing.

Agricultural chemical products

The manufacture of registered agricultural chemical products must comply with the ACVM manufacturing standard, but the manufacturers do not have to have NZFSA approval nor are they subject to formal verification audits. The manufacturers of active ingredients and products must be specified in the application for registration, and NZFSA will register a product only if it is comfortable with the documentation in support of the capability of the manufacturer. NZFSA’s level of comfort is from a general impression rather than an active evaluation or verification. The manufacturer responsible for ensuring that a product meets specifications is included on the registered product’s public register. NZFSA does not maintain a separate list of manufacturers because it does not issue manufacturing approvals for them. Agricultural chemical products that are exempt from registration are not subject to any manufacturing requirements.

NZFSA considers that more rigorous consideration of manufacturing practices is justified given recent cases of fraudulent, mislabelled and contaminated products in the market.

Fertilisers

Fertilisers are exempt from registration, but must comply with minimum fit-for-purpose requirements prescribed in Schedule 5 of the ACVM Regulations. Fit-for-purpose guidance is provided in the voluntary Code of Practice. Suspicions and allegations of non-compliance are investigated, and manufacturers are expected to be able to provide evidence that they have taken due care to comply with the ACVM Regulations. There is no register, they do not have to be approved by NZFSA, and are not subject to a formal compliance programme.

As NZFSA holds no information on who is manufacturing fertilisers, there are significant gaps in its knowledge of whether or not people are following current requirements. NZFSA receives occasional complaints about manufacturer non-compliance.

Oral nutritional compounds, including animal feeds

Oral nutritional compounds are mostly exempt from registration, but they must comply with minimum fit-for-purpose requirements prescribed in Schedule 4 of the ACVM Regulations. Fit-for-purpose guidance is provided in voluntary Codes of Practice. Manufacturers do not have to be approved by NZFSA and are not subject to a formal compliance programme. Suspicions and allegations of non-compliance are investigated, and manufacturers are expected to be able to provide evidence that they have taken due care to comply with the ACVM Regulations. There is no register, and NZFSA does not hold information on who is manufacturing oral nutritional compounds. Pet food manufacturers who export pet food must be registered under the Animal Products Act 1999, and manufacturers of ruminant feeds (eg feed for cattle or sheep) who use ruminant protein must be registered under the Biosecurity (Ruminant Protein) Regulations 1999.

There are significant gaps in NZFSA’s knowledge about who is manufacturing oral nutritional compounds. NZFSA still finds product in the market place that does not comply with current requirements, and there have been a number of allegations that products are not fit-for-purpose.

Vertebrate toxic agents

All vertebrate toxic agents have to be registered and the control of their manufacture is the same as it is for agricultural chemical products requiring registration – with the exception of restricted sale/restricted use products such as 1080 and cyanide products. For the exceptions, the manufacturers must be approved by NZFSA and are subject to a formal compliance programme. It should be noted that this approval is not called GMP.

Despite the registration requirement for vertebrate toxic agents, NZFSA is aware of occasional complaints of manufacturer non-compliance.

2.2.2 Negative effects

The manufacturing process can involve significant risks that need managing under the ACVM Act. Errors in manufacturing can result in:

• product formulation that does not meet required specifications

• contaminated product

• faulty packaging

• mislabelled product

• deteriorated product.

A range of negative effects can be traced back to errors in manufacturing. Faulty products can cause harm to the animals or plants exposed. They can fail to work, which causes animal welfare or agricultural security problems. They can also result in non-compliant residues in food for the New Zealand domestic or export market, which can in turn jeopardise trade in primary produce. Incorrect labelling could lead to the same negative effects.

2.2.3 International agreements

New Zealand’s international agreements on agricultural compound manufacture, which tend to be focused on veterinary medicines, include a:

• Pharmaceutical Inspection Cooperation Scheme (PIC/S)

• Mutual recognition agreement with the European Union

• Memorandum of understanding with the Australian Pesticides and Veterinary Medicines Authority.

