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Contracts and kill switches: the business of reprocessing

by Lisa Chamoff , Contributing Reporter
From the January 2015 issue of DOTmed HealthCare Business News magazine



Kill switches
Many in the reprocessing industry say that OEMs are modifying their products so they cannot be reprocessed, by adding a chip, rendering the product ineffective if it’s reprocessed, or modifying the device — for example, changing the curvature of a scalpel — so that it doesn’t have 510(k) approval from the FDA for reprocessing.
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Craig Allmendinger, founder and chief executive officer of NEScientific, says he has seen these “kill switches” in the cardiovascular devices that his firm is preparing for 510(k) submissions.

“Those are technologies we have overcome and we still have to overcome,” Allmendinger says.

Janet Graesser director of global communications for Johnson & Johnson, responded to suggestions by industry sources that after acquiring SterilMed, Johnson & Johnson has been building chips into single-use devices that prevent them from being reprocessed by a third-party, as well as working language into contracts with hospitals that discourages reprocessing.

“Some medical devices manufactured by Johnson & Johnson operating companies include advanced components that enhance the performance of such medical devices,” Graesser said. “SterilMed, Inc., part of the Johnson & Johnson family of companies, collaborates with some of its sister operating companies to offer unique solutions that support the economic and environmental sustainability goals of its customers, including offering high-quality reprocessed medical devices to their customers.”

Industry changes
While OEM campaigns aimed at curtailing reprocessing are nothing new, some of the consolidation within the industry has raised eyebrows — and suspicions.

In 2010 Stryker, which was a critic of reprocessing, acquired Ascent Healthcare Solutions and renamed it Stryker Sustainability Solutions. In 2011, Ethicon Endo-Surgery, a division of Johnson & Johnson with a well documented history of anti-reprocessing tactics, acquired SterilMed, the second-largest reprocessing company in the U.S.

The acquisitions left industry veterans wondering if the companies, which account for 95 percent of the market, would grow the reprocessing businesses or fragment them to protect sales.

Daniel Vukelich, president of the Association of Medical Device Reprocessors, says SterilMed was a founding member of the industry organization, but left after its acquisition by Johnson & Johnson, and only Stryker Sustainability Solutions, Vanguard, and Medline ReNewal, which was brought into the fold last year, remain in the group.

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