Does being a subsidiary fully absolve company B from complying with 21 CFR 820?

I

icare2much

#1
Hi all, its been a while since I've posted. Lots of alligators.

Lets say there are two companies. Company A is foreign, and registered with the FDA as a device manufacturer. Company B is a U.S. company, but is a wholly owned subsidiary of company A.

Company B writes executable software for company A, develops hardware designs, develops new product prototypes for company A, and assists company A with clinical testing of the new prototypes, maybe even ghost authoring the 510K submissions.

Company B has no established QMS and is not registered with the FDA. There are no products on the market bearing company B's name and company A "owns" all specifications. Company A "verifies and validates" all designs, but they do not have in house expertise to fully understand how the product works. All marketed products bear company A's name.

This is a beautiful thing for company A, they think, because company B has little overhead and focuses exclusively on engineering tasks. Plus, any FDA inspections are limited to company A due to the fact they are foreign (and company B is "hidden").

So the question is - is this compliant? Does being a subsidiary fully absolve company B from complying with 21 CFR 820?
 
Last edited by a moderator:
Elsmar Forum Sponsor

Ronen E

Problem Solver
Staff member
Moderator
#2
Hi all, its been a while since I've posted. Lots of alligators.

Lets say there are two companies. Company A is foreign, and registered with the FDA as a device manufacturer. Company B is a U.S. company, but is a wholly owned subsidiary of company A.

Company B writes executable software for company A, develops hardware designs, develops new product prototypes for company A, and assists company A with clinical testing of the new prototypes, maybe even ghost authoring the 510K submissions.

Company B has no established QMS and is not registered with the FDA. There are no products on the market bearing company B's name and company A "owns" all specifications. Company A "verifies and validates" all designs, but they do not have in house expertise to fully understand how the product works. All marketed products bear company A's name.

This is a beautiful thing for company A, they think, because company B has little overhead and focuses exclusively on engineering tasks. Plus, any FDA inspections are limited to company A due to the fact they are foreign (and company B is "hidden").

So the question is - is this compliant? Does being a subsidiary fully absolve company B from complying with 21 CFR 820?
Hi,

IMO commercial ownership is of little relevance here. In practice, B is one of A's suppliers, and how A manages its suppliers in line with USA medical devices regulations is an issue A is answerable to the FDA to. B should only be concerned with whatever means A deems necessary to inflict on B to meet its own obligations to the FDA - nothing more and nothing less (in that regard).

The geographical locations of A and B are also not too important in this context, IMO.

Cheers,
Ronen.
 
M

MIREGMGR

#3
If B's output technically meets the FDA "medical device" definition without consideration of packaging, labeling or sterilization, then B would be a contract manufacturer by FDA definition and would have to Register and List.

If B's output technically does not meet the FDA "medical device" definition but is shipped to a distributor or end user--say, as a replacement part, accessory or component--they would have to Register and List.

Company A "verifies and validates" all designs, but they do not have in house expertise to fully understand how the product works.
I've heard of a past instance where FDA held that in such a relationship, the equivalent-company-to-B was a "contract specification developer" because the equivalent-company-to-A had a limited capability to understand the specification's technical underpinnings. Specification developers must Register and List.

If B's site acts as the US distribution center for A's products, receiving shipments from A, then B probably would be an Initial Importer. Initial Importers must Register, but do not have to List.

In general, any company that must Register must comply with applicable parts of 21CFR 820 and other applicable 21CFR sections.
 
Last edited by a moderator:
I

icare2much

#4
To the point about whether commercial ownership is relevant or not, I have to wonder. Does the FDA recognize the companies as two separate entities, in which case the supplier control provisions make sense?

Wholly owning a subsidiary allows the parent company to have full control of the child's operations.

Its interesting. If the subsidiary were simply a division of the parent, I would think its operations would be regulated. By creating a subsidiary, does that technically shield the subsidiary from regulatory oversight? ( other than the supplier controls as mentioned). If subsidiaries were such great shields, I would think all the big medical device players would use them to limit exposure and minimize regulatory risks.

I thought I had heard of some case where FDA didn't buy the subsidiary separation, but maybe it was just rumor.

Miregmgr - in the case you heard of, was the "company B" trying to act as a specification consultant? Do you have any idea where I might find more information on that case?

Thanks guys for the great comments.
 
M

MIREGMGR

#5
was the "company B" trying to act as a specification consultant?
They were doing product design on a contract basis, for a company that had no design staff/controls of its own. My recollection is that FDA concluded that a designed product must have someone responsible for its design, and the responsible party must be whoever actually does the design if there is no other party that's qualified to provide oversight and design controls.

Do you have any idea where I might find more information on that case?
I'm sure it was in a Warning Letter, but I've read a lot of those over the years and I don't know of a content search or index system for them.
 
