In an earlier blog I mentioned that a colleague and I reviewed the litigation history of a Medical Device Insurance Company to separate patterns of lawsuits into categories and address the categories in a series of internal position papers. Among the patterns that appeared repeatedly was a failure of medical device firms to comply with FDA regulations and guidelines for contract manufacturing agreements.
Contract manufacturers of finished devices often were not aware that they must comply with applicable requirements of FDA’s Quality System Regulation (QSR) and register their establishment with FDA. Further, they were unaware that under certain circumstances both the contractor and manufacturer may be held jointly liable by FDA for activities performed. The study also found a reliance by manufacturers on insurers and insurance brokers for product liability coverage instead of also consulting legal counsel to make certain that their coverage was appropriate and complete.
FDA’s definition of a manufacturer is in 21 CFR Part 820.1 Scope (a) Applicability (1) This part establishes basic requirements applicable to manufacturers of finished devices. In 820.3 Definitions (o) Manufacturer means any person who designs, manufactures, fabricates, assembles, or processes a finished device. Manufacturer includes but is not limited to those who perform the functions of contract sterilization, installation, relabeling, remanufacturing, repacking, or specification development and initial distributors of foreign entities performing these functions.
Finally, FDA’s Medical Device Quality Systems Manual: A Small Entity Compliance Guide states in Chapter 1 Contract Manufacturer A person(s) that manufactures a finished device under the terms of the contract with another manufacturer is a contract manufacturer. The agreement should be documented in a written contract. Contract manufacturers of finished devices shall comply with the applicable requirements of a quality system and register their establishments with FDA. Depending on the circumstances, both the contractor and manufacturer may be held jointly responsible by FDA for the activities performed.
This FDA “legal” introduction underscores the point that when you manufacture a medical device, you are creating a product in a regulatory environment. A few years ago I was called by a company in Arizona that designed and manufactured lasers for use in different industries. A year earlier they were contacted by a medical device company that wanted to create a medical laser. As they neared completion of the laser, the company’s management became concerned that they might be liable as a medical device manufacturer. They asked if I could fly out to meet with them and discuss some liability issues.
When I arrived on site and quizzed them on their background as a manufacturer, I discovered that they primarily designed lasers for industrial applications and had never designed any lasers for medical use. When asked what guidance they had received from the medical device manufacturer, they said little guidance, just a general idea on paper. When asked if they had consulted FDA's QSR and Guidelines on designing and manufacturing a medical device, they were unaware of FDA's QSR and Guidelines. When asked if their company or the medical device company had prepared a 510(k) or PMA, they said no. When asked if they had a contract spelling out their agreement, they said no, nor did they have product liability insurance. Finally, when asked if they had a medical device quality management system design protocol, they said no. They then showed me a laser that appeared to be complete. Needless to say, I told them that they had serious liability problems with FDA and potential product liability lawsuits with users of the lasers.
After returning home, I received a call from a secretary at the company, asking if I could spell out the liability issues in a written document. I agreed to do so. Within an hour, I received a second call from a manager stating that the secretary had not consulted with them before making the call, they didn’t need a written document. They did not try to sell their lasers in the US or elsewhere.
A postscript to this unusual encounter came a month later from a colleague who sent me an FDA announcement that a Florida medical laser manufacturer had been fined by FDA and ordered to retrieve their lasers at their cost and destroy them. They had been selling their lasers without FDA approval.
If you have regulatory and liability concerns, you can contact me for a free preliminary consultation at email@example.com.