Medical Device Blog – QA & Regulatory Updates from Emergo Group

Germany’s medical technology industry has seen sales rates grow by more than five percent according to a survey by the German Medical Technology Association (BVMed).

The BVMed survey had 117 participants, and was released before the 2011 Medical tradeshow in Düsseldorf last month. Key results:

• Nearly 80% of respondents expect 2011 sales to eclipse their 2010 results, due primarily to growth in exports
• Despite sales growth, German medical device  manufacturers are having to deal with rising costs of raw materials and transportation, as well as late payments—all of which are impacting profits
• Half of all survey respondents have created new jobs in 2011, and 35% of respondents have maintained current staff levels over the same period; BVMed estimates that its entire membership of firms has created 3,000 new jobs in Germany within the last year
• A majority of respondents indicated favorable views of Germany as a business location, citing high levels of patient care, good infrastructure, efficient market approvals and high standards of clinical research as strong points
• Respondents perceived weaknesses in Germany’s reimbursement system, including increasing pricing pressures from purchasing groups, low reimbursement levels and statutory health insurance policies “hostile” to innovative products

Steps respondents would like to see taken in order to address weaknesses in the German medical device regulatory system include shorter decision-making timeframes by the Federal Joint Committee, as well as reforms for self-governing bodies.

A key question based on the survey results is which export markets are providing the most sales growth for German medical device manufacturers. Are these markets primarily other European Union member states, or they primarily overseas markets in Asia and the Americas? As the European economic crisis continues to unfold, these firms may find it harder maintain sales rates in their closest markets.

A new report examining European in vitro diagnostic (IVD) market performance in 2010 sees flat or negative growth across most major EU member states due to cost containment measures and worsening economic conditions.

According to the European Diagnostic Manufacturers Association’s (EDMA) study, the European IVD market totaled €10.5 billion last year, with revenue growth of only two percent from 2009. Cardiology testing and diabetes-related IVD sectors as well as products for managing hospital-acquired infections showed the strongest growth rates in 2010, but all other testing areas showed flat or negative growth.

EMDA attributes these rates to European governments’ placing of limitations on IVD testing volumes and reimbursement to balance budgets. (Efforts by governments to implement ill-conceived austerity measures are also not helping.)

Germany remains Europe’s largest IVD market, but IVD revenue growth there was -0.01% in 2010 following a decision by the Federal Joint Committee to end reimbursement for some diabetes-related tests via statutory health insurance.

In France, new laws allowing consolidation of private laboratories also boosted procurement consolidations in 2010. Growth in the glucose self-testing segment totaled 6.4%, but all other IVD segments remained flat over the same period. Price decreases, Cost per Reportable Result (CPRR) efforts and more demanding customers all affected poor growth rates overall, according to EDMA.

The Italian IVD market showed modest growth (1.1%) last year, but late payments of as many as 700 days plagued the region; the market in Italy will likely face greater challenges as the country’s economy worsens.

Spain’s IVD market also grew slightly in 2010, by 0.5%, but EDMA expects pricing pressures to make Spanish market conditions more challenging for IVD manufacturers.

The UK has no official IVD reimbursement system in place, but cost containment efforts there have nonetheless driven laboratory consolidations. Efforts to contain the National Health System’s budget are also drawing more private-sector providers into the British IVD market.

It is difficult to see European IVD growth rates improving substantially going forward, as Continental governments large and small continue tightening health care-related budgets under the questionable assumption that austerity will stave off recession. 

A voluntary code of conduct for European Notified Bodies appears to be gaining traction following the document’s publishing in early 2011.

Medtechinsider.com reports that eleven Notified Bodies have now signed the code of conduct ahead of a highly anticipated recast of the European Medical Devices Directive.

As we reported last May, the “NB5”—Notified Bodies BSI, TÜV Rheinland, TÜV SÜD, LNE-GMED and DEKRA/KEMA—plan on issuing a second draft of the code of conduct next month to address issues such as the IVD Directive and Conformity Assessments stipulated by MDD Annex III and AIMD Annex 3 (Type Examination) that are not included in the current iteration of the document. (These issues were not addressed in the first version of the code of conduct.)

A new survey conducted by Northwestern University and funded by the Institute for Health Technology Studies (InHealth), a nonprofit research institute whose board consists of AdvaMed, Johnson & Johnson and Stryker executives, finds that smaller medical device manufacturers are favoring Europe over the US for product commercialization at an increasing rate.

Based on online responses from more than 350 medical device professionals, the survey shows that 80% of respondents chose to approach EU regulators first to discuss and plan device submissions, while four percent of respondents opted to approach the FDA as their first regulator of choice.

The survey’s device-specific section furthermore showed that 65% of respondents’ devices attained CE Marking before 510(k) clearance; US review times typically take twice as long as EU processes, the survey indicated.

A broad majority (76%) of respondents large and small reported finding FDA 510(k) preparation and submission requirements unclear; that percentage bears particular significance given that 98% of respondents cited predictability of regulatory requirements as a key factor in whether to undertake new product development efforts.

The survey found that smaller-tier medical device manufacturers are significantly impacted by delayed and protracted FDA review processes. Product development efforts for smaller firms take an average of nearly 27 months compared to about 18 months for larger manufacturers with more resources at their disposal. Along with longer product development time frames come longer FDA review times: Smaller firms reported average review times of 330 days, whereas larger firms reported 177-day review periods. Considering that smaller manufacturers have been responsible for developing some of the more cutting-edge devices and technologies, regulatory processes that stifle their paths to market can only lead to a “brain drain” in the US, argue the survey authors.

In order to better support innovative product development in the US market, the survey authors prescribe a familiar remedy: stronger collaboration between industry and regulators as well as more consistency in establishing and enforcing regulatory requirements.