While life sciences companies continue to decipher and implement EU MDR requirements, it is apparent there is a lot of confusion around the expectations of economic operators (EOs) under the new regulation. According to recent research, 28% of the medical device manufacturers surveyed have not yet started working on their EO requirements, let alone identified the EOs within their supply chain. For many, the question remains: Who qualifies as an economic operator?
Register now for Economic Operators Under EU MDR | A Virtual Event | September 2, 2020Once a responsibility that fell primarily on the shoulders of manufacturers, the EU MDR has rendered compliance an issue of interest for specific entities with an economic interest in medical devices—grouped into the term “economic operators”. In addition, the EU MDR introduces entirely new regulatory requirements for two of the four entities that previously had no formal role in ensuring product compliance, namely importers and distributors. If the burden of compliance is now shared with more entities than just the legal manufacturer, many may be wondering if the industry is ready to meet these new requirements.
However, businesses now have an additional year to properly evaluate and confirm economic operator relationships and agreements. On April 23, 2020, the initial Date of Application of the EU MDR was delayed by a year, establishing a new implementation deadline of May 26, 2021. This presents an opportunity for companies that were facing challenges with meeting the EO requirements on time. In order to provide clarity and guidance on the issue, this article details the specific changes affecting each entity falling under the new concept of economic operators and the role that each party will play under this new set of rules, while also warning against the potentially damaging outcomes of having a non-compliant entity somewhere further along the supply chain.
Compliance: Sharing Is Caring
The term “economic operators” as stipulated in the EU MDR encompasses manufacturers, authorized representatives, importers and distributors. With the exception of distributors, the EO entities will now share in the legal responsibility for the compliance of the devices on the market, making them jointly and severally liable if they allow non-compliant products to enter the market. Problematically, however, many EO entities are not fully aware of the pending EU MDR changes that will impact the way they operate and of their added responsibility and liability under these new regulations. Yet, the repercussions of non-compliance by EO entities have direct legal implications on the rest, so one ill-prepared EO can impact the entire supply chain.
Unprecedented Regulatory Requirements for EOs
The first step for manufacturers is to map out their supply chain and identify each EO entity as defined in Article 2 of the EU MDR. Without this level of initial understanding, it will be impossible for manufacturers to confirm that the rest of the EO entities are able to fulfill their responsibilities. Importers will now see their roles change the most radically, having to meet specific regulatory requirements and verify information from the manufacturer. From now on, all entities placing devices from a third country on the EU market will have specific obligations relating to non-conforming products, product recalls and vigilance incidents. For instance, should Importers identify a non-conforming device, they must have a system for notification in place so that they are able to immediately notify the relevant parties: The manufacturer, the authorized representative and the competent authority. They will also be required to keep a copy of the Declaration of Conformity of the device and any copies of certificates, amendments and supplements as well as provide full cooperation to provide samples of the device and access to it. These are all entirely new processes for Importers and require a radical shift in mind-set as well as specific expertise to be put into place effectively.
Distributors, defined as the entity that makes a device available on the market, are the only EO entity not specifically listed as being jointly and severally liable—and not required to be registered in EUDAMED (European database on medical devices). They must nonetheless verify that the CE mark, EU declaration of conformity and the required unique device identification (UDI) is present, and report incidents to manufacturers within their distributor agreements. In the case of serious public health risks, the report deadline is three days, so distributors will need to review their systems and processes to make sure that they can meet these tight reporting deadlines. Keeping in mind the fact that the previous directives had no regulatory obligations for distributors, this represents a significant amount of added responsibility.
The EU MDR defines an authorized representative as “any natural or legal person established within the Union who has received and accepted a written mandate from a manufacturer, located outside the Union, to act on the manufacturer’s behalf in relation to specified tasks with regard to the latter’s obligations under this Regulation.” Under the EU MDR, the authorized representative (AR) must be registered in EUDAMED, or via whatever method of EO registration is required until EUDAMED is available, and must have access to a person responsible for regulatory compliance (PRRC). Going forward, ARs will be liable for defective devices together with the manufacturer and will therefore need to provide sufficient financial coverage in respect to potential liability. This requires the AR to serve a very active role in the process and for some will represent new business challenges.
For their part, manufacturers have many of the same responsibilities from the medical device directives, but there are many additional requirements and a number of processes will need to be refined and formalized. In addition to their usual responsibilities, they will have to be registered and obtain a single registration number (SRN); generate and register UDIs for their products; and create post-market surveillance plans and reports. Manufacturers will also face the additional challenge of mapping their supply chain ensuring their EOs are registered and compliant. The process of registering their EOs will also prove challenging, given delayed launch of the new database, EUDAMED. In preparation, manufacturers should assess who needs to register in EUDAMED and be prepared for an alternative method of registration.
Practical Steps Towards Tackling EO Requirements
For manufacturers, ensuring that their regulatory team and top management are prepared to tackle EO requirements will be vital to achieving compliance. For this, manufacturing businesses are strongly encouraged to educate at the executive level on regulatory matters. Businesses should also evaluate their specific resource needs for ongoing compliance, including ensuring the right personnel are in place to manage EOs through supplier controls and audits. Using the new definitions and requirements stipulated in the EU MDR, manufacturers should map out the authorized representative, importers and distributors in their supply chain, and identify who falls into each category. Manufacturers must then confirm all parties are willing and able to comply with the new requirements and commit to continued partnerships. This also involves ensuring the authorized representative and the PRRC have the mechanisms needed to stop a product from being placed on the market and halting distribution.
Manufacturers would do well to begin, at the very least, to identify the EOs in their supply chain and prepare for the information needed for registration. The process of verifying the status and health of the supply chain is likely to put additional pressure on smaller businesses while larger companies may also struggle given the likely added complexity and international nature of their web of EO entities. As manufacturers start to make sense of this complex issue and to define their relationships more clearly, the other EOs will also have to address the issue of tackling new and more specific requirements rapidly and effectively. If not, the risk involves losing market access and facing legal liabilities. Reaching out to external experts for guidance may be hugely beneficial for manufacturers struggling to navigate the intricacies of today’s regulatory environment and get their EOs up-to-speed.