I have done more traveling than I probably should have in January and February between the US, the Middle East and various places in Europe.
One of the constant themes was the place of a regulatory regime in the world and how to calibrate the regulatory system just right in the way that it meets both the requirements of society and industry the best. I attended very interesting discussions on this subject in Dubai at the Mecomed RAPS MEA event on 30 January.
At the Lab Quality Days in Helsinki (a conference which I highly recommend if you’ve not attended so far) the red thread was how to calibrate the IVDR and EU horizontal legation like the AI Act in a way that you create a predictable and reliable regulatory system, in which we did not succeed that well in Europe. This lead more and more companies to abandon the historic ‘Europe first’ strategy.
The last IMDRF meetings were flush with talk about international reliance, leading to more and more regulatory convergence. It breaks my regulatory heart to see that international developments seem go the other way now.
International reliance assumes a two way street and a willingness to be a good example by setting standards others want to follow and following them yourself as well.
In that regard we have overshot the mark in Europe with our over-engineered medical devices regulations with its overly complex transitional regime and our complex layers regulatory lasagna piled on top. At the same time the system is decentralised and under-resourced both on EU and national levels. Reality is showing that this has led to a rather over engineered regulatory system that has difficulties delivering on its promise.
I have expressed doubts in my last blog about the course taken by the current US administration, the outlines of which seems to become clearer and clearer as the US seems to have opted for a very rigorous stripping down of its institutions, especially where they are active internationally (or manage nuclear weapons), and for a zero sum perspective on international relations, including alianating allies wherever possible.
The question now is how the US will fare in international reliance with this approach and how many countries will (continue to) see the US as a reliable source of rule based thinking and two-way relations.
If we look at the WHO regulatory reliance definition (“The act whereby the regulatory authority in one jurisdiction takes into account and gives significant weight to assessments performed by another regulatory authority or trusted institution, or to any other authoritative information in reaching it own decision.”) you can immediately see how this will be problematic for the US. These days nobody is bigger than the rest of the world no matter how hard you try.
How this will translate to devices policy both national and international is still not completely clear but I am not optimistic based on developments so far. For example, what will all of this mean for the US participation in the IMDRF? In this regard it’s encouraging that the Commission has announced that it will step up its international activity, which hopefully will include a more active participation in the IMDRF.
This means that Europe is in a great position to restore its position as a jurisdiction of choice for regulatory approval and regulatory reliance, IF it can get its act together. If.
How will the EU get its act together? As I’ve blogged earlier this year by means of a strategy of quick anti-bureacracy wins and targeted changes to the MDR and the IVDR.
I have already seen the Commission announce the first changes to the MDR and IVDR by means of regulatory and non-regulatory actions (the quick wins):
The Commission is still on track to present a proposal for legislative changes later this year. The member states also have the option to finally deliver on their ideas set out in the MDCG 2022-14 position paper.
In a larger context at EU economy level the Commission has presented its Competitiveness Compass for Europe, which, if it will really be rolled out as promised in this communication (COM 2025 (30) final), should lead to significant simplification and deregulation of EU law and a reduction of ‘regulatory ratchet’ – the politically correct term for regulatory lasagna. Even medical devices are explicitly mentioned in the Compass, in relation to simplification of regulatory requirements.
The Compass is functionally built around three pillars and five horizontal cross-cutting measures. Other than from a regulatory perspective the medical device industry may find it interesting that the EU wants to make it much easier for startups to scale making access to cross-border investments much easier, among which by means of the “28th regime”. This is a a single, harmonised set of EU-wide rules that innovative companies can benefit from wherever they invest and operate in the Single Market. A Data Union Strategy should improve and facilitate secure private and public data sharing, simplify the regulatory regime and its application, and accelerate the development of new systems or applications.
While this all sounds totally super on paper, I still remember earlier initiatives in 2008 that were supposed to make the EU the most competitive economy in the world and at the moment we’re not there yet.
Like the US at the moment, the EU is its own worst enemy in the execution of policy and regulation. The EU is divided among its member states and encroached upon by populists that do not believe in the European project but would rather take their country back to the early fifties when everything was better, people still said hello to each other in the street, life was simple, and the sun was shining every day.
The biggest challenge for the EU will be to rally the member states behind this compass and to do much better in convincing the population what the benefits of the EU are.
It’s frankly ridiculous for example how the EU negotiates international trade agreements that are subsequently torpedoed wholly or in part on national level because of local interests of groups of people that choose not to see the bigger picture based on EU hostile desinformation. This does nothing for the reliability of the EU in the world.
I have done more traveling than I probably should have in January and February between the US, the Middle East and various places in Europe. One of the constant themes was the place of a regulatory regime in the world and how to calibrate the regulatory system just right in the way that it meets […]
Happy new year everyone! I hope you had a good rest over the holidays because 2025 will be interesting. I am planning to revive this blog this year and hope to put new energy in it by making it more periodical with smaller bits of information and shorter analysis. You will still get my unique […]
Happy new year everyone! I hope you had a good rest over the holidays because 2025 will be interesting.
