On the Horizon: New Rules for Medical Devices

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By Chris Wong

Medical and biotechnology device manufacturers are no strangers to the necessity of meeting compliance requirements set forward by the U.S. Food and Drug Administration. Managing the constraints of and the accountability for these standards is part and parcel of the medical technology business. However, regulatory issues are set to take on a whole new dimension with emerging environmental directives from the European Union (EU), which will require device companies to change the way they develop their products and bring them to market.

Clearly, the legislation has moved faster than companies’ ability to respond. According to a study conducted by AMR Research Inc. (Boston, MA) last year, an overwhelming majority — 70 per cent — of multinational companies has underestimated the extent of the impact of environmental regulation on major business processes.

What follows is an explanation of these requirements, how they will affect device manufacturers, and what can be done to cost-effectively manage their compliance.

The Regulations
Two environmental policies became law in February 2003 in the EU. Because many medical and biotechnology device manufacturers test new products by bringing them to market first in Europe, EU laws are of top concern to these companies.

The first law governs restrictions on the use of certain hazardous substances in electrical and electronic equipment (RoHS). As of July 1, 2006, the RoHS directive will prohibit the sale of electronics-based products that contain more than 0.01 per cent of specific hazardous materials including cadmium, mercury, lead, hexavalent chromium, polybrominated biphenyls and polybrominated diphenyl ether. Since traces of these materials are found in many devices, this regulation will fundamentally change the way these products are created, from initial design to the sourcing of core components.

The second regulation is the waste electrical and electronic equipment (WEEE) directive, which ensures products are recycled or disposed of properly. Starting August 13, 2005, manufacturers are required to finance the collection, treatment, recycling and recovery of all electronics waste. For this directive, it is important to note that the responsibility rests on the shoulders of the device manufacturers to manage the electronics waste from the products they deliver. It will not affect hospital disposal policies or regulations.

What this Regulation Means
One impact is clear: manufacturers will be required to further increase the scrutiny in their review processes around product development — from inception and design all the way through to end of life and disposal. The four key areas that will be affected by these regulations are reporting, product design, service and repair, and sourcing and procurement.

Reporting: WEEE requires new compliance reporting that will track certifications at every step of the product’s life cycle, including trade documents; labelling; disassembly and recovery processing instructions; and the tracking of disposal, reclamation and reuse compliance. Additionally, RoHS regulations will require documented proof that devices do not exceed the maximum allowable amounts of hazardous substances. Compliance will demand huge stores of data for audit purposes, and will require the ability to summarize this information into higher-level reports.

Product design: Design guidelines will be required. These should ensure that products do not contain hazardous substances and that products are prepared for disassembly, reuse and recycling. This will require system-level test data to support the manufacturer’s claim of product/device conformance. At a design level, this means that by applying compliance efforts to the device design when it is still in the concept stage, companies can minimize the costs of development up front, as opposed to further along in the process. At an engineering level, this means that because proof of compliance must be created in the design cycle, less time will be spent on the creative development of the device and more on administrative tasks.

Service and repair: For devices with long life cycles, companies will need to track, repair and upgrade histories in order to meet regulatory guidelines for end-of-life processing. If changes are made during the life of the product — such as swapping the battery currently shipped with the product for a new battery — this, too, will need to be tracked to ensure that any substitutions meet RoHS requirements, and that at the end of the product’s life, it will be accepted by recyclers.

Sourcing and procurement: This part of the process can be the most complicated of the elements requiring change. Companies will need to incorporate additional qualification criteria for supplier selection and parts qualification and track the information through the life cycle of the product. In cases in which contract manufacturers are responsible for sourcing, this is especially important. Not only will the parts of a device need to meet the requirements, but so, too, will the supplier. This entire process is about to become more complicated as qualified parts must not only be cost-effective and available, but must also comply with the environmental legislation.

Costs
Some analysts estimate that information technology (IT) costs for supporting compliance will account for up to 10 per cent of a company’s IT budget over the next two to three years. Analysts also agree that the primary sources of increased costs will be in the purchase of new materials, regulating outsourcing, and changes to operations and R&D. Although these costs are high, the business risk of noncompliance is even higher. Failure to comply could result in the removal of the manufacturer’s products from the marketplace.

How to Get Started
The following are recommendations for how medical and biotechnology device manufacturers can prepare their companies for the pending regulation:

Step One: Device manufacturers need to change their current perception of a product’s life cycle. Product development now takes longer than before, and includes regulation adherence at the beginning and the end of the process. The need to change requires a commitment across a company’s various divisions, including R&D, marketing, quality assurance, regulatory affairs, corporate management, IT and even sales. Companies can no longer look at the process as piecemeal.

Today, most companies implement a product data-management solution for product design and transition to manufacturing along with customer relationship management, order management and/or service life-cycle management solutions to address various aspects of service and repair. Going forward, information distributed across these stovepipes will need to be much more integrated.

Step Two: Consider new technologies that are addressing the need to manage the entire process from product life-cycle management solution providers. When reviewing these solutions, look for the ability to:

collaborate with suppliers to collect material data for supplier material declarations
generate an environmental view of the product to analyse it for environmental risk — and make “what if” changes to bring the product into compliance
manage regulatory documentation and specifications
track recovery manifests and disposal certificates of destruction
manage compliance of outsourced recovery partners through proactive audits and closed-loop corrective actions
Step Three: Get involved. There are still unanswered questions regarding the implementation of WEEE and RoHS. With few established guidelines, there is an opportunity for companies to have a voice in definitions and accepted practices for complying with these two regulations. Organizations involved in these processes include:

National Electronics Manufacturing Initiative Inc. (Herndon, VA) is an industry-led consortium with a mission to assure leadership of the global electronics manufacturing supply chain.
American Electronics Association, or AeA (Santa Clara, CA), is the largest high-tech trade association in the U.S. This lobbying group is currently working to ensure that environmental compliance regulations in the U.S. are sanctioned at a federal level, for fear that each state will have its own (and differing) legislation.
The Electronic Industries Alliance (Arlington, VA) is a trade organization that includes U.S. manufacturers, representing more than 80 per cent of the electronics industry. This organization is working to create guidelines for environmental compliance.
Medical industry groups such as the Advanced Medical Technology Association (Washington, DC) and the Medical Device Manufacturers Association (Washington, DC) are not currently focused on these environmental compliance requirements. However, it will be important for these organizations to engage in the environmental regulation dialogue to ensure that the medical and biotechnology device industry’s requirements are taken into consideration, especially as the U.S. Congress considers adopting similar legislation.

Conclusion
These regulations are coming fast, but there is time to put into place both the best practices and the technology to manage them. Companies should get involved with organizations now, both to learn and to influence the guidelines for meeting these directives, as well as to take a tip from other industries. By making these initial inroads, companies can continue to drive product innovation and time to market to remain competitive, while complying with global guidelines for ensuring the health of individuals and the environment alike.

Chris Wong is chief products officer and executive vice-president of Agile Software Corp. (San Jose, CA), leading global product strategy, mergers and acquisitions, and technology partnership initiatives. In his 20 years of management experience in the enterprise software industry, Wong has focused on developing and marketing a comprehensive business platform that addresses every facet of product life-cycle management,