Thread starter Similar threads Forum Replies Date
R Does being traceable to NIST meet the requirements of ISO standards? General Measurement Device and Calibration Topics 16
M Does the Head of the Department being audited have the right to amend audit report? General Auditing Discussions 15
F Procedure does not reflect on what is being done Internal Auditing 25
lanley liao Does all of the suppliers need to integrated into the supplier list qualified of the company? Oil and Gas Industry Standards and Regulations 2
0 To which part of 13485 does this refer? ISO 13485:2016 - Medical Device Quality Management Systems 3
A Medical Device Contract Manufacturer - Does the CM need to register with FDA? 21 CFR Part 820 - US FDA Quality System Regulations (QSR) 3
J Records Control - Does each individual record need to be numbered? Records and Data - Quality, Legal and Other Evidence 2
lanley liao Does the customer`s trademark belong to customer-supplied property? Oil and Gas Industry Standards and Regulations 2
H How does a gas turbine work on diesel fuel? Oil and Gas Industry Standards and Regulations 12
G What does performance specification include? US Food and Drug Administration (FDA) 1
W Where does a coatings and paint company fall in IATF? IATF 16949 - Automotive Quality Systems Standard 5
A How much does a complete biocompatibility test package cost? Other ISO and International Standards and European Regulations 1
B Does anybody know how to get older versions of Minitab to work in Windows 10? Quality Tools, Improvement and Analysis 9
M Does the ISO 9001:2015 standard require a disaster recovery plan or emergency response plan ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 16
C Does an accessory need an IFU if it use is discussed in the Parent device IFU? 21 CFR Part 820 - US FDA Quality System Regulations (QSR) 5
S How long does it take to register a product with MHRA? UK Medical Device Regulations 3
M Quality Manual - Where does Revision History Section go? Document Control Systems, Procedures, Forms and Templates 8
U Does *anyone* know a lab that will test to EN 455-4 Medical Gloves shelf life determination? EU Medical Device Regulations 1
A Brexit When does the UK responsible person need to be in place? UK Medical Device Regulations 10
M How does IEC-60601-1 apply to a non-medical device in the patient vicinity? IEC 60601 - Medical Electrical Equipment Safety Standards Series 1
N Does anyone have experience of GB/T 34986-2017? China Medical Device Regulations 1
Z Does anyone have experience with EN ISO 17664 ? IEC 62366 - Medical Device Usability Engineering 9
F Does anyone have an ESD quality/cooler talk to share? Training - Internal, External, Online and Distance Learning 4
A What does this line from MDCG 2020-3 (MDR art. 120 substantial change) mean to you? EU Medical Device Regulations 4
D Change Approval Requirements - Does every change need formal customer approval? Design and Development of Products and Processes 17
T What does AS9100 mean when it says you must establish a process to do X? AS9100, IAQG, NADCAP and Aerospace related Standards and Requirements 24
L Does a backdate form format can be changed if wrong revision is used? Document Control Systems, Procedures, Forms and Templates 8
B General Motors and Honda Alliance - What does this mean to suppliers? IATF 16949 - Automotive Quality Systems Standard 3
C ISO 13485 :2016 - CAPA - Does every CAPA need to be checked by regulations? ISO 13485:2016 - Medical Device Quality Management Systems 9
A Does ISO 9001:2015 cover all the requirements of ISO 10012:2003? ISO 9000, ISO 9001, and ISO 9004 Quality Management Systems Standards 6
N FDA UDI - Label vs. Labeling - Does the insert need to include UDI? Other US Medical Device Regulations 1
A Does anyone have a checklist of API Spec 650 13th Edition? Oil and Gas Industry Standards and Regulations 0
D Does Manufacture can submit CE mark application under MDD with NB for his New product after May 2020? EU Medical Device Regulations 3
A What does this sentence "this symbol shall be used in the orientation shown" mean in ISO 780:2015? Other Medical Device Related Standards 4
L Turkish Requirements - Does the Software need to be translated? CE Marking (Conformité Européene) / CB Scheme 2
R Where does IATF 16949 address Process mapping? IATF 16949 - Automotive Quality Systems Standard 3
J Does Pakistan Medical Device Import License allows parallel import? Other Medical Device Regulations World-Wide 0
BeaBea Interesting Discussion Where Does Marketing/ Advertisement of Products fit in to ISO 9001? Process Maps, Process Mapping and Turtle Diagrams 39
P Does anyone have a API Q1 Documentation Package? Quality Management System (QMS) Manuals 1
N What is our product classification? (Does Unclassified classification still exists) Other US Medical Device Regulations 14
C Does a CE mark infer meeting all applicable standards? CE Marking (Conformité Européene) / CB Scheme 4
N Small Company - Internal audit process - Who does the audit? Internal Auditing 16
J Does anyone have an excel IATF 16949 Internal Audit checklist I could use? IATF 16949 - Automotive Quality Systems Standard 7
A Does AS9100 require traceability to operators performing the work? AS9100, IAQG, NADCAP and Aerospace related Standards and Requirements 4
I Does anybody use Detection in medical device Design FMEA? ISO 14971 - Medical Device Risk Management 18
A EN ISO 14971:2019 does not include the Annex Zs ISO 14971 - Medical Device Risk Management 4
Watchcat Does "Similar Device" = "Predicate"? EU Medical Device Regulations 7
C Document Control Stamps - Does anyone still stamp their documents? Document Control Systems, Procedures, Forms and Templates 24
Y Does Solidworks (2D/3D drafting modules) need validation? Other Medical Device and Orthopedic Related Topics 5
M Definition Open Audit - What does an Open Audit mean? Definitions, Acronyms, Abbreviations and Interpretations Listed Alphabetically 3

Similar threads

Top Bottom