The Medical Device Manufacturers Association (MDMA) joined with other industry colleagues recently in submitting detailed comments to the Environmental Protection Agency (EPA) regarding its proposed changes on medical device sterilization using ethylene oxide. Much like a litany of other companies, MDMA didn’t hold back in expressing deep concern about the proposals potential to hamper patient access.
Impact on small and mid-size medical device companies
MDMA, a national trade association that provides educational and advocacy assistance to approximately 300 companies in medtech, is majority comprised of small to mid-sized medical device companies. In its comments, the association took time to detail the potential implications on these small to mid-sized companies if the proposals were to be put in place.
In the National Emission Standards for Hazardous Air Pollutants (EPA-HQ-OAR-2019-0178-0154) proposal (NESHAP), EPA estimates companies would cumulatively need to spend $220 million in one-time capital investments as well as an additional $74 million to $86 million a year in recurring operating and maintenance costs on equipment. “The combined costs of both regulatory actions are likely to exceed $200 million annually,” according to the MDMA statement, signed by Brendan Benner, executive vice president of public affairs.
Larger companies should be able to fund the additional spending with cash on hand, according to a report by Moody’s Investors Service. However, smaller companies may not have that option, according to the report, which wrote that the additional costs could be “untenable for small companies with just one or two sterilization facilities, especially if those facilities are old and operate at smaller scale.”
Due to the costs of the NESHAP requirements, EPA estimates, according to the MDMA statement, that half of the industries small sterilization firms will likely go out of business. This is based on a rule-of-thumb used by federal agencies that says if regulatory costs are greater than 3% of revenue, it will lead to business failure.
“EPA estimates that 10 of the 24 commercial sterilizer firms have costs greater than 10% of sales and additional two face costs between 3% and 5% of sales,” MDMA wrote.
Of note, an additional five facilities will have costs between 1% and 3% of sales from the NESHAP. With added costs to comply with the other EPA proposal — the preliminary interim decision under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) covering the use of EtO for device sterilization (EPA-HQ-OPP-2013-0244-0044) — these firms would likely have regulatory costs that exceed 3% of sales, meaning the five facilities would then constitute another 25% of the medtech’s small companies.
The closure of sterilization facilities due to increased regulatory costs will result in less capacity to prepare medical devices for patients, meaning that fewer medical products will reach medical professionals and patients.
“Health care facilities will then limit access to certain care since they will lack sufficient or the necessary sterile equipment,” according to MDMA. “Medical care will be delayed, increasing suffering and the risk of more severe patient outcomes.”
Equipment upgrade issues
Away from facilities that will permanently close due to an inability to cope with increased regulatory and operational costs, companies that do survive the overhaul will only have a short window to upgrade needed engineering controls and some may need to temporarily close facilities to retrofit new equipment.
In the proposed registration document, EPA wrote, “The agency acknowledges that there would be impacts to commercial sterilization facilities from implementation of engineering controls. The cost of retrofitting would include the costs of new equipment, installation, operation and maintenance, and the loss of revenue associated with any necessary downtime required for installation. EPA also acknowledges the corresponding potential impacts on the supply chain of sterilized medical devices related to the costs and potential downtime of sterilizing equipment.”
Additionally, EPA acknowledged that manufacturers and, in-turn, patients will bear the cost of its proposed actions, leading to patients deciding against health intervention based on expense.
“EPA acknowledges that medical device manufacturers and patients are likely to bear most of the costs of these regulatory actions due to market conditions,” MDMA wrote in their statement. “EPA also agrees that medical device manufacturers of commodity devices like syringes may not be able to pass on price increases to health care facilities and thus are more likely to cease operations. EPA further concedes that patients and the health care providers will ultimately pay for the regulatory provisions: ‘Given the relative low elasticity of demand for sterilized health products, cost increases may be passed from sterilizers to medical device manufacturers to hospitals and end use consumers.’”
Before EPA published the proposal, other agencies expressed “serious concern with the risks to the medical supply chain” during interagency review of the draft.
When voicing this concern, EPA wrote, “We are aware that, in order to implement the capture and emission reduction systems necessary to comply with the requirements that we are proposing, facilities will need to cease operations for a certain period of time in order to implement these systems. However, an expedited compliance timeframe could result in more facilities needing to cease operations simultaneously. This means that increased coordination would be needed to ensure that the supply of medical devices is not adversely impacted.”
However, when questioned on who would provide this coordination, the agency conceded that “it is unknown what mechanisms for this coordination currently exist,” and anticipated it could be led by the FDA.
If construction schedules fall at similar times of year — as firm may try to implement changes during certain parts of the year to minimize project duration — capacity, according to MDMA, could fall by 30% or more on any given week because of EPA’s short compliance period.
As part of EPAs proposals, companies would be required to use the least amount of EtO possible to sterilize each device — at a minimum, concentrations of less then 500 parts per million (ppm). To do this, medical device manufacturers must go through a testing period to find the lowest effective concentration, validate that these products demonstrate acceptable sterility, and obtain FDA approval for the new concentration level and sterilization duration.
Additionally, FDA may also require manufacturers conduct performance testing and biocompatibility testing of the product at its lower sterilization concentration. These re-validation costs include “the opportunity cost; when the sterilization chamber and other equipment is dedicated to validation testing, it cannot sterilize products for sale,” according to MDMA. “The value of this lost production is part of the validation cost.”
While just a drop in the bucket of the thorough analysis submitted by MDMA to EPA, in this writer’s opinion, the mountain of concerns all point to one main issue: patient impact. If small and mid-sized firms close, along with financial impact, there will be major supply chain disruptions as other companies try to maintain continuous capacity. This means that patients may not have access to life-saving devices because of manufacturing challenges purely resulting from these EtO sterilization proposals. The same school of thought could be used when discussing the short implementation timeline, among additional concerns raised by MDMA and other medtech companies.
Patients are the focus of all medical device innovation and development, shouldn’t it be the same in this context as well?