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Medical-device companies say new safety rules will boost costs, force some companies out of Canada

Medical-device companies say new safety audit rules from Health Canada will send compliance costs skyrocketing, forcing some players to pull out of the country and creating a potential shortage of products for patients.

The Medical Device Single Audit Program (MDSAP), which becomes mandatory on Jan. 1, 2019, is expected to cost some companies thousands of extra dollars in auditing fees. The makers of devices such as oxygen masks, surgical equipment and medication-delivery systems say they’ve been quoted fees of $30,000 to $50,000 annually for an audit that used to cost between $3,000 and $5,000 a year.

The higher price tag is said to be due to the more intensive MDSAP audit program – which provides third-party auditing of the quality-management systems of manufacturers – and a shortage of auditors able to do the work. Small businesses are expected to be the hardest hit, given their lower revenues and profits compared with larger competitors. The audits include everything from how the device is designed, ordered, used and disposed of, as well as how companies deal with complaints and actions taken to correct any issues.

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“It’s reducing access to medical devices in Canada … some of which are very unique and innovative,” says Ted Reesor, director of marketing at Oakville, Ont.-based BLS Systems Ltd., which makes oxygen-therapy masks and other first-aid and critical-care devices. “MDSAP is going to crush Canadian small businesses that distribute medical devices … and stifle innovation.”

BLS Systems President Steve Flynn, right, places a filtered respirator on marketing manager Ted Reesor.

J.P. MOCZULSKI/Globe and Mail

MDSAP is a voluntary international program used in countries such as the United States, Australia, Japan and Brazil, but only Canada has decided to make it mandatory, so far. A Health Canada spokesperson said other countries are considering “similar mandatory requirements and options.” In an email response to questions from The Globe, the department says moving to MDSAP “paves the way for Canadian companies to expand their business to other markets and also reduces red tape for those wishing to operate in multiple markets.”

MDSAP will replace the current Canadian Medical Devices Conformity Assessment System (CMDCAS) program. Health Canada says both use the same three-year cycle and the same audit criteria. The difference between the two programs is in how the audit is performed. Health Canada says MDSAP auditors have to follow a specific audit sequence that is “designed to ensure appropriate coverage and scrutiny of all relevant requirements in a consistent and predictable manner.” It says making MDSAP mandatory will “strengthen the post-market surveillance and risk management of medical devices in Canada.”

Some companies in the sector argue the MDSAP program won’t provide extra protection for patients but instead puts patients at risk if there are fewer medical devices available in the Canadian market, due to the increased costs.

“It is not a question of passing a new audit; it is a question of costs,” says Alex Stenzler, president of California-based 12th Man Technologies, Inc., which makes the Hi-Ox Oxygen Mask, which he says is the only oxygen mask recommended by the Ontario Ministry of Health for use in pandemic responses, including the 2003 SARS outbreak. “It is our intention to stop selling into Canada in 2019,” Mr. Stenzler says. “We just don’t sell enough to justify the MDSAP audit.”

Health Canada acknowledges the transition “may result in longer audits and consequently higher costs for smaller manufacturers,” which is why it’s offering to reduce, for small companies, the time spent performing the audit. It’s also giving all companies more time to complete it, as long as it’s scheduled before the end of the year. The goal is to give companies more time to make the transition and help to reduce costs under the new program.

A Health Canada spokesperson also said it plans to make more adjustments to “further support small businesses” in the weeks ahead for manufacturers with fewer than 100 employees who manufacture lower-risk devices.

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The department said it “is sensitive to the concerns that have been raised by device manufacturers and is committed to working with the industry to address those concerns.”

Health Canada said it did a survey of manufacturers in December, which showed 74 per cent plan to complete the transition to MDSAP, 14 per cent didn’t and 12 per cent were undecided.‎ It said about 1,750 of the 5,943 facilities where the products are manufactured have had audits registered with MDSAP as of last week. That’s up from about 1,500 a week earlier, which Health Canada says suggests momentum for the program is picking up as it offers more help with the transition.

David Boudreau, executive director of the medical-devices bureau at Health Canada, says he and his team have been calling companies that threatened to pull out as a result of MDSAP. After providing more information and details on the process, he said “most if not all,” of the manufacturers contacted have decided to stay. “We are taking this very seriously,” Mr. Boudreau says.

Steve McCann, senior vice-president of sales at Barrie, Ont.-based Southmedic Inc., which manufactures and distributes medical devices to the global health-care market, says about a half dozen suppliers have said, as of last month, that they won’t be renewing their licence to sell in Canada as a result of the program change.

“They don’t want to pay the fees to come to Canada,” he says. That will result in about $1.6-million annually in lost revenue for his company. If the business isn’t replaced and other suppliers don’t renew, Mr. McCann may have to reduce his workforce.

He believes it will “stifle patient safety and innovation, not help it.” To date, Mr. McCann says four potential new suppliers with “disruptive technology” are backing away due to MDSAP.

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Grant Ramaley, director of regulatory affairs for Aseptico, a dental equipment manufacturer and retailer based in Woodinville, Wash., argues that Canada needs more companies to compete in the medical device market, not fewer.

“MDSAP will not only reduce choices of what their healthcare providers can buy to treat patients,” he says. “Note that highly specialized devices, made for unique patient populations, these are often made by the smallest manufacturers. They will be the first to leave Canada.”

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