At least one respected commentator has predicted that the global market for refurbished medical equipment will be worth $8.45 Billion by 2017. This market will include diagnostic imaging equipment, surgical devices, ra diation oncology equipment and biotechnical equipment. While the definitions of ‘refurbishing’ and ‘remanufacturing’ are very much the subject of debate, industry players typically concede that these terms involve the restoration of used equipment to conditions which are consistent with original equipment manufacturers’ specifications. The sale of ‘refurbished’ or ‘remanufactured’ equipment is often accompanied by a parts or a service warranty undertaken by trained and experienced personnel.
Small hospitals and group medical practices reportedly make up the largest end-user segment for refurbished or remanufactured devices. While the United States is the largest market for refurbished medical devices, Europe, Latin American, South America and the Middle East represent growth areas. Some of this growth has been limited by blanket bans instituted by certain countries for the importation of used medical equipment. IAMERS is working on behalf of its members to limit or remove these trade obstacles.
IAMERS is composed of both original equipment manufacturers and independent refurbishes/remanufacturers and brokers. All IAMERS members undertake a pledge to support the ethical sale of medical equipment and have strongly supported educational programs and when possible, ISO certification. Established and respected U.S. based IAMERS members (particularly small businesses) have faced competitive challenges by the practices of some original equipment manufacturers.
These practices include the withholding of ‘assembly’ information in contravention to the specific requirements of 21 C.F.R. Section 1020.30(g) which requires upon the request of a third party the disclosure of information concerning the assembly, installation and testing (AIAT) for each certified component in a diagnostic x-ray system. Notwithstanding this obligation and corollary obligations for disclosure (see 21 C.F.R. Section 820.170[b]) IAMERS members continue to experience the withholding of passwords, equipment manuals and training. To date, the FDA has not sought to enforce these regulations on a consistent basis. The net result has been that some IAMERS independent servicers, are unable to service equipment at a competitive rate and smaller hospitals and group practices are forced to engage the servicing departments of more expensive OEMs. This results not only in a diminished competitive environment but also in higher health care costs.
Recently, some OEMs have engaged in a practice of limiting software access and limiting passwords through the use of ‘locational licenses’. The OEM takes the position that while the equipment has been sold to the hospital or group practice, the software is leased. This ‘locational license’ practice limits or prohibits the ability of an owner of medical equipment from transporting the device to another location absent the written consent of the OEM from whom the device is purchased.
Implementation of the locational licenses is but yet another competitive concern as the independent servicers are unable to service the equipment in the new location absent the hospital/group practice obtaining the consent and agreement of the OEM. IAMERS senior management has yet to learn this year of an OEM consenting to the servicing of the medical equipment in a new location by an independent servicer. Some independent servicers are reluctant to document their concerns about anticompetitive behavior because of additional concerns about retaliation. Servicers are in many instances dependent upon OEM cooperation to obtain spare parts and access to higher diagnostic levels.
The net effect of the OEM practices of withholding passwords, equipment manuals and training and the implementation of locational licenses is to limit the cost effective choices available to smaller hospitals and group practices. IAMERS is pleased that the National Rural Hospital Association has engaged in dialog with IAMERS to encourage choice. IAMERS is also pleased that group practice associations have also reached out to IAMERS to encourage choice and to encourage competitive alternatives.
When challenged concerning this anticompetitive conduct, some OEMs point to quality assurance regulations promulgated by the FDA as reasons to withhold access. Ironically these same OEMs will contract for the use of independent servicers when a location of a service call is geographically inconvenient or when an emergency prevents their immediate availability to a customer.
In 2006, IAMERS president Diana Upton received a FOIA response from the FDA which noted that there is no greater incidence of adverse events in the operation of used equipment than that which might occur with new equipment. IAMERS believes that the election to withhold information to experienced servicers (many of whom were formerly employed by the OEMs) on quality assurance grounds is inappropriate.
The overall effect of the withholding of access and the spotty and inconsistent enforcement by the FDA of its own safety regulations is to negatively affect small businesses ability to bring about safe and competitive options. The FDA has openly conceded that anticompetitive concerns are not within its regulatory ambit. Some representatives have said that in the absence of IAMERS being able to identify an ‘adverse’ event which is caused by the withholding of passwords or access/assembly information; they are not willing to act. IAMERS hopes to develop strategic relationships with policymakers both domestically and abroad to open markets, lower costs and encourage safe device operation. IAMERS does not wish to have the catalyst for regulatory involvement to be an adverse event. IAMERS will continue to reach for strategic partnerships.