Economy concerns and globalization are just a couple of the issues contract sterilization providers tackle today to remain valued outsourcing partners.
To outsource or keep sterilization in-house is a decision every medical device OEM (and many full-service contract manufacturers) must make for each product line it produces. Based on the continued success of contract sterilization service providers, it would appear that device firms increasingly are choosing the former option to accomplish this critical function in the medical device production process.
It’s hard to pinpoint precisely how many medical device manufacturers are outsourcing sterilization versus how many are performing the process in house, since no solid numbers have been documented by the industry. Sterilization service and equipment providers who spoke with Medical Product Outsourcing “guesstimated” that as many as 60% of device firms are outsourcing the process today.
These providers said most common reason device manufacturers turn to service providers for this task is the need for increased expertise with regard to the sterilization process and the myriad regulations and standards governing it. “Customers want more expertise in terms of sterilization management, and regulatory is the biggest part of why companies are outsourcing,” reported Kathy Hoffman, vice president of regulatory affairs and quality assurance for Oak Brook, IL-based Sterigenics International, the industry’s largest provider of contract sterilization services.
“The questions we get a lot are related to clinical trials—what do I need to do? What’s the least amount of testing I can get away with? What will the FDA accept?” noted Brenda Sparks, contract sales manager for Centurion Sterilization Services, a Howell, MI-based division of Tri-State Hospital Supply Corp.
Regulatory concerns are warranted, if a review of FDA warning letters is any indication. During a four-year span, 20% of the agency’s warnings to medical firms contained one or more observations related to sterility assurance.
“You need highly qualified technical staff that knows how to keep the machines running, perform preventive maintenance and deal with a potential catastrophic failure. For that reason, a lot of the people we have on board are ex-military or from radar componentry industries,” said Ray Calhoun, president and CEO of BeamOne LLC, a contract electron-beam sterilization provider based in San Diego, CA.
Indeed, many sterilization modalities are tricky to manage, and if they are not properly overseen, product safety could be compromised. Furthermore, catastrophe could strike. More than half of all sterile medical devices are sterilized with ethylene oxide (EO), a highly flammable gas. Between 1994 and 1998, EO was involved in 10 explosions at industrial EO sterilization facilities and EO repackaging plants, according to data from the US Centers for Disease Control and Prevention. One explosion caused one death and 59 injuries among workers, and all of the incidents damaged the plants housing the equipment.
In spite of the complexity and risks involved with some sterilization methods, medical device manufacturers may prefer to keep the process in house. For many companies, that decision may be driven by the types of products being made. Complex devices such as combination or implantable products, and low-volume specialized products, seem to be sterilized in house more often than high-volume commodity products such as bandages, gauze and gloves.
“You may have a device that’s moisture sensitive or that is highly expensive to produce, for example,” said Thad Wroblewski, regional sales director for STERIS Isomedix Services in Mentor, OH. “Rather than looking for a contractor, you might look instead for a small vessel to sterilize it. If you look at sheer volume bases, one might say there’s a critical change that’s happening with moving in house. There’s very specific reasons, which involve contingency planning or logistical cost advantages, driving people in house.”
One company that helps companies maintain sterilization operations at their own facilities is Advanced Sterilization Products (ASP), based in Irvine, CA. A subsidiary of Johnson & Johnson, ASP is a niche provider that built a presence in hospital markets during the 1990s (and continues to do so today) with the company’s proprietary STERRAD hydrogen peroxide gas plasma system and has been helping medical device firms install and operate the equipment at their own sites since 1998. For all the growth in outsourcing, ASP has found its sales increasing by double digits annually, according to Mike Valentine, ASP’s director, scientific and industrial business.
The majority of customers Valentine works with are interested in shifting processes from EO to a method that can help reduce residuals, he said. Although cost isn’t the primary reason device firms turn to ASP, savings often are realized through the multitude of ancillary services the company offers its customers.
“We consider ourselves more as a sterilization solutions provider than equipment provider,” Valentine explained. “We’ll bring the equipment in house and provide expertise with getting validated and offering technical support, for example. We more or less hand-hold on site and support regulatory submissions and packaging changes, if needed. And if we are needed for an audit, we’re there to support the company as well.”
Making Life Easier in Tough Times
These days, who couldn’t use a little extra support?
