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COVID-19: Supplying vital medical equipment in uncertain times and managing regulatory, contractual and reputational risk.

The spread of COVID-19 has resulted in a sharp increase in demand for personal protective equipment (“PPE”), medical devices and COVID-related health technology products. Consequently, many companies – both within and outside the healthcare sector – are considering, and many for the first time, manufacturing products such as protective masks, ventilators and hand disinfectants. We have seen existing manufacturers increase their supply levels, as well as breweries making hand sanitiser and vacuum cleaner manufacturers making ventilators.

However, for marketing these products in the European Union companies still need to comply with legal requirements regarding certification and marketing, although European authorities have recently sought to lower regulatory hurdles in light of the COVID-19 pandemic in order to enable suppliers to meet the extraordinary market demand. Companies seeking to contribute to the COVID response will need to assess whether they can comply with these regulatory requirements, in addition to balancing the contractual and, potentially more important, reputational risks of supplying this vital equipment.

Faced with such challenges, many are finding the use of technology is increasingly important and can, in fact, be deployed in ways which were previously considered too difficult. Our global healthcare regulatory, digital, procurement and supply chain teams have been supporting our clients on a wide range of activities, including on a pro bono basis, in battling the COVID crisis. This includes, for example, the accelerated deployment of a digital identity system in public healthcare to facilitate the return to work of retired medical practitioners; the supply and distribution of test kits in various jurisdictions; and the expedited cross-border shipment of PPE.

 

Regulatory Requirements

In order to be “CE marked” (certified) and placed on the market, protective equipment and medical devices need to pass conformity assessments under relevant EU regulations.

Protective equipment 

The production of PPE such as face masks, gloves, protective coveralls or eyewear protection is regulated by the Regulation on Personal Protective Equipment (Regulation (EU) 2016/425). Under this Regulation, marketing PPE (high-risk, category III products) requires a conformity assessment involving an independent third-party conformity assessment body. 

Medical devices 

Medical devices which protect patients, such as surgical masks, exploration gloves and some gowns, are subject to the Medical Devices Directive (Directive 93/42/EEC). Under this Directive, obtaining CE marking and marketing of medical devices (non-invasive, Class I products) does not require the involvement of a third-party conformity assessment body. Failure to comply with certification requirements can lead to the competent national authorities requiring the product to be retrospectively altered and/or recalled – and, for serious violations, fines and prosecution.

Accelerating conformity assessments 

Steps have been taken, however, to help to accelerate the introduction of PPE and medical devices onto the market. The European Commission’s recommendation of 13 March 2020 encourages Member States and conformity assessment bodies to use available mechanisms of accelerating market authorisation under the current legal framework. These mechanisms may include prioritising testing of COVID-19-related products by conformity assessment bodies and/or reliance on World Health Organisation recommendations by conformity assessment bodies, for the assessment of PPE products which are not manufactured in accordance with harmonised standards.

 

To avoid legislative change and uncertainty, the EU Commission has proposed to delay the implementation of the new Medical Devices Regulation, commenting that “any potential market disruptions regarding the availability of safe and essential medical devices must and will be avoided.” The decision was adopted by the European Parliament on 17 March and proposal now also has to be approved by the member states.

Hand disinfectants

Hand disinfectants which focus on disinfection, fall within the scope of the European Biocidal Products Regulation (EU) 528/2012 as they are considered to be ‘biocidal products’. Under the Biocidal Products Regulation, both making a biocidal product available on the market and the use of such product, require an authorisation granted by the competent authority of the respective Member State. Hand disinfectants which clearly only focus on cleaning are regulated by the Cosmetics Regulation (EC) 1223/2009 and therefore fall outside of the scope of the Biocidal Products Regulation.

A pre-requisite for authorisation of a biocidal product is that the active substance has previously been approved for availability on the market by the European Commission.

Exception to authorisation requirement

National authorities of Member States are able to derogate from the authorisation requirement when necessary because of a danger to public health which cannot be contained by other means (Art. 55 of the Biocidal Products Regulation). Several Member States have started using this derogation in relation to the COVID-19 pandemic. 

This means that a biocidal product which does not fulfil the conditions for authorisation can be made ‘available on the market’ and ‘used’ provided it is for a limited and controlled use; and for a limited period of time (max. 180 days). For example, Germany’s Federal Institute for Occupational Safety and Health has issued a general ruling on 9 April 2020, enabling the manufacturing and making available on the market of hand disinfectants of varying formulae based on WHO recommendations by pharmacies, the pharmaceutical and chemical industry and legal persons under public law. 

The Role of Technology

More than ever, technology is going to play a large role in delivering medical solutions. As we have previously examined here, contact tracing apps look likely to play a critical part in COVID exit strategies. The use of telemedicine and virtual GP consultations has increased, with some countries dropping previous regulatory restrictions on the provision of medical advice in this way. However, medical device regulations will also apply to such technology products in certain circumstances and developers of these products should not ignore these requirements, especially where they are less familiar – and less well equipped to deal – with them than traditional pharma companies. 

Supplying Governments and Public Bodies

A number of key customers for PPE and medical suppliers will be national authorities, public health bodies and other public sector health providers. These organisations tend to have obligations under procurement law which restrict their ability to freely purchase in the way the private sector can. In order to highlight the flexibility which is afforded to such bodies in emergency situations the EU Commission has published Guidance on using the public procurement framework in emergency situations related to the COVID-19 crisis. This guidance sits alongside additional guidance from national governments, such as PPN 01/20 published by the UK government.

Both highlight the availability of emergency procurement options which are available to public authorities to allow them to purchase more quickly and without the same level of competition and administration as normal. Suppliers should be aware of such guidance when talking to public authority customers.

 

Reputational Risk

More broadly, there are real potential reputational consequences for companies in supplying PPE and medical devices. On the upside, supplying products which are low-risk (for example, hospital gowns) can be an effective way of demonstrating the company’s values and societal contribution. However, on the other hand, non-specialist manufacturers making critical care items (such as ventilators) risk damaging their reputation for quality and ingenuity if the high quality with which their normal products are associated is not maintained.

We have clearly seen that the response of companies, both in and outside the traditional healthcare sector, has overwhelmingly been to take whatever action they possibly can to aid in the COVID response. However, there are a number of issues to be navigated and, whilst regulators around the world are sympathetic to well-meaning efforts to support the COVID response, it is clear these legal requirements still apply.