I am planning to revive this blog this year and hope to put new energy in it by making it more periodical with smaller bits of information and shorter analysis. You will still get my unique perspective on things and I’ll probably not be able to help myself so will probably occasionally write more in depth stuff anyway. For the actualities and the occasional arguments with others, follow me on LinkedIn.
Everybody and their mother and then some other people even has been clamoring for changes to the structure of the MDR and the IVDR. The Commission has indicated that it will pursue measures in the short term intended to combat bureaucracy slowing down the system (such as the still not optimal functioning of structural dialogues). Member States / MDCG can be part of this solution by just implementing all points of MDCG 2022-14 and facilitate notified bodies in this regard with uniform instructions and otherwise just let the Commission do its job.
The Commission is planning to present a package of proposals more structural changes later this year (Q4), the targeted evaluation. These will be based in the fact finding exercise conducted in the second half of 2024 (of which the results are still to be published), the call for evidence currently open and may be inspired of course by the many helpful white papers, position papers, Parliament joint resolution and EPSCO paper and other initiatives. You can still submit comments and wishes in the Commission’s public consultation open until 25 March 2025.
If there is one structural change that I would personally favor it would be more accountability of notified bodies, legal review of all of their decisions by analogy to article 51 (2) MDR and more external harmonisation of their procedures, as this would force notified bodies to be more the solution to the problem than part of the problem. Let’s not forget that notified bodies wield delegated state power that enables them to unilaterally determine the rights and obligations of citizens, with at the moment basically zero accountability as this is not built into the system. What this sort of control could look like has been set out in the BVMed and VDGH white paper and Peter Liese initiative. Exercise of state authority without effective accountability, that does not sound very constitutional and I can assure that much can be improved there.
In the mean time we had the Dragi report in the EU and we have a new Commission with new plans. We will need to see how the new EU Commissioner for Health attacks the MDR and IVDR. At this point I am still wondering how this is going to happen with the degree of understaffing of the devices unit at DG Health that has a headcount of less than 10 people. It’s a big burden on a small team and I have said more than once that these people deserve great respect for what they manage to do with such a small team. If I were in charge my first action would be to properly resource this unit. Maybe someone could calculate the external costs to society of this unit being under-resourced? I bet that this these are much higher than tripling the headcount, apart from the moral hazard of not properly resourcing the Commission for devices policy.
Under-resourcing seems to be a general theme: I keep experiencing how difficult it is for EU medtech startups to secure EU based funding and having to spend a lot of the funding from whichever source on often preventable mistakes in regulatory strategy and/or pretty steep notified body fees. This is also one of the themes in the Dragi report.
Let’s not become an open air museum of bad choices in Europe!
The FDA has been running circles around the EU regulatory system for the last years with market access procedures that worked a lot better, were way most cost effective and encouraged innovative devices to the market earlier than possible in Europe. The FDA did really well in this regard.
But will they we able to keep this up during the new administration? We will need to see how the FDA and its procedures are affected by the new administration’s plans with downsizing and gaining more direct influence over independent government institutions.
Maybe the regulatory pendulum will swing back to EU once more after all the changes planned to the MDR and IVDR for 2025 and the Union will be called one big clinical trial for the US again. Who knows!
The new obligation under the MDR and IVDR to report interruptions and discontinuations of supply enters into force on 10 January. We now have Commission Q&A, a reporting form and still a lot of remaining questions. A lot these were asked at the webinar that I was part of together with Bassil Akra on 17 December 2024. I have emailed everyone by now that had questions that were not answered at the webinar. You might still be able to get the recording via Sean Smith of Medtech Leading Voice.
My take away is that the legal dimensions of this change are still not well understood by manufacturers and especially not be the supply chain, but also not by competent authorities. Manufacturers and distributors often have no idea how shortage reporting may impact their distribution, tender and supply agreements. For example, a shortage report may trigger an anticipatory breach or other right of the other party. Regarding competent authorities it will be interesting to see if they understand what it means in the Commission Q&A about article 10a that article 109 MDR/102 IVDR apply, meaning that the information repored to them is confidential. Yet, I have for example seen competent authorities argue that local freedom of information regulation trumps article 109 MDR / 102 IVDR and without much qualms disclose information from vigilance reports pursuant to freedom of information requests of parties working on product liability claims. Why is this kind of policy problematic? Because you cannot be sure that what you report in confidence stays confidential and will not be used against you. That makes reporting or full reporting risky and leads to a chilling effect on reporting. This will help nobody to achieve their goals. We’ll also have to see what any national enforcement policy will look like and if national competent authorities have the capacity to review the reports filed in any meaningful level of detail anyway.
If you have more questions, or need help taming the beast of article 10a, let me know.
By the way, there will be a full article on article 10a coming (in English) in the German legal journal MPR by my colleague Judith de Wilde and me. Watch that space!
As a new feature on this blog I decided to add a section to blogs about what I found interesting last month(s), as this may signal developments interesting to others too.