Through the arrangements with the European Union and Australia, NZFSA accepts the European and Australian GMP status of veterinary medicine manufacturers. It has also decided to accept the GMP status issued by the Authorities in other countries recognised by PIC/S. In addition, NZFSA informally recognises the equivalence of regulatory control in countries such as Canada, Japan, and the United States via their parallel agreements and commitment to the Veterinary International Cooperation on Harmonisation (VICH) programme.

Manufacturers in all other countries must supply full manufacturing operating plans to NZFSA for consideration, usually via the applicant for a product registration. Although the manufacture of agricultural chemicals and vertebrate toxic agents, fertilisers and animal feeds can pose relevant risks, there is no clear international standard governing manufacture and trade in such products. NZFSA’s manufacturing rules for such products are not as stringent as for veterinary medicines. With no international standard to use as a benchmark, New Zealand has to decide the level of control that it considers sufficient to manage risks down to an acceptable level.

2.3 Proposed regulatory regime

The recurrence of cases of contaminated, mislabelled and fraudulent product has convinced NZFSA that the regulation of the manufacture of agricultural compound products should be more rigorous. NZFSA considers that regulatory requirements for manufacturing should focus on outcomes that can be achieved by complying with the principles of responsible manufacturing, such as confidence in the safety and reliability of agricultural compounds. NZFSA therefore proposes that regulations be drafted to apply the following obligations, which are consistent with the principles of responsible manufacturing, to all manufacturers of agricultural compounds and veterinary medicines:

• The manufacturing process must be clearly defined and should be evaluated as being capable of consistently manufacturing product that meets that product’s specifications and the required quality standards.

• The manufacturing process must be subject to a clear and unambiguous operating plan (approved by NZFSA for certain products) that specifies procedures and instructions.

• Critical steps in the manufacturing process, and any changes to those steps, must be validated.

• The personnel involved in the manufacturing process must be appropriately qualified and trained.

• Responsibilities must be clearly defined.

• The premises and space must be suitable for the manufacturing process undertaken.

• The equipment and services must be suitable for the manufacturing process undertaken.

• All formulation materials and processing chemicals must be of a suitable quality; sourced from a competent and reliable source; and managed in a manner that is suitable for the products and the manufacturing process undertaken.

• Product containers and other packaging must be appropriate for the product, such that it can be stored, transported and handled without posing unacceptable ACVM risks.

• The part of the label attached to the container and packaging must be durable enough to be in good condition through to the expiry date of the product, and the label as a whole must be clearly printed with all the minimum required information about the product.

• Product must not be released for sale until the quality of the product has been confirmed. This includes sampling (starting materials, packaging materials, intermediate, bulk and finished product as appropriate), testing to written specifications, and a formal approval by an authorised person that the final product contains the active ingredient(s) as per the marketing authorisation (both qualitative and quantitative) and is packed and labelled correctly.

• Manufactured product must be stored (and transported within the manufacturer’s operation) in a manner that ensures it remains consistent with its specifications (this does not include storage and transport beyond the control of the manufacturer).

• Records which demonstrate that all the required steps were followed must be made during manufacture. Any significant deviations must be fully recorded and investigated.

• Records of manufacture (including initial distribution arranged by the manufacturer) must be retained so that the history of any batch of product can be traced.

• The manufacturing process must include a system to recall any batch of product from sale or supply.

• Complaints regarding manufacturing must be investigated and appropriate corrective action taken to prevent recurrence.

• The manufacturer must notify NZFSA if their product poses immediate and unacceptable risks that would require product recall.

The above bullet points are all existing requirements in the ACVM Standard for Good Manufacturing Practice and the ACVM guidelines for labelling and advertising.

