Medical Device Outsourcing & the Role of Regulatory Compliance Scott Pletzer President MEDICAL...

Medical Device Outsourcing & the Medical Device Outsourcing & the Role of Regulatory ComplianceRole of Regulatory Compliance

Scott PletzerScott Pletzer

PresidentPresident

MEDICAL DEVICE OUTSOURCING SOLUTIONS

2007 CARZER Technologies, LLC All Rights Reserved

Who Am I?Who Am I?• B.S. Mechanical Engineering, West Virginia B.S. Mechanical Engineering, West Virginia

UniversityUniversity• M.S. Bioengineering, Clemson University M.S. Bioengineering, Clemson University

(Dr. Shalaby)(Dr. Shalaby)• 13 yrs industry experience (Boston 13 yrs industry experience (Boston

Scientific, Becton Dickinson, C.R. Bard, The Scientific, Becton Dickinson, C.R. Bard, The Tech Group)Tech Group)

• Founded CARZER Technologies 2003Founded CARZER Technologies 2003• American Society for Quality (ASQ)American Society for Quality (ASQ)• Residing in Arizona since 1998Residing in Arizona since 1998


Who is CARZER?Who is CARZER?

CARZER Technologies has over 20 CARZER Technologies has over 20 years experience in the medical device years experience in the medical device industry. We provide solutions to industry. We provide solutions to organizations regulated by ISO organizations regulated by ISO standards and/or FDA regulations.standards and/or FDA regulations.


CARZER’s ServicesCARZER’s Services

• Quality management systems Quality management systems • Compliance Compliance • Training & development Training & development • Contract engineering & Contract engineering &

manufacturingmanufacturing• Regulatory preparation & Regulatory preparation &

submissionsubmission• Supply base managementSupply base management


Outsourcing Reaches the Outsourcing Reaches the Entire Biomedical IndustryEntire Biomedical Industry

• AcademiaAcademia• EntrepreneursEntrepreneurs• Biomedical organizationsBiomedical organizations• Funding organizationsFunding organizations• Legal counselLegal counsel

““The question for device The question for device makers is not whether to makers is not whether to outsource--it's what to outsource--it's what to

contract out, where to do it, contract out, where to do it, and how to begin.”and how to begin.”

Source: MDDI-March, 2003Source: MDDI-March, 2003


Today’s OutsourcingToday’s Outsourcing

……It’s about systems and infrastructure, It’s about systems and infrastructure, training and awareness, design houses training and awareness, design houses for prototyping, contract manufacturing, for prototyping, contract manufacturing, third party testing and clinical services, third party testing and clinical services, regulatory representation, experienced regulatory representation, experienced and skilled personnel, without permanent and skilled personnel, without permanent salaries. It’s more than consulting as we salaries. It’s more than consulting as we know it…know it…


Factors Driving OutsourcingFactors Driving Outsourcing

• Cost effectivenessCost effectiveness• ResourcesResources• Speed to marketSpeed to market• ExpertiseExpertise• Competitive edgeCompetitive edge• CapacityCapacity


Top Device ManufacturersTop Device Manufacturers1.1. Johnson and Johnson ($20.3B)Johnson and Johnson ($20.3B)2.2. GE Healthcare ($16.6B)GE Healthcare ($16.6B)3.3. Medtronic ($11.3B)Medtronic ($11.3B)4.4. Baxter International ($10.4B)Baxter International ($10.4B)5.5. Siemens Medical Solutions ($10.1B)Siemens Medical Solutions ($10.1B)6.6. Cardinal Health ($10B)Cardinal Health ($10B)7.7. Tyco Healthcare ($9.6B)Tyco Healthcare ($9.6B)8.8. Philips Medical Systems ($8.5B)Philips Medical Systems ($8.5B)9.9. Boston Scientific ($7.8B)Boston Scientific ($7.8B)10.10. Becton Dickinson ($5.8B)Becton Dickinson ($5.8B)Source: MPO magazine, July/August-2007Source: MPO magazine, July/August-2007


