Nobody is in any doubt that the new European Medical Device Regulation (EU MDR) is on the agenda of compliance professionals in the medical devices industry. But is it far enough up on their priority list?
Early compliance to the European Medical Device Regulation—the outline of which was finally published in the Official Journal of the European Union on May 5, 2017—is crucial if manufacturers are to maintain access to EU markets, which in aggregate are economically larger than the United States.
The MDR replaces both the previous Medical Device Directive (93/42/ EEC) and the Active Implantable Medical Device Directive (90/385/EEC), and entails a raft of changes to the oversight of many critical processes in manufacturing (see sidebar "Key Issues for Compliance with the Medical Device Regulation (EU 2017/745)). Through a more transparent and comprehensive regulatory framework, the EU MDR is designed to improve clinical safety and fair market access for all medtech players while promoting innovation in the sector.
The Compliance Conundrum
A three-year compliance transition period was agreed, meaning that the EU MDR will not be fully in force until May 2020. However, medical device companies should not rest on their laurels. A significant stumbling block to compliance has already come to light: the potential under-capacity of compliance professionals both in terms of in-house specialists and Notified Bodies.
In-house compliance staff are crucial to pave the way for the smooth introduction of the EU MDR, working to obtain buy-in from the necessary stakeholders across the organization and ensuring that sufficient commitment and resources are allocated to properly adapting business processes. The dearth of talent in this area is part of a wider skills shortage in the life sciences sector, which is especially evident in clinical trials and compliance.1 To some extent, relying on outsourced compliance consultants can provide a solution by plugging the skills gap, but we should point out that their supply is also not guaranteed. Manufacturers that get moving quickly with the compliance process are likely to engage the best consultants at the best price.
As for Notified Bodies, which are responsible for the auditing and certification work in the industry and which must themselves seek designation under the MDR, their capacity issues have been well documented. Their numbers have decreased by a fifth in Europe over the past two years and some of them have already stated that they are not taking on further CE Marking work at the present time—and that's before the full burden of the EU MDR kicks in.
Based on this twin capacity issue, pioneering manufacturers have much to gain by seizing the compliance initiative as early as possible. This will not only allow them to circumvent the capacity bottleneck, but will enable them to pick up business that non-compliant competitors will simply not be certified to service.
To further investigate this notion that EU MDR compliance could become a decisive factor in market position, we created a model that quantifies in clear financial terms the scale of the potential commercial advantage—the Market Opportunity Value model. Based on interviews with large players operating in the European markets, we believe that compliance under-capacity is likely to be in the region of 20% of total market value. Factoring this into our model, we conclude that the potential annual revenues achievable for EU MDR-compliant manufacturers is an eye-watering $16.5 billion across the top 10 EU markets plus Switzerland. Of course, this can be viewed from the other perspective: It also represents the scale of the potential market penalty facing compliance late movers.2
The EU MDR is the most significant change to the regulatory framework in the medical device industry since CE Marking was introduced in 1993. There is a rapidly emerging capacity shortage both among Notified Bodies (certification) and expert in-house compliance staff and consultants (preparation). Combined with the complexity and breadth of the required changes, it is imperative that medtech companies put their compliance plans into motion now. Not doing so runs the risk of being excluded from the markets and even handing market share to EU MDR-compliant competitors, which may prove impossible to win back even once compliance has been achieved.
1. See, for instance:- The Pharmaceutical Journal, UK life sciences industry faces skills shortage, says ABPI, 13 Nov 2015; Deloitte, Unravelling complexity, April 2017
2. The total market values from which it is derived are based on the latest verified medical market value estimates from a variety of established analysts8. The countries selected represent the top 10 EU countries by nominal GDP, plus Switzerland.