"E" is for economic operator – you know: the MAID
In the series of articles on this blog discussing parts of the proposed EU medical devices and IVD regulations I am taking a look now at economic operators, or as Maurizio Suppo calls them in an interesting analysis of the IVD regulation proposal: the MAID (manufacturer, authorized representative, importer, and distributor). Both the IVD and medical devices regulation lumps all of these together in a single section of the proposal, along the methodology of Decision 786/2008 on a common framework for the marketing of products, which forms the template for regulating the supply chain in EU regulation for CE marked products. Since the economic operators are regulated identically under both the MDR and the IVDR proposals, everything below applies to both. The party line in this respect is the Commission’s attempt to make the supply chain a closed system, much like the Commission has also tried with the Falsified Medicines Directive, by requiring that each link in the chain checks compliance of the previous one and by imposing autonomous regulatory obligations on the respective actors in the supply chain. Both of these elements are new compared to current medical devices and IVD rules and are a departure of the principle that the manufacturer is the focal point of all regulatory responsibility.
For an overview you can download the presentation I gave on this, among other subjects, at a recent medical devices regulation seminar organised by my law firm. This post is also not the exhaustive word on the MAID under the proposals – there is more to follow, for example on authorised representatives, which I already discussed in detail recently, and will discuss in detail again in another post.
I’m not going to go through the entire manufacturer concept, but will rather focus on some things that jumped out at me. As a point on which there is a significant departure of the current system I’d like to take you to article 14 in the MDR and IVDR, called “Cases in which obligations of manufacturers apply to importers, distributors or other persons”. A distributor, importer or other natural or legal person shall assume the obligations incumbent on manufacturers if he does any of the following:
(a) makes available on the market a device under his name, registered trade name or registered trade mark;
(b) changes the intended purpose of a device already placed on the market or put into service;
(c) modifies a device already placed on the market or put into service in such a way that compliance with the applicable requirements may be affected.
So far no really big departures to the current rules. But then there is the translation and pack changes provision in section 2, which imposes some very new things:
- Translations and pack changes by others than the original manufacturer must be subject to quality system that is notified body certified; and
- Prior to making the relabelled or repackaged device available, the manufacturer and authorities must be informed and (upon request) be provided with a sample or a mock-up of the relabelled or repackaged device, including any translated label and instructions for use.
To me these changes make a lot of sense, but they do not do a good job of accounting for European Court of Justice case law regarding repackaging of medicinal products. Point 2 was the subject of bitter and protracted litigation in that field, and the EU Court delivered a number of judgements setting out how the manufacturer and repacker should behave towards each other, of which you can find a helpful overview right here and the latest judgment in the series over here. Since recital 25 IVDR and 30 MDR explicitly refer to the last judgment mentioned for guidance, we will have to assume that the Commission intends this case law to apply to the medical devices and IVD field. That automatically means that there is a lot more nuance to repacking and translating than is presently set out in the proposals themselves. Important case law on the effect on the manufacturer intellectual property rights relating to the packaging, such as the distinctive character of the manufacturer trademarks, is not addressed in the operative part of the proposals (and, according to EU Court case law, cannot serve as rules directly prescribed by the regulation). Since these trademarks will appear on the changed pack, this would normally be trademark infringement – or in other words: something that the manufacturer should have a say about. The pharmaceutical industry has fought for years and years about this and it might just be that the Commission is trying to quietly fly this one in under the radar for the medical devices industry, because in the MDR and IVDR proposal the only right that the manufacturer has is to be “informed”, whereas the trademark owner with respect to a medicinal products is much better protected. Of course we don’t know if “informed” is a term that denotes that this is the only remedy the manufacturer has, but on the other hand it does not give any detail to the contrary either. Although the proposals have tried to incorporate the original five so-called BMS conditions developed in the case law discussed, the further refinement and regard for the trademark owner’s reputation set out in that case law (e.g. the division of the burden of proof about damage to the reputation of the trademark of the manufacturer) has not been put in the proposals. As an IP litigator I am intrigued by the opportunities for me but not happy for industry.
Importers must ensure that:
- the appropriate conformity assessment procedure has been carried out by the manufacturer;
- an authorized representative in accordance with Article 9 has been designated by the manufacturer;
- the EU declaration of conformity and the technical documentation have been drawn up by the manufacturer;
- the device bears the required CE marking of conformity;
- the device is correctly labeled and accompanied by the required instructions for use and EU declaration of conformity; and
- a Unique Device Identification has been assigned.
