On November 30th 2018, US President Donald Trump, Mexican President Enrique Peña Nieto, and Canadian Prime Minister Justin Trudeau signed The United States–Mexico–Canada Agreement (USMCA), concluding over a year of negotiations surrounding the much publicized successor to the North American Free Trade Agreement (NAFTA). Though signed and agreed to in principle, the new agreement has not been ratified by each country’s legislature and has therefore not yet come into force.

Despite the controversy and acrimony that surrounded the contentious negotiations, as well as criticism levelled at some of the new provisions, analysts appear to agree that the USMCA represents an upgrade—albeit a modest one—over NAFTA for all parties included. One facet of the new agreement surrounding medical devices marks clear progress for North American medtech markets, given that NAFTA did not include any provisions dealing with medical devices specifically.

Titled Annex 12-E,  this addition has been hailed by AdvaMed as a significant improvement in the rules governing medical devices across North America. Included in Annex 12-E are a handful of provisions that the signatories must abide by once the agreement is ratified and in force, which are summarized below:

  • On Competent Authorities:
    • All signatories must make available online a description of each competent authority, its specific responsibilities, and regularly updated contact information.
    • In addition, all parties must ensure that regulations surrounding medical devices across the three countries are not duplicative, and are also required to institute regular examinations into potential duplicative practices by their competent authorities. (In this context, “duplicative” refers to requiring medical device companies to conform to highly similar regulatory requirements in each individual country, which increases costs and delays authorization).
  • On Regulatory Harmonization:
    • All parties should assure that the definition of “medical devices” in its own laws and regulatory requirements are aligned and consistent with the definitions approved by the Global Harmonization Task Force.
    • Signatories are required to bolster cooperation in order to maintain aligned and harmonized regulatory requirements across North America, including through participation in international and regional initiatives, such as the International Medical Device Regulators Forum.
    • All audits of companies’ quality management systems (QMS) that are conducted by sanctioned regulatory authorities and abide by conditions of the Medical Device Single Audit Program are to be recognized and accepted in all three countries.
    • Regulations for medical device market authorization should be developed and implemented in accordance with internationally and regionally recognized guidance documents.
  • On Regulatory Implementation:
    • Signatories are required to guarantee that products that are imported from another signatory (as well as any other country) receive equal treatment under their country’s regulations.
    • All parties must ensure that medical devices are classified through a risk-based approach, and any related regulations are based on risk assessments.
    • To avoid the implementation of regulations that may decrease the effectiveness of procedures or devices or delay the availability of products in a certain market, signatories developing regulatory requirements must take into consideration their resources and capacity to ensure compliance.
  • On Marketing Authorization:
    • All parties are to grant marketing authorizations for medical devices based on information and data that relates solely to the safety, effectiveness, design, usage, and quality of the device; no data surrounding sales, pricing, or other financial information can play a part in marketing authorizations.
    • Marketing authorization processes must avoid duplicative requirements, be conducted based on a set of publically available criteria (with a published checklist or guidance document detailing required information), consider potential conflicts of interest, and be conducted within a “reasonable period of time” (which is noted to possibly vary depending on the novelty of the device or other circumstances).
    • Parties should implement processes that would provide applicants with the opportunity to review or resubmit applications that have been denied.
    • Barring findings of safety, efficacy, or quality issues, devices that have previously received authorization and require regular reauthorization are to be allowed to remain on the market until a decision for reauthorization is issued.
    • Devices will not be required to have received authorization in the country they were manufactured in in order to receive authorization under a signatory’s authority.
    • Signatories can recognize marketing authorizations issued in another country as proof of a device’s adherence with local regulatory requirements; in cases where a signatory does not possess the required resources to provide marketing authorization for a certain device, it can require a marketing authorization from another country. (The signatory is required to have a pre-established and publically available list of countries from which marketing authorizations will be accepted).
    • All parties must allow manufacturers the opportunity to relabel or supplement existing labelling after devices have been imported but before they are commercialized, as long as labeling is aligned with each party’s requirements; under NAFTA, improperly labeled imported devices had been sent back to the exporting country.

According to AdvaMed, these provisions are expected to enhance transparency and fairness throughout North America, and will afford patients in the region with broader access to novel medical technology under stable, clearly defined, and harmonized regulatory systems. Moreover, these provisions—specifically those eliminating duplicative regulatory requirements—will likely reduce costs for manufacturers bringing devices to market in North America, which may allow companies to bolster investment into R&D and the development of innovative solutions. More particularly, the new trade agreement diminishes so-called “non-tariff barriers”, which will enhance the ability of US companies to offer devices in Canada and Mexico, and vice versa.

However, as mentioned above, the USMCA still requires ratification by each country’s legislature before coming into effect; given that Democrats have recently secured a majority in the US House of Representatives, and considering that many Democrats voiced their disapproval of certain portions of the USMCA during negotiations, receiving congressional approval may prove to be a contentious and somewhat protracted process. Nevertheless, as it stands, it is largely expected that the USMCA will ultimately be ratified by congress (potentially with some minor adjustments). The agreement’s passage and coming into force will be warmly welcomed by medical device manufacturers in the region.

 

For more information on DRG’s insights into North American medical device markets, please see our Medtech Solutions. Visit PriceTrack’s homepage to learn more about our SKU-level pricing and analytics tool. For any questions, please contact us at questions@teamdrg.com.

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