BUSINESS & MARKETINGNorbert Sparrow
As the world's second-largest consumer of medical products, the European Union (EU) is a market U.S. manufacturers cannot afford to ignore. Harmonized legislation that allows CE-marked products access to markets in all member states and a third-party review system that has slashed premarket approval times compared to those in the United States are encouraging American manufacturers to pursue EU markets for virtually all types of medical products.
While U.S. interest in European markets is not new, some may be surprised at the strength of that interest. In 1993, for instance, U.S. companies controlled 43% of the EU's medical device market, according to The Global Competitiveness of the European Medical Device Industry, a recent study contracted by the European Commission. The LEK Consultancy (Paris), which conducted the study, arrived at this figure by combining import statistics with the number of U.S.-owned production facilities in Europe.
As the EU's single largest group of trading partners, U.S. device manufacturers must not only keep abreast of the regulatory and economic issues that have a direct effect on their business, but should watch more general movements within the EU. One relevant example of such movements is the intergovernmental conference that is currently reexamining the terms of the 1991 Maastricht Treaty, which established a timetable for European economic and monetary union (EMU) by 1999. But even with a close-up view of such activities, getting a sense of the state of the European Union often depends on whom you ask.
In the Europhile camp, the shared view is that the EU is forging ahead on the road to the single market. The intergovernmental conference, which convened last March 29 and is tentatively scheduled to conclude in Amsterdam in June 1997, will usher in institutional reform, allowing for the incorporation of as many as 12 new member states in the near future. France and Germany, after a brief falling out, are once again firmly committed to economic and monetary union. And the EU is poised to cross yet another threshold when the Medical Devices Directive becomes mandatory for product approval at midnight on June 14, 1998.
The Europessimists paint a far less flattering portrait. The ultimate goal of the intergovernmental conference is institutional reform. Without it, the enlargement of the union could cripple an already sluggish legislature. But first there must be agreement on the breadth of that reform, proposals for which run the gamut from a radical overhaul proposed by Germany to a simple "5000-mile checkup" of the Maastricht Treaty advanced by the United Kingdom.
Despite the recent display of Franco-German solidarity, add the pessimists, EMU is far from a given. In an effort to meet the Maastricht goal of a budget deficit of 3% or less of gross domestic product (GDP) by 1997, Germany and France have embarked on social policies that anger many within their respective electorates. Because only Denmark and Ireland currently meet the criteria for monetary union, many observers wonder what purpose EMU would serve if it involved only a handful of the EU's member states.
Steady progress has been made in establishing a single market for medical devices, but the Europessimists note that the transposition of directives into national law seems to have whittled away at the overarching goal of removing barriers to free trade within the EU. Meanwhile, the In Vitro Diagnostic [IVD] Directive is still wending its way through the legislative maze, where it has encountered several obstaclesnotably, the issue of which national languages should be required to appear on labeling.
THE MEDICAL DEVICE DIRECTIVES
The Active Implantable Medical Devices Directive (AIMDD), adopted on June 20, 1990, harmonized legislation on pacemakers and related devices. These products must now carry the CE mark, indicating compliance with the directive, in order to be sold in the European Economic Area (EEA), which comprises the EU member states as well as Norway, Liechtenstein, Iceland, and Switzerland.
The more far-reaching Medical Devices Directive (MDD) was adopted on June 14, 1993, and covers all other medical devices with the exception of in vitro diagnostic equipment, which will be regulated by a third directive still in draft form. The MDD is currently in its transitional phase, meaning that manufacturers can place their products on the market either by complying with the new, harmonized legislation or by meeting the national requirements of the individual member states. The transitional period ends at midnight on June 14, 1998, at which time all medical devices under the scope of the MDD must carry the CE mark. In the meantime, member states are expected to transpose the text of the directives into their national laws.
The vast majority of EU member states have already done so. Only Austria and Belgium have yet to write either the AIMDD or MDD into national law, while transposition of the MDD alone is still pending only in Italy and Luxembourg. Political instability and bureaucratic inertia explain the delays, according to Victoria Dedrick, technical director of the European Confederation of Medical Devices Associations (EUCOMED; Brussels).
"Belgium hasn't had a stable government in five years and Austria has had some problems with its coalition government," points out Dedrick. "They are in a holding pattern." But transposition will ultimately move forward, she believes, and EUCOMED is presently focusing on issues that have come to the fore in countries where the directives have already been transposed. Echoing the concerns of industry, Dedrick notes that in some instances national laws and procedures are undermining the establishment of a "level playing field" in the EU.
One example Dedrick finds particularly galling is France's use of the MDD's "safeguard clause." Conceived as a last resort to ensure user safety, the safeguard clause empowers member states to restrict a CE-marked product's placement on the market if the product is believed unsafe. A key principle of the clause, says Dedrick, "is that something must have occurred in the postmarket process to trigger the procedure." Thus far, France has been the only country to invoke the clause. But it has done so with utter disregard for the text's mechanism, says Dedrick.