Mergers and significant changes keep causing headaches and costing (a lot) money unnecessarily. First, application of the concept of ‘significant change’ in article 120(3c) (b) MDR by notified bodies in the context of mergers remains a source of controversies. While the section on administrative changes in MDCG 2020-3 Rev 1 that mentions ‘mergers’ are allowed as administrative changes, notified bodies often get hung up on the clarification in footnote 17 that the result of a merger must be that the manufacturer legal entity must remain after the merger. This has been added to clarify that asset transfers that require new certificates to be issued in the name of a new legal entity are not allowed. Notified bodies will tend to interpret this as that mergers between legal entities in which the manufacturer entity is merged into the acquiring legal entity trigger a substantial change, while this is clearly not intended by the Commission (see also Q&A on Regulation 607/2023, question 9.2).
I have found that notified bodies are typically not very good at understanding what a merger is and then cling to misinterpreting the literal text of footnote 17. This causes sometimes quite severe damage and costs for the manufacturer and/or the acquirer. It may lead to unnecessary cancelling the legacy device certificate, causing to the devices in scope of the cancelled certificate to be no longer available to the market. Yes, this is precisely what was not intended by the EU legislator with the legacy devices regime. Notified bodies do not seem to understand the existential crisis that they can put a company in by being unpredictable, slow or unreliable with respect to merger activity.
In my experience with this, contact persons at the notified bodies were without exception unqualified for a meaningful discussion that had any depth beyond the literal text of the MDR or Commission/MDCG guidance (no legal understanding or training, nor any recourse to the notified body’s legal department), which is disturbing and puts entirely needless pressure on the relationship between the manufacturer and the notified body. This reflects badly on the EU regulatory system.
My pro tip for notified bodies would be to clarify their understanding of the concept of significant change in merger scenarios with their competent authority, immensely up their game in discussion of a potential significant change in a merger scenario with a manufacturer and make sure that their legal department is available to assist front line staff that is basically never qualified for legal matters immediately to prevent unnecessary escalation.
Manufacturers and their acquirers, for their part, should never assume that the notified body will intuitively understand what a merger and its effect is (this includes basic corporate house keeping within the corporate group – never dissolve / merger a legal entity without talking to regulatory first), should explain how it is not a significant change, have this confirmed by the notified body in advance and (important) have a very good paper trail of this before implementing the merger. Be ready to escalate to the notified body’s competent authority because they may be on your side more often than you think. And MDCG, please please please why not just write this down better? It would save so much agony and costs and improve the impression of predictability and reliability of EU medical devices law.
The Batteries Regulation keeps people very busy, as the first major phase in date (18 August 2024 for CE marking of batteries) has passed now. The Batteries Regulation is horizontal EU legislation and applies regardless of MDR or IVDR compliance, which is something many companies in the devices do not realise. Non-compliant battery leads to a non-compliant device, and there is your conundrum. We spent a lot of time in Q4 2024 helping manufacturers of medical devices and IVDs figure out how to work with the Batteries Regulation.
Did you know that even cybersecurity is a thing for batteries? If the battery in your device has battery management software that can talk to the outside world somehow, you have a cyber security risk to manage (also as part of the device’s cyber risk management – see MDCG 2019-16, Annex II regarding battery depletion as a result of external unauthorised acces).
Would you like to go on a Battery Regulation safari with me and my battery specialist colleague Jilles like some of the biggest medtech companies have already done and found interesting? Let me know!
It was not in the press much, but a Swixit reversal may be in the works. Not immediately, but the EU and Switzerland have taken steps again to revisit the integration of Switzerland into the EU internal market, which would mean that mutual recognition of CE marking and Swiss notified bodies might be back on the table. It’s still early days and the current package is not the same as the comprehensive Institutional Framework Agreement that turned out to be more than Switzerland could process politically, but negotiations seem to go the right way. Basically we are back to good old MRA times and a new MRA for MDR and IVDR would be very logical (and has the warm support of industry).
What could that mean for the plan of Switzerland recognise FDA approved devices? Good question! First, this plan has still not been implemented. Secondly, given these developments it might never be.
Watch the negotiations between the EU and Switzerland as the MRA and its MRA annex are filled in in the coming months.
After the consultation last year about extending the eIFU regulation to other professional use devices the Commission has now announced that it plans to adopt the new implementing regulation in Q2 2025, which will allow to issue electronic instructions for use for all medical devices intended for exclusive use by healthcare professionals. We are still very much in the stone age in Europe on eIFU, since the underlying assumptions to the current eIFU regulation are that basically nobody has reliable access to internet and that everyone saves their paper IFUs for reference use. By now all these underlying assumptions have proven wrong and outdated, and it’s time for a thorough update.
Although this still does not seem to be in the stars for the upcoming update, many other jurisdictions allow eIFUs for lay users as well, and there is no reason for the EU not to do so either given the experiences in other jurisdictions. While the outcome of the last consultation has not been published yet, I’ve seen the results and even professional users overwhelmingly agree that this would be a good idea for lay users. In fact, let’s not forget how only providing paper IFUs disadvantage people with disabilities and are even contrary to other EU law intended to make life easier for persons with disabilities by obliging IFUs for products to be provided in multiple sensory channels. Who use a lot of medical devices you ask? Indeed: persons with disabilities, generally. Let stop limiting their autonomy with these unjustifiably outdated eIFU rules.
