There have been major regulatory changes within the Medical Device market, with more coming in the form of the Medical Device Regulations (MDR) which is in the process of being implemented at the moment. The main change that has affected the market over the last 12months has been the introduction of Virtual Manufacturers.
The term Virtual Manufacturers (VM) has been introduced to replace the term Own Brand Labellers (OBL), these are companies who do not manufacturer their own products but go to an Original Equipment Manufacturer (OEM) to produce products packaged with the livery of the Virtual Manufacturer. This change in the UK was driven by some actual changes made across Europe and to align with the way other Competent Authorities in Europe were perceived to manage these companies. The main consequence of this change is the Virtual Manufacturers, as the new title implies, are seen a manufacturers in their own right and have to comply with the same standards as full blown manufacturers. Without going into specific detail this has massively increased the workload on Virtual Manufacturers and directly increased the cost of the products, to the extent that in Germany it has pretty much closed down this sector of the market.
Whilst no-one will argue that we shouldn’t continue to improve the quality of medical devices and the oversight of the manufacturers and suppliers it is difficult to see how this specific change achieves this, and certainly not in a way that legitimises the potentially significant increase in costs. The simplest analogy would be if Tesco stopped selling it’s value/own brand products, or were forced to increase the price to the same level as the branded product. Those most affected would be the poorest off, those who are reliant on the ‘value brands’, in the case of Medical Devices this is likely to be the NHS. With strong downward pressure on drug pricing via schemes like PPRS, it is ironic that as (hopefully) an unintended consequence of these changes the NHS is likely to struggle to maintain device prices let alone further reduce them.
