Regulatory Open Forum

This message was posted by a user wishing to remain anonymous

Need some thoughts/feedback on the following scenario please:

Company A - A foreign device manufacturer with 510(k) clearance for Device X
Company B - Distribution agreement with another device company who markets a number of their own and private-labelled devices in the US. 

Company A and Company B form a partnership for Company B to be the exclusive distributor of Device X in the US.  The labelling for Device X is modified to incorporate Company B's branding (colours, logo, catalogue numbers, etc.) as well as the following statements "Manufactured for Company B" and "Developed and manufactured by Company A". 

Company B issues purchase orders to Company A. Company A manufactures the devices to fulfil the order, labelled as above, and ships the order to Company B.  Company B accepts the order as Initial Importer, but considers the receipt of the order as transfer of ownership of the devices, thus ending the supply chain for Company A.  However, both Companies would collaborate on complaints/MDRs and recalls.

Based on this information, Company B considers itself a customer of Company A, rather than a distributor. 

If you were Company A and accepted this approach (due to a rather vague partnership agreement), how would you reflect this in a Quality Agreement with Company B, as well as your QMS? 

​If FDA were not involved, I would say that two companies could structure agreements however they wanted to and decide how to treat a transfer of product into distribution centers.

However, FDA is involved, and both companies have made representations to FDA regarding their respective roles in a regulatory sense. In general, FDA stays out of business agreements between two entities.

Company B may consider itself a "Customer" of Company A in a business sense, but if they are registered and listed as an "Initial Importer" and performing a distribution function per an agreement, they are a distributor.

If Company B were the 510(k) holder and Company A a contract manufacturer, I could see Company B asking Company A for specific quality agreements. However that is not the case. Company A is the 510(k) holder and therefore first and foremost obligated to have a QS in place which satisfies 21 CFR 820. What requirements would a distributor have that they would need to put in a Quality Agreement over and above adherence to 21 CFR 820?

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Jean Bigoney PHD, RAC
Managing Member
Nu Device Consulting LLC
Murphy NC
United States
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Original Message:
Sent: 28-Sep-2017 19:47
From: Anonymous Member
Subject: Distributor vs Customer

This message was posted by a user wishing to remain anonymous

Need some thoughts/feedback on the following scenario please:

Company A - A foreign device manufacturer with 510(k) clearance for Device X
Company B - Distribution agreement with another device company who markets a number of their own and private-labelled devices in the US.

Company A and Company B form a partnership for Company B to be the exclusive distributor of Device X in the US.  The labelling for Device X is modified to incorporate Company B's branding (colours, logo, catalogue numbers, etc.) as well as the following statements "Manufactured for Company B" and "Developed and manufactured by Company A".

Company B issues purchase orders to Company A. Company A manufactures the devices to fulfil the order, labelled as above, and ships the order to Company B.  Company B accepts the order as Initial Importer, but considers the receipt of the order as transfer of ownership of the devices, thus ending the supply chain for Company A.  However, both Companies would collaborate on complaints/MDRs and recalls.

Based on this information, Company B considers itself a customer of Company A, rather than a distributor.

If you were Company A and accepted this approach (due to a rather vague partnership agreement), how would you reflect this in a Quality Agreement with Company B, as well as your QMS?

Original Message------

This message was posted by a user wishing to remain anonymous

Need some thoughts/feedback on the following scenario please:

Company A - A foreign device manufacturer with 510(k) clearance for Device X
Company B - Distribution agreement with another device company who markets a number of their own and private-labelled devices in the US. 

Company A and Company B form a partnership for Company B to be the exclusive distributor of Device X in the US.  The labelling for Device X is modified to incorporate Company B's branding (colours, logo, catalogue numbers, etc.) as well as the following statements "Manufactured for Company B" and "Developed and manufactured by Company A". 

Company B issues purchase orders to Company A. Company A manufactures the devices to fulfil the order, labelled as above, and ships the order to Company B.  Company B accepts the order as Initial Importer, but considers the receipt of the order as transfer of ownership of the devices, thus ending the supply chain for Company A.  However, both Companies would collaborate on complaints/MDRs and recalls.

Based on this information, Company B considers itself a customer of Company A, rather than a distributor. 

If you were Company A and accepted this approach (due to a rather vague partnership agreement), how would you reflect this in a Quality Agreement with Company B, as well as your QMS? 

This can get really tricky if the devices are RX devices, because then to really be considered a "customer" it would need to be authorized to purchase prescription devices - a hospital, Dr etc and would also need processes to ensure they kept records of prescriptions etc.

While distributors are indeed a type of customer, it generally is good to use the terminology so that the actual role is more clear. As for quality agreements, I am not entirely sure you make quality agreements with a "customer" but we do with distributors, OEM manufacturers/designers etc all the time.

g-

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Ginger Glaser RAC
Vice-President, Engineering
MN
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Original Message:
Sent: 28-Sep-2017 19:47
From: Anonymous Member
Subject: Distributor vs Customer

This message was posted by a user wishing to remain anonymous

Need some thoughts/feedback on the following scenario please:

Company A - A foreign device manufacturer with 510(k) clearance for Device X
Company B - Distribution agreement with another device company who markets a number of their own and private-labelled devices in the US.

Company A and Company B form a partnership for Company B to be the exclusive distributor of Device X in the US.  The labelling for Device X is modified to incorporate Company B's branding (colours, logo, catalogue numbers, etc.) as well as the following statements "Manufactured for Company B" and "Developed and manufactured by Company A".

Company B issues purchase orders to Company A. Company A manufactures the devices to fulfil the order, labelled as above, and ships the order to Company B.  Company B accepts the order as Initial Importer, but considers the receipt of the order as transfer of ownership of the devices, thus ending the supply chain for Company A.  However, both Companies would collaborate on complaints/MDRs and recalls.

Based on this information, Company B considers itself a customer of Company A, rather than a distributor.

If you were Company A and accepted this approach (due to a rather vague partnership agreement), how would you reflect this in a Quality Agreement with Company B, as well as your QMS?