Evolving Pharma Inspections: Hybrid Audit Insights from Parexel Veteran Dr. Siegfried Schmitt

Pharma Now: Hello, we're here with Dr. Siegfried Schmitt. He is the Vice President at Parexel Consulting. Thank you for being here.

Dr. Siegfried: Thank you, thank you for having me. I'd like to briefly introduce my career in the industry. I've been in the pharmaceutical industry for over 35 years and have held manufacturing and quality assurance roles. I've worked for several companies that provide consulting services, and this month, I reached 18 years with Parexel, where I provide strategic consulting services to our clients. 

I find this role particularly interesting because we cover the entire lifecycle, from clinical to market access to post-marketing, and from engineering to operations, quality, and regulatory affairs. A part of my role also involves performing audits all over the world. The companies I audit range from clinical sites and sponsor sites to manufacturing and distribution facilities.

Pharma Now: Sounds like a wealth of experience. One of the things your company is doing now is hybrid audits. Could you explain to our audience what exactly a hybrid audit is, and why the industry is shifting, or has already shifted, to this model?

Dr. Siegfried: Right, yes. I think the best way to explain it is to start with what a classical audit is, namely, an in-person, on-site audit. Audits are part of the due diligence process; you want to determine whether a company is suitable and capable of performing the job in a compliant manner.

The COVID pandemic was a significant trigger for the industry and regulatory agencies to reconsider how audits are conducted, pushing for remote audits, meaning audits performed via video link. However, it’s challenging to thoroughly review documentation or observe working practices through video. That’s where the hybrid model came in.

A hybrid audit is a combination of both on-site, in-person auditing and remote auditing. So, at least for part of the time, someone will be physically present on-site, while other elements are conducted remotely.

Pharma Now: So the main difference between a hybrid and traditional audit is that part of the process is conducted remotely. How does that impact the submission of documentation and the review of evidence?

Dr. Siegfried: Documentation in any company is bespoke and unique. No two companies have the exact documentation. That means an auditor will always need to ask for explanations to truly understand the content and context of what's been documented.

When you're on site, it's quite easy to point to a passage in a document and ask someone to clarify it. But for someone reviewing documentation remotely, that’s obviously not so simple. It’s typically not sufficient to just send a document to a remote auditor; you may also need to include explanatory notes as part of the submission.

Pharma Now: This ties into a broader transformation across industries, not just pharma, toward digitalization of nearly every procedure. In the pharmaceutical and life sciences sectors, this shift is accelerating. But with that comes a lot of misconceptions. So, if you had to identify the most common misconception about hybrid audits, what would it be?

Dr. Siegfried: One of the key assumptions is that hybrid audits are cheaper, especially since the pandemic triggered them. The logic is that you save money on travel and accommodation instead of flying someone on-site. And yes, that’s true to an extent.

However, the cost savings are often offset by the increased effort required to manage a hybrid audit. These audits are more complex and time-consuming to coordinate. So, you must be very careful when assuming overall cost savings. Often, there aren’t.

Pharma Now: That’s an important point. And in terms of execution, how should companies prepare for a hybrid inspection? I imagine the process is quite different from a traditional audit.

Dr. Siegfried: You’re right. And this was one of the biggest challenges when hybrid audits first began; there were no established procedures. You need to proceduralize the process. That means having the right SOPs in place and the right technology infrastructure.

You should be able to transfer large data packages securely between sites and between the auditor and auditees. But technology alone isn’t enough; the people using it must be trained. They need to understand how to handle data transfers securely and efficiently, and how to operate the tools involved.

Pharma Now: Since we’re on technology, another challenge with digitalization is access to the right tools. What kind of technologies or digital tools would you recommend for remote inspections?

Dr. Siegfried: A strong signal and sufficient bandwidth are essential if you're trying to show operations over a video link; that’s often a challenge, even during a simple Zoom call. But beyond that, you need the right camera equipment and someone with experience.

I’ve seen people attempt remote tours using mobile phones. The result is often shaky, unfocused footage. Plus, the person recording typically doesn’t see what the auditor is seeing on the other end.

So, rather than using a mobile phone, I recommend using something like a headset camera. I’ve seen those work very well in this context; they offer stability, focus, and allow for more seamless remote observation.

Pharma Now: It seems fairly obvious when you say it out loud that you need a good connection and a to run these audits, but in reality, not all companies are prepared to handle that internally. So it becomes part of the overall preparation.

Dr. Siegfried: Indeed. And in many countries, privacy laws don’t allow video capture of individuals without their consent. So you can’t simply walk through a laboratory and show everyone's face to a remote auditor. Whereas, if you're there in person, you can walk through and observe freely; nothing prevents that. This means internal audit programs must ensure, first, that the auditors’ needs are addressed, and second, that privacy regulations are not violated.

Pharma Now: Right. So companies have to update their internal audit procedures. What's the most common mistake you've encountered in that regard?