2.3.1 Status of manufacturers

NZFSA proposes to formally recognise manufacturers of certain classes of agricultural compounds under the ACVM Act. This will mean that mandatory performance and technical standards would likely be set by NZFSA, both as a measure for the compliance programme and as a means to confirm acceptable performance for the purposes of investigations. This is not a material change; it is only a change in the regulatory mechanism. The only parties that would require formal recognition are those that are already required to be approved as manufacturers.

Veterinary medicines and restricted sale/restricted use vertebrate toxic agents

NZFSA considers that manufacturers of veterinary medicines and restricted sale/restricted use vertebrate toxic agents should be formally recognised and required to comply with certain minimum performance and technical standards. All such products have significance in regard to the risk areas specified in the ACVM Act. Because of overseas jurisdictions’ views on the control of veterinary medicines and the potential for significant negative effects, NZFSA considers it should have evidence readily at hand to address suspicions or allegations of non-compliant product. NZFSA’s proposal for veterinary medicines reflects an international expectation, a bilateral requirement in the NZ/EU Mutual Recognitions Agreement and a memorandum of understanding with the Australian Pesticides and Veterinary Medicines Authority.

Section 75 of the ACVM Act has been amended to allow the regulation of people’s behaviour (as opposed to just the regulation of products). As a result, the GMP approvals will be issued as statutory recognition under section 62 of the ACVM Act. This will create a list of GMP approved manufacturers.

The existing ACVM standard and guidelines for GMP will be converted into performance and technical standards. This will involve no material change to the requirements imposed; the existing vague administrative approval will become a transparent statutory one. Recognitions will be contingent on compliance with the standards. Whether or not the standard and guidelines will be re-issued as notices under section 76A will depend on discussions with affected parties. It is NZFSA’s view that such notices will be used as guidance rather than as instruments to impose regulatory requirements. Such requirements should be imposed via regulations, with reference to notices if necessary.

NZFSA proposes to convert the requirement for restricted sale/restricted use vertebrate toxic agent products to comply with the ACVM manufacturing standard into a requirement to be recognised under section 62 with an operating plan approved under section 28. This will automatically create a list of approved manufacturers for such products.

Other product groups

NZFSA is considering whether manufacturers of all other classes of agricultural compounds (agricultural chemicals, oral nutritional compounds, fertilisers and the remaining vertebrate toxic agents) should be on an NZFSA list. If so, name and contact details should be sufficient in most cases. Such a list, which would not be published on the NZFSA website, could be used to facilitate investigations of non-compliance or product recall.

NZFSA will not be formally recognising manufacturers of such products, or requiring compliance with performance and technical standards, or requiring operating plans to be approved except on a case by case basis. The minimum labelling requirement to identify the manufacturer would link products on the New Zealand market to the appropriate manufacturer listed with NZFSA.

NZFSA will conduct occasional compliance checking programmes (“slice of life” reviews) to check whether industry sectors’ programmes are performing as expected.

Active ingredient manufacturers

NZFSA proposes to provide recognition for active ingredient manufacturers if they need official assurances for exports, in the context of issuing certificates of compliance under section 35A of the ACVM Act. While it is not within the scope of this paper, it should be noted that NZFSA will have to consider whether it should require an approved status for active ingredient manufacturers as a prerequisite of product registration.

Export-only products

NZFSA proposes that all export-only products be exempt from registration with conditions, including the condition that the manufacturers are recognised under section 62 of the ACVM Act. That recognition will be contingent on compliance with performance and technical standards which will require the manufacturer to operate in a manner that is equivalent to that required under the manufacturing regulations, with particular emphasis on preventing the diversion of export-only product onto the New Zealand market.

2.3.2 Overseas manufacturers

NZFSA proposes to set criteria to determine whether or not products manufactured outside New Zealand’s jurisdiction should be authorised for import, sale and use in this country. The criteria will be based on EITHER the:

• status given to the manufacturer by the competent authority (recognised by NZFSA) in the country in which the manufacture occurs OR

• information provided to or held by NZFSA (including its knowledge about the relevant competent authority) on the acceptability of the manufacturer and the manufacturing process for the product in question.

