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March 2020

The current legal uncertainty regarding the so-called Institutional Agreement – also known as the framework agreement EU-Switzerland – is causing unrest in the Swiss MedTech industry.

Bilateral agreements on the mutual recognition of conformity assessments (Mutual Recognition Agreement, or MRA) have existed between Switzerland and the EU since 2002. Due to the MRA, Swiss medical device manufacturers are currently able to sell their devices – which have undergone conformity assessments according to Swiss law – in the EU (and vice versa).

However, on 26 May 2020, the Medical Device Regulation (EU) 2017/745 (MDR) will be fully applicable within the EU, which makes it necessary to update the MRA.

The EU has already agreed on the text for a framework agreement allowing for the continuation of the bilateral agreements, but it hasn't yet been approved by the Swiss Federal Council. Further progress on the framework agreement is only expected after the vote on the citizens' initiative Limitation Initiative on 17 May 2020, through which the right-wing populist party SVP seeks to achieve the termination of the agreement of free movement of persons with the EU.

There is, therefore, a very real threat that as of 26 May 2020, the MRA will no longer be valid. Although there is a chance that Switzerland will still approve the framework agreement, time is pressing, and Swiss MedTech companies are faced with the question of whether to hope for diplomacy or prepare for the expiry of the MRA.

If the MRA is no longer valid from 26 May 2020, Swiss MedTech companies will face higher administrative barriers when exporting to the EU, not only with regard to medical devices approved after 26 May 2020, but possibly also where devices certified under the legal framework of the Medical Device Directive (MDD) are concerned.

In concrete terms, this could mean that the EU no longer recognises Swiss conformity assessments of medical devices. Instead, the same regulations would apply to Swiss medical device manufacturers as to manufacturers from any other third country, such as the USA or China.

As a result, medical devices intended for sale in the EU would require CE certification issued by a Notified Body within the EU. Furthermore, Swiss manufacturers would have to appoint an authorised representative in the EU, and enable them to fulfil their obligations under Art. 11 MDR.

It is estimated that the reorganisation would cost a total of around 1 billion Swiss francs for all Swiss MedTech companies affected by it. Moreover, many devices would only come onto the market with a delay, as some companies would need up to 2 years (approximately) to go through the whole procedure. Experts also estimate that the effort involved in re-certification will only be worthwhile for devices that are performing very well in the market.

Conclusion

Manufacturers might have to meet MDR third country requirements in order to place products on the market in the very near future. Contractual arrangements with an authorised representative with a branch in the EU area – who will assume manufacturer responsibilities, including product liability on behalf of the manufacturer – should be put in place sooner rather than later.

Even if the Federal Council still comes out in favour of the institutional agreement in the course of the year, companies should bear in mind that there will probably not be enough MDR certification capacity available, which might call for applications for exemptions under Art 59 MDR.

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