NEW YORK – With new regulations set to take effect in Europe, a shortage of organizations that certify medical devices and tests is putting an already-rattled industry further on edge.
And the departure from the market in recent weeks of two such organizations, called notified bodies, is further fraying nerves.
At the same time, though, representatives of NBs, which certify in vitro diagnostics for clinical compliance in Europe, say they are adding capacity to allow oversight of the anticipated large number of submissions before the new IVD Regulation (IVDR) comes into force in three years.
On July 8, UL UK, the British arm of the global safety science organization, said it would stop certifying medical devices and most IVDs for clinical use as of September 1, and that it would no longer pursue accreditation for the new European Medical Device Regulation (MDR) and IVDR, which will come into force in May 2020 and May 2022, respectively.
A month earlier, London-based Lloyd's Register Quality Assurance (LRQA) similarly announced it would not pursue accreditation for overseeing submissions under the new MDR and IVDR.
For manufacturers of IVDs, the retreat of UL UK and LRQA from the market only increases concerns about a lack of capacity for certifying what is expected to be a colossal number of IVD submissions before the 2022 deadline.
Whereas under the old IVD Directive, most IVDs were self-certified with a CE IVD mark, the new IVDR mandates that most tests be certified by an accredited NB before they can be sold for clinical use under a CE mark, including tests that were already CE-marked under the old IVDD. Yet more than two years since the IVDR was enacted with a five-year period for bringing products into compliance, no NB has been accredited to certify IVDs in Europe.
The list of NBs in line for being accredited for IVDR has been reduced to less than a dozen with the exits of UL UK and LRQA. Moreover, UK NBs have handled most European IVD submissions under the older regulation in the past.
Their exit from the market, therefore, reduces the infrastructure available for certifying what is expected to be a massive number of tests.
"There is quite a massacre going on with NBs in the UK," noted Erik Vollebregt, a founding partner at Amsterdam-based law firm Axon Lawyers, who specializes in EU legal and regulatory issues related to medical technology. "Really, you are in deep trouble if your NB lays down service at the moment because you have three months to get your product certified by another NB," he said. "But doing that under the current circumstances is basically impossible."
UL UK and LRQA have provided a variety of reasons for their decisions to exit the market. An LRQA spokesperson said it was based on "recent market developments" and that the company was in the process of helping clients transfer to new NBs. UL UK has partnered with a Polish NB, PCBC, to ensure a smooth-as-possible transition for its clients as it leaves the market. The company said that as of July 3, 80 percent of its CE certificates had been transferred to its Warsaw-based partner.
Still, all of UL's clients will soon have to seek new certificates under the new IVD Regulation.
A significant reason for the market exits is the pending British exit from the European Union. Newly sworn-in Prime Minister Boris Johnson has pledged to leave the block by October 31 with or without a deal, and in the event of a no-deal Brexit, which is becoming increasingly likely, all UK-based NBs would lose their ability to certify tests under European regulations, anyway.
"Brexit is a total fiasco," said Axon Lawyers' Vollebregt. "It's such a totally ill-considered project because we are near the end of the extended deadline and the UK still doesn't have a solid plan." For testmakers, this will create a "major speed bump" in terms of market access, he said.
BSI UK, another major UK NB, has opted to transfer its MDR and IVDR certification operations to its Dutch office, BSI Netherlands. The company earlier this year was accredited to certify medical devices under the MDR in the UK and a company spokesperson said this week that BSI Netherlands will likely be accredited to certify medical devices under the MDR and IVDs under the IVDR by the end of 2019.
TÜV-SÜD, a Munich, Germany-based NB that was also accredited under the new MDR earlier this year, is on a similar timeline. At the moment, BSI and TÜV-SÜD are still the only NBs accredited to oversee the MDR, which has a much tighter deadline of May 2020 for compliance.
While its accreditation was a positive step for TÜV-SÜD, the exit of UL UK and LRQA is still "very bad news" for IVD manufacturers, according to Andreas Stange, vice president for the medical health services group at TÜV-SÜD.
