Medical devices in Italy: the relationship between OBL and OEM in Virtual Manufacturing

published on 14 October 2024 | reading time approx. 5 minutes

During the process of placing medical devices on the market, issues may arise between the OBL (‘Own brand labeller’) manufacturer and the OEM (‘Original equipment manufacturer’) manufacturer with regard to the obligations that the law places on the generic ‘manufacturer’. As this may lead to the imposition of sanctions, it is appropriate to clarify who the OBL and the OEM are, their respective obligations and how they can best relate to each other.

Own brand labelling, own brand labeller and original equipment manufacturer: let's have clarity.

It often happens that medical devices are placed on the market under the name or trademark of a company other than the one that actually manufactured them.

The company that places a medical device on the market under its own name is called an Own Brand Labeller (OBL) or Virtual manufacturer, while the company that physically produces it is called an Original Equipment Manufacturer (OEM).

The process involving the OBM and the OEM in the marketing of products is therefore referred to as ‘own brand labelling manufacturing’ or ‘virtual manufacturing’.

Own brand labelling manufacturing in the EU legislation

While not directly regulating own brand labelling manufacturing, the legislation contained in Regulation (EU) 2017/745 (Medical Device Regulation or ‘MDR’) directly impacts this process. Indeed, Article 10(8) of that Regulation states that the manufacturer must keep ‘the technical documentation, the EU Declaration of Conformity [...] at the disposal of the competent authorities for a period of at least 10 years after the last device covered by the EU Declaration of Conformity was placed on the market [...]’.

Since the OBL manufacturer is the person who applies his own mark to the medical device and places it on the market under his own name, he is also the recipient of the obligation to keep the technical documentation under Art. 10 Reg. (EU) 2017/745. The figure of the original equipment manufacturer is not, however, directly regulated in the Medical Device Regulation.

Mandatory retention of technical documentation and secrecy

The obligation under Art. 10 of Reg. (EU) 2017/745 creates a major problem in the relationship between OBL and OEM: if it is true that the OBL manufacturer, i.e. the one who places the product on the market under his own name or trademark, has to keep the technical documentation, he will demand that the OEM provide him with this documentation. The OEM, on the other hand, will want to avoid sharing information of high economic value or its know-how contained within such documentation.

However, the breach of the obligation to keep records by the OBL manufacturer is punished by Article 27, paragraph 6, of Legislative Decree 137/2022 with a fine ranging from EUR 20,000 to EUR 112,000, which creates an obvious tension between the opposing interests of the OBL and the OEM.

Possible compromises

Although there is no clear-cut answer to this problem, there are at least two possible solutions that allow, on the one hand, the OBL manufacturer to comply with its obligation to keep technical documentation, and, on the other hand, the OEM manufacturer to maintain confidentiality on information of a secret nature.

THE ‘REDUCED’ TECHNICAL DOCUMENTATION

The United Kingdom's Medicines and Healthcare products Regulatory Agency (MHRA) has published a guide (Virtual manufacturing of medical devices) offering some useful recommendations for manufacturers based in the UK; these could also be used by manufacturers located within the European Community.

According to the MHRA guidance, information held by the OEM may be passed on to OBL on a limited basis, as long as this is done for reasons of secrecy. However, if the information was essential for the market surveillance authority's assessment, the OBL manufacturer would be required to share it with the authority. The success of this approach therefore depends entirely on the assessments that the OBL manufacturer and the competent authority could make with respect to the essentiality of the information not shared.

With respect to these issues, the guidelines recommend the signing of a agreement to regulate the relationship between the OBL and the OEM in which the method of selecting the information that will be shared and the information that will remain confidential is foreseen. In this way, the OBL manufacturer could assess whether the information to be shared is sufficient, in its own way, to satisfy a possible documentary request by the competent authority.

THE MAINTENANCE OF ‘INDIRECT’ TECHNICAL DOCUMENTATION

As an alternative, OBL and the OEM could establish, again by means of a agreement, an obligation for the OEM to immediately send information covered by confidentiality - and potentially necessary for the authority's assessment - to the competent authority upon request by OBL. This would satisfy the OEM's need not to share confidential information with OBL, the OEM's obligation to have the technical documentation available (‘indirectly’), and the authority's timely receipt of data relevant to its investigation.

Conclusions

Reg. (EU) 2017/745 placed an obligation on the OBL manufacturer to hold the technical documentation without taking into account the possible critical issues and opposing interests of the OEM.

As a result, it remains for the OBL manufacturer to bear the risk of an administrative penalty, which, as we have seen, could also be significant.

While awaiting an unlikely legislative intervention or interpretation by the competent authorities or the Commission, the two solutions offered could, at least for the time being, ensure a balance between the interests of the parties, while safeguarding the underlying objectives of the Community legislation.

Authors:

David Vaccarella - Manager

Elena Bonvini - Intern