Healthcare products always will be in demand—and thus, medical device manufacturers often are in a better position to overcome many of the challenges a depressed economy can bring with it—but nonetheless, cost-containment pressures are mounting for the industry. As such, OEMs and their sterilization partners are wrestling with inflated costs for gas, oil and electricity, among other items.
“Economy concerns have all the purchasing groups jittery,” said Wroblewski. “Transportation costs are significant; gas prices are very frustrating. I’m at the forefront of negotiating agreements every day, and it’s tough to pass along increases—and we’re battling those increases every day. There’s a lot of uneasiness and a pressure by groups to hold the inevitable costs where we can.”
Some service providers in the industry are able to ease burdens simply by virtue of their business model. For example, B. Braun OEM, a contract manufacturer based in Bethlehem, PA, is a vertically integrated company that offers one-stop shopping for its customers. Many contract manufacturers today offer sterilization services through partnerships with other contract solutions providers, but B. Braun is the only one of its kind in the United States that offers sterilization under its own roof. This is because its parent company, B. Braun, is a large OEM that churns out high volumes of disposable hospital products such as IV and other fluid-management kits.
“The advantage we can offer customers is that we don’t have to ship product out of our facility to another one and then bring it back. We build the product, it goes into sterilization down the hall and then we ship it to our customers,” said Joel Bartholomew, B. Braun OEM’s research and development manager. Another benefit pertains to validation. Since many of the products B. Braun OEM manufactures are similar to those made by the parent company (which offers a range of disposable medical products for hospitals and physician offices), the validation process often is reduced by virtue of the knowledge gained from the cross-sharing of experience.
Centurion is another company whose sole focus isn’t sterilization—packaging and laboratory services are other areas of expertise. “They go hand in hand. It’s a good fit, especially for customers just getting started in the industry. They only have to deal with one vendor for packaging, sterilization and validations. One source makes it easier for clients,” noted Sparks.
Indeed, outsourcing is all about making life easier for an OEM. Thus, customer satisfaction undoubtedly is measured by how well an outsourcing provider can identify and respond accordingly to trends in the industry.
Globalization, for example, has been a large focus for sterilization solutions providers as more of their customers set up shop in multiple regions around the world.
“When companies come to us and want us to support them globally, we need to be able to do that,” said Valentine, who additionally noted that 60% of ASP’s sales are internationally based. “We’ve sold equipment in every location. [For example,] I had a customer doing well in the US and wanted to install equipment for its new operation in Ireland. We were able to support it from both an equipment standpoint and provide regulatory help.
“Transportation costs for shipping product back and forth to outside vendors is increasing, just like they are for everyone else,” he continued. “We are providing companies with an inside sterilization option that is safe, has a very fast turnaround time, is cost competitive, can reduce inventory costs significantly and gives the company control over its sterilization supply chain and logistics.”
Supply chain management, including distribution, increasingly has fallen onto contract sterilization providers who do receive outsourced projects because these companies usually are the last provider in the supply chain to handle a product.
“People are trying to streamline their distribution. For some customers, we are shipping products to multiple sites or even the final destination,” Sparks reported.
“Developing relationships with third-party logistics providers is becoming more frequent,” Wroblewski confirmed. “I’m often in meetings with customers and their third-party logistics guy. We see more of an interest in the management of inventory and an understanding of where it is and where it is going.”
Photo courtesy of Sterigenics.
“Our customers are asking us to be more integrated in their manufacturing and distribution process to get them to market more quickly,” said Hoffman of Sterigenics. “Our customers used to see sterilization as a ‘black box,’ and now with our Web portal they can see where their product is every step of the way.”
Another approach to reducing logistical and related challenges is to go where customers are setting up shop. This fall, BeamOne will open its newest facility in Costa Rica to meet the needs of a growing population of medical device OEMs and suppliers doing business there. To date, no other sterilization providers have entered Costa Rica, making BeamOne the first to establish a presence there.
“I have noticed that medical device companies—we have several existing customers there—weren’t leasing space; they were buying properties there and investing for the long term. That attracted my attention, and as I spoke with customers more, we looked at the economics,” Calhoun explained. Free trade zones obviously offer savings in terms of transportation costs associated with distributing products to other countries, but the biggest advantage BeamOne’s service offering in Costa Rica is, “we’ll reduce the days needed to bring their products to market,” Calhoun said.
