Staying on the right side of the Food and Drug Administration

Transcription

1 July, 2016 Staying on the right side of the Food and Drug Administration Chinese medical device manufacturers and US regulatory compliance

2 The nuances of regulatory compliance can be daunting, especially for exporters unfamiliar with the workings of regulations and their enforcers. For Chinese medical device manufacturers, meeting regulatory requirements can be especially difficult to achieve as they face mounting pressure to maintain double-digit growth, launch new products, and beat development cycles, all while operating costs tighten. However, understanding sometimes confusing regulatory requirements and learning to work with the relevant enforcement agency - in this case the Food and Drug Administration (FDA) - is a prerequisite for any manufacturer with ambitions to break into or develop the US market. The FDA is responsible for developing and enforcing complex and comprehensive regulatory policies for a wide range of products used in the US. Indeed, one of the Agency s most important responsibilities is to develop and enforce medical device-related regulations, including in vitro diagnostic devices. A recent study from the Wharton School found that the FDA has established an optimized regulatory process for medical devices that yields benefits to patients and compares favorably to other regulators around the world.1 This is reflected from forwardthinking programs like the FDA s Medical Device Innovation Initiative, a program that focuses on accelerating medical innovation, while adhering to one of the highest standards in regulatory science and safety. From , the number of foreign inspections by the FDA has more than doubled, with China ranking among the top locations for inspection. For Chinese medical device manufacturers that are eager at global expansion into the US, this introduces formidable challenges. As these companies mature, so will the headwinds they encounter with regard to regulatory compliance outside China. Chinese companies often find the competitive and regulatory pressures rigorous, even when working together with FDA regulatory expert consultants to help manufacturers comply with regulations and train staff 1 for audit inspections. In addition, deciphering the FDA s black box requirements, unpredictable pre-market submission approvals, and regulatory grey areas can prove to be fraught with difficulties. In some cases, the stringent and unpredictable regulatory landscape of the FDA can be discouraging for companies looking at entering the US medical device market, and can hinder the competitiveness of China s medical device manufacturers. This has repercussion, as regulators of other countries often wait to see the FDA s position before acting on applications received within their jurisdictions. In other cases, those companies accepting the headwinds of regulatory challenges are often placed under time and cost pressures; too many (especially newlyestablished) manufacturers risk noncompliance rather than accepting the challenge of embedding comprehensive and up-to-date quality system (QS) processes into their businesses, often doing so without outside professional advice. The risk of regulatory sanction, however, is very real and manufacturers should expect on-site FDA inspections to be the norm rather than an exception. Warning letters are a relatively common means for the FDA to initiate proceedings. Both domestic and foreign medical device manufacturers are eligible to receive FDA warning letters that pinpoint deficiencies in manufacturing operations. Having sent such a letter, the FDA will ensure that certain issues or potential malpractices are specifically reviewed in future audits. Further, once a warning has been issued, there is a greater likelihood that the FDA will undertake more frequent visits, and potentially place a given company on the Agency s watch list. There are substantial implications, particularly to medical device manufacturers which intend to enlarge their scale and sales in the US. In October 2015, China outlined the core investment themes that will guide

3 the 13 th Five Year Plan, highlighting the importance of medical devices and diagnostics in supporting healthcare development as one of the economic pillars 2. Through its regional office, FDA China, the Agency is working closely with its Chinese counterpart to enact priorities at raising awareness among exporters, not only on regulatory requirements, but also on enforcing good manufacturing practices (GMPs) and compliance, data integrity, as well as product design, manufacture, packaging, labeling, storage, installation, and servicing procedures. Further, many manufacturers that had previously failed Western standards, are now making major improvements to infrastructure, benefiting from adaptation of the FDA s clean room requirements. As a result, there has been a decrease in the number of FDA warning letters issued in recent years. These trends demonstrate how shared accountability among medical device manufacturers are helping to achieve a safe and global supply chain. Essential steps for manufacturers aiming to avoid regulatory sanctions If device manufacturers are to avoid quality system violations, which may jeopardise access to the lucrative US market, they will need to establish formal systematic procedures that conform to FDA quality system requirements, build up an organisational system to follow established procedures, and ensure that the entire process is carefully documented in the event of a regulatory audit. One common pitfall, that Chinese companies in particular frequently fall short of in terms of FDA requirements, relates to design changes. Even basic design changes to products already on the market can have significant regulatory implications. At first glance, many changes can appear insignificant. Replacing a simple dial with a digital interface following a change of supplier or as a result of updated manufacturing facilities, software upgrades, or manufacturing process improvements, may seem little more than a cosmetic adjustment. Likewise, changes to packaging and labeling or procedural changes may seem to have little substantive effect on a device. The FDA, however, takes a different view, and requires that even minor alterations and process changes are tightly controlled and thoroughly evaluated and documented before applying them to products. Change control is a critical area of the FDA regulatory requirements and needs to be carefully integrated within a company s quality system. It is also important to note that executive management bears ultimate responsibility for the company s quality system and are solely to blame in the event of compliance failure. Therefore, if, as is often the case, responsibility is delegated to a specific department head, such as a quality assurance manager, then he or she should directly report to management. Ultimately, the establishment and practice of a robust, comprehensive, and detailed Quality Management System is the most direct solution to avoid regulatory sanctions. The FDA outlines specific guidelines in the Code of Federal Regulations Title 21. This is a codification of the general and permanent rules published in the Federal Register concerning the management which cover the full value chain of medical product development, from product design to manufacturing. Considered as reference even for other regulators around the world, the FDA updated its guidance documents in 2015 on current GMP requirements, including combination products produced as a single-entity throughout the product development cycle. The guidance is viewed as a step forward in integrating innovation and combined devices. To help medical device manufacturers navigate in this complex ecosystem, a quality management system will be an essential operating model governing many aspects of the value chain to fulfill the requirements defined by FDA. In general, a comprehensive quality management system should include controls ranging from design, material, records, equipment and facilities, processes and preventative actions. Critically, governance and behavior of the management underpin these controls, which together, can help nurture a culture of quality throughout an organization. 2