One of the problems with well-established technologies is that you would think they could do with some less strict oversight (especially on the class III and IIb classes). The Commission aims to reclassify certain well-established technologies, for which the application of the general classification rules in Annex VIII of the MDR is not proportionate to the devices’ nature and respective (limited) risks, with a new implementing act planned for Q4 2025.
Many people don’t understand how Eur-Lex works and get their MDR and IVDR text versions wrong. The most recent consolidated version which includes all the last changes have just been published for the MDR but not yet for the IVDR (which is still in the consolidated version of July 2024). Understanding how Eur-Lex works and how to use this incredibly versatile tool is a very good investment of your time (next to reading the Blue Guide). If you ever need to recruit or vet regulatory staff or consultants with EU capabilities, ask them two these things: show me how Eur-Lex works and have you read the most recent version of the Blue Guide? In case of unsatisfactory answers, these are not the people you’re looking for.
A new year, new conferences. What am I up to? Currently I’m planning to be at
So if you’re interested in meeting me, meet me at these international events! Others are in the works and I’m planning a boatload of webinars for this year as there is so much to talk about.
And: this year will likely see the third edition of The Enriched MDR and IVDR, to which I’ve added presently 200+ additional pages of substantive content and of which I’ve revised and updated a lot of content too (that was a lot of work that did not go into this blog).
After having contributed to the improvement of medical devices legislation in many ways over the years (most recently by helping the European Parliament to come up with an initiative for targeted amendments to the MDR) it is now my great honour to have been invited as external independent expert to assist the Bundestag (the German Parliament) in forming the MDR revision agenda that the German government should take to Brussels.
The Council is one of the three important institutional actors in the legislative procedure for amendments to the MDR, the co-decision procedure. And Germany is one of the most active and heavyweight Member States in the Council when it comes to medical technology matters so what Germany wants with the MDR will carry a lot of weight.
We also know now what the European Parliament wants (Peter Liese’s initiative), and we also know that the Commission is keeping its cards close to its chest for the moment although we do know that also the Commission wants amendments to the MDR in the short term (the planned ‘targeted evaluation’) and may well be working on those already.
The Bundestag session will take place tomorrow from 14:45 to 15:45 CET. You might be interested in the position papers (Stellungnahmen) filed for this session (including mine), which can all be conveniently downloaded here. For those interested, the session in the Bundestag has a public live stream that you can watch (in German).
What you will see happening tomorrow may be another important step in how the MDR and IVDR may change soon.
As I’ve recently posted on this blog, there is a momentum of converging of positions building up. For example, the Peter Liese initiative was generally received quite well by industry as I’ve been told by several people. But we cannot fix the MDR alone as the IVDR suffers from the same issues, as I have argued in my position paper sent in for Parliament session tomorrow.
This momentum will culminate in the short term and will lead to targeted but significant revisions of the MDR and IVDR to fix the bigger inefficiencies and improve these regulations by building on the solid foundations that are already there with the experience gained since 26 May 2017. My guess is that we will see this happen early 2025.
For me personally the most important points as a legal and regulatory expert are that
Everyone needs to be part of the solution to make the system work because as things go the MDR and IVDR are underdelivering in a completely preventable way as they are suffering from problems caused by policy choices, both on EU and national level (notably those underlying the transitional regime and Member States’ resourcing of the implementation and notified bodies re-notification). The good part about this type of choices is that they can be remedied. Because let’s face it: we are all (potential) patients and have dear ones that are (potential) patients, and we would like a devices regulatory system that lives up to its promise. And then there is the geopolitical dimension: why would the EU, who prides itself on being world champion in setting the bar for regulation, inflict this crisis of healthcare and innovation upon itself if it is entirely preventable?
It’s time for everyone to step up and do better. Because who has two thumbs and can be part of the solution? Yes that’s right – that is you. You could start right now.
The MDR and IVDR are now in force for seven (7) years, and they are not in good shape.
I think it is safe to say that they did not deliver on their promise of a better, more streamlined and more SME and innovation friendly regulatory system.
Deadlines keep being moved, patchwork happens here and there. But it is still not a world-class regulatory system – essential parts like Eudamed are not even finished yet. Innovation is fleeing to other jurisdictions and hospitals complain about shortages of devices. This is not a good place to be, and certainly not to stay.
Today is an important day under the MDR, as the era of legacy devices truly starts. The manufacturers that do not have an MDR application in the works by today will lose existing legacy device benefits.
We have now truly entered the era of legacy devices – an area in which is ever harder for the outside world to understand. Many of the non-Union jurisdictions that attach importance to CE certificates for local registration are finding it more and more complicated to understand if a certificate is actually valid or not after Regulation (EU) 2023/607 created the MDR legacy devices regime that we have today. Having legacy devices certificates is of course better than not having any certificates but I often see that manufacturers do not really know what it entails.
First, there is the issue of no significant changes. That’s right, the device’s design and intended purpose are essentially frozen until the MDR or IVDR certificate drops. That means that competitors that get their MDR or IVDR certificates earlier can outcompete you with new features that you are not able to implement yet.
