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Does your medical device company prefer to outsource the responsibility of its quality management system (QMS) to a third-party supplier?

Companies need to understand the ramifications of not owning, managing, and maintaining its QMS.

Today’s guest is Mike Drues of Vascular Sciences. In this episode, Jon Speer and Mike discuss reasons why contract manufacturers should or should not own your company’s QMS.

 

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Some of the highlights of the show include:

  • There’s an alarming and risky interest for companies to outsource different parts of designing, developing, manufacturing, and commercializing medical devices.

  • Executive management needs to be involved with the quality of the company’s products and processes. Or, they’re in violation of complying with regulations.

  • The CEO has the responsibility to ensure that the QMS is appropriate, effective, and structured to meet the needs of the business and regulatory requirements.

  • New companies with limited resources should bootstrap their QMS, as well as leverage consulting and system resources.

  • Pick a manufacturer that aligns with various aspects of your product. After selecting a qualified contract manufacturer, perform ongoing monitoring of them.

  • If it's your company's name on the medical device you're bringing to market, then it is ultimately your company that is legally responsible for your quality system. Will you put your business in the hands of a third party and hope they care as much about your company’s compliance as you do?

  • A contract manufacturer can be a cost-effective way to develop devices, but a company needs to maintain its own records and sync them with its QMS.

  • Understand medical device regulatory requirements, and clearly identify processes and procedures to address them.

 

Links:

Why Contract Manufacturers Shouldn't Own Your Quality System

FDA: Overview of Device Regulation

European Union Medical Device Regulation (EUMDR)

ISO 13485

FDA 820

Mike Drues

Greenlight Guru

 

Quotes:

“Companies are looking to outsource more...of what needs to be done in designing, developing, manufacturing, and commercializing medical devices.” - Jon Speer 

“I don’t want companies to do things because regulations say so. I want them to do it because it makes good business sense.” - Jon Speer

“Medical device companies today, regardless of size, farm out a lot of activities to contract manufacturers.” - Mike Drues

“Hiring a contract manufacturer can provide a cost-effective way to develop devices, but you need to be involved in every step of the process.” - Jon Speer


Transcription:

Announcer: Welcome to the Global Medical Device podcast, where today's brightest minds in the medical device industry go to get their most useful and actionable insider knowledge, direct from some of the world's leading medical device experts and companies.

Jon Speer: Attention, medical device companies. It's very important that you understand the ramifications of a quality management system. It's very important that you understand what you should own, what you should manage, what you should maintain, versus what you are able to outsource to third party suppliers and resources such as contract manufacturers. I've seen an alarming trend with medical device companies where they are very keen to hand off responsibility for a quality management system to a third-party resource. And I think there's some real challenges. I think there's some real problems. I think there are some real concerns and questionable business practices by doing so. So, I hope you enjoy this episode of the Global Medical Device podcast.

Jon Speer: Hello and welcome to the Global Medical Device podcast. This is your host, founder and VP of Quality and Regulatory at Greenlight Guru, Jon Speer. Today, we're gonna do a little bit of role reversal, familiar voice with me, and familiar voice with Mike Drues from Vascular Sciences. Mike, welcome.

Mike Drues: Thank you, Jon.

Jon Speer: But Mike, we're gonna turn the tables a little bit. You and I've been chatting prior to today's session about maybe diving into a content piece that caught your eye recently on the Greenlight Guru blog. And the specific content piece is, "Why Contract Manufacturers Shouldn't Own Your Quality System." And you have some thoughts and ideas about ways to dive into that a little bit. So, if we're okay with this, I think you're gonna be asking me some questions this time. How's that sound?

Mike Drues: That's correct. I'm looking forward to it, Jon. Yeah, as you just mentioned, recently, there was this piece that came across my email, "Why Contract Manufacturers Should Not Own Your Quality System." And it was written by this really wackadoodle guy named Jon Speer. I think he's almost as wackadoodle as I am.

