Key Issues As Automakers Shift To Medical Device Production

By Eric Henry, Amanda Klingler, Christina Markus, Jessica Ringel and James Vines
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Law360 (April 3, 2020, 6:12 PM EDT) --
Eric Henry
Eric Henry
Amanda Klingler
Amanda Klingler
Christina Markus
Christina Markus
Jessica Ringel
Jessica Ringel
James Vines
James Vines
As the coronavirus pandemic demands all-hands-on-deck responsiveness and the creative use of health product manufacturing resources, automakers have stepped up to potentially repurpose automotive factories to manufacture sorely needed medical devices such as ventilators.

Such a shift, however, requires anticipation of the performance and quality requirements, and potential barriers, that companies and regulators must address to quickly transform an automotive (or other industry) factory into a medical device factory.

The U.S. Food and Drug Administration is the federal agency with primary authority to approve and regulate the production of medical devices in the U.S. Important considerations from an FDA compliance perspective include:

What products would be manufactured, and who would be responsible for oversight?

Most ventilators, for example, are classified under FDA regulatory law as Class II medical devices. For a Class II device, there is no need for FDA approval of a change in manufacturing location.

However, the FDA and its partner regulators (e.g., state-level food and drug agencies) will be concerned with how a producer can validate the manufacturing processes, and ensure finished product safety, appropriate quality and functionality, while expediting the installation and qualification of necessary manufacturing equipment.

Automakers would likely work closely with a medical device manufacturer that designed a ventilator to implement equipment and processes, and possibly train employees. Although automakers typically have high quality controls and standards, there nevertheless may be a need to upgrade certain processes to medical grade, rather than automotive grade.

Can necessary quality control be easily applied?

The FDA regulatory framework for production quality systems contains specific requirements, and these may differ from the requirements applied during automotive manufacturing. Nevertheless, quality system experts in the medical device field believe that quality control is unlikely to be a substantial barrier.

For example, the automotive 8-D problem-solving process is roughly equivalent to the corrective action/preventive action system required by medical device regulators, and should be easily adaptable. Similarly, process failure mode and effects analysis, or PFMEA, and other risk management tools are similar in both industries, with very little additional training needed.

In fact, the automotive industry often is more rigorous in tying PFMEA, design failure mode and effects analysis, and use failure mode and effects analysis to risk management compared to many medical device companies. Auto manufacturers also will likely be able to utilize the complaint handling system already in place with few modifications.

Are new registrations or fees involved?

Typically federal and state registration/licensing requirements and fees apply to the manufacture of medical devices. During the current crisis response, and after discussion with governments, some of these requirements might be streamline or waived.

The FDA also has the right to inspect medical device production facilities. Automakers should have clear, up-front arrangements with the FDA and other regulators so that companies and regulators can work constructively and smoothly, while minimizing any production halts or transfer downtime.

What records and communications will be required?

A bidirectional documentation path would need to exist between the medical device manufacturer and the automotive contract manufacturer.

The device master record (including assembly instructions), training requirements, instructions for design transfer and more would come from the medical device manufacturer and be included in design transfer activities at the automotive manufacturer. The automotive manufacturer would have to prepare documentation (e.g., device history records, training records) with each unit assembled, and provide those (along with test and other results) to the medical device manufacturer.

Medical device and automakers should adopt standard procedures and forms, as well as maintain appropriate surveillance systems to identify issues or trends that signal finished products satisfy their intended functionality, or that there may be some concerning issue that needs to be addressed. One challenge here will be the supporting IT systems and tools, which may not be equipped to scale up once a high-volume automotive manufacturer gets underway.

A transition from auto manufacturing to medical device production also could impact environmental and U.S. Occupational Health and Safety Administration compliance as well as commercial agreements. All automotive plants are regulated to varying degrees by a complex web of federal, state and local environmental, health and safety regulations.

Some of the more prominent environmental programs address air quality control, waste water discharges and hazardous waste disposal. These laws are frequently administered by a combination of federal and state environmental authorities.

In respect to air quality, most large manufacturing facilities in the U.S. operate under the pollution emission limits and air pollution control technology standards set under the federal Clean Air Act and state counterparts. These legal and regulatory standards are administered at the facility level, typically through operating permits that have been negotiated with the applicable regulatory agencies.