Secondly, the notified bodies have until end 2027 or 2028 (depending on risk class) to finish the conformity assessment and even if they don’t by then this has no legal consequences. So there is a clear incentitve to be MDR or IVDR for the manufacturer to be CE marked as soon as possible. In that regard it is strange that notified bodies are reporting a drop in applications, both for MDR and IVDR. There is no obligation for the notified bodies to finish as soon as possible unfortunately.
Also, it is not encouraging at all that the number of application refusals is increasing, with refusal for incomplete applications and applications outside the scope of designation of the notified body accounting for the two biggest grounds of refusal. These grounds for refusal should normally be avoidable, and yet they happen more and more.
It’s also an important day under the IVDR, because all except the last of the requirements for in-house produced devices in article 5 (5) IVDR become applicable. Only the justification requirement for the use of an in-house produced device still needs to become applicable on 26 May 2028.
While the MDCG has issued guidance (MDCG 2023-1) on the subject, this guidance is really broad in some areas and shows divergence in policy (or absence thereof) between member states. It seems that most member states are just waiting with local policy until they have an idea of the likely level of compliance in their respective markets. Where member states do express themselves I’ve seen interesting things, such as for example statements that cross-border testing is not allowed under article 5 (5) IVDR – excuse me? Health institutions can provide cross-border medical services to patients in the EU but not testing services? That would be very much at odds with the internal market.
The health institutions, for their part, have a hard job complying – especially the hosptial labs that are invariably under-resourced to do the extra work required under article 5 (5) IVDR.
So we seem to be entering into a kind of wild west phase for in-house produced devices. We have rules but scattered compliance and little enforcement.
We have a legislative proposal in the works that will amend the MDR and IVDR with a duty in the new article 10a MDR and IVDR to report interruptions and discontinuations of supply of a device. The proposal will also provide for a mechanism to phase-in Eudamed by module and move IVDR legacy devices deadlines. See here for Q&A.
The Council is expected to approve this on 30 May after which it will be published and enter into force somewhere in June most likely. The provision about supply interruption will enter into force six months after entry into force of the amendment, so this autumn. Manufacturers should be ready for this.
Although the proposal started out as targeting only interruptions of supply of a device but the version voted on by the Parliament additionally included discontinuation of supply of a device. As the proposal currently stands:
“a manufacturer [that] anticipates an interruption or a discontinuation of the supply of a device, other than a custom-made device, and where it is reasonably foreseeable that such interruption or discontinuation could result in serious harm or a risk of serious harm to patients or public health in one or more Member States, the manufacturer shall inform the competent authority of the Member State where it or its authorised representative is established, as well as the economic operators, health institutions and healthcare professionals to whom it directly supplies the device, of the anticipated interruption or
discontinuation.The information referred to in the first subparagraph shall, other than in exceptional circumstances, be provided at least 6 months before the anticipated interruption or discontinuation. The manufacturer shall specify the reasons for the interruption or discontinuation in the information provided to the competent authority.”
There will also be additional obligations for economic operators: all importers, distributors and other economic operators involved (e.g. procedure pack or system composers) economic operators who have received the information from the manufacturer or from another economic operator in the supply chain shall, without undue delay, inform any other economic operators, health institutions and healthcare professionals to whom they directly supply the device, of the anticipated interruption or discontinuation.
This means that manufacturers will need to do an impact assessment with an at least 6 months horizon at least that looks at individual Member States in the Union if they plan to discontinue or temporarily stop supply of a CE marked device. And then tell everybody and their mother about it if this may create issues in one or more member states. Distributors and importers in the Union need to establish processes to inform the supply chain downstream as well.
I understand that the MDCG is working on guidance about how to apply this provision, which is a good idea as it is very vague. My own legal experience with broadly and vaguely drafted security of supply information obligations is not good.
I am litigiating several cases in relaton to medicines where companies were find for not complying with quite unclear and broadly worded similar requirements, I hope we can avoid this in devices. In the meantime these rules for medicines are being amended to become much more sophisticated in the review of EU pharmaceutical law. Why has the legisalator not looked at the experience gained in this sector? Your guess is as good as mine.
The Commission has announced in January when it made the propsal that is now nearing the end of the legislative pipeline that it will pursue further amendments to the MDR and IVDR to fix ongoing problems. The European Parliament also announced when it had voted for the latest amendment on 30 April 2024 that this would not be the end of amendments to the MDR and IVDR.
One of the most recent steps is that Peter Liese, member of the European Parliament and long since involved with the MDR and the IVDR, has forwarded a proposal for Parliament suggested changes to the European Commission, as was made public on a press conference on 17 May. I had the honour to be retained by Mr. Liese’s office to serve as external expert for developing this proposal.
The European Parliament does not have the right of initiative for amendments to legislation so this is not an actual pending legislative proposal now. However, Parliament can of course seek support within the Commission for this idea so the Commission may decide to table a proposed amendment for the Council and the Parliament in a legislative procedure that includes the Parliament’s ideas because it increases the chance of success and speed of the proposal. I understand this is exactly what Mr Liese has been doing.
As said above, the Commission is also working on its own plans as it announced back in January:
“The Commission will already start in 2024 its preparatory work for a targeted evaluation of the legislation on medical devices. The evaluation should assess how the legislation is affecting the availability of devices, in particular for devices with specific characteristics (e.g. paediatrics, orphan, innovative devices). In the assessment, special attention may also be given to costs and administrative burdens stemming from the implementation of legislation, especially for SMEs.”