Dedicated to Anticipating Customer Needs
Clearly, many sterilization solution providers are doing all they can to sway the “outsource vs. in-house” decision in their favor. An encouraging sign of their dedication to meeting customers’ long list of needs is all the enhancements these partners have been making to their businesses. Even in a downturn economy, they are taking their profits and reinvesting them—to everyone’s benefit.
A couple of examples of recent initiatives include the following:
• Beam One has been shortening turnaround times by making a 24-hour lead time more of a norm than an exception; the company also has been helping customers combine families of products, when feasible, to create fewer sterilization product lots and cut down on tracking and handling costs.
• Centurion is expanding service offerings by including parametric release testing and, beginning this summer, also will offer residual testing in house in an ongoing effort to reduce lead times.
As any wise businessman knows, customer satisfaction is key—and in the outsource equation, it is what will drive more companies to hand off sterilization to an expert who can handle their needs.
“If you can hire a niche specialist, you’re probably going to have better service than if you do it yourself. If we can get in front of where the market is going with our facilities and earn the trust and respect where the device companies know we can get their product to market without interruption, then it’s kind of like, why buy it when you can rent?” Calhoun said. “We’re responsible day to day for how people get their product to market. We’re not just a supplier.”
Working Groups to Examine the Feasibility of Reduced Sterility Assurance Levels
Recent activity in the industry indicates that there is a re-examination occurring with regard to current sterility assurance levels used to ensure medical devices are safe for use.
No sterilization method available can ensure 100% sterility; as a result, sterility assurance levels (SALs) are used as a sort of law of probability for defining sterility. In the device industry, the current acceptable level is 10-6—meaning, the chance of there being any remaining microbials on a device after sterilization with radiation or ethylene oxide is one in a million.
Interestingly, the pharmaceutical industry uses a lower SAL of 10-3 (ie, the chance of remaining microbials is one in 1,000) in aseptic filling applications. Since this level is acceptable to a similarly highly regulated sector and there is precedent showing it is safe, device manufacturers and other groups now are questioning why it’s not being used for other medical products. The issue especially has become more prominent as an increasing number of drug-device combination products are developed.
Already, a series of meetings have been held in Washington and committees formed to examine the issue, according to Thad Wroblewski, regional sales director for STERIS Isomedix Services in Mentor, OH. “Some of the largest OEMs in the industry are serving on them,” he reported. “They’re all looking at their combination products and would look to use radiation but can’t because the doses needed to assure sterilization are substantial.”
The International Irradiation Association (IIA) also is on board with this initiative. The group has been performing a survey regarding SAL requirements for radiation sterilization and, as of press time, was planning to present the results to the AAMI Sterilization Standards Committee and Affiliated Working Groups at a meeting to be held June 23-25. The organization also reported on its Web site (www.doubleia.org) that, as a result of two recent IIA workshops on the radiation sterilization of combination products, the FDA has agreed to take part in the re-examination of SALs.
If the 10-3 SAL were to be deemed acceptable for devices, the lower radiation dose required to achieve this level potentially could allow radiation-sensitive products such as convergent technology, micro-electronic devices and nanotechnology products to be terminally sterilized instead of processed aseptically, according to the IIA.
That’s not the only benefit. “Reducing the sterility assurance level will provide a cascading of benefits in the sterilization industry. Less radioactive isotope would be needed to process a given volume, thereby increasing industry processing capacity without the need of capital expenditure for building capacity. Of course, more products could be processed and radiation processing volumes would increase. This could help balance the cost increases we are seeing, particularly with cobalt-60 isotope, especially with the US dollar exchange rate we have today. On the ethylene oxide front, less gas could be used, perhaps shorter cycles leading to lower product residuals that affect worker EO exposure potential in post-processing inventory areas as well and device to patient EO residual exposure,” explained Wroblewski.
Given the nation’s concern with homeland security, the reduction of radioactive cobalt-60 as well as flammability and explosive ethylene oxide containers circulating certainly is of interest to the government as well, as it seeks to limit their use to limit terrorists’ opportunity to procure items needed to make “dirty bombs” containing radioactive materials. —J.W.