Medical Device Supply Chains in the Age of COVID-19

As a result of the COVID-19 pandemic, companies engaged in the import and distribution of PPE and COVID-19 related medical devices have had to adapt to working with unfamiliar overseas manufacturers and unfamiliar supply chains.

BHSM has gained significant experience in advising and assisting clients in navigating these unfamiliar supply chains in recent months.  As demand for COVID-19 related medical devices remains high, particularly in the private sector, we highlight some of the key issues to be aware of in the procuring these products below:

Research

It is imperative that companies engaging with new manufacturers / suppliers overseas, carry out as much research as possible in relation to individual manufacturers, their products, their manufacturing lead times and their track record on reliability and quality.

Companies are advised to consult with independent third parties, such as certification and verification companies, with a presence in the relevant region of manufacture to gain reliable local insight into the reputation and standing of individual manufacturers.

Purchase Contracts

Given the high level of demand for COVID-19 related medical devices and the competition between buyers to acquire them, some manufacturers in overseas jurisdictions have been demanding upfront payment in full to secure orders.

In our experience, it is of central importance that the payment terms in any purchase contract for COVID-19 related medical devices are constructed so as to allow for the release of funds to the manufacturer in tranches linked to the completion of milestones in the manufacturing process.

These milestones should, inter alia, provide for the independent inspection of the products, prior to their departure from the manufacturing site and on delivery to the delivery address, to ensure their conformance to the type, specification and quality of product ordered before full payment is made.

Quality, Conformance and Certification

Companies are advised to seek confirmation from the manufacturer that their products have the benefit of a CE Mark, thereby authorising them to be marketing throughout the EU.  In addition, where a manufacturer’s product has the benefit of a CE Mark but the manufacturer does not have a presence within the EU, it is advised that contact is made with the manufacturer’s Authorised Representative to obtain the necessary assurances that the CE Mark is genuine and valid.

In our experience, it is also best practice to engage an independent inspection, verification and certification company in the country of manufacture who is suitably qualified to inspect the products and prepare a verification report confirming that the products are of the expected standard and conforming to the terms of the purchase contract, before those products leave the manufacturing site for shipping.

Import Duty / VAT / Insurance

Appropriate provision and sufficient funds must be available for the shipping of the product to its point of delivery which will likely include freight costs, insurance, import duty and VAT (if applicable).  These costs can be significant and should be carefully considered when assessing the commercially feasibility of any transaction.

Regulatory Obligations 

It is important to note that companies, not previously involved in the import and distribution of medical devices prior to the COVID-19 pandemic, will need to register as Economic Operators with the HPRA prior to completing any transaction leading to the distribution of medical devices in Ireland.

How we can help

If you require any assistance with reviewing contracts, advertising materials or advice with respect to any product liability concerns please contact David Scott in the Healthcare & Life Sciences Department of BHSM on 01 440 8300 / dscott@bhsm.ie.

This article is for general information purposes.  Legal advice must be obtained for individual circumstances.  Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.

 

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