Finger on the pulse: Be aware of EU healthcare regulation

PE firms backing medical device businesses should become familiar with EU regulations that are increasing costs and time-to-market, writes Alison Dennis, Taylor Wessing’s co-head of life sciences and healthcare.

Alison Dennis
Alison Dennis

The stated aim of the EU in fashioning the EU Medical Devices Regulations 2017/745 (the MDR) is the welfare of patients. Every device regulated under the MDR is required to have clinical data supporting safety and efficacy.

A tighter regime for vigilance and post-market surveillance is intended to more quickly alert manufacturers to adverse events, with the aim of preventing the ongoing saga of suffering in the past caused by products such as pelvic mesh, metal-on-metal hips and the PIP breast implants.

In the MDR, the EU has created a monster piece of legislation. It is anticipated that eventually there will be some 60 pieces of delegated legislation, as well as reams of guidance from the Medical Device Coordination Group, some of which raises more questions than it answers. This has caused a spiral of growth in regulatory teams at medical device companies.

PE firms backing medical device businesses should be aware that the advent of the MDR, in force from 26 May 2021, is increasing the cost of regulation, but also the time to market. Where under the prior regime (the Medical Device Directives) one might expect to receive a notified body certificate in six months, under the MDR, timelines are currently stretching out to almost two years and might get longer.

The preparation time for more extensive technical documentation, including any clinical data, is in addition to that timescale. Companies are now looking to have their US regulatory authorisation ahead of the EU and to start marketing in the US first. This is a reversal of the position under the MDD.

Medical device companies are finding that it is not always cost-effective to obtain clinical data for certain devices, and consequently companies have been pulling products from the market.

Deadline distress

MDD certificates can expire before the deadline of 26 May 2024, depending upon when they were originally issued. Because of the lengthy delays in obtaining notified body certificates, more companies are failing to get their MDR certificates in advance of expiry of their MDD certificates; these companies are no longer able to place their devices on the market in the EU or EEA.

While there is a derogation process under which companies can request the competent authority of each member state to continue to sell in their market, this is a time-consuming exercise and far from certain to be granted. From experience, northern European countries are more likely to grant these derogations.

MDD certificates are ‘frozen’ because no significant changes may be made, meaning that the name of the manufacturer cannot be changed on those certificates. Effective completion of an asset transaction therefore cannot occur until new MDR certificates are obtained in the name of the new manufacturer.

The cautionary principles of MDR also extend to the supply chain, and manufacturers are expected to have greater controls over the supplies to the market in the EU/EEA. Economic operators – including importers and distributors – have individual obligations to the competent authorities.

Manufacturers should exert control over those communications to be kept informed and to have the right to control them, except if this would cause the economic operator to breach the law.

The EU market has to date lacked any publicly available database of medical devices that are available on the market. Under the MDR, increasing amounts of information will be made publicly available. This will be helpful in any due diligence process to be able to assess companies as well as their competitors.