New legislation would mandate all ISOs register with FDA
April 27, 2017
An editorial by Robert J. Kerwin
IAMERS General Counsel
On Tuesday, April 25, 2017, Congressman Ryan Costello (R-PA) and Congressman Scott Peters (D-CA) with the support of the Medical Imaging Technology Alliance, filed H.R. 2118 seeking to require registration of independent servicers of medical devices.
The Act — self-described as the “Medical Device Servicing Safety and Accountability Act” — would require the FDA, not later than 18 months after passage, to issue final regulations which:
SUMMARY OF KEY LEGISLATION POINTS
It seems, if adopted, that some independent servicers may well have to employ a compliance officer to address satisfaction of the requirements imposed by the legislation, though they may in fact be duplicative of the scope of responsibilities of the owner, manufacturer or importer.
Independent servicers will likely need to either absorb the cost of compliance (if they can afford to do so) or pass along the cost in terms of higher fees and expenses. In this age of controlling health care costs and encouraging competition, this legislation seems at odds with these goals.
Hearing will be next Tuesday
A hearing on the bill is slated to occur seven days from filing — on May 2, 2017 at the House Energy and Commerce Committee, 2123 Rayburn House Office Building, Washington, D.C. That the hearing on such important and far reaching legislation would be scheduled within a week seems quite remarkable, as it had not been previously introduced in a prior legislative session.
Is this a possible amendment to MDUFA IV?
One congressional observer noted that it was likely the intention of the bill sponsors to add the servicer legislation to the Medical Device User Fee Amendments of 2017 (MDUFA IV). While at first blush this new bill seems unrelated to MDUFA IV, the user fee system requires medical device companies to pay fees to the FDA when they register their establishments and list their devices with the FDA.
If the servicer legislation is included in MDUFA IV, it would seem that ISOs might also be assessed fees, as the legislation (by its terms) requires all independent servicers both to register with the FDA and pay the associated fees and expenses of registration and the compliance management system imposed by FDA.
The FDA's recent examination of third-party service
On Tuesday, I called Peter Weems, MITA’s Policy Director, to inquire about the "Medical Device Servicing Safety and Accountability Act." While readily acknowledging that MITA was the catalyst for the Servicer Legislation, he declined to discuss further details and advised that MITA had a legislative director with whom he might check. Later Mr. Weems sent me a copy of the actual bill.
In October 2016, I met Mr. Weems when we both appeared at a two-day FDA workshop in Silver Spring, Maryland, to consider the possibility of further FDA regulation of servicers. Over 500 people attended in person and many more attended via web access. Over 40 speakers presented and 20 additional attendees voiced their opinions.
Mr. Weems, on behalf of MITA, showed pictures of rusty equipment attributed to nameless independents, and advocated for further regulation of independents. On behalf of IAMERS, I suggested that regulation by anecdote was not appropriate and advocated that further regulation of servicers could hamper competition and increase health care costs – a concern to all, but particularly a concern to rural hospitals.
The American College of Clinical Engineering offered that there was a lack of real-world evidence to support MITA’s advocacy for additional regulation. The respected scientific research institute, ECRI, after review of, among other things, the FDA MAUDE reports, offered that there was no evidence to date that a patient safety problem exists.
Several independents at the FDA workshop noted they were having difficulty obtaining resources from device manufacturers (passwords, manuals and software) that would hasten the repair of equipment. One gentleman from a major Boston hospital asked, "if this is about patient safety, shouldn’t the hospital be provided a copy of the equipment manual?"
The FDA advised that it would be preparing a summary of the information gathered. In the last few months the FDA has contacted stakeholders to clarify and confirm the takeaways from the workshop. Even as this new legislation goes to Congress, stakeholders continue to await the FDA's report.
MITA's pursuit of device servicing standards
In February 2017, MITA announced that it was forming an effort to develop an American National Standard for servicing of medical imaging devices. The "Consensus Body" formed by MITA was announced as open to all materially-affected interested parties.
When I inquired as to whether issues such as access to Assemble-Install-Adjust-Test (AIAT) information and manuals would also be discussed, I was informed that it was not likely to find its way into a servicing standard. My takeaway: MITA was working on a Servicing Standard but wouldn’t be addressing whether independent servicers would be receiving AIAT or other information that is required by 21 C.F.R. Parts 820.170 and 21 CFR 1020.30.
The MITA Servicing Standard’s forward begins with stating there are “gaps in quality” at provider facilities which lead to performance and safety issues. Presumably all who would agree to the standard would be adopting this unsubstantiated claim.
