Why Virtual Manufacturing Is Likely To Be Less Popular Under EU’s New Device Regulations
The scale of responsibilities for a virtual manufacturer under the EU’s new Medical Device and IVD Regulations may deter many companies from taking on this role. Elisabethann Wright, partner at Cooley law firm, explains why.
It is not necessary to physically produce a device to be a manufacturer. A company can source products from other manufacturers (often referred to as original equipment manufacturers ̶ OEMs) and thereby become a “virtual manufacturer”.
But in so doing, and in putting its own name on the product, the virtual manufacturer accepts legal responsibility for the device and is regarded as “the manufacturer.”
This means that the regulatory requirements applying to a virtual manufacturer are the same as for a manufacturer. And those responsibilities and the resources needed to meet them have increased under the new EU Medical Device and IVD Regulations compared with the medical device directives.
Now, virtual manufacturers face increased requirements relating to technical file submissions, as well as an obligation to fulfil post-market surveillance and vigilance activities and, where relevant, the need for notified body oversight. There are liability considerations too.
Medtech Insight asked Elisabethann Wright, partner at law firm Cooley, about the current changing regulatory factors impacting virtual manufacturing.
The principles of the Recommendation have now become a legal obligation imposed on the virtual manufacturer by the relevant provisions of the MDR and the IVDR. The practical requirements for fulfilment of these obligations, particularly the obligation to prepare and keep up to date relevant technical documentation, may result in a further decrease in the number of virtual manufacturers in the EU.
In addition, unlike the equivalent provisions in the MDD and the IVDD, Article 10 of the MDR and IVDR now detail the general obligations that manufacturers, including virtual manufacturers, must fulfil.
Moreover, while notified bodies may previously have accepted submission by virtual manufacturers of an abbreviated technical file to support conformity assessment of medical devices, this practice will no longer be acceptable under the MDR and IVDR. It is anticipated that, as a result, many virtual manufacturers will face greater challenges when seeking to demonstrate compliance with the MDR or IVDR than they did under the MDD and the IVDR.
Moreover, while the Regulations include a specific definition of a distributor as “any natural or legal person in the supply chain, other than the manufacturer or the importer” who makes a medical device available on the EU market, there is no specific definition of a virtual manufacturer.
In addition, while Article 14 of both the MDR and IVDR detail the specific responsibilities of the distributor, no equivalent details are provided for virtual manufacturers.
Virtual manufacturers are assimilated into the definition of manufacturers. In accordance with Article 10(4) of the MDR and the IVDR, this means that virtual manufacturers of medical devices must comply with the obligation imposed on “real” manufacturers, including the obligation to draw up and keep up to date technical documentation for the devices. Virtual manufacturers and distributors, therefore, have very different responsibilities and obligations regarding the medical devices they make available on the EU market.
Even if the OEM has not placed the device on the EU market, or does not plan to do so, the virtual manufacturer entity may still contract with the OEM to manufacture the device on their behalf. In this case, however, the OEM would be a contract manufacturer for the virtual manufacturer. This would mean that the virtual manufacturer entity would be the sole legal manufacturer of the device in the EU.
The technical documentation to which the virtual manufacturer has access must be appropriate and adequate to support the conformity assessment and CE mark of the devices marketed in the EU in their name. It must also include the information provided in Annexes II and III to the MDR and IVDR. This includes documentation relating to the design and manufacturing processes of the device, risk management processes, verification and validation data as well as technical documentation on post-market surveillance activities and plans.
One difficulty that virtual manufacturers may face in negotiating access to the OEM's technical documentation is that this documentation will commonly include OEM commercially-confidential information. As a result, the OEM may not be willing to share certain the information with the virtual manufacturer necessary to ensure fulfilment of the obligations imposed by the MDR and the IVDR.
Access by the virtual manufacturer to the OEM’s technical documentation is likely to constitute access to the OEM’s commercially-confidential information.
Virtual manufacturers must demonstrate how their quality management system (QMS) enables them to ensure continuous compliance with the requirements of the applicable regulation. Any agreement concluded with the OEM would be part of the virtual manufacturer's QMS. The agreement may, therefore, be audited by the notified body, as applicable.
Cooperation between the parties will be particularly important for fulfilling post-market vigilance obligations. Virtual manufacturers and OEMs could consider including within the agreement provisions addressing among other things:
Where both the virtual manufacturer and the OEM plan to CE mark and market a medical device in the EU;
How the parties plan to establish a clear link between the party and the medical devices placed on the EU market in their name;
How the parties plan to cooperate in relation to post-market surveillance and vigilance activities such as the communication of incidents and post-market clinical follow-up;
Communication between the parties regarding potential changes to the devices;
Facility auditing by the parties and their notified bodies; and
Fulfilment of registration requirements in the Eudamed database.
The OEM would be independently responsible and liable for any injury or damage related to medical devices that they have placed on the EU market in their own name.
In addition, some OEMs may consider that the risks that they may face in sharing their technical documentation and related commercially-confidential information with a virtual manufacturer outweigh the potential income generated in supplying medical devices to virtual manufacturers.
Consequently, unless OEMs and virtual manufacturers can agree on an individual basis how access to technical documentation will be shared, we would anticipate that virtual manufacturing will decrease under the MDR and IVDR.