4 The devil is in the details Medical device manufacturers can find FDA compliance particularly complicated when regulations are unclear or leave room for interpretation. One effective measure companies can take is to conduct a gap assessment to identify a manufacturer s current level of compliance against the required level of compliance and the industry best practices. A common solution can involve a self-audit exercise. A mock FDA audit allows manufacturers to evaluate their performance against a set of predefined benchmarks, and will be helpful to establish the efficacy of a compliance strategy. Manufactures can also conduct a systematic review of all regulatory requirements to ensure that no requirements have been omitted. It is important to ensure that processes are all documented, an issue commonly encountered by Chinese companies with regard to their quality systems. Interpretation of requirements can form a stumbling block. For instance, a manager s signature, either at supporting actions to handle a complaint or correcting a defect, without an appropriate record as proof, will likely not be considered compliant with the FDA Quality System Regulation (FDA QSR). In this regard, companies should embrace tools like technical frameworks and IT implementation strategies to employ automatically generated feedback and data analytics as a means of tracking ongoing deficiencies while real-time corrective solutions are taken. In some cases, certain medical device manufacturers have used such data to contest the allegations of FDA warning letters against them. The challenges of change control: What to do and what to avoid Informal communications: Avoid any informal verbal decision. An originator should be identified and formal change request forms submitted to a change control committee or board. Implement (and follow) a written approval procedure. Inadequate documentation: Document any decisions made during the process, including verification and validation data supporting the approval of the change, implementation plan, and effective date. Lack of training: Effective training is critical in the FDA QSR system. The FDA will likely regard inadequate training as potentially causing incorrect implementation of changes. Comprehensive approach to change control: Ensure the quality system can manage the end-to-end change control process from initiation, through review and evaluation, approval, implementation, and finally documentation.

5 The FDA often also leaves room for manufacturers to implement their own quality systems, which can be another blurry area for medical device manufacturers. For example, it is the manufacturer s responsibility to determine whether a modification to an existing device will have a significant impact on the safety and effectiveness of the device. A systematic change control process is therefore an essential part of a company s quality system. Specifically, medical device design controls require that all design changes need to be reviewed throughout the development cycle to make sure all requirement are being met and all changes are managed effectively. In practice, there are four shortcomings by medical device manufacturers which commonly violate FDA quality systems. First, without design control procedures and documentation in place, manufacturers fail to demonstrate that they have any design control procedures or that they document design control activities, as required by 21 CFR (a). Second, it is a lack of protocol for corrective and preventive action. A company will not be compliant if it only provides a corrective action and preventive action (CAPA) form, but does not reference any training for corrective and preventive action procedures or implemented a CAPA system, as required by 21 CFR (a). Third, a company will violate the quality systems if executive management fails to institutionalize a commitment towards quality, as required by 21 CFR (a) and lacks an establishment of defined, documented and implemented quality policies and objectives. Finally, companies that have failed to establish procedures to conduct or document management reviews, will run afoul of the FDA s 21 CFR (c) requirements. Ultimately, oversight on any one or all of these quality measures can have lasting repercussions. Historically, the medical device sector has proved to be lucrative and relatively recession proof, bolstered by aging populations across many parts of the globe and the US. By helping medical device manufacturers capitalize in this market, FDA regulatory expert consultants work intimately with medical device manufacturers to navigate compliance issues and requirements set out by the FDA QSR and ISO FDIS They also provide training and coach companies to work with the FDA, understand regulatory obligations, and implement and integrate a compliance quality system compatible within their business. As foreign regulatory requirements tighten at the FDA, there should be regular dialogue and updated channels with China s FDA that facilitate adaptation to the evolving regulatory and compliance requirements, while also helping to ensure a more level playing field for Chinese medical manufacturers.

6 For more information, please contact Mark Gilbraith PwC China and Hong Kong Health Industries Leader +86 (21) Patrick Hui PwC Hong Kong Consulting Partner +(852) Huw Andrews PwC Hong Kong Consulting Partner +(852) James Wang PwC China Consulting Senior Manager +86 (21) We are highly recognised in healthcare, pharmaceuticals and life sciences industries globally 2016 MarketScape leader, IDC Worldwide Life Science R&D Strategic Consulting Services Vanguard leader, ALM (formerly Kennedy) Digital Healthcare Consulting: Payers, Providers, and New Market Entrants 2015 MarketScape leader, IDC Life Science Manufacturing and Supply Chain Strategic Consulting Life Science Sales and Marketing Strategic Consulting Vanguard leader, ALM Consulting to Public and Private Healthcare: Cybersecurity Vanguard leader, Kennedy Consulting to Healthcare Payers & Providers: Digital Information for Alternative Care Models (ACM) Consulting to Healthcare Payers and Providers: Alternative Care Models (ACM) Life Sciences Supply Chain, Operations and Talent Life Sciences Supply Chain Technology Enabled and Digital Initiatives Consulting to Private Healthcare Payers & Providers: Customer Engagement Healthcare JVs, Partnerships and Collaborations 2014 Vanguard leader, Kennedy Life Sciences: Key Technology Initiatives #1, KLAS Financial ERP Implementation Services Category Leader 2016 PricewaterhouseCoopers Management Consulting (Shanghai) Limited. All rights reserved. PwC refers to the China member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details.