© Performance Review Institute Program Overview & Value Proposition Revision Date: 7 January 2015...

© Performance Review Institute

Program Overview & Value Proposition

Revision Date: 7 January 2015

1

© Performance Review Institute2

Content

• Value Proposition Objective

• Current Medical Device Industry

Challenges

• Chronology

• Next Steps

• Benefits

• Medical Device Industry

• Medical Device Industry OEMs

• Medical Device Industry Suppliers

• Scope

• Using MedAccred for Critical Process

Supplier Oversight

• Critical Process Areas of Interest

• Existing PRI Processes and Products

• Program Risk Analysis

• Confidentiality of Information

• Case Studies

• Aerospace (Nadcap Subscriber Critical

Process Escapes)

• PRI Transportation & Power Generation

Program (OEM)

• Medical Device (Electronic Circuits –

PCBA Hypothetical)

• Financials

• Subscriber Fees / Supplier Audit Pricing

• Template for Cost/Benefit Calculation

• Additional Information

• PRI Contact & Future Meetings


Value Proposition Objective

To demonstrate to the medical device industry the value of creating an industry managed supply chain oversight program (MedAccred) that will reduce risk to patient safety, assure quality products and compliance with requirements as they apply to critical processes.


Current Medical Device Industry Challenges

• Increased outsourcing and globalization of the supply chain throughout the medical device industry, thereby increasing the challenge of appropriate level of oversight

• Increased number of recalls attributed to supplier quality issues

• Purchasing controls:

o is one of the top cited FDA-483 observations for medical device quality system violations

o has been included as an element of several enforcement actions (warning letters, consent decrees)

• Flow down of design requirements from OEMs to first-tier and sub-tier suppliers is a critical issue affecting Quality & Safety


Date Activity

December 2012Industry roundtable #1 (5Dec12):

• 19 industry stakeholders from 15 different OEMs and Suppliers present• Strong interest in a process-focused Industry-Managed Program expressed

February 2013 eAuditNet demonstration conducted (5Feb13) Industry roundtable #2/Observation of Nadcap (aerospace) meeting (20-22Feb13)

March 2013 Value Proposition document created and released to industry

April 2013 Proof of concept audit (welding) conducted

May 2013 Industry roundtable #3 (15May13)Management Council sub-teams formed (Proof of Concept Audits, Program Docs, External Comms. & Strat.)

June 2013Program Management Council established with bi-weekly conference calls5 Task Groups created (C&H, HT, PCBA, STN, WLD)

August 2013 Industry roundtable #4 (28Aug13)Program branding: “MedAccred” name agreed by Management Council

September 2013 Proof of concept audit (PCBA) conductedMedAccred website developed

October 2013 Proof of concept audit (Heat Treating) conducted

December 2013 Industry roundtable #5 (05Dec13)Program presented to FDA CDRH Dept. (03Dec13)

January 2014 Program presented to FDA Commissioners Level (27Jan14)

March 2014 Philips Healthcare became first subscriber to the MedAccred ProgramProof of concept audit (Cable & Harness) conducted

May 2014 DePuy Synthes (a Johnson & Johnson company) became the second MedAccred subscriber

June 2014 Stryker became the third MedAccred SubscriberPresentation made to FDA Case for Quality Executive Forum

December 2014 Plastics (Injection Molding, Resins) Task Group created

Chronology


Next Steps for 2015

• Increase participation and commitment from the Medical Device Manufacturers

• Increase participation and commitment to suppliers who provide critical manufacturing processes

• Conduct MedAccred audits of suppliers

• Continue dialogue with CDRH and FDA Office of Global Operations

• Complete software validation of eAuditNet and update system as required

• Promote MedAccred to the wider Medical Devices industry


Benefits to Medical Device Industry

• Promotes a philosophy of continuous improvement and a culture of patient safety and quality for all participants

• Enhances compliance and quality management system effectiveness throughout the industry

• Promotes best practices to assure patient safety and quality

• Promotes application of industry and technical standards/practices

• Provides an opportunity for collaboration between Suppliers and OEMs

• Improves visibility of industry requirements to sub-tier Suppliers

Similar program in aerospace industry has a 25 year history of successful performance and regulatory acceptance


Benefits to Medical Device Industry (cont.)

• Promotes least burdensome approach by reducing redundant process audits by multiple customers

• Enables reallocation of resources to other areas requiring attention

• Provides real-time and consistent visibility of supply chain quality

• Aligns with FDA’s “Case for Quality” strategic initiative


Benefits to Medical Device Industry OEMs

• Establishes stringent industry consensus audit criteria based on industry and specific OEM requirements that ensure compliance and quality of devices, reduce the risk to patient safety and will satisfy the requirements of all participants

• Conducts in-depth special process audits that are compliant and consistent to accepted industry/technical standards and conducted by industry recognized and approved Subject Matter Experts. • Covers 3 areas:

1. Assess effectiveness of Suppliers’ QMS at the special process level; 2. Audits based on robust core and OEM-specific checklists; 3. Process-focused Product Audits


Benefits to Medical Device Industry OEMs (cont.)

