Pro-dex

Negotiating MPO Agreements

Pros and cons to the contract manufacturing agreement process

Byline: Joe Rotino

Who’s responsible for device problems if things go wrong? Is it the OEM? The supplier?

If a supplier puts a $.05 part in a $1,000 device, and that $1,000 device causes harm, should the onus fall on the supplier?

Answers to these tough questions were attempted at the “Negotiating Medical Product Outsourcing Agreements” panel at AdvaMed 2011. But not all were satisfied with the answers.

Here are some highlights and lowlights …

Highlights:

• Many agree that standardization of supplier agreements is needed and appropriate for the industry. Change is necessary to make it less complex, time-consuming, and bureaucratic.
  
  
• With growing demand world-wide, the need for medical product outsourcing agreements are increasing and more win-win, collaborative partnerships are being created than ever before.
  
  

Lowlights:

• "Supplier agreements are being sent to companies that need to be reviewed by general counsel due to their complexity."
  
  
• OEM’s see it as a rarity that one company could be strong as a one-stop-shop for their design, development, and manufacturing needs. Unfortunately, this means they tend to overlook CM’s that can actually provide those services efficiently, effectively, and within accelerated time-frames.

When it comes to providing quality, reliable, safe products that benefit consumers, everyone in the MedTech space is responsible. But we need to be careful that the process isn’t so litigiously focused and complex so that no one benefits.

Let’s come up with some standardization for the industry about how we look at a supply base (e.g. holding an ISO 13485 certification). Right now the process is imbalanced and complex.

Fortunately, there are ample opportunities to work together and create win-win partnerships between OEM’s and their contract manufacturers. But in order to grasp those opportunities, the process needs to be drastically simplified.