[chuckle]

Mike Drues: But Jon, why don't you start out by telling the audience what your motivation was for writing this particular column?

Jon Speer: Sure, happy to. And there's a couple of, I'll say, trigger events, and I think it's probably... Well, it's been kind of an escalation, if you will, over time, and there was sort of, as they say, the straw that broke the camel's back, recently. And let me elaborate. For... Well, really, I've been in this space for 20 years, and I would say, from the day one that I started up till present day, that there has been a growing migration, or interest, or whatever the right term is, where companies are looking to outsource more and more and more of different parts and pieces of what needs to be done in designing, developing, manufacturing, and commercializing medical devices. And there's been a, to me, a little bit of an alarming, growing trend where startup company has idea for device or the IP associated with a particular product.

Jon Speer: They go through the design and development process either on their own, or with a design partner. And then they get to the point where they've gone through the regulatory submission process, and clearances, and so on, and they're ready to start scaling up their manufacturing. And they're like, "Oh, I don't wanna do this anymore. I wanna hand off all this responsibility for quality to a contract manufacturer." And there are some contract manufacturers who are out there advertising, "Hey, you don't have to worry about your QMS, we'll take care of that." And I just think that that's an alarming thing for me to hear, that there are companies out there offering this because in some of these startup companies, they are at a point where they're like, "Oh, well, I don't have to do this." "That quality stuff's painful. That regulatory compliance stuff, I don't like it, so I'll just hand it off to somebody else." And I think that's very, very risky from a business perspective.

Mike Drues: Well, Jon, this topic is very timely, not just in the sense that you, of course, published your column just a few weeks ago, but let me share very quickly a personal story. Just yesterday, I had a telephone call with a potential new customer to help them on their regulatory strategy, and they happened to mention that on the quality side, they have farmed out making or putting together their quality management system to one of these third parties that you just alluded to. And they're looking forward to getting the results when it's all done. In other words, according to them, they're not planning to participate in the process. They've just hired these folks to put it together and to give it to them. I can guess the answer to this question, Jon, but what do you think of that approach?

Jon Speer: I just think it's full of risk, risk from a business perspective, risk from a regulatory compliance perspective. I just think it's a bad, bad idea. And let me elaborate on this. It's very clear that... And I don't want people or companies to do things because the regulations say so. I want them to do it because it makes good business sense. And some of the things that I'll share with you today, they'll be because this is what the regulations are very clear about. And some of it is gonna be, this is what makes good business sense. But from a regulatory lens, if you will, a compliance lens, it is very clear from FDA regulations, it's very clear from all other regulations that I'm aware of in the modern world in the medical device industry, that executive management needs to be intimately involved with the quality of their product and their processes. And when you outsource this responsibility to a third party resource and are completely hands-off, you're in direct violation, in my opinion, with complying with these regulations.

Mike Drues: Well, Jon, I couldn't agree with you more. As a matter of fact, what I said in this conversation yesterday to this potential new customer is that while you can certainly do that in terms of the letter of the law, I think that violates the entire spirit of the law, as you and I have talked about before. I don't take a boiler plate approach to regulation or even quality, for that matter. It's not just a matter of having these forms in place. Who do you think is ultimately responsible within a company for having, and maintaining, and following the QMS quality system?

Jon Speer: Well, there's this phrase, or this term that... It's not an official term. It's one that's kind of slang, if you will, but there's this concept of a chief jail-able officer that I've heard from time to time.

Jon Speer: But in all seriousness, it starts with the C-suite of a company, specifically, a CEO. The CEO ultimately has the responsibility to ensure that a quality management system is appropriate, effective, and structured in a way that not only meets the needs of the regulatory requirements, but also the needs of the business. I think it really starts with the CEO. The FDA regulations go on to define this role of a management representative that, for companies, that's generally the person who is sort of, if you will, the face of the company with... The person that's going to most likely interface or interact with regulatory bodies the most. And then with the new EU MDR, there's a new phrase. I don't think it's a new expectation, but it's a new phrase that has been defined by EU MDR, "A person responsible for regulatory compliance," is a phrase. And from everything that I understand about that, that this "new term" is part and parcel with the expectation of a management representative.