In March 1995, France used the safeguard clause to block the sale of condoms that had not received French premarket approval (homologation). Pointing out that the European standard for condoms (EN 600) had not then been adopted, French authorities demanded that condoms be tested under national law before being placed on the market. "Now that EN 600 has passed, the issue should be resolved," says Dedrick. "But we're still waiting."
Two months after restricting condom sales, France imposed a ban on the import, export, sale, and implantation of all nonphysiological breast implants that had not been approved through the traditional French system. According to the French National Agency for the Development of Medical Evaluations (ANDEM; Paris), the action was warranted because implant manufacturers were not meeting the MDD's essential requirements, which enumerate the safety and performance criteria with which devices must comply.
For Dedrick, that rationale has no basis in fact. "There were no data; there was no objective safety reason. French authorities simply said, 'We want some time to look at this.' So if you were manufacturing breast implants in France, even if you were only exporting them, you were to cease and desist." France, says Dedrick, is using the safeguard clause preemptively.
The ban has had a dramatic impact on companies operating on French soil, forcing some of them to relocate their factories outside of France to continue doing business. On May 17, one year after the initial ban, the French secretary of state for health and social security issued a communiqué outlining the conditions for the marketing of breast implants in France that will be put into effect by a forthcoming interministerial order. The document stated that implants will be required either to have received national premarket approval or to be CE marked and meet a set of reinforced technical requirements. The additional tests will cover mechanical resistance of the shell, toxicological evaluation of materials, and clinical evaluation under normal conditions of use. The bottom line for manufacturers is more testing and greater expenditure of time and money.
According to industry analysts, during the transposition process a number of issues have surfaced that could seriously undermine the spirit of harmonization. In Belgium, for example, government authorities have requested that products stored in a warehouse on Belgian soil carry registration numbers on their labels to indicate that they were stored in an approved facility. EUCOMED argues that this specious reading of MDD Article 2 is contrary to the intent of the directive because it imposes a set of national criteria on products that have already been CE marked.
Varying notification requirements regarding Class I devices (the lowest-risk devices in the MDD's classification system) have also caused concern among manufacturers. According to EUCOMED, MDD Article 14 requires companies to provide one competent authority in the EU with the address of their business and a product description. In transposing the MDD, however, several member states have interpreted this article to mean that companies must notify each country's competent authority if the product is placed on its national market, regardless of whether notification has been performed elsewhere. In addition, some member states have requested that technical data on each product be submitted to the national competent authority. This, argues EUCOMED, is excessive and clearly in contradiction of the directive.
"Member states may not require technical documentation on Class I devices," concurs Robert Viréfleau, expert intramuros of the European Commission, Directorate General III. He believes, however, that these additional demands are generally voluntary and therefore do not constitute an infringement of the MDD. Dedrick is optimistic that these and related issues will be resolved through a series of amendments to the MDD that EUCOMED would like to see implemented via the IVD Directive.
However well discussion of those amendments goes, dialogue between the member states may yet end in a stalemate on another matterlanguage requirements. Notes Steven Ogilvie, regulatory affairs and quality assurance manager at Portex, Ltd. (Hythe, Kent, UK), "MDD Essential Requirement 13, which deals with labeling, is studded with phrases like 'as far as practicable' and 'where appropriate,' suggesting that a commonsense approach should be possible." However, the directive does not spell out who decides on the appropriateness of the measures, thus opening the door to wildly differing interpretations. Consequently, manufacturers may need to use as many as 12 languages to satisfy the legal requirements of member states, says Ogilvie. The future incorporation into the EU of the former communist countries of central and eastern Europe can only exacerbate this problem.
"There is definitely a movement afoot toward national languages," concurs Dedrick, "but industry is fighting it." As part of this offensive, EUCOMED has proposed the introduction of an amendment to MDD Article 4.4which states that countries may require labeling information to be in a national languagethrough the IVD Directive. Because language restrictions can act as barriers to the free movement and availability of goods, the association argues that the MDD should contain wording similar to that in the draft proposal of the IVD Directive. That text states that the use of a national language is required only in those cases where it is needed for the safe and correct use of a device. The issue of language in the IVD Directive itself, however, is the object of considerable debate in the European Parliament, which could ultimately veto the directive if a compromise is not reached.
THE IN VITRO DIAGNOSTIC DIRECTIVE
The European Parliament's veto power raises serious concerns for Maurizio Suppo, director of the European Diagnostic Manufacturers Association (EDMA; Brussels). The IVD Directive is currently with the European Council, which must now reach a common position before sending it to Parliament for a second reading. "At that point, the Parliament will have a three-month time limit for the second reading," says Suppo, "and then one of two things will happen. Either everyone will be satisfied with the text so that the directive is adopted and sent to member states for transposition, or Parliament will opt to send the proposal back to the council." That scenario could lead to a conciliation procedure, during which 15 members of Parliament representing the EU and 15 representatives of the national competent authorities attempt to hammer out an agreement. "If they fail," adds Suppo, "the project is trashed. That happened with the directive on biotechnology: after seven years of work, Parliament dumped the project and we had to start from scratch.