• Provides greater visibility of the supply chain to all levels and sub-tiers that provide critical processes, consistent with regulatory requirements (e.g. FDA, ISO 13485, MDD, etc.)

• Identify and reduce risk of exposure to lower-quality Suppliers and reduction of costly recalls

• Provides early warning notification to OEMs of supply chain quality issues

• Provides complete visibility of audit results and corrective actions taken in a secure and retrievable format

• Reduces cost of non-quality• Reduces cost of compliance


Benefits to Medical Device Industry OEMs (cont.)

• Releases OEM resources to focus on Supplier development opportunities and/or problem area resolution

• Improves flow down of OEM requirements to sub-tier Suppliers

• Makes the Supplier selection process more efficient

• Global supply chain visibility through a web based system to support and improve efficiency in industry managed auditing and accreditation system (eAuditNet).

• Supports procurement to identify accredited Suppliers (Qualified Supplier List)

• Supports Supplier risk management activity

• Creates a shared pool of trained, recognized and approved subject matter experts among OEMs


• Provides consistent/standardized critical process audits accepted by the medical device industry resulting in fewer redundant onsite audits by multiple OEMs

• Can use accreditation to increase client-base and opportunities across the Medical Device Industry

• Enhances the Supplier’s compliance status

• Medical Device Industry-accepted and consistent technical requirements leading to process discipline, greater operational efficiency and continuous improvement resulting in higher quality and lower overall cost.

Benefits to Medical Device Industry Suppliers


Benefits to Medical Device Industry Suppliers (cont.)

• Helps Suppliers develop a structured approach to special process and product

• Provides opportunity to participate in development of audit criteria and the accreditation program

• 85% of suppliers report quality improvements after accreditation, including reducing scrap rates, reworks, escapes and defective products (from aerospace survey data)


What is MedAccred and it’s Scope

• An industry-managed audit program that addresses critical manufacturing process issues in the supply chain and reduces risk to patient safety by enhancing compliance to critical process manufacturing requirements

• MedAccred is a tool for Medical Device OEMs to use in the oversight of their supply base while they maintain ultimate responsibility for quality and compliance

• MedAccred program provides in-depth, critical process, audits that are compliant and consistent to accepted industry/technical standards and conducted by industry recognized and approved Subject Matter Experts

• Scope of audit

o Critical, process-focused, technical audits with sampling of product audits to ensure process capability to meet requirements

o Assesses effectiveness of suppliers’ Quality Management System (QMS) at the critical process level (e.g. PCBA, Heat Treating, Welding, Sterilization, etc.)

o Audits based on robust core and OEM-specific checklists


Using MedAccred for Critical Process Oversight

OEMs: - Establish requirements and effective Flow-down- Ensure oversight

SUPPLIERS:- Maintain compliance to requirements

MEDACCRED:- Provide audits to verify compliance to requirements- Issue accreditation

MEDACCRED:- Qualified Suppliers List (QSL) - Sub-tier suppliers

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• For devices to meet the industry and FDA requirements, OEMs must:

o Define design specifications for the products to be manufactured

o Understand which of the manufacturing processes used in making the device or its components are Critical to Quality (CTQ) and hence safety of the device

o Define industry standards and OEM specific requirements for these critical processes

o Communicate (i.e. Flow-Down) these requirements to all levels of the Critical Process Supply Chain

o Understand who are the Contract Manufacturers, as well as sub-tier suppliers that are providing Critical Manufacturing Processes for the devices or their components

o Define requirements for periodic oversight via the MedAccred program

OEMs Establish Requirements And Provide Oversight

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• Critical Process Providers (Suppliers) are responsible for ensuring all requirements (Industry Standards, OEM specifications, etc.) as flowed down by the OEM are met.

o This includes ensuring compliance to all critical process requirements.

o Receiving and maintaining MedAccred Accreditation is a mechanism for Suppliers to demonstrate they have been verified as having the necessary processing capabilities and controls to ensure compliance.

Flow Down: A systematic approach that ensures OEMS specifications and expectations of quality are effectively communicated to critical manufacturing process providers for devices and device components at all tiers of the supply chain

Suppliers: Critical Process Providers Must Maintain Compliance To Requirements

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• The MedAccred Audit verifies the Suppliers have the process capability, necessary equipment, controls, qualified personnel, sub-tier controls, etc. and the ability to follow the process requirements as defined by the OEM and/or industry specifications.

