How New European Regulations Could Affect Outsourcing

Monday, March 16, 2015

Source: MD&DI

During the last two decades, there has been a steady increase in the outsourcing of medical device manufacturing to contract manufacturers, service providers, and component suppliers. However, over the past few years there has also been an increase in the frequency of recalls and increased scrutiny of the supply chain by regulators. The new European Medical Device Regulation (EMDR) places additional burden on manufacturers and their suppliers. Ultimately, this may hurt the profitability of contract manufacturers and the willingness of manufacturers to outsource manufacturing. Here are some examples of how the EMDR may impact outsourcing of medical device manufacturing:

Changes to Supplier Quality Agreements

In the fall of 2013, most manufacturers of Class III devices were informed by Notified Bodies that they should expect an unannounced audit in 2014. They were also told that if they outsourced manufacturing to critical subcontractors, or if there were crucial suppliers of unique components, then the Notified Body may also perform an unannounced audit of their suppliers. This information was in response to a recommendation published by the EU Commission on September 24, 2013.

Throughout 2014, especially during the second half of the year, Notified Bodies subjected high-risk Class III device manufacturers and a few contract manufacturers to unannounced audits. These unannounced audits are expected to continue throughout 2015, and gradually, these audits will be extended to Class IIb and Class IIa manufacturers and their suppliers. In order to ensure that Notified Bodies will be able to conduct these audits, supplier agreements will need to be updated to specifically allow unannounced audits.

Increased Scrutiny of Your Supplier’s Supply Chain

In the past, if a supplier outsourced operations like heat treatment, coatings, or laser marking to a third party, the manufacturer was seldom aware of who was conducting the work. The only “control” of a supplier’s supply chain was the requirement that any changes to suppliers be communicated to the manufacturer as a change notification.

One of the consequences of the fraudulent Poly Implant Prosthese (PIP) breast implant scandal is that Notified Bodies are asking manufacturers to disclose each of their crucial suppliers—including raw material suppliers. This is different from previous years when Notified Bodies only focused on significant subcontractors that perform contract sterilization or manufacture a finished device. Ultimately, this will result in more thorough incoming inspection by suppliers as well as auditing of raw materials and component suppliers.

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