Move to Regulatory Outsourcing
Companies of All Sizes Depend on Regulatory Firms to Meet a Plethora of Needs
A cornerstone of any medical device’s successful rollout is the manufacturer’s development of a coherent regulatory strategy that ensures a timely FDA approval process. Any delay along the submission route, whether internally or at the agency level, can mean the loss of millions of dollars in sales or even the viability of a start-up OEM.
But as any director of regulatory affairs will point out, keeping up with the constant change of regulations—not only in the United States but also in major markets such as Europe and in Asia—can be daunting, especially when the medical device manufacturer is stretched thin in its resources. Even staying in compliance with existing regulations can be an overwhelming chore, let alone trying to stay current with developments across the globe.
The regulatory maze can be challenging, indeed. Take US regulations, for example. With the FDA placing a greater emphasis on post-market surveillance—as evidenced by its first joint workshop with AdvaMed held in February—medical device manufacturers will surely come under greater post-market scrutiny. Similarly, with healthcare reform well under way in Japan, US companies face a whole new set of hurdles to overcome in the world’s second largest market.
And in Europe, the recent release of the Medical Device Directive amendments promises to further complicate the regulatory path for the industry. As a result, demand for outsourced regulatory expertise is rising. Whether the need is simply to procure more able bodies to help with submissions or surveillance efforts or the need is for deeper regulatory knowledge in a specialty area, medical device manufacturers are outsourcing a larger portion of their regulatory workload to outside firms and consultants. At a time when some OEMs have simply cut back on internal staff and when others can’t find qualified expertise, many medical device manufacturers have come to rely heavily on contract service providers for their regulatory needs.
Higher Noise Level
“The noise level has been higher than it had been, and part of that is the economy,” said Brent Noblitt, a partner at the regulatory consulting firm of Noblitt and Rueland in Irvine, CA. He said that because the medical device industry is growing rapidly in recent years—particularly as more venture capital funding pours into the sector—the number of development programs is rising rapidly at all levels. These include startup companies with just a few employees to Fortune 15 device manufacturers. In addition, he noted, more Asian manufacturers are also looking to enter the US market and require the expertise of consulting firms.
Noblitt’s experience is not unique. Consulting firms contacted by Medical Product Outsourcing said demand for outsourced regulatory work is growing—not only from medical device manufacturers seeking a broad array of services, but also suppliers.
Some point out that, because the industry is moving to more outsourced finished goods and not just components, vendors seeking to capture this growing segment of outsourced manufacturing are investing more in their quality systems.
For well-regarded regulatory consulting firms with experience in quality systems, the recent years have been a bonanza for their bottom line. The need for regulatory experience is across the board. While demand for quality systems knowledge is strong, so are other areas in which medical device companies traditionally outsource.
For instance, clinical studies and submissions have been the bread and butter of many firms, and they remain a major portion of their business. With greater funding available, more projects are being started, leading to companies to seek help with their clinical studies.
Moreover, startups are seeking the same consultants to help develop a regulatory strategy that will enable them to reach milestones more quickly and move onto additional rounds of funding or even to be acquired.
“It appears the money supply is back in the healthcare area, so that demand for [regulatory consulting for] submissions and getting products into the market is increasing,” noted Bill Morton, president of MDCI, a North Attleboro, MA-based consultant with a large base of medical device clients.
Morton, who chairs the regulatory certification board at the Regulatory Affairs Professionals Society (RAPS), said demand has been particularly strong for consultants who have strategic insight and broad product knowledge.
While many regulatory consultants are familiar with preparing submissions, auditing quality systems or conducting clinical trials, those who can develop and improve a device company’s regulatory strategy are even more valued because they can often save their clients time and money by leading them to the path of least resistance at the FDA, Morton added.
Recently, he noted, the industry has been facing a shortage of experienced regulatory professionals. As a result, the work many companies used to perform internally is now outsourced to firms such as MDCI and others.
One reason for the shortage in professionals with device-specific skills, he pointed out, is that many who remember the passage of the 1976 medical device amendments have reached retirement age. Furthermore, not enough universities offer regulatory affairs as a program, although Morton pointed out that schools such as Northeastern University and UC San Diego now offer master’s programs in this area. Because of this skilled labor shortage, some medical device companies have resorted to not only outsourcing to consulting firms, but also recruiting from their consultants’ talent pool.
Filling All Needs
Outsourced regulatory services cover a broad gamut, with companies at varying stages of maturity requiring different services. Startups usually need all kinds of hand-holding because they tend to man a sparse regulatory staff.
In some cases, they fail to comply with medical device regulations simply because they lack the knowledge, said Russ Gray, the president and CEO of consulting and product development firm Theron, which is based in Indianapolis, IN. A provider of training and quality systems consulting, the company also offers product design solutions for clients whose products fail to comply with regulatory requirements.
