Sweeping New EU Regulations, Taking Effect in 2020, Will Create Upheavals in The European Medtech and IVD Markets

Starting in 2020 medtech firms will be competing in a significantly more complicated European market. New Medical Devices Regulations (MDR) were written to strengthen device safety standards but they will make it far more onerous and expensive for medtech firms to market their products in Europe.  Because of the MDR, many smaller companies may not be able to comply, and their futures may be uncertain.  Larger device manufacturers who saw Europe as a quicker path to market than the U.S. may now rethink that strategy and deal with the FDA and the US market first.  The European Parliament also adopted a similar new regime for IVD products --- the In Vitro Diagnostic Medical Devices Regulation (IVDR) last year -- which will have similar effects.

Under the MDR, all medical devices will have to be resubmitted for clearance. There are grace periods depending on device type, but eventually everything will have to comply to the new standard. No existing medical devices in the EU will be allowed to be sold under the old rules.

Key changes include:

New Classification. New complicated classification rules are added for new devices that weren’t previously classified, as well as new categories that will put some devices in a different level.

New Equivalence Process. The majority of new devices in the U.S. are launched under the FDA’s 510(k) clearance process. Under the new EU regulations, any equivalence claims must come with significant documentation supporting the device to which equivalence is claimed.

New Post-Market Clinical Requirements. Device makers will be required to provide a post-market clinical follow-up (or post-market performance follow-up for IVDs) in their post-market surveillance process. The summary of safety and clinical performance must be updated annually.

Unique Device Identification ("UDI") System. MDR requires that each component that is considered a medical device and that can be purchased separately will be assigned a separate UDI. The new EU UDI system is designed imposes: (a) new labeling requirements (device and product identifiers), (b) data submission mandates via the central UDI database, and (c) and storage/traceability submissions.  UDI information assigned to medical devices would have to be tracked by manufacturers, authorized representatives, importers and distributors and in some cases, also by healthcare institutions and professionals. This implies that all parties in the supply chain would need to modify their quality management system to ensure information is not lost but stored in a proper, systematic way.

Increased Transparency. Companies must use the European Data Bank on Medical Devices (EUDAMED) electronic system for reporting pre- and post-market to relevant "Competent Authorities".

Keywords: Healthcare Investment Banking, Healthcare M&A, Healthcare mergers