They must furthermore:
- Be able to identify any economic operator to whom they have supplied a device, any economic operator who has supplied them with a device and any health institution or healthcare professional to whom they have supplied a device for a period of five years;
- Label the device with their contact details;
- Take corrective action (a.o. recalls and report to authorities) autonomously;
- Engage in post-market surveillance (among other things report complaints); and
- Refuse to import devices of which he has reason to believe are not in conformity with the requirements.
Just some remarks here. How is an importer going to “ensure” that the ” appropriate” conformity assessment procedure has been carried out by the manufacturer and that the device bears the “required” CE marking of conformity and is “correctly” labeled? It seems that the Commission is intending the importer to be a notified body of sorts. Of course the importer can check if certain paperwork is in place, but making the importer autonomously responsible for second guessing the notified body’s work, that’s serious stuff I think. You might say this is justified for class I devices (where a notified body has not been involved) but for class III devices? Perhaps I’m reading too much in these qualifiers and we only need to look at what they trigger (article 11 (2) MDR and IVDR):
“Where an importer considers or has reason to believe that a device is not in conformity with the requirements of this Regulation, he shall not place the device on the market until it has been brought into conformity. Where the device presents a risk, the importer shall inform the manufacturer and his authorised representative to that effect, as well as the competent authority of the Member State in which he is established.”
So if there is only a need to inform in case of suspected non-compliance, why does the statute stipulate a duty to “ensure” compliance? This can only mean that the authorities can enforce against an importer of which they believe he has not done enough to “ensure” compliance and this will have a lot of consequences for the agreements in the supply chain, because importers are faced with a new and substantial risk that must be accounted for in the agreement. But if “not enough” was intended, why not phrase it as such? Now it’s phrased as a binary obligation rather than a duty of care, so essentially a no-fault liability – and one without legal recourse on the manufacturer, at least not on the basis of the MDR and IVDR. If there is anything I’d be lobbying on as industry to get out of the proposal, it would be something like this. However, it looks like the industry will be stuck with it, as the proposals implement the exact template of economic operator supervision set up in Decision 768/2008. That doesn’t mean that these things are not picked up by the market. Orgalime for example mentioned problems with applying the “ensure” criterion in the supply chain in 2010 already. Eucomed is flagging the issue again now in its brand new position paper on the MDR.
Distributors must verify that:
- the product bears the required CE marking of conformity;
- the product is accompanied by the information to be supplied by the manufacturer; and
- the manufacturer and, where applicable, the importer have complied with the rules.
They must furthermore:
- Label the device with their contact details;
- Take corrective action (among other things undertake recalls and report to authorities) autonomously; and
- Engage in post-market surveillance (i.e., report complaints)
The same applies as for importers with regard to the terms”required” and “complied with the rules”.
You will see some common themes here: each link has to check compliance of the previous links. Sounds very nice in theory. As discussed the no-fault liability for another party’s behaviour is nothing to look forward to. But there is more to meeting these obligations.
In practice this will involve exchange of a lot of confidential information that nobody likes to just give to someone else. As Mr Suppo puts it: “Rules are rather unclear on how access should be granted to technical documentation for economic operators other than the manufacturer.” I would take a further step back, because this statement assumes that economic operators would be granting each other access to tech files for the purpose of allowing the other to check compliance. Being quite familiar with supply chain contracts (imports and distribution) in the medical devices industry I have not come across agreements that allow the distributor or importer full access to the technical file of the manufacturer. Both under the current directives and the proposals a tech file as such would be confidential information. Moreover, why grant only access to the technical file then? The quality system documentation is also an important pillar for compliance. I have double-checked the proposals but could not find a proposed requirement for companies to give each other access to tech files. Also, this would not solve the no-fault liability that I discussed – the importer and distributor may disagree with the manufacturer, and even with the manufacturer’s notified body. Should the system be set up in a way that economic operators have to second-guess notified bodies to manage their own potential liability? I think that undermines the core of the CE marking system: you have to be able to always rely on certificates of conformity. My contention is that distributors and importers duty’s on the no-fault liability part should not extend beyond verification of the certificate of conformity and corresponding declaration of conformity (except in the case of class I devices, in which case only verification of a declaration of conformity should suffice).
Here it is: a tip of the iceberg with regard to economic operators. As discussed, companies in the medtech sector should really watch where this is going. Importers and distributors have to start thinking about upping their game in regulatory compliance. Companies should account for this in long term contracts that may run beyond the transitional period set out in the proposals. Etc. More to follow!