The (MedTech) World Needs More Canada

Hello,

Thanks for opening this 2nd issue of the Regulatory Raconteur, a monthly publication focusing on the impact of Regulatory and Quality Assurance on MedTech businesses with an emphasis on the Canadian ecosystem.

From Canada to the World

Ambitious Canadian MedTech leaders know the Canadian market is too small to be the basis for significant growth for their business. The question then becomes whether to invest in getting the CE Mark or to chase US FDA approval/clearance instead.

It used to be that CE marking was the first certification Canadian companies sought, sometimes even before gaining a Canadian Licence. A quick search on EUDAMED, the European Database for Medical Devices, shows 170 Canadian companies listed but less than 100 in FDA's equivalent database.

With the major changes in the regulatory landscape in Europe and ongoing misinformation and confusion about the new CE marking process, many companies are quick to shift their focus to the US, thinking that a 510(k) clearance is easier to obtain once a predicate has been identified. There is no doubt that FDA’s Pre-submission alone significantly increases predictability and confidence in gaining clearance, let alone MDUFA committed review timelines and the agency’s centralized processes, something CE Mark-seeking companies can only dream of.

Despite the complete absence of any accountability from European regulators and Notified Bodies with no committed timelines, KPIs or standard (however exorbitant) fees, one should not forget that Europe remains the largest jurisdiction in the world, the second largest medical device market, and is far less litigious and competitive than the US.

In the current economy, however, and combined with decreasing capital for life sciences firms (see this excellent July 2023 report by HSBC Venture), global regulatory strategies that worked a decade ago might no longer be relevant today.

The idea that one must have at least the US or EU clearance to tap into abridged approvals in emerging markets is largely obsolete. Companies with clearance from Health Canada, a reference regulator together with the US, Australia, EU, and Japan, can use less familiar regulatory pathways to obtain abridged clearance in jurisdictions like Australia, and in economically promising regions such as the Middle East and Southeast Asia. The Arab Health tradeshow is a good indicator of this growth, as it helped secure 1.8 billion USD in deals last year alone.

Speaking with several European counterparts, I know many of them have started directing their smaller clients to Canada. Interestingly, Health Canada also confirmed an increase in Medical Device Single Audit Program (MDSAP) certifications.

From the World to Canada

Imagine a hybrid of the centralized processes and global collaboration efforts of the FDA with the level of requirements of CE Marking under the (now obsolete) EU Medical Device Directive (MDD). That is Health Canada!

Despite its small size, Health Canada's Medical Device Directorate works in similar ways to the USFDA. Manufacturers can get pre-submission meetings with the regulator to discuss their plans before undertaking costly clinical trials or starting the submission review process, something the European Commission does not allow Notified Bodies to do.

Perhaps the most exciting aspect of the similarity with the USFDA is Health Canada’s Small Business designation program to waive application review fees for qualifying manufacturers. Under this program, first time Pre-market Evaluation submission fees are completely waived, with a 50% reduction for subsequent pre-market Evaluation fees, 25% reduction for all Right to Sell fees; and 25% reduction for all Establishment Licence fees, which apply only to Class I devices.

Health Canada defines a small business as one with fewer than one hundred employees or between $30,000 and $5 million (CAD) in annual gross revenue. The designation application is free of cost and valid for 12 months following receipt of status.

Put into perspective, the "extra cost" of the MDSAP, which is mandatory only in Canada, looks a lot more worthwhile—especially when contrasted with the cost of CE Marking under the EU-MDR.

The MDSAP program has gained significant interest after Brexit and following the medical device shortages experienced during the pandemic. New alliances have formed to secure uninterrupted access to medical devices among jurisdictions like Canada, Australia, the UK, and Singapore, most notably the ACCESS consortium. The success of these efforts will depend on the adoption of a shared MDSAP-like process to assess the capabilities of manufacturers.

A UK MHRA consultation invited views on whether the administration should introduce an alternative route to market which relies on MDSAP certificates. Of the 211 responses received, a whopping 86% supported the proposal.

With the imminent harmonization of the ISO 13485:2016 in the US, I can only imagine the agency favoring MDSAP certifications in the same fashion Australia’s TGA does. Australia and the new EU Medical Device regulation both have pathways to leverage some or all of the evidence generated from MDSAP audits to accelerate approvals in their jurisdictions.

Mexico has also recently joined the MDSAP program as an affiliate member, a significant step given the number of US- and Canada-based sponsors sourcing their manufacturing to Mexican facilities. Taiwan likewise joined as an affiliate member, which is particularly interesting as the island positions itself as an ideal destination for manufacturers seeking to diversify their supply chain and reduce their reliance on China.

BREAKING: Fighting against Forced Labour and Child Labour in Supply Chains Act

This is a great initiative by Canada, following the same path as the UK and Australia to implement forced and child labour reporting requirements.

The law entered into force on January 1st, 2024, with the first report due on May 31st, 2024 regarding the previous fiscal year. It impacts any companies listed on Canadian stock exchanges, having a place of business in Canada, doing business in Canada or with assets in Canada and meeting at least two of the following conditions:

• $20 million (CAD) in assets,

• generating $40 million (CAD) in revenue, or

• employing more than 250 people.

In my view, this will also impact some firms that do not immediately have to fulfill the reporting requirements. Smaller suppliers could be asked by their larger business partners to disclose this information to enable them to comply with this regulation.

A Questionnaire has been put in place to help manufacturers put together the report. More relevant to our expertise at QARALOGIC, we recommend that manufacturers doing business in Canada review their Supplier Quality Agreements and ensure they are updated to fulfill the requirements under the Act.

Note that the final report must be reviewed and signed by the company’s board and posted on the company’s website. Failure to comply or providing misleading statements can result in a fine of up to $250,000 (CAD). Finally, you can read the Act in its entirety here.

ICYMI

Western Canada MedTech Monthly

We started a monthly online meeting for MedTech and Digital Health innovators interested in peer-to-peer learning and in fostering a supportive, inclusive eco-system in Western Canada. There will be no obligations, ads, sales attempts, or pressure tolerated. Lessons learned and experiences shared can be used to advance participants' own projects. If this resonates with you, register here.

Is Toronto the next Boston?

AdvaMed’s MedTech Conference is taking place this year, for the first time outside the US, in Toronto. I will be attending, and hope to see Western Canada well represented. Feel free to send me a note if you plan to attend. If you are interested in submitting a panel, the call for sessions closes on February 23rd.

Thanks for reading.

P.S: If you have any questions or would like to discuss anything from this publication, feel free to book a meeting.