Mike Drues: Well, I love that phrase "chief jail-able officer", Jon. I have not heard that before, so I'm gonna have to borrow it from you.

Jon Speer: [laughter] Yeah, borrow it. It's not mine. That's somebody... I can't tell you who to give credit for, but I do think it is serious for people to think about. Think about it, if you are the C-suite of a med device company, and you have this mindset where you're gonna completely be hands-off of a quality system and completely outsource this "responsibility" for the quality of your products and the processes that are involved with your product. If there are issues, if there are events, if there are, God forbid, but adverse events and somebody gets hurt, I assure you that you have responsibility to address this. And you hope it never happens, but there is an escalation process. And if the infractions or the issues are severe and serious enough, it could lead to some time behind bars. It doesn't happen very often, but when it does, it's not a good day.

Mike Drues: That's definitely correct, Jon. And you mentioned in your blog, the name of the company on the product who is responsible, and I say very much the same thing. I like to say that the name of the company at the top of the label is ultimately responsible. And never mind, from an FDA perspective, getting pinged with a warning letter. If you just alluded to a person that's harmed from one of our medical devices and the company gets sued, then you're exactly right. Some people can in some cases, doesn't happen very often, go to jail.

Mike Drues: This is high stakes bingo. But, obviously, Jon, you and I work with a lot of small companies and startups. They have limited knowledge, perhaps, internally. They might not be experts in qualities management systems, or even regulatory, in general. They might have limited resources, in terms of time and money. Even if they wanted to sit down and put together a new QMS for their organization, they may not be able to do it by themselves. What would be your advice? In other words, we both agree that simply farming out the entire QMS is not a good thing, but what would be your pragmatic advice for companies in this kind of a situation with limited resource?

Jon Speer: Sure. And I think... Let's talk about it from the lens of a company who is in the development of... Trying to bring their first product to market and maybe don't have products on the market. My approach to... My advice to companies when you're establishing your quality system is... I use this term "bootstrap" or... Really, it's about building it as you go, building it as you need it. And if you're still in development, you don't need to focus on everything under the sun, from a quality management system perspective, especially if you're still, let's say, pre-regulatory submission, you probably need to establish processes around things like design controls, around risk management, have good processes for document management and records management. And in the event that you are that start-up and you're working with suppliers, whether that be design firms or testing resources or consultants, you should also have supplier management processes well defined.

Jon Speer: That's early stage, but as you progress further through the design and development process and closer and closer to design transfer and full production, you'll need to build out other parts and pieces of your quality management system. And there's a lot of ways that you can do this if you're a small company. You could leverage consulting resources. You could leverage solutions like Greenlight Guru EQMS software platform. But, eventually at some point in time, you're gonna have to dedicate a resource. Now, does that have to be a full-time resource? It depends. The favorite response of any quality and regulatory professional is, it depends. There's a lot of factors, but you can't completely eliminate the responsibility from your company. A scenario that I see a lot of smaller companies engage with is, their early days, they may leverage a consultant or a resource like Greenlight Guru, but then as they prepare for design transfer, that kind of becomes a point in time where you have to make a decision. Do I hire a full-time resource? Or can I still leverage that third party resource to assist me with this as long as my finger as that CEO of the company or the C-suite with the company? As long as I'm engaged and involved and an active participant in that, I don't have to own a quality system, per se, but as long as I'm active and engaged in that process, I may be able to leverage third party resources.