Dr. Siegfried: Many companies today have excellent technology. But as I mentioned before, most documents are not self-explanatory. If an auditor needs a specific piece of information buried on page 39 of a 60-page document, companies often make the mistake of sending the entire document. Instead, they should either send just the relevant page or annotate where the information is: “This paragraph, on this page, contains what you’re looking for.” That saves a lot of time.

Pharma Now: That speeds up the process. From the perspective of regulatory bodies, like the FDA, EMA, MHRA, or others, what's the difference in their approach or expectations between a regular audit and a hybrid audit?

Dr. Siegfried: In principle, all types of audits, including hybrid ones, are now accepted by regulators, provided the companies have proper procedures. However, some agencies, particularly in the European Union, still require specific on-site, in-person audits for critical operations such as aseptic manufacturing. They argue you can never fully assess the situation unless you're physically there.

Pharma Now: That makes sense. Apart from those procedures that strictly require in-person audits, have expectations changed for the remote parts of audits? Are they asking for more proof or detailed documentation, or is it mostly the same?

Dr. Siegfried: I think it’s the same. I haven’t seen much of a change in that respect.

Pharma Now: Okay. So, could you share an example of a successful hybrid audit you've conducted, witnessed, or participated in and what made it successful?

Dr. Siegfried: I’m sorry to say, but I cannot recall a hybrid audit that I’ve been involved in that was entirely satisfactory. There were always technical challenges. It’s not that they couldn’t be overcome, but they were always there, which makes it somewhat frustrating for the auditor.

Pharma Now: Yeah, it becomes clear when you say it out loud, this is a complex process. So it makes sense that issues will crop up from time to time. Having a flawless procedure is hard to achieve. But if you had to pinpoint the biggest drawback of hybrid audits in general?

Dr. Siegfried: I think there are two key challenges. First, imagine you're in a manufacturing environment, and there's a logbook you want to show to the auditor. You need to display it clearly, without shaking or constantly zooming in and out, which is technically challenging. The second issue is something you simply can't replicate via video: human behavior. When you're physically present, you can observe body language, how people interact, how comfortable they seem, those subtle cues that help form a complete picture. In a hybrid setup, the remote and on-site auditors experience very different things.

Pharma Now: That makes sense. It's like viewing two versions of the same reality. Could technologies like AI or machine learning help bridge that gap?

Dr. Siegfried: AI is certainly being explored in many areas and might help here eventually. But at this point, it’s too early to say whether it will impact hybrid auditing. It could, but we’re not there yet.

Pharma Now: Got it. Returning to the idea of having two on-site and one remote auditors, how do you manage real-time requests from both during a hybrid inspection? I imagine the communication can get quite hectic.

Dr. Siegfried: Yes, it can. Many digital tools are available, and some companies are quite advanced in testing and applying them. But not every company is equally prepared. Many small or mid-sized companies see inspections as interruptions to their regular business, rather than a core focus.

Still, one thing that any company can do, regardless of resources, is not just to send a document and expect the auditor to figure it out. Instead, add annotations, highlight the relevant sections, and guide the auditor to where the vital information is. That requires minimal effort but makes a huge difference.

Pharma Now: That makes it more of a guided review than a document dump. And as you described, this whole system seems to be constantly evolving. Companies are adopting better technologies and tools to manage hybrid audits. Looking ahead, say five years from now, what significant changes do you expect in regulatory inspections?

Dr. Siegfried: The overall goal for companies and regulators is to have fewer but more effective inspections. Digital tools will be key enablers in achieving that. Think about it: ten years ago, hybrid audits were practically unimaginable. The technology just wasn’t there. But today, they’re common thanks to digital advancements. In five years, we’ll see even smoother, more streamlined hybrid inspections, faster, better prepared, and more collaborative.

Pharma Now: And if you were to give just one piece of advice to QA managers in companies looking to adopt hybrid setups, what would that advice be?

Dr. Siegfried: You always have to weigh the pros and cons. As I said before, no two companies are the same. For some, it may be the perfect tool, and for others, not. You need to weigh the pros and cons, but don’t base your decision on cost alone.

Pharma Now: I want to bring up another topic because during our preliminary conversation, you mentioned a critical point that never occurred to me before, pallet contamination. I’d like you to introduce this unseen risk and explain why it’s practical and where the danger lies.

Dr. Siegfried: When we talk about logistics, the industry uses a lot of pallets to transport goods. Surprisingly, much of the logistics environment is unregulated, especially regarding the transportation and storage of pharmaceuticals. Contamination of medicines in the supply chain is typically caused by co-transporting other goods in the same vehicle or container, but it can also come from the wooden pallets on which the goods are transported.

Pharma Now: So we’re talking about wood pallets contaminating the product. What exactly is the nature of that contamination?

Dr. Siegfried: It’s not the splinters. The risk is that wood can absorb moisture and grow mold, for example. Untreated wooden pallets pose risks because fungi or pests can bore into the wood. If the wood stays untreated, these organisms can affect the goods stored on top. Another issue is the lack of segregation, mixing good pallets with bad ones in the same vehicle or container, which you definitely want to avoid.