• Critical Process Task Groups, made up of Industry Representatives, create industry agreed audit criteria which drive supplier process compliance to customer requirements.

• Auditors review OEM requirements and ensure the supplier is in compliance

• Subscribing OEMs can maintain oversight and ensure effective flow-down of their requirements by participating in the Critical Process Task Groups and the audit process.

MedAccred: Can Provide Oversight To Verify Compliance To Requirements

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• For those Suppliers that outsource a critical manufacturing process, the MedAccred QSL allows them selected accredited sub-tier suppliers

• The MedAccred QSL (Qualified Supplier List):

• A publicly available list of accredited MedAccred Suppliers to specific Critical Process technologies

o Display of all Audits/Certificates for a supplier

MedAccred: Can Provide Oversight To Verify Compliance To Requirements


Critical Process Areas of Interest

• Casting/Forging

• Chemical Processing

• Cleaning

• Coatings

• Electronics

• Displays

• Electronic Circuits - PCBAs

• Power sources/supplies

• Cable & Harnesses

• Fluidics

• Heat Treatment

• Machining

• Laser Etch

• Material Testing Laboratories

• Measurement/Inspection

• Non-Destructive Testing

• Optics

• Packaging

• Sterile

• Raw Materials

• Re-agent

• Resins

• Composites

• Injection Molding

• Sterilization

• Software

• Hosted Services

• Welding

KEY:BOLD PRI currently has

checklists addressing these Critical Process/Product areas

BLUE Active Task Groups as of January 2015

© Performance Review Institute21The Medical Device Industry has expressed interest in these Critical Processes and Products

Special Processes Systems & Products

Non-Destructive Testing

Welding

Chemical Processing

Heat Treating

Materials Testing Laboratories

Coatings

Non-Conventional Machining

Conventional Machining as a Special Process

Surface Enhancement

Non Metallic Materials Testing

Electronics

Fluid Distribution Systems

Sealants

Aerospace Quality Systems

Composites

Elastomer Seals

Castings & ForgingsRaw Materials

Future Processes

Measurement & Inspection

Non Metallic Materials

Manufacturing

Existing Nadcap Processes and Products


Program Risk Analysis

• Risks of developing a program/not doing it right

• Not timely

• No critical mass

• Proof of Concept audits not showing much

• Cost could go up without critical mass

• Risks to implementing a program

• Will find Suppliers that aren’t capable – increased exposure

• Could mean more work for OEM – short term stretch on resources

• Finding enough/the right SMEs to conduct audits

• Agency acknowledgement

• OEMs may still have to conduct special process audits


Confidentiality of Information

Addressed in MedAccred Program Document PD1300:

• 1.1 describes the MedAccred program“This Program Document shall govern the operations of the MedAccred Program. This document establishes the policies for how MedAccred shall meet the requirements defined in PD1000. MedAccred Management Council (MMC) and all MedAccred Task Groups and committees shall operate in accordance with these procedures and all referenced documents.”

• 4.4 describes the roles and functions around Task Groups.


• eAuditNet implements operating procedures:

• Each Company has one (or more) administrator(s) who are verified by PRI before any other users can be associated with that Company

• Each user has unique credentials, and is only associated with a Company by that Company's administrator(s)

• Each user can only access audits/functions relevant to their company and roles

• eAuditNet uses standard IT security best practices:

• All eAuditNet/program data is delivered over Secure Socket Layer (‘https’)

• All system activity is logged

• Audit data is stored behind multiple firewalls, and physical safeguards are in place

• PRI and SAE have regular information security audits:• PCI compliance• External penetration testing, etc

Confidentiality of Information (cont.)

eAuditNet security features:


Case Studies

• Aerospace (Nadcap OEM – Critical Process Escapes)

• Transportation & Power Generation (OEM)

• Medical Device (Electronic Circuits - PCBA Hypothetical)

Aerospace OEM - Critical Process Escapes

2001 2002 2003 2004 2005 2006 2007 2008 2009 as of

(6/09)

Internal Data Provided by Nadcap Subscriber

Supplier SP Process

Internal SP Process

No

. o

f E

sca

pes

26

78% decrease

* An escape is where defective product has been shipped to the customer prior to being identified as faulty


PRI Transportation & Power Generation (TPG) Program – Fastener Example

• Event: OEM experienced a product escape due to a faulty fastener and were forced to make an expensive repair

• Included in OEM Recourse: Requested a PRI NDT audit for their fastener Supplier

• TPG Audit Results: NDT audit uncovered cracks not found during initial inspection and process control violations that would have prevented the cracks

• Pre-TPG Program: Focus was on certifying the component (product-centric)


Medical Device Quality-Related Product Recall (Hypothetical)

2010: FDA issues a Class II recall on an Automated External Defibrillator ¹.