Mike Drues: Taking that a step further, Jon. Obviously, medical device companies today, regardless of size, farm out a lot of activities to contract manufacturers. This happens obviously in huge medical device companies, and it happens also in very small companies, farming out things like design, like development, like testing, like a lot of different things. One of things you talk about in your column, Jon, is, how do you find a good contract manufacturer. Maybe you can sort of recap some of your advice there, perhaps even take it a step beyond, what you've talked about in your column.

Jon Speer: Yeah, sure. There are... Contract manufacturing, there's a lot of upsides to this. In today's day and age, with... Cost is often at times a factor for a lot of things, and especially if you are that start-up, you probably don't have an infinite amount of capital where you could build manufacturing facilities and purchase equipment and go through all the installation and the qualification and the validation of all of your equipment and your processes. In those cases, that lends itself to that opportunity of working with the contract manufacturer. This puts a lot of emphasis on your old internal process from supplier qualification, supplier evaluation. You have to do your due diligence to vet and identify and qualify and perform due diligence on any supplier that you're working with and it needs to be commensurate with the risk that that supplier plays in your whole product realization process. A contract manufacturer is gonna be a pretty high risk supplier for you, so the level of scrutiny, and the level due diligence, and the level of ongoing monitoring is gonna be pretty important that you put that contract manufacturer through its paces. And there, my advice to you is you should be choosing a contract manufacturer that aligns with the skill sets, with the expertise, with the critical attention to quality, the cleanliness that really aligns with your product.

Jon Speer: And I'll use an example to try to illustrate that. If you're a med device company and you're going to an automotive contract manufacturer, that might raise some flags and concerns because how do you know that that particular contract manufacturer is meeting your needs as a medical device company? I'm not saying they won't but that's gonna put more weight on you internally, to make sure that you are properly qualifying, that you're doing... You might need to do on-site audit of that supplier, you might need to compare their internal processes against the regulations. You probably have to be much more hands-on in those scenarios. On the flip side, a lot of... In my practice, what I see a lot of companies do is they look for a contract manufacturer who is already ISO 13485 certified and it's almost like they take a very laissez faire approach in that situation, where, "Oh, they're 13485 certified, therefore they meet the intent and the needs, and I don't have to do so much. They've got the certificate hanging on the wall." I would be very cautious by just taking that approach, too. That's a little too lax.

Jon Speer: Bottom line is, you wanna make sure you'll clearly articulate and identify what you need from your contract manufacturer and prove or have objective evidence to demonstrate that that contract manufacturer can meet those needs, so document these needs and the best practice would be to have a quality agreement in place between you and your contract manufacturer and perform that due diligence to confirm that those processes and those details and those reporting needs and all of the things that are important are in place and you have proof of that.

Mike Drues: So Jon, as we get close to the end of this discussion, there's just two last things that I wanted to ask you about. First, as many in these audience know, I'm not a big fan of reading regulation to people, you can read it themselves. However, there were two sentences in your column, that, for the benefit of the audience, I would like to read because I find them to be particularly poignant, and what I'd like you to do, Jon, is explain why you put them in there. This is in the final thoughts section of your column and it reads, I quote, "If it's your company's name on the medical device you're bringing to market, then it is ultimately your company that is legally responsible for your quality system. Will you put your business in the hands of a third party and hope they care as much about your company's compliance as you do?" This is from Jon Speer's column, a direct quote, and since we're talking to you, author Jon, why did you put that in your column? Maybe you can provide a little additional background or a back story on that.

Jon Speer: Sure, so it's scenario where... And as I said, the inspiration for this particular content piece, we were in conversations with a company, a med device company, the technical inventors, they had brought their product or designed their product and had taken it through... I think they ended up getting a 510K clearance. And at some point in the conversation, like, "We're not really keen to this whole quality stuff, but we did find this contract manufacturer that says that they'll take on all that responsibility on our behalf," and I asked them. I'm like, "Whose name is gonna be on the product?" "It's gonna be our name, our company name." And it's just like I said, red flags were waving like crazy and I communicated to them.