"Our products are small. There is simply no room on their packages to fit all the EU languages," argues Suppo. "And you have to remember that these are for the most part professional-use products that are not intended for lay users." If the IVD Directive ultimately requires manufacturers to relabel their products according to their destination, Suppo predicts that companies will simply abandon some of the smaller markets. "IVD manufacturers represent about 1% of most countries' health-care expenditures. In some cases, it would not be economically viable to repackage and relabel everything."
If all goes well, "the IVD Directive could be adopted as early as May 1997 and transposed one year later," says Suppo. "But if all goes wrong, who knows?"
Notified bodies are appointed by the EU member states' national competent authorities (usually the ministry of health) to assess and certify products and quality systems as required by a European directive. Currently, 42 organizations have been notified to the European Commission under the MDD, a number that will increase as pending applications in Austria, Belgium, Greece, Iceland, and Portugal are approved.
The system has been successful at speeding up premarket approval times. A recent study conducted by Medical Technology Consultants Europe, Ltd. (Staines, Middlesex, UK), found that medical devices were approved, on average, three times faster in the EU than in the United States. Statistics such as these have prompted U.S. manufacturers to lobby FDA to adopt a similar approach as quickly as possible. But that would not be a wise move, says Alan Kent, chief executive of the Medical Devices Agency (MDA, London), the United Kingdom's competent authority.
"Let me stress that I am optimistic about the outcome," says Kent, "but if I were a U.S. regulator, I would watch with interest how Europe solves its third-party review problems before jumping in. FDA is at the top of a ski slope with a lot of people behind trying to push it off. The EU has regulations in place, and the member states are already on the way down. It's completely sensible for FDA to stand back and watch how things evolve."
One of the problems that Kent points to is a lack of experience among the competent authorities of some member states. "The MDA has a history of auditing manufacturers against GMP [good manufacturing practices] requirements, so it has an experienced staff. But other member states are in the position of having to turn to their national accreditation organizations, which have a generalist background. They have high standards, but they don't necessarily have the knowledge to make decisions about medical devices," says Kent. Consequently, they will have to seek expertise elsewhere. The methods they adopt to accomplish this and how they go about appointing notified bodies will bear close scrutiny, he cautions.
Another challenge that can be viewed as a litmus test of the EU system's efficacy, according to Kent, is how successful it will be at ensuring the development of a level playing field. "One of the areas where we still have questions to answer and procedures to formulate is in ensuring that each member state applies more or less equivalent standards in the implementation of the directives." The notified bodies, in particular, must show not only on paper but in practice that they have sufficiently high ethical standards. "The way things stand today," says Kent, "I might be satisfied with the notified bodies in, say, 9 or 10 countries, and have doubts about 2 or 3 others."
According to EUCOMED and other industry sources, the doubtful cases tend to be located in countries with a strong tradition of centralized government institutions: France, Spain, Italy, and Portugal. The primary concern is that these member states' notified bodies, which are supposed to be independent commercial entities, tend to have a more than casual relationship with the competent authority.
G-MED (Fontenay-aux-Roses, France), France's only notified body, is constituted as a groupement d'intérêt économique, a nonprofit public-private partnership of four institutions: the Ministry of Health (which is also the competent authority), the Ministry of Industry, the Central Laboratory for Electrical Industry, and the National Testing Laboratory. According to Viréfleau, this type of structure is "well within the parameters of the Medical Devices Directive. There would be a problem if there were a shared interest between the notified body and the manufacturers, but that is not the case."
Dedrick begs to differ. "Until the MDD becomes law on June 14, 1998, G-MED will act in the name of the Ministry of Health in terms of handling homologation. In essence, it's somewhat similar to the way FDA operatesand we know how hard it is to be judge and jury."
"France chose to create a group specializing in the application of the medical device directives and capable of offering a full range of certification and testing services," counters Emmanuel Grimaud, CEO of G-MED. "This structure allows us to consolidate our expertise and be a one-stop service provider that can facilitate evaluations in a well-equipped testing house as well as help set up clinical trials." It simply makes good business sense, argues Grimaud, and furthermore there is nothing untoward about the competent authority being a part of the group. The ministry's role is clearly defined within G-MED, he stresses, "and it simply does not involve itself in G-MED's decisions as a notified body."
Harmonization, say the experts, is a work in progress. The thing to remember is that the EU is attempting to create a level playing field in a union that encompasses 15 countries with singular geographical and cultural differences and 11 different languages. Moments of cacophony are therefore inevitable.
"Europe is facing very similar problems to those the United States confronted in the 1970s, but they are compounded by language difficulties and a nonprescriptive approach to guidance," says Kent. "The regulations are very new, as are the notified bodies and the competent authorities that are heading up their learning curve. I am optimistic at the outcome," he reiterates, "but I am also realistic in recognizing that there are definitely problems to be solved."