What Manufacturers What Manufacturers OutsourceOutsource



Contract Manufacturing Contract Manufacturing Market SizeMarket Size

Source: Medical device market size and gross profit from IBISWorld estimates. Contract Source: Medical device market size and gross profit from IBISWorld estimates. Contract manufacturing market size based on consensus among Frost and Sullivan, Millennium Research, manufacturing market size based on consensus among Frost and Sullivan, Millennium Research, MedTech Insight and Accellent estimates.MedTech Insight and Accellent estimates.


Top Contract ManufacturersTop Contract Manufacturers

• Accellent Inc. (12%)Accellent Inc. (12%)

• Symmetry Medical (6%)Symmetry Medical (6%)

• Greatbatch (5%)Greatbatch (5%)

• Heraeus, Avail (4% each)Heraeus, Avail (4% each)

• The Tech Group, Lake Region, Fort The Tech Group, Lake Region, Fort Wayne Metals (3% each)Wayne Metals (3% each)

• Orchid International, Doncasters Orchid International, Doncasters Medical Technologies (2% each)Medical Technologies (2% each)

Source: MPO-July/August, 2007Source: MPO-July/August, 2007


Geographical OpportunitiesGeographical Opportunities• Idaho - Showing entrepreneurs the moneyIdaho - Showing entrepreneurs the money• Arizona - Building more technology centersArizona - Building more technology centers• Wisconsin - A partnership powerhouseWisconsin - A partnership powerhouse• Ohio - Rich in researchOhio - Rich in research• South Carolina - Legislating life science South Carolina - Legislating life science

successsuccess• Traditional - San Francisco, San Diego, Traditional - San Francisco, San Diego,

Boston, MinneapolisBoston, MinneapolisSource: MPO-July/August, 2007Source: MPO-July/August, 2007


Factors Driving Contract Factors Driving Contract ManufacturingManufacturing



What’s Important When What’s Important When Outsourcing?Outsourcing?



What are the Challenges?What are the Challenges?



Achieving Contract Achieving Contract Manufacturing SuccessManufacturing Success



Outsourcing Partner Outsourcing Partner ConsiderationsConsiderations

• Identify the company’s specialty areaIdentify the company’s specialty area• orthopedics, cardiology, interventionalorthopedics, cardiology, interventional

• Device classification (I, II, or III) Device classification (I, II, or III) • affects the development strategy, affects the development strategy,

regulatory pathway, finances, product regulatory pathway, finances, product liability, etc. liability, etc.

• Assess the gapsAssess the gaps• engineering, supply base management, engineering, supply base management,

packaging, manufacturingpackaging, manufacturing


Outsourcing RelationshipsOutsourcing Relationships

PreferredOutsource

EstablishedPartnership

StrategicAlliance

InitialContact


Achieving Outsourcing Achieving Outsourcing SuccessSuccess

• Begin earlyBegin early• Due diligenceDue diligence• Common objectivesCommon objectives• CommunicateCommunicate• Trust and respectTrust and respect


Regulatory ComplianceRegulatory ComplianceFDA & ISOFDA & ISO


Food & Drug Administration Food & Drug Administration (FDA)(FDA)

• Motivated by public safetyMotivated by public safety• Indifferent to company size or statusIndifferent to company size or status• Enforces federal lawEnforces federal law• Authority over company premises Authority over company premises

and productand product• Applies to companies doing Applies to companies doing

business in the United Statesbusiness in the United States


International Organization International Organization for Standardization (ISO)for Standardization (ISO)

• Business orientedBusiness oriented• Promotes global harmonizationPromotes global harmonization• Regular standard reviews and Regular standard reviews and

revisionsrevisions• Applicable internationallyApplicable internationally


Compliance Deficiencies Compliance Deficiencies Company ACompany A

Failure to adequately validate the Failure to adequately validate the manufacturing process with a high manufacturing process with a high degree of assurance, approve, and degree of assurance, approve, and document the results of the document the results of the validation activities to ensure that validation activities to ensure that product specifications can be product specifications can be consistently met, as required by 21 consistently met, as required by 21 C.F.R. § 820.75(a).C.F.R. § 820.75(a).

