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FTC to focus enforcement action on illegal repair restrictions

Posted 30 July 2021 | By Jeff Craven 

FTC to focus enforcement action on illegal repair restrictions

In a unanimous vote, the Federal Trade Commission (FTC) has decided to focus law enforcement efforts on repair restrictions that impede or prevent consumers and businesses from repairing products they own.
 
“While unlawful repair restrictions have generally not been an enforcement priority for the Commission for a number of years, the Commission has determined that it will devote more enforcement resources to combat these practices,” FTC said in a new policy statement, released on 21 July. “Accordingly, the Commission will now prioritize investigations into unlawful repair restrictions under relevant statutes such as the Magnuson-Moss Warranty Act and Section 5 of the Federal Trade Commission Act.”
 
The FTC has asked consumers and businesses to report suspected violations of the Magnuson-Moss Warranty Act and said it will examine repair restrictions that “constitute tying arrangements or monopolistic practices” in violation of the Sherman Act.
 
A report titled “Nixing the Fix,” released by the FTC to Congress in May 2021, highlights how repair practices potentially violate Magnuson-Moss across a variety of industries. Methods that manufacturers use include “using adhesives that make parts difficult to replace, limiting the availability of parts and tools, or making diagnostic software unavailable,” according to an FTC press release. The practice has “increased the burden on consumers and businesses,” the FTC said.
 
“While efforts by dominant firms to restrict repair markets are not new, changes in technology and more prevalent use of software has created fresh opportunities for companies to limit independent repair,” FTC Chair Lina M. Khan said in a prepared statement. “As both the FTC’s work and public reporting have documented, companies routinely use a whole set of practices, including limiting the availability of parts and tools, using exclusionary designs and product decisions that make independent repairs less safe, and making assertions of patent and trademark rights that are unlawfully over-broad.”
  
In the medical device industry, these repair restrictions can even impact patient care, and the problem was further exacerbated during the COVID-19 pandemic. “The pandemic exposed serious weaknesses in our nation’s resilience and ability to recover from shocks. While we typically view improper repair restrictions through its effects on fair competition, consumers, and small businesses, the Right to Repair movement also showed us how these problems can be matters of life and death,” FTC Commissioner Rohit Chopra said in a prepared statement.

“During the FTC’s review of this issue, we heard about hospitals worried that they would be unable to fix a ventilator because a manufacturer was seeking to deny access to repair it. Outages caused by repair restrictions like these can make the difference in times of emergencies.”
 
Jenn Engstrom, state director of the California Public Interest Research Group (CALPIRG), echoed Chopra’s assessment of the situation. “When a ventilator or dialysis machine breaks, we need to have all hands on deck to get it up and running so that it can be used to treat a patient—especially during a pandemic,” she said in an interview with Focus. “But medical device manufacturers tie the hands of qualified hospital technicians by restricting access to necessary repair materials.”
 
The “Nixing the Fix” report outlines industry’s argument that medical devices cannot be compared to consumer electronics and are “categorically different than consumer goods in that they are heavily regulated products which have direct impact on patient care and safety.”
 
FDA’s position on repairing vs. remanufacturing
 
While Engstrom said FTC’s vote isn’t likely to eliminate repair restrictions on medical devices alone, she noted it is “an important step forward.” FTC would need to work with the US Food and Drug Administration (FDA), as “action on medical equipment repair restrictions would likely need to come from the FDA.”
 
“Now that the FTC has said they will pursue enforcement action to eliminate harmful repair restrictions, they should work with the FDA to do the same with medical equipment,” she said.
 
FDA recently outlined its thinking on what it considers a repair of a medical device and when servicing a device crosses over into “remanufacturing.” In draft guidance released on 24 June, FDA defined remanufacturing as changes, including addition or removal, to device components that either directly or indirectly contact body tissue, when this manipulation results in significant changes to device performance or safety specifications. Reconditioning, refurbishing, or rebuilding is defined by FDA as restoring a medical device to “like new” status under original equipment manufacturer (OEM) specifications and using OEM parts. (RELATED: FDA explains when device 'servicing' becomes 'remanufacturing', Regulatory Focus 17 June 2021)
 
The “guiding principles” for determining whether a device has been repaired, rather than remanufactured, are whether there has been a change in the intended use, if the modification changes the safety or performance of the device, and if any change would require a new marketing submission. In general, many new software updates would also fall under the “remanufacturing” label if they change software architecture, specifications to software requirements, or introduce “unresolved abnormalities,” FDA said in a webinar on 27 July clarifying the draft guidance.
 
FDA also raised the issue of cybersecurity at the webinar regarding servicing medical devices. Key issues in this area include balance of designing devices that are serviceable but also limit access to privileged users, the role of servicing entities in identifying and preventing or mitigating cybersecurity vulnerabilities, and the challenges of supporting legacy devices that may still be clinically useful but contain cybersecurity vulnerabilities. The agency noted that cybersecurity is “a shared responsibility among all stakeholders” and “expects manufacturers to appropriately secure their devices in order to continue to assure the devices’ safety and effectiveness.”
 
The medical device trade association Advamed did not respond to a request for a comment.
 
FTC
FDA: Remanufacturing of Medical Devices Draft Guidance

 

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