NZFSA will not use the term “approved” unless an approval was issued by NZFSA. As NZFSA does not have the capacity to assess and approve overseas manufacturers, it will not be able to audit them. It intends to use the term “acceptable manufacturer” to describe a party for whom there is sufficient evidence (other than an NZFSA assessment) to conclude that they are acceptable and, consequently, that products manufactured by them can be authorised for import, sale and use.

Manufacturing information requirements will be specified for veterinary medicines from countries that NZFSA informally recognises as having equivalence to New Zealand’s regulatory control. NZFSA intends to create criteria for other classes of agricultural compounds based on these requirements.

2.3.3 Use of operating plans

NZFSA proposes to require all manufacturers of agricultural compounds to have an operating plan. An operating plan will describe how product will be manufactured and assessed as meeting specifications. NZFSA would ask to examine operating plans for the purposes of confirming compliance, investigating non-compliance, and supporting recalls. NZFSA will impose formal recognition and approval of operating plans only when there is a need to give official assurances of compliance, or to assure Government or the public that the regulated parties are complying.

Although the term “operating plan” is not usually used in agricultural compound manufacture, the expectation that manufacturing should be subject to a documented system is not new. A documented manufacturing plan is a fundamental part of responsible manufacturing. A statutory requirement to have such a plan should be no more onerous for businesses than what has always been expected.

NZFSA considers it will need to approve operating plans for registered veterinary medicines, registered restricted sale/restricted access vertebrate toxic agent products, and any products requiring NZFSA certification of matters relating to the manufacturing process specified in the plan. Other manufacturers will make and implement their operating plans, except when there is an international expectation that must be met or where risks are so significant that assurances to the public must be given. NZFSA will make it very clear to affected parties when operating plans need to be approved.

2.3.4 Compliance programme

NZFSA proposes to impose a formal compliance programme on every manufacturer who has to be recognised by NZFSA under section 62 and have an operating plan approved under section 28. This would include manufacturers of:

• registered veterinary medicines

• registered restricted sale/restricted use vertebrate toxic agent products, and

• any manufacturer who wants NZFSA to issue certificates of compliance concerning aspects of the manufacturing process.

All other manufacturers will be subject to compliance activity through intermittent checks or investigation of suspicions or allegation of non-compliance.

When NZFSA imposes the approval requirements mentioned above in section 2.3.3 “Use of operating plans”, it will also impose a formal compliance programme. Manufacturers will otherwise be subject to the minimum requirements in the Regulations, with guidance from NZFSA when necessary. During any investigations of non-compliance, the manufacturing operation will be examined in light of the operating plan and the conditions of authorisation for the products being manufactured.

2.3.5 Linking products to manufacturers

There is an insufficiently close administrative relationship between manufacturer performance and the authorisation of the products being manufactured. Where manufacturers are required to be approved prior to product registration, the approval is not linked specifically to the particular product but rather granted on the basis of the general manufacturing capability of the person/entity. For other products there is no formal approval of the manufacturer, and the authorisation of the products is based on a level of comfort associated with information provided to or held by NZFSA.

NZFSA proposes to administratively link all manufacturers to the products being manufactured. NZFSA also proposes that verification audits should include specific verification of the products and substances that a manufacturer has authorisation to manufacture, to ensure that they align either with the data held by NZFSA (if registered) or with the company’s operating plan (if exempt from registration).

It should be noted that verification audits for companies whose products are exempt from registration will not be carried out by NZFSA, as they will be part of each such company’s operating plan.

Registrants and persons responsible for substances or products exempt from registration will need to be aware that unacceptable performance of the manufacturer could have an impact on the authorisation of their products. This is relatively clear in regard to veterinary medicines now, and will become more significant for the other classes of products as these proposals are put into effect.