Source: FDA Warning Letter Dated 19Jan07Source: FDA Warning Letter Dated 19Jan07



Failure to establish and maintain Failure to establish and maintain procedures for finished device procedures for finished device acceptance to ensure that each acceptance to ensure that each production run, lot, or batch of finished production run, lot, or batch of finished devices meets acceptance criteria prior devices meets acceptance criteria prior to releasing the devices for distribution, to releasing the devices for distribution, as required by 21 C.F.R. § 820.80(d), and as required by 21 C.F.R. § 820.80(d), and failure to maintain acceptance records, failure to maintain acceptance records, as required by 21 C.F.R. § 820.80(e).as required by 21 C.F.R. § 820.80(e).

Source: FDA Warning Letter Dated 19Jan07 Source: FDA Warning Letter Dated 19Jan07



Failure to establish and maintain Failure to establish and maintain procedures to control the design of procedures to control the design of the device in order to ensure that the device in order to ensure that specified design requirements are specified design requirements are met, as required by 21 C.F.R. § met, as required by 21 C.F.R. § 820.30(a) through (j).820.30(a) through (j).



Compliance Deficiencies Compliance Deficiencies Company BCompany B

A medical device manufacturer that A medical device manufacturer that ignored FDA regulations by selling ignored FDA regulations by selling unapproved medical devices to unapproved medical devices to doctors treating children with heart doctors treating children with heart problems agreed to plead guilty to problems agreed to plead guilty to four misdemeanor charges in federal four misdemeanor charges in federal court and pay $4.5 million in fines.court and pay $4.5 million in fines.

Source: MPO-July/August, 2007 Source: MPO-July/August, 2007


Compliance Deficiencies Compliance Deficiencies Company BCompany B

The plea agreement ends a three-The plea agreement ends a three-year criminal investigation of year criminal investigation of XYZ XYZ Medical, Inc.Medical, Inc. of New York and its of New York and its founder and president founder and president John DoeJohn Doe by by the U.S. Attorney that began amid the U.S. Attorney that began amid charges of improper conduct by charges of improper conduct by doctors at doctors at AnytownAnytown Hospital for Hospital for Children.Children.

Source: MPO-July/August, 2007Source: MPO-July/August, 2007


Compliance Deficiencies Compliance Deficiencies Company CCompany C

Failure to implement complaint Failure to implement complaint handling procedures to ensure that handling procedures to ensure that all complaints are evaluated to all complaints are evaluated to determine whether the complaint determine whether the complaint represents an event that must be represents an event that must be filed as a Medical Device Report filed as a Medical Device Report under 21 CFR Part 803, as required under 21 CFR Part 803, as required by 21 CFR 820.198(a)(3).by 21 CFR 820.198(a)(3).

Source: FDA Warning Letter Dated 03Jul07Source: FDA Warning Letter Dated 03Jul07



Failure to submit MDR reports within Failure to submit MDR reports within 30 days of receiving or otherwise 30 days of receiving or otherwise becoming aware of information that becoming aware of information that reasonably suggests that a marketed reasonably suggests that a marketed device may have caused or device may have caused or contributed to a death or serious contributed to a death or serious injury, as required by 21 CFR injury, as required by 21 CFR 803.50(a)(1).803.50(a)(1).




A correction or removal conducted A correction or removal conducted to reduce a risk to health posed by a to reduce a risk to health posed by a device was not reported in writing to device was not reported in writing to FDA, as required by 21 CFR 806.10(a)FDA, as required by 21 CFR 806.10(a)(1).(1).



