INSIGHT REPORT
Vol 8 #3

2005

INSIGHT REPORT

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Insight Report Vol. 8 -  No.3

The 510(k) - an asset that can be sold and transferred

The Pre-Market Notification or 510(k) ? as the medical device industry began to call it, at the early stages, when the medical device amendment to the Food Drug Act went into effect in 1976 ? is one of the most important regulatory requirements; but, is also one of the most misunderstood.
What is this 510(k) and why is this number used and not by its official name: Pre-Market Notification?

There are basically three ways to market a medical device in the USA and the way that you must follow is based on the device classification.
There are three classes of medical devices: Class I, Class II and Class III. (Unlike the classifications for the CE mark where the classes are called Types and there are four types of device classifications Type I, Type IIa, IIb and III.)

What are the definitions of the FDA device classes? Device classifications are based on several factors that determines which device risk applies: The risk the device poses to the patient and/or the user is a major factor in the class it is assigned; Class I includes devices with the lowest risk; and, Class III includes those with the greatest risk.

The other determining factor for device classification depends on the intended use of the device as well as upon indications for use. For example, a scalpel's intended use is to cut tissue. A subset of intended use arises when a more specialized indication is added in the device's labeling such as, "for making incisions in the cornea". Indications for use can be found in the device's labeling, but may also be conveyed orally during sale of the product.

The following are the Device Class and Regulatory Controls:

1. Class I General Controls
   • With Exemptions
   • Without Exemptions
2. Class II General Controls and Special Controls
   • With Exemptions
   • Without Exemptions
3. Class III General Controls and Pre-market Approval

The class to which your device is assigned determines, among other things, the type of pre-marketing submission/application required for FDA clearance to market. If your device is classified as Class I or II, and if it is not exempt, a 510k will be required for marketing. All devices classified as exempt are subject to the limitations on exemptions. (These limitations are covered under in the CFR Parts 862-892.) For Class III devices, a pre-market approval application (PMA) will be required unless your device is a pre-amendments device (on the market prior to the passage of the medical device amendments in 1976, or substantially equivalent to such a device) and PMA's have not been called for. In that case, a 510k will be the route to market.

The 510(k) is the section of the act that states,

‘Based on the FDA databases, there has been as estimated 6000 510(k)s cleared per year since 1976. That means that companies have in their possession approximately 160,000 510(k)s. That includes the special 510(k)s (changes to an already cleared 510(k) started in 1997) and modifications to 510(k)s prior to the special 510(k) procedures.’

What is required to legally sell or transfer a 510(k)?

You could consider the ownership of a 510(K) as a license to market you device. The 510(k) is also an asset that can be transferred and/or sold. What would a company have to do to either purchase, sell or transfer a 510(k)? There are several things must be done to assure that the transfer of the 510(k) is correctly completed and documented.

First you must understand the FDA’s policy concerning their 510(k) database. This is one area that causes the most problems for the company that is taking the ownership of the transferred 510(k). The FDA will not edit or change any information in the original 510(k) application or in their 510(k) data base. The name on the original 510(k) will always stay the same. This means that the new owner of the 510(k) would not be able to go to the FDA database and see their name associated with that 510(k).
So what are the steps for transferring a 510(k) and assuring that the new owner can demonstrate 510(k) ownership:

The owner of the 510(k) must do the following:

1. Notify the FDA with a letter on their company letterhead that they are transferring the ownership of the 510(k) to a new owner. The letter provides the name of the new owner. The letter must also provide the information on the original 510(k) notification to assure that the right 510(k) is being transferred.
2. The original 510(k) holder must delist the device from the FDA listings. This can be done using the FDA 2892A, device listing form.

The company that is taking ownership of the 510(k) must do the following:

1. The new owner must maintain a copy of this transfer letter in their files in case they:
       a. are audited by the FDA and want to demonstrate ownership
       b. they want to make changes to the 510(k) via the “Special” 510(k) route.
2. The new owner must submit a device listing for the device and they should include the brand name that they intend to use when selling the device. (The FDA 2892A form must be used).

This information must be sent into the FDA via ‘Certified Mail Return Receipt Requested’ to assure that you have the some documentation that the information was sent into the FDA.

In today's business climate, companies should understand how to handle their assets. The 510(k) is an asset that is not often thought about as one to be sold or transferred, which our experience in assisting many companies in transferring their 510(k) has taught us. Remember, what you might not consider valuable, may, in fact, be valuable to someone else. Obtaining a 510(k) for a device today can cost tens of thousands of dollars. Transfer maybe one option for a company when they are no longer selling a product.

For any questions on how to sell or transfer a 510(k) email mdi at info@mdiconsultants.com 

The next Insight Report: Importing non-approved devices to the USA.

If you have any comments on these INSIGHTS we hope that you let us hear them. If you have any of your own INSIGHTS that you feel would be of value to other companies, we would be pleased to hear from you and to discuss them with you and if you allow, we would even put them up on this site for others to learn from.
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