An MD&DI May 1997 Column
An interview with Michael Baker, director-general, European Confederation of Medical Devices Associations (EUCOMED)
With the increasing globalization of the medical device industry, it might be tempting to think that the importance of national boundaries is on the wane. But that notion is soon put to rest by even a short conversation with Michael Baker, who was recently named director-general of the European Confederation of Medical Devices Associations (EUCOMED).
A veteran of the medical device industry, Baker was a cofounder and the first chairman of the UK Sterilization Packaging Materials Association. Before joining EUCOMED, he served as secretary-general of the European Sterilization Packaging Association (ESPA).
Now Baker is confronting the inherent challenges facing a trade association whose membership comprises a variety of national associations. In this interview with Steve Halasey, editor of MD&DI's sister publication IVD Technology, Baker discusses the issues of importance to the European medical device industry, and how the European approach might influence U.S. manufacturers.
Q. As we speak, U.S. and European officials are very involved in talks to establish mutual recognition agreements (MRAs) between the two markets. What is Europe's position in those discussions, and what is EUCOMED's role in advancing that position?
A. President Clinton's hope was that there would be an MRA on medical devices by the end of January, but that hasn't happened. There have been a number of talks in both Brussels and Washington, and those are to be furthered with more discussion later this year.
We have probably reached a situation where FDA is unable, for whatever reason, to give any more than it has already. There is an agreement to recognize quality systems inspections and to allow a limited number of devices to undergo a pilot program for premarket approval by a third party. But obviously, Europe wanted far more than that.
Europe wanted the two markets to agree to a complete recognition of each other's systems and procedures but, unfortunately, FDA is not willing to relinquish its rights as the sole custodian of the health of U.S. citizens. Nor, at present, does it have a legal basis for relinquishing those rights. As a result, Europe is unlikely to get precisely what it wanted at the outset.
From a EUCOMED perspective, it would certainly be my hope that European industry and the European Commission will be able to accept FDA's response. Provided we have an understanding, this could be merely a stopping point in the progress toward mutual recognition. And we could then agree on a transition period, maybe 18 months or so.
Q. What would you see developing in that subsequent period?
A. I see the interim agreement as the basis for a transitional, confidence-building period of up to three years, leading to an extended operational agreement. It would be my hope that by the end of that period, we would get to a situation where FDA is prepared to throw more into the pot. But if Europe agrees now to move ahead on the basis of such an interim agreement, it must retain the right to opt out if, at the end of the transitional period, it appears that the United States is not prepared to move any further.
Q. Does it make the European medical device associations nervous that the United States doesn't have a system for qualifying notified bodies or third-party inspectors?
A. The fact that FDA does its own product approvals eliminates the need for notified bodies. But it would be a lot easier to attain complete recognition between the two systems if in the course of time FDA were to recognize third-party assessment bodies in the United States. Notified bodies make life a lot easier for Europeans, and I think they would make life a lot easier for FDA, because one of its problems at the moment seems to be its workload.
Q. The biggest stumbling block in the MRA talks seems to be in mutual recognition of product approvals. If some kind of interim agreement is reached, how long do you think it will take to evolve a system where there is really complete mutual recognition? That may be asking, "How quickly can FDA give in?"
A. I think that is probably what it boils down to. Because Europe is ready for that now, and that is what we would welcome now. We recognize that FDA has legal restraints that will not allow it to relinquish its final veto, but we hope that there is commitment to seek the legislative changes necessary to achieve this.
It is very creditable that the agency takes its responsibilities so very seriously, and obviously it has to do so. But there has to come a time--in the interests of free trade, open competition, and global market access--when FDA relaxes its hold and gives other bodies the credibility they deserve. Sometimes FDA gives one the impression that it believes there's nobody in Europe who is as concerned about the health of their own people as FDA is about the health of American citizens--and that is just blatantly not true.
So I think FDA needs a period of confidence building to appreciate and understand that we do take these matters very seriously in Europe and that we are equally intent on ensuring that our peoples' health is not impaired by a lack of enforcement or regulation.
In terms of how long it's likely to take, I think the answer is, "How long is a piece of string?" We would hope that if there is an agreed transitional period for this confidence-building exercise, it would be as short as practically possible. Having said that, it's likely to be three years. Even then, we may not see complete mutual recognition for all devices. But we would hope to see at least progress toward full mutual recognition on Class I and Class II devices via a change in legislation, followed by initiation of a program to build confidence with the higher-risk, Class III devices. It may take more than five years to actually get a level playing field and complete mutual recognition.
Q. FDA has said that guidances are essential to ensure that all device reviewers are on the same page when they review a product submission. Do you think that might be a stumbling block?
A. I think that is probably a very major practical stumbling block. But one needs to be pragmatic about this sort of situation. Europeans need to recognize that FDA does have a few practical problems, and this is one of them.