Gray, whose company is heavily focused on IVD products as well as other medical devices, said his business is growing from greater demand for quality system services. Smaller clients who don’t have deep knowledge of FDA regulations often ask for help with compliance. He said one client who originally hired the company to help with product development ended up using the company’s regulatory consulting services because it had moved to a different facility and was alerted by Gray’s team that it needed to validate its processes following the move. He said this was typical of many smaller OEMs.
By developing solutions, in addition to helping diagnose a company’s deficiencies, Gray said Theron offers a multi-pronged approach to a client’s regulatory needs. He added that many firms can perform services such as building technical files or performing failure mode effects analysis, but few consultants can recommend design changes to address problems.
In addition, Theron provides validation services, which he says many clients fail to perform when designing and making changes to their products.
“A lot of clients are way behind on methods validation,” Gray said, adding that other clients are seeing the FDA take more enforcement action on products that fail to incorporate human factor engineering, which is a way to mitigate use-related hazards in medical devices. “All this additional enforcement has helped our business.”
Indeed, enforcement actions are often the catalysts for medical device OEMs seeking outside consultation.
Whether it’s a recall, 483 form or warning letter, an enforcement action often leads a device company to call outside for expert advice to help resolve the problem. Many companies bring in regulatory consultants to help them avoid the FDA knocking on their door. This is especially true of larger OEMs, which may ask regulatory consultants to review internal work.
Gray noted that global OEMs typically outsource regulatory work when they need additional capacity. Because companies such as Johnson & Johnson, Medtronic and other large device makers have a full complement of regulatory staff, outsourcing is seen more as a supplement to their internal capability than as unique expertise they lack. In addition, when companies cut back on their internal regulatory staff, they end up outsourcing the additional workload.
For larger companies, regulatory outsourcing is mostly about addressing capacity problems—but what about medium and small startups?
According to some consultants, they are the regulatory department for some of their clients, responsible for a host of services. Consultants may be asked to run clinical trials, manage all pertinent data, file the submission and build the quality program.
“We can help from protocol development right through to making the submission,” said Schuyler Ritter of Beaufort Advisors, a Norfolk, VA-based regulatory consulting firm that specializes in medical device regulations. “There are few companies that do it all inside.”
Ritter said smaller device companies often seek a suite of services because they either don’t have the expertise or the manpower. “They might have a really good medical director with good experience but whose staff isn’t big enough to support his or her needs,” he said, adding the consultant sometimes must explore at length what the client really needs and not what he or she thinks is needed.
Another group increasingly using outsourced regulatory services is the virtual medical device manufacturers, noted Rene van de Zande, president and CEO of the Emergo, an Austin, TX-based regulatory firm that specializes in European regulatory services. He noted that virtual companies have become easier to start, require minimal funding and rely on outsourcing providers to meet most of their needs.
For these businesses, which often have exit strategies based on reaching a regulatory milestone, employing a trustworthy consultant is critical.
“With a virtual company, you often don’t have a quality person onboard,” he said, adding that even those looking to find qualified regulatory professionals may find it difficult at times to accomplish their goal. “If [their human resources department] isn’t out there on the street, sometimes they outsource” regulatory work.
Furthermore, regulatory consulting firms that also serve as authorized representative in Europe are assuming a more prominent role in the European Union’s regulated landscape. They are taking on more liability and, thus, must become much more intimately familiar with their clients’ quality and compliance programs.
Van de Zande and other consultants pointed out that developing a cohesive regulatory strategy for clients is especially critical to startups because these companies can least afford setbacks in their rollout plans. Failure to meet milestones set forth by venture capital backers can lead to a severe backlash, as many ex-CEOs can attest. Because consultants have broad experience with the different arms of the FDA—CDRH, CBER, CDER—they offer insight into the most expedient ways to obtain agency clearance, can flag issues with submissions before they reach reviewers and help with other issues such as post-market surveillance.
Morton of MDCI recalled one instance in which a client ignored his firm’s advice about the client’s flawed study design. FDA reviewers flagged the same problem and rejected the submission, setting back the company an additional six months. He contended that competent consultants can help clients save time by not only developing strategy, but also pointing out problems with all regulatory-related issues.
Of course, medical device manufacturers aren’t the only ones outsourcing regulatory work these days. Contract manufacturers and the consulting firms themselves also outsource. Independent contractors who have narrowly focused skills—with experience in quality audits, certain types of products or overseas regulations, for example—are often called on by consulting firms to participate on a project-by-project basis.
With outsourcing becoming a more common practice in the medical device industry, OEMs are increasingly incorporating regulatory consultants into their operations. As a provider of additional capacity, expert knowledge and regulatory strategy, these firms are sure to be a more integral part of the medical device industry.