Root cause: Printed Circuit Board Assembly (Electronic Circuits)

(1) Trautman, K. (2010). Purchasing Controls – Background & Examples. Retrieved November 02, 2012, from FDANews.com

• Supplier has incorrectly applied solder flux• Ineffective cleaning

Specific root-causes

• 20,525 devices were recalled• Contamination could have lead to inoperabilityProduct

failure/recall

• Although individual Supplier could resolve issue, the industry remains exposed

• Customers remain exposed to potential consequences

• Highly likely industry will face similar issues from other Suppliers

Threat to life & profits


Medical Device Quality-Related Product Recall (Hypothetical) (cont.)

Root cause: Printed Circuit Board Assembly (Electronic Circuits)

Supplier has incorrectly applied solder flux Ineffective cleaning

Nadcap process compliance is used as a preventative measure:AC7120 Revision B – audit criteria for circuit card assembly

17.1 Reflow Soldering17.1.14.C Are soldering defects including solder joint touchup identified, recorded and addressed in a continuous

improvement plan?

17.1.15.C Is the cleaning method being used as per the procedure and is the maximum time permitted between reflow and cleaning being observed?

Audit Note: Maximum allowed time of 8 hours unless otherwise specified by customer or manufacturer’s recommendation.

20 Coatings and Encapsulation20.1.C Is there objective evidence of cleanliness verification?


Subscription Fees

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1st Subscribing Year 2nd Subscribing Year Onwards

New Subscribers 1-5 Active Subscribers

6-10 Active Subscribers

>10 Active Subscribers

Program Subscription Fee $60,000 $55,000 $50,000

Program Development Fee $90,000

Total Annual Subscriber Fees $90,000 $60,000 $55,000 $50,000

Revised: 29Oct14


Supplier Audit Pricing(Per-audit fee including travel costs. Based on current auditor daily fee of $420 per day. Will be increased as auditor fees and travel costs increase in subsequent years)

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Stand Alone Audits (includes travel costs)

N. America (Dollars)Asia/Pacific& S.

America (Dollars)UK (Pound) EMEA* (Euro)

1 Day $4450 $5100 £2975 €4450

2 Day $5700 $6350 £3800 €5700

3 Day $6950 $7600 £4625 €6950

4 Day $8200 $8850 £5450 €8200

5 Day $9450 $10100 £6275 €9450

Application Fee included

Follow-up Audits For Verification Of Corrective Action

1 Day $4450 $5100 £2975 €4450

Each Added Auditor Day $1250 $1250 £825 €1250

N. America (excludes US)

Asia, ANZ, S. America UK EMEA

ITAR/EAR Fee** $575 $1060 £685 €900

*EMEA – Europe, Middle East and Africa

**ITAR - International Traffic in Arms Regulations, EAR - Export Administration Regulations (Audits with Export Control restrictions require a US citizen to travel to other regions. Hence, the additional fee to cover travel costs).

NOTE: The above pricing model includes travel surcharges for Asia-Pacific and South American audits, and for ITAR/EAR audits outside of the United States. These surcharges were shown as “expected to be between USD1000 and 2000” in the initial cost structure shown from the beginning of the program.

Revised: 29Oct14


OEM Cost/Benefit Template

• What number of Critical Process Audits currently performing?

• How many can be eliminated?

• What is the cost to conduct these audits?

• Travel/Time savings?

• Can the QMS audits currently being conducted by OEMs be reduced?

• cGMP compliance

• Intangibles

• Draw from entire med-tech industry expertise

• OEM experts could observe audits conducted by Subject Matter Experts


Additional Information

• Details on upcoming MedAccred meetings, and access to supporting information on the program (including this presentation), can be found on the MedAccred website:

http://www.p-r-i.org/other-programs/medaccred/


Contact Details & Upcoming Meetings

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Joseph PintoExecutive Vice President & Chief Operating Officer, [email protected]+1 724 772 7175

Bob LizewskiManager Nadcap Program Quality and NUCAP, [email protected]+1 724 772 8618

Upcoming MedAccred meetings:

• MMC Monthly Teleconference: January 14 at 10:30am - 11:30am EST

• MMC Face to Face Meeting: February 17 (all day) in Memphis, Tennessee – Memphis Hilton

Justin McCabeResearch & Development Specialist, [email protected]+1 724 772 8693

mailto:[email protected]



© Performance Review Institute Program Overview & Value Proposition Revision Date: 7 January 2015...

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