Compliance Deficiencies Compliance Deficiencies Company DCompany D

Failure of management with executive Failure of management with executive responsibility to review the suitability and responsibility to review the suitability and effectiveness of the quality system at effectiveness of the quality system at defined intervals and with sufficient defined intervals and with sufficient frequency according to established frequency according to established procedures to ensure that the quality procedures to ensure that the quality system satisfies the requirements of 21 system satisfies the requirements of 21 CFR Part 820 and the firm's established CFR Part 820 and the firm's established quality policy and objectives, as required quality policy and objectives, as required by 21 CFR 820.20(c).by 21 CFR 820.20(c).




Failure to review, evaluate, and Failure to review, evaluate, and investigate any complaint involving investigate any complaint involving the possible failure of a device to the possible failure of a device to meet any of its specifications, as meet any of its specifications, as required by 21 CFR 820.198(c).required by 21 CFR 820.198(c).




Failure to establish and maintain Failure to establish and maintain procedures for receiving, reviewing, procedures for receiving, reviewing, and evaluating complaints by a and evaluating complaints by a formally designated unit to ensure formally designated unit to ensure complaints are processed in a complaints are processed in a uniform and timely manner, as uniform and timely manner, as required by 21 CFR 820.198(a)(1).required by 21 CFR 820.198(a)(1).




Failure to establish and maintain Failure to establish and maintain procedures to address the procedures to address the identification, documentation, identification, documentation, evaluation, segregation, disposition evaluation, segregation, disposition and investigation of nonconforming and investigation of nonconforming product, as required by 21 CFR product, as required by 21 CFR 820.90(a).820.90(a).



Violators ProfiledViolators Profiled• Company ACompany A

• Startup in 2005Startup in 2005• Naïve and unaware of regulationsNaïve and unaware of regulations

• Company BCompany B• Doing business since 1982Doing business since 1982• Self proclaimed worldwide leader in the fieldSelf proclaimed worldwide leader in the field• Claimed device benefits outweighed violationsClaimed device benefits outweighed violations

• Companies C & DCompanies C & D• Within top ten device manufacturersWithin top ten device manufacturers• When does naivety become deceit?When does naivety become deceit?


Compliance Governs The Compliance Governs The IndustryIndustry

• 21CFR Part 82021CFR Part 820• ISO 13485:2003ISO 13485:2003• Procedure drivenProcedure driven• Results documentedResults documented• Failures must be addressedFailures must be addressed• If it wasn’t written…it didn’t happenIf it wasn’t written…it didn’t happen


Give Me an “A” for AuditorGive Me an “A” for Auditor

• Expect to be part of auditsExpect to be part of audits• FDAFDA• ISOISO• CustomerCustomer• InternalInternal

• Be prepared to defend your workBe prepared to defend your work• Less is always betterLess is always better


When Your Ethics Come When Your Ethics Come Into PlayInto Play

• AlwaysAlways follow procedures follow procedures and and alwaysalways tell the truth tell the truth

• Make your decisions Make your decisions based on databased on data

• Bring about resolution Bring about resolution quickly, but correctlyquickly, but correctly

• You are accountable for You are accountable for your actionsyour actions


The Cost of ComplianceThe Cost of Compliance

• Compliance has Compliance has a pricea price

• Non-compliance Non-compliance has a much has a much greater pricegreater price


Additional ResourcesAdditional Resources• fda.govfda.gov• iso.orgiso.org• devicelink.comdevicelink.com• mpo-mag.commpo-mag.com• carzer.comcarzer.com• ISO 13485:2003 (ISO requirements)ISO 13485:2003 (ISO requirements)• 21CFR Part 820 (FDA regulations)21CFR Part 820 (FDA regulations)• Medical Device & Diagnostic Industry (MD&DI)Medical Device & Diagnostic Industry (MD&DI)• Medical Design & Manufacturing (MD&M)Medical Design & Manufacturing (MD&M)


QuestionsQuestions

MEDICAL DEVICE OUTSOURCING SOLUTIONS

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