EU says “kill off” virtual manufacturing

Law & Regulation
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BDIA and ABHI call for a level EU playing field regarding virtual manufacturing in dentistry, while MHRA tightens regulation

What is virtual manufacturing (VM), why does the EU want it stopped, and what should be done about it? During the first Seminar jointly hosted by the British Dental Industry Association (BDIA) and the Association of British Healthcare Industries (ABHI) these questions were answered, and the MHRA explained its latest guidelines regarding VM.

To answer the first question is easy, VM used to be called own brand labelling. An OEM retains the intellectual rights to a product and manufactures it, but it is labelled, distributed and sold under another company’s brand name and liability. We see something similar in just about every high street store and in many car showrooms, Skoda = Volkswagen, Vauxhall = Peugeot. During the Seminar we learned that in the UK, VM has a strong market presence and many supporters, but it is also regulated to within an inch of its life.

Remember these are companies providing medical devices and technology for your surgery or lab and they must be monitored for your safety and that of your patients, but – while the PIP breast implant scandal may still be very fresh in our memories – the draconian levels of expensive regulation a VM faces may make them rethink the value of getting involved.

In dentistry VM has many benefits, allowing the dental team greater, more cost-effective choice when buying essential products or investing in new technology. In the UK, VM is seen as a worthwhile business model; however such is not the case in Europe. After a welcome by ABHI Director Phil Brown, BDIA Director Edmund Proffitt (above) explained the current VM situation during his introduction to the Seminar. He pointed out that although there was no evidence of any problems arising from the practice of VM it was evident that was a lack of a level playing field across Europe. When he was in Brussels Edmund overheard an EU Commissioner state vehemently that he wanted to, “see VM killed off” probably to reduce the expense or regulating both the VM and OEM. The BDIA does not agree and has become “vociferous” in its defence of VM and says it trusts in the UK’s positive and pragmatic attitude towards the issue as we move forward through Brexit – even in the face of new EU legislation.

The one consistent thing is change

Gary Bond, Dental Directory’s head of its own brand ‘Unodent’, also one of the day’s speakers, agreed. He said that experience and clear market research has demonstrated a market desire for own brand products, which are perceived as providing added value and to be more affordable. He added that VM drives competition and innovation while increasing choice. However, Bond continued, changes in manufacturing regulation should lead to better standards of manufacture, improved quality, and fairer competition, not tie them up in red tape. He explained that the current assessment process, undertaken by Notified Bodies (NBs) – which are commercial entities that must be paid by the VM – needs clarity. One VM might be visited by a number of NBs, which means two inspectors each visiting for at least one full day. The fee must cover their day rate plus expenses, and this can become extremely prohibitive.

L-R: Gary Bond, Mary Ryan, and Phil Brown

Mary Ryan, the QARA Director for Penlon Ltd, outlined the challenges for UK VMs on the global stage. Penlon is based in 90 countries. Some of them are regulated, some are not. In some countries the regulations are enforced, in others they aren’t. Some countries will insist on a Certificate of Conformity and CE mark, they want to know the product has been manufactured to correct standards; others, especially in the Middle East, want a Certificate of Origin. This means that in certain countries if any product was manufactured in say, China, no matter how strictly regulated or where the branded VM might be based, it will be rejected. Mary concluded her presentation by observing that 25% of Notified Bodies have gone and the medical devices industry is creaking under the strain as a result. The only consistent thing about the medical devices industry, she offered, is change.

The medical devices regulator, MHRA, has been revisiting the regulatory hoops VMs must jump through in order to exist. This is thanks to the UK coming more in line with EU practices. However, since 2013, member states want inconsistencies in NB practices dealt with. In the UK, NBs were reviewing Summary Technical Documentation, or STED files when assessing a VM’s product. Elsewhere the VM had not only to provide a full technical file but also demonstrate that they fully understood how the product was manufactured. Changes to regulation are designed to bring the UK into line with the rest of the EU.

The more sharp-eyed amongst you will see the inherent problem in this. As stated earlier the OEM retains the Intellectual Property rights to the product and might not be willing to share certain information with the VM. If the VM can’t comply with the NB and the OEM refuses to provide full technical files the product will fail to get CE certification and must be withdrawn, or the VM must agree to act purely as a distributor.

L-R: Phil Brown, Martin Penver, Edmund Proffitt, and the MHRA team: Graeme Tunbridge, Rob Higgins, and Dhruti Patel

The day ended with a talk by LRQA’s Martin Penver, an NB of long standing. He went into more detail about NB’s unannounced visits than we need to consider here, but he approached the subject of cost. The VM’s OEM must be visited, he explained, to assess the quality of manufacture and its quality management systems. If the OEM is in China they must be visited, and the cost is reflected in the fee. Assessment starts with raw materials and ends with the finished product, he said, and the costs of assessment are only going to go up. His advice is to forget becoming a VM and become a branded distributor, the manufacturer’s name and details would need to be on the branding – but much smaller than the distributor’s. All it needs is the for the OEM’s details to be readable, not obvious. He lamented the amount of work he and his men were doing to meet the current VM demand, and distributors have none of the NB costs faced by VMs. He urged those considering entering the VM arena to rethink and take the distributor route, meaning less work for him, less cost for the company, less regulation, and no liability.