Obviously if the doors were to be opened to specific devices, then FDA would have to have inspection guidelines for those devices. Otherwise, how would the European test houses and notified bodies know what they're testing for and what criteria are to be used? I have heard that the list of some 30 devices that FDA has agreed to release for free interchange was in part dictated by the fact that it has the necessary documentation for those devices.
But FDA doesn't have guidance for the hundreds of other products that we would ultimately want to see, and it would be a hell of a task for the agency to produce the required documentation in a very short space of time. So, it's a very practical problem, one that in Europe we have to try to understand. It is a much more practical and pragmatic approach to rely on the use of international standards.
Q. FDA has suggested that industry begin the process of writing guidances and submit them to FDA as a starting point. Would European device associations be interested in contributing to that process?
A. No. European industry is interested in using international performance and safety standards--not in the production of guidances on a device-by-device basis.
Q. In the international standards-writing process, U.S. organizations sometimes feel that they are inappropriately outvoted. How does one organize such an effort to ensure that the greatest weight is given to the proper entities?
A. To my knowledge, this is not true. FDA needs to assign greater resources to standardization work, and fewer to the production of internal guidance documents that essentially become mandatory.
But I would question whether the United States is not one of the dominant forces in ISO [International Organization for Standardization] already. From the European perspective, the United States is certainly perceived to be dominating ISO, and I am not personally aware of any instances where standards adopted by ISO did not first meet with U.S. favor or approval.
Q. But in some instances--such as the ISO 10993 standard on biocompatibility testing--FDA has refused to accept the standard "as passed" by the international committee. And the result is that U.S. manufacturers still have to satisfy two sets of standards, however similar.
A. n that situation, of course, it's the governing body for U.S. industry that's the stumbling block. It's not European industry or Korean industry that's telling the United States, "No, you can't have your way." It's the United States itself saying, "We are not prepared to accept this standard." And presumably this is because the procedures are not up to the standards that FDA would require.
Q. So, essentially, U.S. manufacturers have to put more pressure on FDA to accept those standards?
A. If that's the situation, yes. The rest of the world recognizes ISO as being primarily U.S.-controlled. But if U.S. industry is having a problem getting approved standards through its own controlling body, then that is very much a U.S. problem. So U.S. industry needs to exert a little more pressure to make sure that its views are well understood at FDA. Or, vice versa, FDA needs to explain to U.S. industry why the approved standards are not acceptable.
&Theoretically, since FDA is usually involved in the ISO committees that generate standards, the agency should have ample opportunity to provide input. When FDA has had a chance to be involved in the discussions from the word go, it shouldn't then effectively veto industry use of an approved standard. I find that absolutely amazing.
Q. EUCOMED must have to face these questions of procedure and structure all the time in dealing with its various national associations and corporate members. How do you manage to deal with all of them?
A. Basically all the decision-making processes within Europe are based upon consensus. There are occasions when one of the big five states, which have the power of veto, will actually exercise that power. But that doesn't necessarily stop legislation from happening. For example, the United Kingdom can be against a particular piece of legislation, but that legislation will nevertheless go through by consensus view.
We try to operate EUCOMED in much the same way. The association membership includes at least 15 different nationalities, so it is difficult to reach consensus. But we try to ensure that issues of importance are discussed very openly, and as a result of that discussion we hope to arrive at a consensus.
When it is empowered by its members, EUCOMED seeks to take a leading position on certain issues. If there is no consensus view, then there is a structure within EUCOMED that determines what view will be adopted.
Q. Could you explain EUCOMED's request for an extension of the June 14, 1998, effective date for the Medical Devices Directive?
A. EUCOMED is not really requesting an extension. It is trying to make it clear that for medical devices legally placed on the market without CE marking prior to the end of the transitional period, there is no legal basis to force their removal or withdrawal after that date.
The point at issue really is the question of CE marking. The directive currently says that no product without the CE mark can be placed on the market in the EU after the June 14, 1998, deadline. We are suggesting to the European Commission that this would cost the medical device industry an inordinate sum of money, because it would likely require manufacturers to withdraw a lot of stock that was legally placed on the market prior to the deadline.
Instead, we are recommending that the commission agree to a transitional period of five years, up to June 2003. During that period, non-CE-marked products already placed on the European market prior to June 1998 could continue to be sold and used. June 2003 would be an agreed deadline for their removal.
We think that this proposal will minimize the cost and inconvenience of CE marking not only to industry but also to hospitals. Otherwise, it's going to be a fairly massive task for hospitals to go through all their inventory on June 13, 1998, to discover what's got to be removed and what can continue to be used, and then to replace their old, unmarked stock. The hospitals aren't really equipped to do this and shouldn't have to spend time doing it. Our proposal will benefit both health-service providers and the medical device industry.
Q. Has EUCOMED estimated what it would cost companies to withdraw, relabel, and redistribute their products?
A. We estimate that if 10% of products do not have the CE mark on June 14, 1998, withdrawing them from the marketplace will probably cost industry in the region of half a billion dollars.
