Distributors, dispensers, and retailers of medical device products face a patchwork of federal and state requirements governing distribution chain compliance. Given the evolving and expanding requirements for device distribution activities, companies must take proactive measures to assess and mitigate risk. Below are key considerations that companies operating in this space should consider to safeguard their operations and maintain compliance.
State Licensure and Related Requirements for the Device Distribution Chain
State regulators generally have the primary role in overseeing entities involved in the medical device distribution chain, including wholesale distributors, durable medical equipment providers (DMEs) and other dispensers, and retailers. Most states require licensure for distributors of prescription medical devices and impose related requirements, which may include requirements related to recordkeeping, storage, quality assurance, facility specifications, security, reporting, personnel training, and know-your-customer/supplier processes. Many states have similar requirements for device dispensers/DMEs and retailers (i.e., entities that sell or distribute directly to patients/consumers).
The scope of device distribution requirements varies from state to state, although most states focus their regulatory oversight on the distribution of prescription medical devices rather than over-the-counter devices. Significantly, the number of states actively regulating medical device distribution and dispensing activities has increased over the years, and likely will continue to do so. Further complicating the regulatory landscape is the fact that the states’ requirements for the distribution and dispensing of medical devices are often based on laws written specifically for pharmaceutical distribution and dispensing, under an apparent assumption that devices are similar enough to drugs to be grouped into the states’ existing drug regulatory scheme. These factors can present challenges for device distributors, dispensers, and retailers.
It is nonetheless important for device distribution chain entities to assess and monitor the requirements in the state in which they are located, as well as each state to which they distribute device products. To the extent required in the states in which they operate, such entities will need to establish appropriate procedures and controls to obtain, maintain, and timely renew the required licenses and ensure compliance with the state quality, diligence, recordkeeping, and reporting obligations.
Federal FDA Requirements for the Device Distribution Chain
Although FDA’s medical device regulations focus primarily on device manufacturers and initial importers and generally do not extend to entities engaged solely in domestic distribution (with the exception of the requirement for distributors to maintain complaint files), device distributors, dispensers, and retailers should be mindful of the broad prohibitions related to devices under the Federal Food, Drug, and Cosmetic Act (FFDCA). For example, the FFDCA prohibits the introduction or delivery for introduction into interstate commerce of any violative medical device (i.e., an “adulterated” or “misbranded” device) or the receipt in interstate commerce of any violative device. These general prohibitions apply not only to device manufacturers but also to device distributors, dispensers, and retailers.
Because the FFDCA is a strict liability act with potential criminal penalties, entities involved in the device distribution chain should take appropriate steps to protect against such liability. This may include, for example, performing appropriate diligence on device products and suppliers and ensuring that agreements with suppliers include contractual terms to address FDA compliance. Such agreements should also include FDA’s recommended form of a guaranty, which can help protect distributors from liability under certain criminal provisions under the FFDCA.
In addition, entities in the distribution chain that want to avoid direct FDA regulation should ensure they do not engage in activities that FDA views to be “manufacturing.” This includes activities such as device kitting, device modification (including making changes to the device packaging or labeling), and making new or different promotional claims from those provided by the device manufacturer. Device distributors, dispensers, and retailers should have appropriate controls in place to avoid accidentally crossing the line into “manufacturing” activities if they want to avoid FDA oversight.
Conclusion
Monitoring and ensuring compliance with the evolving requirements related to medical device distribution activities can present challenges but is critical to ensuring device distributors, dispensers, and retailers are appropriately protected from unnecessary regulatory risks and liability.
How We Can Help
Morgan Lewis provides strategic compliance counseling for all entities involved in the medical device distribution chain, from device manufacturers and developers to wholesalers, DMEs, dispensers, and retailers. Our deep familiarity with both the federal FDA and state regulatory requirements helps our clients navigate these complex and variable requirements.
If you have any questions or would like more information on the issues discussed in this blog post, please contact the authors.