In certain instances, where local opposition to industry is present, these permits will have survived legal challenges by citizens or nongovernmental organizations such as environmental protection advocacy groups. Furthermore, in practice, many permits will have been tailored very specifically to the planned (normal) operations, including taking into consideration periodic output of product or throughput of raw materials of the facility, perhaps with some flexibility for growth over time.

It is not easy, however, to change gears and make completely different products — especially abruptly. To put it plainly, a shift from automotive to medical device manufacturing is not a contingency generally anticipated in the development of air operating permits. Plants intending to make a transition from making vehicles to making medical devices and other health care products will need to look closely at their permit limitations and determine how the transition can be made expeditiously and lawfully.

In addition to the air laws, similar concerns arise with respect to regulation under the federal and state clean water laws, which are typically enforced through contaminant, flow and volume limits on waste water discharges under another permitting system. These, too, are tailored to the expected operations of a plant at the time the permit is issued. Likewise, the legal and regulatory limits on generation and disposal of hazardous wastes is most likely linked to expected operations of the plant.

Beyond air, water and waste regulations, automotive plants may face compliance challenges with community-right-to-know and toxic substances control laws. Very generally, these laws are meant to provide communities and regulatory authorities with information about what is going on in a particular plant with respect to environmental and human health risks. A sudden change in operations may require substantial revision in the plants' compliance efforts under these laws and regulations.

Most of the major environmental laws contain some sort of exemption that can be invoked in the event of national emergency or in the interests of national security. But these exemptions typically call for executive action or presidential order. Such action to invoke these provisions has not yet happened.

The secretary of the U.S. Department of Health and Human Services did establish relief from certain legal liability related to medical devices and associated products used to address health aspects of the COVID-19 pandemic under the Public Readiness and Emergency Preparedness Act, on March 17. The language in this invocation of the act, however, limits the relief to tort immunity against assertions of product liability. The president could possibly establish temporary relief from certain environmental limitations if he were to invoke the Defense Production Act, but it is not clear under the terms of the DPA how that can be accomplished.

A final consideration on the environmental side is the ubiquitous use in the U.S. of ethylene oxide, or EtO, as a sterilizing agent for medical devices and other health care products. In 2019, actions of health agencies, environmental agencies and community organizations came together in heightened opposition to the continuing use of EtO for medical sterilization due to recently updated data and conclusions regarding the health impacts of EtO emissions in populated areas.

This situation has created a complicated legal and regulatory situation under environmental and tort laws and OSHA standards for companies in this industrial sector. As of the time the COVID-19 pandemic emerged, no clear resolution to this challenge has been discovered. Companies and plants in the automotive sector that are now entering the medical device and health care sector will also have to include in their plans strategies for dealing with the EtO sterilization challenge.

As of the time of this writing, a few developments have just occurred that are relevant to these environmental issues:

  • The White House has successfully urged the state of Georgia's regulators to loosen consent decree restrictions on ethylene oxide use by a medical sterilizer.

  • At least one regional air pollution control agency in California has put out a notice that it will expedite the permit process for manufacturers to more quickly initiate manufacturing of pandemic critical products. It remains to be seen whether similar regulatory relief will arise on a more comprehensive basis and whether the environmental community will attempt to temper relief efforts.

  • The U.S. Environmental Protection Agency's enforcement office issued a memorandum indicating that it "will exercise … enforcement discretion … for noncompliance" for circumstances specified in the memorandum. However, the enforcement relief indicated will only apply to certain obligations in existing environmental permits. It does not address the question of new permits needed to transition from traditional industrial operations to pandemic critical products.

Given the complexity of laws, legal counsel should be engaged to help affected companies navigate with the government and seek appropriate accommodations. Counsel can also help to anticipate future transitional issues and other business considerations such as intellectual property ownership and licensing.

The foregoing are just some of the preliminary issues that are likely to arise. As is true with so many decisions in this quickly moving space, creative governmental interaction may be necessary.



Eric Henry is a senior quality systems and compliance adviser in the FDA and life sciences practice at King & Spalding LLP

Amanda Klingler and Christina Markus are partners at the firm.

Jessica Ringel is counsel at the firm.

James Vines is a partner at the firm.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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