But it's not only cost that's at issue. The inconvenience and logistical difficulties involved in such a massive withdrawal are quite horrendous. I maintain that EUCOMED's proposal is of benefit not only to industry, but to the hospital end-user as well. It would save an awful lot of cost and inconvenience. In all honesty, the commission probably recognizes this.
Q. Would this recommendation apply to both U.S. and European companies?
A. Yes. It would apply across the board.
Q. In Europe, the term multinational tends to be read as "U.S.-owned." Does it create problems for Europeans to have such a heavy penetration by U.S. companies in the European market?
A. I don't think it causes any practical problems. Obviously, it may impinge upon one's sense of national or European pride, but I don't think it generates specific problems.
There are a number of multinationals that are not U.S.-owned and that are very strongly represented in the U.S. market. There are some from Germany, and many from Scandinavia and the UK. So it does work in reverse.
Generally speaking, the biggest device companies tend to be U.S.-owned, and that presumably arises from the fact that the United States is the largest market for medical devices. So U.S. companies have grown to a size that reflects the market's importance and strength.
But because of the length of time it takes to get a premarket approval (PMA) in the United States, many U.S. companies are now going to Europe first to get their new products on the market. In this sense, FDA might be described as not only American industry's best defense, but also its worst enemy.
Even so, Europeans prefer to buy European if they can, and I think this is why U.S.-owned multinationals don't openly portray themselves as being from the United States. When they are in Europe, they set up local operations, they employ local people, and they are represented by local people. That's a very sound move that helps to alleviate problems, perceived or otherwise.
Q. How might the completion of MRAs between Europe and the United States change that picture?
A. Right now, the major factor that is causing U.S. companies to adopt a Europe-first strategy is the short time it takes to get a product to market in Europe compared with the United States. Hopefully MRAs will even out the availability of products in the United States and Europe. That will certainly be part of the benefit of having completed MRAs so far as U.S. industry is concerned. Whether the agreements so far completed will have that effect for the 90 devices that FDA has agreed to include in the first three years, I don't know.
Q. Are there other crisis points that EUCOMED is concerned about--particular market issues that have the potential to affect device manufacturers harshly?
A. I don't want to be too specific, because that could arouse interest where there is not much at the moment. But the whole problem of cost containment is an increasingly important issue. The German situation is just one example. Health-care budgets are under pressure and are being cut, whether through DRG reductions or simply through sweeping cuts of a certain percentage, and this is a very general problem that industry has to address in some way.
For the most part, companies did not need to be too clever to cover the initial round of cost-containment pressures. So long as the decreases were in the range of 3 to 5%, companies could consider them a straight reduction in pricing--and therefore also a straight reduction in margin--but they were of a magnitude that could be handled. Companies got rid of their fat, reduced their prices a bit, and they covered the decreases. But when demands go beyond that stage--that's when companies have to start thinking cleverly.
Q. Are current budget pressures forcing manufacturers to trim essentials such as their R&D budgets--or is that still to come?
A. That is probably still to come. But let us hope it does not arrive at that. R&D is the long-term lifeblood not just of industry but of patient health. If we want to improve our overall standard of health care, we have to ensure that industry continues with its R&D programs.
Q. Where else in the world is EUCOMED involved?
A. We work in the overall framework of global harmonization with Australia and Japan, both of which have very strong manufacturer associations. We also get involved in seminars and promotional work in parts of Eastern Europe and Southeast Asia, where we are endeavoring to promote the European style of device regulation. Eastern European countries are keen to become part of the EU. These countries, therefore, need to begin developing the infrastructure and technical expertise that will be required for their participation at the competent authority and notified body levels of the EU regulatory structure.
So, EUCOMED is involved quite heavily in parts of the world that are theoretically not within our immediate scope--in other words, not within Western Europe.
I think it is relevant to stress the importance that EUCOMED attaches to the development of a good working relationship with other associations. In the United States, we work with the Health Industry Manufacturers Association as well as with the National Electrical Manufacturers Association. We also enjoy good rapport with MEDEC in Canada, MIAA [Medical Industry Association of Australia] in Australia, and JFMDA [Japan Federation of Medical Devices Associations] in Japan. International cooperation is an increasingly important element as our industry becomes increasingly global.
Q. Is EUCOMED also involved in supporting its member associations in technical areas?
A. Yes. One issue that has become very important in Europe is the propensity for end-users to reuse single-use devices. This is a practice that we are very much against, and we are aggressively publicizing the fact that it is highly dangerous for patient health. We have issued a publication on this topic that is available in six languages, and we are hopeful that hospital end-users will read the document and understand why it is so important not to pursue this policy of reusing single-use products.
It is very understandable why it happens, particularly in light of current cost-containment pressures. Hospitals have demands placed upon them which they feel obliged to meet, and if they can reduce some of their costs by reusing a product, then they will obviously do so. I am quite sure that no hospital would adopt the practice unless it felt that it was reprocessing the device correctly. But the fact remains that this is a highly dangerous practice, and end-users need to be aware of that. The practice should be forbidden.