Pharma Now: That makes total sense. So, what do you suggest for pharma companies in terms of SOPs or checks to proactively detect pallet-related contamination?

Dr. Siegfried: Pallets are usually treated, preferably heat-treated to prevent insects, mold, or fungi. These pallets are stamped with a mark indicating the type of treatment they’ve undergone. Prevention is key. You want to ensure that only the right pallets are used because there's usually no way to recover the medication once contamination happens. This means your staff should be trained to recognize whether a pallet has been appropriately treated and is safe for use.

Pharma Now: But how do you test it? You mentioned the risk of cross-contamination between treated and untreated pallets. Even if a pallet is stamped, how do you ensure it’s not contaminated? Do you run surface contamination tests?

Dr. Siegfried: The tests are actually very simple. First, look and check if the pallet has the required stamp. Second, smell if something’s wrong; deterioration usually has an odor. I’ve never seen any other test methods used, and these basic sensory checks are usually sufficient.

Pharma Now: Does risk differ depending on the type of pharmaceutical product being transported, like solid dose forms versus injectables?

Dr. Siegfried: Yes, there is some difference. Sterile medicines are typically packed in glass vials or containers, which create a more substantial barrier and reduce the risk of contamination compared to solid dosage forms packed in blisters or cartons. But that doesn’t mean contamination is impossible. In practice, it’s probably not worthwhile to differentiate because logistics is a fast-moving business.

Pharma Now: Do the FDA, EMA, or similar organizations come into the picture regarding packaging and logistics? Are they doing something about this concern?

Dr. Siegfried: For example, U.S. regulations—21 CFR 211.56(c)- require written sanitation procedures designed to prevent contamination of equipment and goods. It doesn't specifically call out pallets. There are other regulations for drug substances and GMP as well, and again, they don't specifically mention pallets. But of course, anything that can cause contamination needs to be prevented, so we need to take them into account. Regulations can't include a complete list of every possible contamination risk.

Pharma Now: I see. Do you have a real-world example of contamination that happened and is connected to a wooden pallet?

Dr. Siegfried: I can't say for sure, I haven’t personally seen one. However, we need to understand that most citations are never made public. Yes, we hear about warning letters, but that’s a tiny fraction of all the global inspections and observations. So it’s quite possible, but I just don’t have a practical example to show you.

Pharma Now: What alternative materials could be used instead of wood pallets? Could we use metal or other materials?

Dr. Siegfried: You can use plastic and metal, and they are being used, mostly within manufacturing facilities or pharma warehouses. In most cases, it's plastic pallets. I've seen both, but mostly plastic. They come with a higher cost and additional weight compared to wood. So, general transport is not a viable choice unless the environment supports it. Using a metal pallet next to a wood pallet doesn’t make much difference. The environment and the pallets must work together.

Pharma Now: So alternatives are available in the market, but they’re kind of a pain to implement because they're more expensive and more complicated to manage.

Dr. Siegfried: Yes, the logistics of using them for general transport would be too onerous. It's not just costly, it’s just not practical.

Pharma Now: So what should companies do? Do they have a chance to integrate some risk management practices into the supply chain, like risk assessment?

Dr. Siegfried: We need to recognize that the value of pharmaceuticals is phenomenal. It’s known that stealing and selling pharmaceuticals on the black market is more profitable than dealing with illegal drugs. So, the risk must be addressed, and companies must perform risk assessments. As I said, you want to prevent. Many companies opt for bespoke logistics, like ensuring that pharmaceuticals are transported only in vehicles that transport pharmaceuticals, not food, goats, or whatever else. You don’t want to risk any contamination. Avoidance and prevention are the key messages here.

Pharma Now: That makes total sense. Can technology play a role in this? Can blockchain or similar technologies help in tracking contaminated products?

Dr. Siegfried: They are used predominantly for traceability, knowing where the goods are. That’s all, as far as I’ve seen.

Pharma Now: Just so that in the event of contamination, there’s a better understanding and traceability of the specific product that was exposed?

Dr. Siegfried: Exactly.

Pharma Now: Do you see any changes coming in the future, or are there any initiatives to handle these risks, or will this be something that the current logistics companies progressively address?

Dr. Siegfried: We're seeing a trend, especially among logistics providers, to offer more pharma-focused services, particularly in air freight and road transport, less so in ocean freight. Given the value of pharmaceutical goods, providing specialized services rather than generic ones is viable. 

We’ve seen several industry-driven initiatives where ports, logistics companies, hauliers, etc., come together to create standardized services. As I mentioned, a lot of this isn’t regulated by the MHRA, FDA, etc., so the initiative must come from the industry to achieve higher standards.

Pharma Now: For sure. It's something that has to come from within. It makes sense.

Thank you, Siegfried, for your valuable insights. That was very informative, and we appreciate your time today on Pharma Now.

Dr. Siegfried: Thank you. Thank you for having me.