"It's a disaster," said Stange. "It's a disaster for the industry, a disaster for the market," he said. "Lloyd's and UL have a rather large share in the IVD certification business and they are among the top five," Stange noted. "If two of those go away, that is very bad news, especially for small and medium-sized enterprises, because they have to transition to a different NB as soon as possible."
Like Vollebregt, Stange said that the British political situation is compounding issues related to transitioning to the new regulation on IVDs. European NBs were already expected to be overwhelmed by submissions because of the increased oversight of diagnostic tests, but the exit of multiple UK NBs, which arguably had some of the greatest capacity for clearing those tests, is making the situation even more challenging for IVD manufacturers.
"Brexit is adding complications to regulatory changes in Europe, it is not getting easier," noted Stange. For its part, TÜV-SÜD is ramping up operations and has continuously invested in its IVD resources, tripling its number of IVD experts in the past two years, Stange said.
"Some of these decisions have been Brexit driven, and others economic," commented Sue Spencer, who recently joined global regulatory consultancy firm Qserve after serving as global service line director for regulatory affairs at UL.
Spencer, who will head up Qserve's IVD team, also underscored the burden new regulations have put on NBs. "In takes two years before a reviewer becomes fully utilized, so their cost has to be carried by the NB while in training," she noted. NBs are also expected to have staff in place prior to designation. In this way, the new regulations are also reshaping the market for NBs. As it is easier for larger NBs to absorb costs connected with preparing for the MDR and IVDR, the market is likely to be left with "a handful of large NBs with very limited competition and a shortage of capacity," Spencer said.
Finding IVD experts to oversee submissions is also proving troublesome for NBs, Vollebregt pointed out. "In IVDs, the capacity problem is exacerbated because most of the IVDs on the market were self-certified, and there was never a need for a large pool of certified experts at NBs," he said. "Now the IVDR has flipped the system upside down, most need certification by May 2022, but the authorities did not provide a timely mechanism for achieving that," he said.
"On the one hand, they are more than quadrupling the amount of IVDs that need certification, but that doesn't mean that overnight or in two years the number of regulatory professionals needed will be there," he said.
Associations that represent industry are acutely aware of the lack of capacity for clearing their tests. Doris Williams, chief executive of the London-based British In Vitro Diagnostic Association (BIVDA), said that the lack of NBs available for certifying IVDs remains a "key concern" for its members.
"BIVDA, along with the entire IVD community in Europe, has concerns about the lack of NBs," Williams said. She acknowledged that LRQA and UL UK have made their own commercial decisions to leave the market, but also noted the decision to transfer out of the UK, such as by BSI, has been driven by uncertainty around Brexit. Williams noted that the UK has been lobbying Brussels for resolution of regulatory issues for both general medical devices as well as for IVDs.
"The situation now is very much reliant on the EU Commission to find solutions," she said.
Oliver Bisazza, director of regulations and industrial policy for MedTech Europe, a trade organization representing diagnostics and medical device manufacturers, said the association remains "very concerned" about NB capacity, and said it will be difficult to get all IVDs, both new and existing tests requiring certification, cleared by the May 2022 deadline.
According to Bisazza, roughly 85 percent of IVDs, equivalent to about 32,000 products, will require NB certification under the IVDR. "Despite the looming tsunami of work, the EU is on track to only have a small trickle of NBs designated and notified," he said. While noting that roughly a dozen NBs have applied to be accredited for IVDR, Bisazza underscored that none has completed the 18-month designation process and "only a handful of applications, at best" are on track to complete the process anytime soon.
"This raises big questions as to how the new regulatory system can enable tens of thousands of IVDs to remain available to patients, laboratories, and hospitals across Europe," Bisazza said.
Given the circumstances, Bisazza urged authorities to "maintain an ambitious level of momentum in implementing the IVDR and monitoring the notified body situation, so that potential supply disruptions to IVDs can be addressed proactively rather than late in the transition period."
'Rabbit in the headlights'
Multiple IVD companies reached for comment on the issue deferred to their respective trade associations. Vincent Petit, the CEO of Evry, France-based diagnostics firm Metafora Biosystems, said that the availability of NBs is "critical for the entire industry to be on time for the new regulation." He did note that the IVD industry is "lucky" compared to medical device manufacturers in that it's still three years away from the compliance deadline.