Also disconcerting is the "Expected Service Life" provision, which leaves the manufacturer to determine when the "end of life" of equipment occurs. “Time period specified by the manufacturer during which the medical electrical equipment or medical electrical system is expected to remain safe for use.” This provision has important implications for rural hospitals, which may not be in a position to purchase new equipment and yet might well maintain older equipment.
The secretaries to the MITA Servicing Standards consensus committee were also MITA’s advocates for independent servicer regulation at the FDA workshop in October. It is troubling to have one’s advocates now presiding over the consensus body encouraging openness and due process.
Implications for competition, cost and rural hospitals must be considered
All of this has cost and competition implications for hospital servicing, if adopted. Under the 21st Century Cures Act, it would seem possible that MITA could well propose the standard for FDA adoption, and the FDA would have 60 days to determine whether to accept or decline the standard.
Could it be that there is a strategy to pass the “Medical Device Servicing Safety and Accountability Act” and then submit the MITA Servicing Standard for FDA adoption? None of this seems consonant with the standards requirement that a standard should not be implemented, where possible, to adversely affect trade or commerce.
If there continue to be reports by independent servicers of withholding of AIAT, manuals and service key information, how will these vital stakeholders meet the MITA standard? What happens to the hospitals that welcome choices and competition in the marketplace? What are the possible implications for job loss and for the future of rural and regional hospitals, which so depend on having choices, with the presence of independent servicers in the marketplace? Is any of this going to be examined in the rush for consideration of the Servicing Legislation and Standard Implementation?
IAMERS hopes that MITA might make good on its professed desire to work together (recently expressed again) and also on assessing the potential rising hospital costs and loss of competition if MITA succeeds.
In the meanwhile, IAMERS encourages servicers and indeed all stakeholders to oppose the rush to approve servicing legislation. We hope we are misplaced in our concern that some seek — in this time of rising health care costs — to regulate independent competitors potentially out of existence.
ABOUT THE AUTHOR: Robert J. Kerwin has served as general counsel to the International Association of Medical Equipment Remarketers and Servicers, Inc. for over twenty years.
IAMERS General Counsel
On Tuesday, April 25, 2017, Congressman Ryan Costello (R-PA) and Congressman Scott Peters (D-CA) with the support of the Medical Imaging Technology Alliance, filed H.R. 2118 seeking to require registration of independent servicers of medical devices.
The Act — self-described as the “Medical Device Servicing Safety and Accountability Act” — would require the FDA, not later than 18 months after passage, to issue final regulations which:
- Requires any person who owns or operates a company engaged in servicing of medical devices to register with the FDA. The FDA will be required to specify the timing, format, and information to be submitted by any person required to register
- Provides exemptions from registration that would apply to servicing operations conducted by a device user facility or a physician’s office in accordance with applicable laws
- Defines "servicing" to include refurbishing, reconditioning, rebuilding, remarketing, repairing or other servicing of the device by a person other than the manufacturer of the device
- Requires the servicer (by amending section 519(a) of the Federal Food, Drug and Cosmetic Act), to establish and maintain reports, if applicable, to assure that a device is not adulterated or misbranded; to report to the FDA whenever the servicer receives or otherwise becomes aware of information pertaining to, among other things, malfunctioning of a device, though the owner or manufacturer may also have this immediate responsibility; and also to submit reports on a quarterly basis depending upon the type of the device and situation — the procedure for the reports will follow FDA requirements
- Requires the servicer to establish a complaint-handling system equivalent to a system meeting the requirements of 21 C.F.R. 820.198
- Mandates the FDA to issue final regulations implementing the Servicing Legislation
It seems, if adopted, that some independent servicers may well have to employ a compliance officer to address satisfaction of the requirements imposed by the legislation, though they may in fact be duplicative of the scope of responsibilities of the owner, manufacturer or importer.
Independent servicers will likely need to either absorb the cost of compliance (if they can afford to do so) or pass along the cost in terms of higher fees and expenses. In this age of controlling health care costs and encouraging competition, this legislation seems at odds with these goals.
Hearing will be next Tuesday
A hearing on the bill is slated to occur seven days from filing — on May 2, 2017 at the House Energy and Commerce Committee, 2123 Rayburn House Office Building, Washington, D.C. That the hearing on such important and far reaching legislation would be scheduled within a week seems quite remarkable, as it had not been previously introduced in a prior legislative session.
Is this a possible amendment to MDUFA IV?
One congressional observer noted that it was likely the intention of the bill sponsors to add the servicer legislation to the Medical Device User Fee Amendments of 2017 (MDUFA IV). While at first blush this new bill seems unrelated to MDUFA IV, the user fee system requires medical device companies to pay fees to the FDA when they register their establishments and list their devices with the FDA.