The question is now what will happen with the Parliament elections and Commission reshuffle coming up. The Commission will have to determine what actions might still be kicked off under the current Commission, and what exact proposal it will want to make at what time.
In any event, more and more developments seem to be converging that will likely lead to another revisiting of the MDR in the short term. And this will go beyond deadline amendments as nobody seems to want to amend the deadlines further.
For me personally a number of things need amending:
This was my personal wish list, and many other wish lists are circulating. Things are moving and positions converging. Now it’s time to fix the MDR and IVDR.
Happy birthday MDR and IVDR – I’m curious what the next one looks like!
In any event the new third edition of The Enriched MDR and IVDR will have been published by then, one of the reasons that this blog has received less attention from me than usual. Many people have told me that they miss it, so I will do my best to post more often again.
Sometimes you come across cases that violate Mandalorian Creed: “One does not speak unless one knows.”.
This happened to me last week when I read the Dutch Supreme Court’s judgment in a case about VAT levied on medical devices, rendered on 8 September.
Some background: in the Netherlands we like to use taxes as a means to organise society by providing (dis)incentives through taxes. This is why we now have a tax system that is so complex that nobody understands it anymore and the tax service cannot even implement it reliably (this not made up or a personal opinion by the way). Also, for many of the tax (dis)incentives it is absolutely unclear if they achieve the intended effect because our government hates to do impact assessments for things that look nice politically.
So what happened in this case? In the Netherlands we have two VAT (turnover tax) brackets: high (21%) and low (9%). This is great for policy by politicians, because you can move products and services around between these brackets. You can subsidize certain professions or products to look like you are really helping people, which Dutch politicians liek to do, especially with elections in sight.
For historical reasons medicines are in the low VAT bracket and medical devices are in the high VAT bracket. Since the Netherlands is a state of law, we have legal principles underlying taxes, such as the principle of fiscal neutrality (which is also an EU tax principle by the way). That means (in short, because the application is actually complicated legal voodoo that you can use in anyway as is opportune for tax collection as we will see in this case as well, as I’ve blogged about before on this blog in relation to customs law characterisation of products) that products that serve the same purpose for a consumer should be taxed in the same way, because that would be fair and non-arbitrary.
A medical devices company with a substance based device that does the same as some medicines decided to challenge the high VAT rate applied to its products based on violation of the principle of tax neutrality and then ran into what I can only qualify as an impressive exercise in regulatory bias based on prejudices about medical devices regulation, without empirical basis.
No empirical basis? It is actually confirmed in the judgement where it says that the lower courts could suffice by conceiving an abstract idea of how the consumer chooses between interchangable medicines and medical devices that are indicated for the same treatment rather than check how consumers really think by means of market research.
I must concede here that the European Court’s case law provides that a national court is not obliged to order market research under all circumstances when having to decide how the decision pattern of the average consumer works in a given factual context. However, the European Court, wise as it is, also holds that it may be very prudent to do market research to support a national court decision on this point. To which I will add: and it would be nice if the court also takes the trouble to be properly briefed about how medical devices regulation actually works. Both of these things did not happen in this case and then the results can be case law that does not look convincing at all and gives a strong whiff of regulatory bias between the medicines and medical devices regulatory frameworks.
More detail: the lower court landed on the ruling that the products concerned (over the counter medicines and over the counter devices for the same therapeutic indication) were not similar for consumers because:
Let’s how the Supreme Court paraphrases this (this is my unoffical translation from the judgment in Dutch):
“3.4 The Court took as its starting point that the principle of fiscal neutrality applicable to the levying of turnover tax precludes the different treatment for turnover tax purposes of supplies of goods that are similar from the point of view of the average consumer. Artificial distinctions based on insignificant differences are to be avoided. In the Court’s view, the non-prescription registered medicines to which the interested party compares are not similar to the S products. Not only do the legal framework and legal regime under which each of these groups of products falls differ, but also their use is not similar. Here, the Court took into account that suppliers of registered medicines, including those that may be supplied to consumers without a prescription from a general practitioner or medical specialist, have to comply with different and more stringent requirements and undergo a more extensive procedure in terms of market authorisation, quality, efficacy and risks of those products and informing consumers about them, than that which the interested party has to comply with as a supplier of the products. The supervision of (non-prescription) medicines is also stricter. Monitoring the quality of medicines on the market is an ongoing process. In contrast, the Health and Youth Inspectorate checks only by means of a random sample whether medical devices indeed fall under the low risk class claimed by the manufacturer and meet the other requirements, the Court said.