According to Petit, some of the other manufacturers with whom he is familiar in the space are aware of the issues related to the enactment of IVDR but have internal regulatory programs in place to ensure a transition.
Some experts who work with IVD companies have described a situation where larger IVD players are preparing their tests for submissions in line with the new regulation, while smaller companies, outside Europe in particular, have been slower to react.
"When I look around at my circle of clients, what I see is a lot of rabbit in the headlights behavior," said Vollebregt. "IVD companies are slower to catch onto this because they are mostly sitting on their hands, thinking this is years away," he said.
"If you are a rational actor, which a company should be, you are not going to just sit there and wait, you are going to draw up solutions for scenarios," he said. "This is what I see that most companies are just not doing," Vollebregt added. "The Big IVD companies are doing that, but in the IVD market, there are a lot of [small and medium-sized enterprises] that apparently do not have the resources to understand this whole thing."
Come what may, Vollebregt said that companies can prepare themselves for eventual submission by building good quality data around their tests, assembling technical files, and investing in quality management systems, so by the time they are actually able to submit their tests for review, they will be at the top of the pile.
"That is something that I do not see companies doing yet, particularly small- and medium-sized companies, thinking this is years away or [that] it will blow over," he said.
Marty Zuzulo, director of compliance and risk advisory at Grant Thornton, a tax, auditing, and advisory services company headquartered in Chicago, said it usually takes industry time to adjust to major pieces of legislation, such as the IVDR.
"What we have seen is that our clients are consigned to doing it, but maybe not necessarily taking vast portions of the legislation into the analysis," Zuzulo said. "There has been reflexive action to assess what they know, not what they don't know."
IVD makers are currently undergoing internal assessments to determine the cost of bringing their menus into compliance with the new regulation. "When those calculating remediation come back with pretty significant numbers, CEOs, CFOs, and others within the C suite, react pretty strongly," Zuzulo noted.
Remarking on the departure of LRQA and UL UK from the market, Zuzulo noted that the regulations themselves have resulted in a "pretty significant winnowing" of NBs because some NBs cannot meet the more stringent standards that MDR and IVDR are applying to them as well.
"You see this effect of massive regulation, lack of clarification, and a lack of readiness on the part of clients and their inability to interpret pretty ambiguous regulations," Zuzulo said.
Grant Thornton for its part recently launched two tools — SmartMDR and SmartIVDR — to guide companies through the process of gaining regulatory compliance under the new regulations.
"Manufacturers should make sure they are ready and that the regulatory system is the rate-limiting step," Spencer advised. "Don't assume there will be a formal extension to the transition period."
Françoise Schlemmer, director of the Brussels-based European Association of Medical Devices Notified Bodies (TEAM-NB), said the organization, representing 26 NBs from 14 European countries, is aware of industry's concerns, but that its members are working toward being ready to certify medical device and IVD applications under the new regulations before the compliance dates.
Schlemmer, who founded TEAM-NB in 2001, said that while only two NBs have been accredited for MDR, she expects around 20 to be designated by the end of the year. "We have a lot of members in the last steps of the designation process," she said. Not all of those NBs, however, will go on to seek accreditation for IVDR, though. A survey of its members conducted in January found that 11 TEAM-NB members would seek accreditation for IVDR.
She acknowledged that with the departure of LRQA and UL UK from the market, the number of potential NBs is now below 10. Schlemmer also stressed that TEAM-NB members set on achieving IVDR accreditation have been adding capacity to meet anticipated demand. A June survey of TEAM-NB members showed a 24 percent increase in personnel hired in 2018 compared to 2017. Members surveyed expressed a desire to hire even more staff.
As for IVD manufacturers, Schlemmer said that how they react to the evolving regulatory landscape is largely dependent on the situation of each manufacturer. "Some of them already have a NB they work with, some are startups, and some haven't had an NB because their products were self-certified," she noted. "There are plenty of different situations out there."