If the servicer legislation is included in MDUFA IV, it would seem that ISOs might also be assessed fees, as the legislation (by its terms) requires all independent servicers both to register with the FDA and pay the associated fees and expenses of registration and the compliance management system imposed by FDA.
The FDA's recent examination of third-party service
On Tuesday, I called Peter Weems, MITA’s Policy Director, to inquire about the "Medical Device Servicing Safety and Accountability Act." While readily acknowledging that MITA was the catalyst for the Servicer Legislation, he declined to discuss further details and advised that MITA had a legislative director with whom he might check. Later Mr. Weems sent me a copy of the actual bill.
In October 2016, I met Mr. Weems when we both appeared at a two-day FDA workshop in Silver Spring, Maryland, to consider the possibility of further FDA regulation of servicers. Over 500 people attended in person and many more attended via web access. Over 40 speakers presented and 20 additional attendees voiced their opinions.
Attendees look on at the FDA Workshop in October
Mr. Weems, on behalf of MITA, showed pictures of rusty equipment attributed to nameless independents, and advocated for further regulation of independents. On behalf of IAMERS, I suggested that regulation by anecdote was not appropriate and advocated that further regulation of servicers could hamper competition and increase health care costs – a concern to all, but particularly a concern to rural hospitals.
The American College of Clinical Engineering offered that there was a lack of real-world evidence to support MITA’s advocacy for additional regulation. The respected scientific research institute, ECRI, after review of, among other things, the FDA MAUDE reports, offered that there was no evidence to date that a patient safety problem exists.
Several independents at the FDA workshop noted they were having difficulty obtaining resources from device manufacturers (passwords, manuals and software) that would hasten the repair of equipment. One gentleman from a major Boston hospital asked, "if this is about patient safety, shouldn’t the hospital be provided a copy of the equipment manual?"
The FDA advised that it would be preparing a summary of the information gathered. In the last few months the FDA has contacted stakeholders to clarify and confirm the takeaways from the workshop. Even as this new legislation goes to Congress, stakeholders continue to await the FDA's report.
MITA's pursuit of device servicing standards
In February 2017, MITA announced that it was forming an effort to develop an American National Standard for servicing of medical imaging devices. The "Consensus Body" formed by MITA was announced as open to all materially-affected interested parties.
When I inquired as to whether issues such as access to Assemble-Install-Adjust-Test (AIAT) information and manuals would also be discussed, I was informed that it was not likely to find its way into a servicing standard. My takeaway: MITA was working on a Servicing Standard but wouldn’t be addressing whether independent servicers would be receiving AIAT or other information that is required by 21 C.F.R. Parts 820.170 and 21 CFR 1020.30.
The MITA Servicing Standard’s forward begins with stating there are “gaps in quality” at provider facilities which lead to performance and safety issues. Presumably all who would agree to the standard would be adopting this unsubstantiated claim.
Also disconcerting is the "Expected Service Life" provision, which leaves the manufacturer to determine when the "end of life" of equipment occurs. “Time period specified by the manufacturer during which the medical electrical equipment or medical electrical system is expected to remain safe for use.” This provision has important implications for rural hospitals, which may not be in a position to purchase new equipment and yet might well maintain older equipment.
The secretaries to the MITA Servicing Standards consensus committee were also MITA’s advocates for independent servicer regulation at the FDA workshop in October. It is troubling to have one’s advocates now presiding over the consensus body encouraging openness and due process.
Implications for competition, cost and rural hospitals must be considered
All of this has cost and competition implications for hospital servicing, if adopted. Under the 21st Century Cures Act, it would seem possible that MITA could well propose the standard for FDA adoption, and the FDA would have 60 days to determine whether to accept or decline the standard.
Could it be that there is a strategy to pass the “Medical Device Servicing Safety and Accountability Act” and then submit the MITA Servicing Standard for FDA adoption? None of this seems consonant with the standards requirement that a standard should not be implemented, where possible, to adversely affect trade or commerce.
Robert J. Kerwin
IAMERS hopes that MITA might make good on its professed desire to work together (recently expressed again) and also on assessing the potential rising hospital costs and loss of competition if MITA succeeds.
In the meanwhile, IAMERS encourages servicers and indeed all stakeholders to oppose the rush to approve servicing legislation. We hope we are misplaced in our concern that some seek — in this time of rising health care costs — to regulate independent competitors potentially out of existence.
ABOUT THE AUTHOR: Robert J. Kerwin has served as general counsel to the International Association of Medical Equipment Remarketers and Servicers, Inc. for over twenty years.