3.5 Although the Court of Appeal considers it plausible that the S-products and the non-prescription medicines referred to by the interested party have similar properties as regards the treatment of the skin conditions referred to above in 2.1, in the Court of Appeal’s opinion, the interested party has not made it plausible that the differences described above in 3.4 do not play a role for the average consumer. The Court of Appeal considers it plausible that for the average consumer the quality and control guarantees surrounding registered medicines may be a decisive factor when making a choice between a registered medicine and (one of) the S-products. For the average consumer, the registration of a product as a medicinal product constitutes an important indication of the reliability of its efficacy and safety, which is underlined by the legally required comprehensive package leaflet containing relevant information on the efficacy, side effects and any other risks associated with the use of the medicinal product, the Court said. Since the S-products do not meet the requirements set out in the Medicines Act, nor are those products presented to customers as registered medicines, the Court does not consider it plausible that the S-products are nevertheless interchangeable with the non-prescription medicines referred to by the interested party in the eyes of the average consumer. The fact that the S-products must comply with the requirements of Directive 93/42/EEC does not make them medicinal products within the meaning of the Medicines Act, the Court continued.”
X / de STAATSSECRETARIS VAN FINANCIËN, Supreme Court 8 September 2023, ECLI:NL:HR:2023:1124
Mind you, this reasoning has not been based on factual research about what consumers actually think. This was conceived by the lower court in abstracto without the court thinking that it might be good to back this up with some facts. The Supreme Court upheld the lower court’s judgment on all points.
What does this mean? Apparently according to the Supreme Court:
Let’s unpack this.
I do not believe for one single second that consumers attach importance to the regulatory framework under which a product is regulated. I really don’t. Rather, I think that consumers attach importance to the products being safe and effictive, regardless of the regulatory framework. This is the basis of EU product law for healthcare products: ensure a high level of public health and a high level of consumer protection. Medical devices regulation really is not intended by the EU legislator to do any concessions on these points compared to other legislation for other products. Rather, different products are subjec to different regulatory approaches, each proportionate and suited to the products in scope.
If it were true that the regulatory approval system of any product would decisively matter to consumers, this would lead to some truly bizarre situations. For example: consumers would always choose birth control pills (medicine) over condoms (medical device) for anti-conception purposes because the pill is a medicine and therefore obviously superior. Can you see how absurd that would be? I can tell you that I’m really glad that my own young adult children think about these things differently than the courts. More in general (if this theory of regulatory approval regime is a decisive factor in choosing) consumers would prefer to travel by airplane over travel by train, because airplane type approval is more ‘extensive’ regulation than train type approval and of course: consumers are deemed aware of this. People in the Netherlands would abandon their bicycles en masse in favor of cars because motor vehicles are subject to the stricter regime of type approval whereas bicycles only fall under the rather low end general product safety requirements (plus a batteries and EMC/LVD top up for e-bikes, which should have people preferring e-bikes over normal bikes because they are regulated more strictly).
If the court would have taken the trouble to do a descente (technical procedural law term meaning that the court leaves the court building to go look at a real thing happening in real life) to the real world and visited a drug store (where they sell the products concerned in this case) instead of dreaming up this theory in the privacy of its chambers, ask yourself if it would be possible that the court would have witnessed the following conversion:
[enter customer while court members browsing products are trying to look unsuspicious in various places in the drug store]
Customer: “Good morning, do you have something for [skin problem]?”
Sales person: “Good morning sir, we sure do. Would you come with me please?”
They walk to a shelf where a lot of colorful boxes with lots of letters on them are stacked under a big sign on the ceiling saying “SKIN”.
Sales person takes two boxes from the shelf: “Here sir, we have product [A] and product [B].”
These two products happen to be both creams, one a medical device and the other a medicine because they have a different mode of action.
Customer looks at the colorful boxes: “Which one do you recommend?”
Sales person: “Well, they both work for your skin problem. They have a bit of a neutral scent. Customers seem to be happy with either of them. But we sell most of these. [indicates medical device box]”
Customer: “In that case I want the medicine one.”
Sales person: “Oh?”
Customer: “Because the approval system is stricter and it has better post market follow up.”
Customer takes boxes from the sales person examines boxes by turning them in all directions.
Customer: “Yes, look, here. Here is the CE mark for the medical device product.”
[customer grimaces disapprovingly]
Customer continues: “And here is the RVG number for the medicinal product. So I’m taking that one. You can put the medical device back. Nobody wants that, with its substandard regulatory approval system. I’m surprised you even bother trying to sell this stuff. Nobody wants medical devices if they can get medicines for the same thing.”
Sales person: “Alright sir. Would you like me to give you more information about the medicinal product? Like about possible side effects?”
Consumer: “No thanks, I’ve got my medicinal product – that’s all I’m interested in. Nothing can top that and I’m sure these products are the best and that side effects for me are properly risk managed. I am of course going to read the patient leaflet from top to bottom. Can I pay please?”
Sounds absurd? Of course I’ve added some poetic license to show in this example dialogue how absurd the Supreme Court’s argument about assumed customer preference is, but essentially it reflects the argument 100%.
I hope you agree by now that this line of argumentation is not that realistic if not supported by facts about what consumers really think and what properties of products with similar intended use really matter to them. I am willing to bet a very good bottle of wine that the regulatory regime is utterly irrelevant to the average consumer. The average consumer expects something that is safe and effective, and will assume that any rules applied to any product publicly available will produce that outcome.
The most cynical point about this case is that the Appelate Court ruled that, when deciding whether product are similar for fiscal neutrality purposes, ‘artificial distinctions and insignificant differences are to be avoided’ (“Daarbij moeten kunstmatige onderscheiden op basis van onbeduidende verschillen worden vermeden.” – Supreme Court judgment section 3.4).
