Six Ways to “Walk the Walk” on Medical Product Safety
We often hear that “form follows function.” In corporate organizational structures, though, sometimes function flows from form. In other words, the way a company chooses to organize itself—how it draws its “org chart”—can impact product quality and risk management. Sometimes these implications are positive. Sometimes, though, they are dysfunctional.
For medical device firms, organizational structure deserves assessment and reassessment to ensure that management teams identify dysfunctional structures and facilitate product safety. That sounds nice but what does this actually mean? Let’s consider some examples.
Periodically, the U.S. Food and Drug Administration (FDA) cites 21 CFR 820.20(b)(1) when it believes a firm has given quality assurance (QA) professionals insufficient responsibility for inspecting/testing materials, components, in-process units or finished devices. This regulation mandates that manufacturers grant quality assurance professionals the appropriate authority and resources to do their jobs. Additionally, the FDA can sanction firms that fail—in the agency’s view—to grant QA personnel the “independence and authority” to enable them to check manufacturing processes and to prevent shipping dubious products.
One take-away: management teams periodically must step back and self-assess the true drivers of behavior within the firm to ensure they align with quality, regulatory compliance and patient safety. Thesedrivers include:
• Performance evaluation criteria;
• Management goals and objectives;
• Incentive compensation;
• Marketing and strategic plans;
• Sales training programs; and
• Call plans.
Understandably, organizational structures for device firms often are marketing and production focused. This makes perfect sense. Firms strive to capture market share and attain profitability. Quality assurance undoubtedly is vital, but it is not the “sexy” part of a device firm’s business. In some companies, QA may report to production or marketing, which often can trigger problems. It can make it easier for QA concerns to become subordinated to the pressures of shipping product out the door, even when prudence might dictate that shipments be halted due to quality issues. Having QA report to marketing or production is like having the proverbial fox guard the henhouse.
Management structure and practice thus is one component of an effective product liability risk management program. The question for device firms is, does your management structure help or hinder risk management? It is important to ensure that company management not only talks the talk regarding product safety, but also that it “walks the walk.” How, though, does a management team determine whether its policies, practices and structures facilitate or hinder product risk management? Six issues should
be considered:
1. Has the CEO issued a statement regarding product safety? If not, that sends a message by the absence of upper management communication. Paying lip service to safety is not enough. Companies and CEOs must not just “talk the talk” but also must “walk the walk.” Ideally, both should occur; talk should precede or, better still, accompany the walk. If a CEO does not pledge support for product safety or quality, that silence could imply that these values have low priority. Moral: The CEO should be involved, visible and articulate in stating a commitment to product quality, not just as a one-time campaign but as an ongoing communication theme. Silence is golden, the old maxim goes, but not when it comes to a CEO’s corporate communication regarding product safety.
2. Is the CEO safety statement platitudinous or does it lay a foundation for developing and implementing product safety? No corner office public relations campaign or pronouncement will be credible if it is not followed by concrete steps and actions that boost product safety. Talk is cheap. In fact, top management verbal support for safety that is exposed as only so much hot air can later backfire. In product liability trials, plaintiff attorneys delight in showing the contrast between public corporate utterances and actual practices. These demonstrations can cause juries to assess larger awards, as well as punitive damages.
3. How widely is the CEO commitment circulated? Is it solely within the company? Has the CEO shared it with key suppliers, the medical community and patients? The broader the currency of the CEO’s commitment, the better. This recognizes that a device company has multiple constituencies, both within and outside the organization. Particularly if the medical device company engages in outsourcing, communicating a strong commitment to patient safety to key suppliers is absolutely essential. Physicians, hospitals, healthcare practitioners and the ultimate consumers of medical devices—patients—merit reassurance that the device firm is strongly committed to patient safety and quality manufacturing. Moral: Top management communication should broadcast to both internal and external constituencies.
4. How often does the company review and update its written product safety policy? Unfortunately, it is easy for a corporate safety policy to degenerate into “credenza decoration,” an impressive document which evokes nodding agreement but which sits on a shelf gathering dust. Safety policies may and should evolve over time, responding to changing regulatory, legal and medical developments. Formulating such a policy is not a one-time exercise but is part of an ongoing discipline to periodically step back, reassess and reframe a company's written safety commitment. Put differently, developing a written safety policy is not a one-time, one-shot “scratch it off a checklist” exercise where corporate leaders congratulate themselves for finishing a flavor-of-the-month task. Moral: Formulating and refining a product safety policy is never totally completed.
5. Does the policy statement assign authority and responsibility for implementing a safety program? If so, with whom? There should be a link between high-level pronouncements and operational duties and responsibilities. For safety programs to be credible, management teams must link the desire for safe products to daily operational duties and responsibilities, both at the front line production level and at the management/supervision level. If this is lacking, the disconnect between corporate pronouncements and operational execution also is fodder for plaintiff attorneys seeking large recoveries from adverse patient outcomes, claims and product liability litigation. Railing against an alleged disparity between highfalutin corporate pronouncements and front-line operational behavior risks exposing the enterprise as hypocritical and invites juror backlash that can cost a company millions of dollars.
6. Does the company have a top-level product safety coordinator? Is this an executive-level position? What are the coordinator’s responsibilities and authority? Device manufacturers should consider appointing a product safety coordinator or creating such a position. Further, the product safety coordinator position should have clout and standing within the organization to avoid having the role marginalized and essentially impotent. For example, after receiving a series of warning letters relating to its Trident hip implant, Stryker Corp. created the position of Group President for Global Quality and Operations. It also pledged more than $200 million over a three-year span to address the issues noted by the FDA. To be sure, fixing a product problem is more than simply creating a slot on the org chart or spending money, but these are two concrete steps in a positive direction.
Ideally, the company’s written product liability policy should clearly define the job’s role and explain how the coordinator will liaise with other functional areas, such as research and development, product design/engineering, production, sales and marketing, legal, quality control and purchasing, among others. A product safety coordinator should not be an organizational island, isolated and with little authority, budget or support. Simply re-drawing the org chart is not enough. Creating the role is a positive step—but just a start—toward an organizational structure that promotes product safety and furthers the aims and practice of sound risk management.
Building an effective product liability program requires a strong foundation. Visible support for product and patient safety from the top of the organization is essential. It is a necessary but not a sufficient condition. CEO commitment combined with ongoing follow-through will drive an organization-wide culture that helps manage risks, capture savings and promote patient safety.
Kevin Quinley is vice president of risk management services for Berkley Life Sciences, LLC. Berkley Life Sciences specializes in providing financial protection for life-science companies. The views expressed here do not constitute legal advice, are those of the author alone and do not necessarily reflect those of Berkley Life Sciences or its customers. Kevin can be reached at kquinley@berkleyls.com.