Jon Speer: I get the role that a contract manufacturer can play, plenty of good contract manufacturing resources, really good opportunities to leverage these types of relationships, but at the end of the day, what assurance do you have that that contract manufacturer is going to take this as seriously as you? What happens if there's a complaint on your product or an adverse event? Do you know for certain that that company is going to take this as seriously as you should, as the owner of this company? And they really didn't have good answers to that, I felt as though they were using hope as a strategy, they were hoping that that company, this contract manufacturer was going to care as much as they did, but that's not really the motivation of a lot of contract manufacturers.

Jon Speer: That's really what that was all about, is just realize that at the end of the day, you are designing and developing a product, hopefully, it's to improve the quality of life and I hope you take that responsibility very seriously and that you're willing to own that responsibility because at the end of the day, what we're trying to do is help people and save people's lives and just makes their life better. And so that's really what that message was all about.

Mike Drues: Well, as often is the case, Jon, I could not agree with you more. And I think it's unfortunate that not everybody in this industry feels as you and I do. It's regrettable, you and I have talked many times about what I like to call this tick box on a form mentality. And when people farm things out, like for example, farming out your quality management system, that's just another form of that tick box on a form mentality. And I think that's something that we, as professionals, and as an industry need to get passed. To wrap up our discussion today, Jon, what do you think are the one, or perhaps two, most important lessons to be learned or things that you want our audience to come away with after reading your column and/or after listening to our discussion today?

Jon Speer: Yeah, the main thing is understand what the requirements are. If you are a medical device company, there are certain requirements in a FDA, they're defined in 820. If you're outside the US, you may lean on things like ISO 1345 and other regulatory requirements from the markets that you're in, but understand those regulatory requirements for the markets that you are selling your product and make sure you have clearly identified processes and procedures to address each of these things. And in some cases, it is okay to outsource that responsibility on the day-to-day management of things, but make sure that you always have line sight and visibility and an access to the proof and the objective evidence and know what's really happening with your products and processes.

Mike Drues: Thanks, I'll give you the opportunity to wrap this up officially in just a moment, but let me just take this opportunity to take what you just said a half a step further. Obviously, it's important to identify and comply with the regulatory requirements and the quality requirements, either here in the US, or wherever it is that you're doing business. However, I would argue that that's a starting point, that's not a stopping point. The regulatory requirements are at the bare minimum. As I've mentioned in some of our previous discussions, when we meet the regulatory requirements, that's the academic equivalent of being a C student. I think our goal should not be simply quality compliance or regulatory compliance, that's a pretty low place to set the bar. I think our goal should be higher than that. There are many companies that have a quality management system in place. As a matter of fact, all medical device companies are required to have one. And yet, they get into trouble, they have problems and so on. Just because you have the paperwork in place, just because you're meeting the requirements of the FDA or whoever it is, that doesn't necessarily mean that you're being a good medical device professional. Something to think about. Jon, why don't you do our official wrap-up and we'll close for today?

Jon Speer: Alright, sounds good. And Mike, thanks so much, I know what it feels like to be you and you and I do these podcasts now.

Jon Speer: Anyway, folks, this topic of quality management system, and being a medical device company, this is the sole reason why we exist at Greenlight Guru. We've built an eQMS software platform that is specific for the medical device industry, designed by actual medical device professionals, so that is unique. Nothing like that in the world exist. I would encourage you, if you have questions or comments about how to scale or structure or build your quality system and what you should be doing internally versus what types of things are okay to outsource and establish a strategy and a plan for working with third party resources and suppliers and contract manufacturers, I would encourage you to reach out to us. Go to www.greenlight.guru to learn more. Mike, thank you so much, always enjoy these opportunities to chat with you. Once again, this is Jon Speer, the host, founder, and VP of Quality and Regulatory at Greenlight Guru and you have been listening to the Global Medical Device podcast.


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