The judgment contains – in my modest opinion – some misunderstandings about medical devices law as it applies currently (or rather, already does since 26 May 2021) with the MDR. The Supreme Court and lower courts mention a number of determining characteristics that make medicines regulation apparently more attractive to consumers:
Let’s address these three points one by one.
If you compare apples and oranges, a comparison never produces a relevant outcome. That’s basic logic. As I’ve shown with the examples above, the comparison between regulatory regimes for different products serves no purpose. It makes no sense to measure a product by a yardstick that doesn’t apply to it. A nuclear plant has a more extensive approval process than the solar panels on the roof of my house. Yet they serve the exact same purpose for me: produce electricity. And I am happy that each is controlled by a regulatory regime appropriate to it, ensuring that it is safe and effective for its purpose. But it does not mean that I favor nuclear generated electricity because the regulatory regime for nuclear plants is more extensive.
In the cases where borderline products are concerned (typically the category of substance based devices under rule 21 of Annex VIII MDR), it is important to note that under the MDR the conformity assessment procedure has become a lot more complex and now also includes an assessment of the quality of the substance by the medicinal products authorities, which leads to the interresting situation that with this the Supreme Court’s comparison argument is even less valid, because the same authortiy looks at substance quality of both groups of products (medicines and substance based devices). It means that if this case would be re-litigated for a substance based device under the MDR, the Supreme Court would need to come up with a new argument.
Same point as previous, but worth to repeat verbatim: if you compare apples and oranges, a comparison never produces a relevant outcome. That’s basic logic. You learn this in basic math. But, tax is voodoo with different logic apparently. In tax law you can say that a fish is less evolved than a monkey because it doesn’t climb trees and that people therefore like monkeys better.
Apart from this, there is the underlying assumption that PMS and supervision of medical devices is so much more inferior that this would be (a) known the average consumer and (b) relevant to the average consumer and (c) relevant in the overall quality of supervision.
Since 26 May 2021 the MDR has added – for all devices in the market, including the legacy ones, and even the class I devices – the MDR PMS requirements which are very elaborate and apply to the entire life cycle of the device, even for class I self certified devices.
The Supreme Court would have done well to for example check with the competent authority for pharmacovilance and medical devices PMS and vigilance (IGJ) about what they think. If the IGJ would have been asked on the spot which one is better, I think that the IGJ would have said that both serve their respective purpose for the products in scope as well as they can.
This is just not true. Both under the MDD and MDR, and even for class I devices, the manufacturer has to monitor how the device is doing in the market by means of vigilance monitoring and report to the authorities any incidents that qualify as reportable. In case of any device above class I the device is (and was under the MDD too) subject to surveillance by the notified body that issued the CE certificate that is mandatory for classes IIa and up, as well as for sterile devices and devices with a measuring function (and under the MDR reusable surgical instruments, but these are usually not sold over the counter to consumers so not relevant in this picutre).
This means that the Supreme Court has either been misinformed on this point or misunderstood the argumentation that parties provided. In either case, all the more reason to revisit this.
The judgment is also, in my view, quite presumptuous about the comparative quality of (in both cases) European legislation. It suggests that medical devices are supervised ‘worse’ and that this is also obvious to consumers to the point that it determines their preference.
I would assume that the task of a Supreme Court is not to make value judgements about the comparative quality of different sets of EU legislation for different products, but rather decide on issues of law (what regime applies) and not of preference (what regime is better).
The respective products are monitored differently because they are very different products that work differently and are each subject to regulatory controls that the EU legislator has deemed effective and proportional for the products concerned.
In my opinion this presumptuous second guessing is at odds with the principle of Community loyalty of EU member states. The Supreme Court might have asked the EU Court if fundamentals of EU law even allow making this kind of distinction for the purpose of VAT law (which, also, is EU law by the way).
As stated at the beginning of this post, I think that this case would have been more appropriately decided under Mandalorian Creed. The Supreme Court might get some inspiration from the Mandalorians, a humble warrior caste from the Star Wars universe that is low on value judgments because the Mandalorians know that knowledge is by definition empirical, i.e. fact based. Because this is the way.
As my examples show, the abstract argumentation used is spectacularly unhelpful in this case because it is not convincing, compares apples and oranges and looks arbitrary.
As much as everyone likes to pay taxes, me included, a credible application of the principle of neutrality in taxes does help for a good legal basis for the tax measure concerned. Making a hypothetical distinction between regulatory approval systems and attributing that to the average consumer without any factual backup does not serve that purpose of a solid legal basis. It sounds abritrary, which is not a lawful basis for imposing tax to begin with. We need a substantiation that at least sounds somewhat rational and is preferably tax based.
I hope that another company will have the guts and stamina to re-litigate this case with explicit reference to the MDR (because the present case only looked at the MDD) and the need to support this with some hard facts. That should lead to a different outcome, especially for devices that have gone through MDR conformity assessment. If that company needs someone for the devices and medicines argumentation, please count me in because the good part about mistakes in (case) law is that they can always be corrected. As the Mandalorians would say: this is the way.
