Pre-and polyfluoroalkyl substances (PFAS) are known as ‘forever chemicals’ due to their long half-life and high resistance to degradation. PFAS are often used in medical devices because of their ‘non-stick’ quality. However, these chemicals are likely to be banned in Europe from 2025 as a result of their toxicity to humans and the environment. An EU-wide ban will force manufacturers to seek out PFAS-alternatives. This presents an upside for manufacturers of PFAS-free materials but may also introduce supply-chain disruptions and regulatory hurdles in the medium-term.
In this piece, Marwood analyses the regulatory changes on the horizon in the medical device sector and the potential impact the PFAS ban may have on existing or potential assets.
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Pre-and polyfluoroalkyl substances (PFAS) look set to be banned in Europe from 2025. However, due to their essential use in many medical devices, current proposals suggest the ban will likely contain a transition period of 18-months with an added exemption period of 12 years.
Conversely, cosmetic applications for PFAS, will not see any derogation, meaning investors in these products will need to consider more imminently whether manufacturers are prepared to make changes to their cosmetic product formulations.
Figure. 1 Legal Passage Of The PFAS Ban In Europe Is Likely By 2025
Restrictions On Using PFAS In Medical Devices Is Expected To Be Fully Implemented In 2038
In February 2023, health authorities from Germany, Denmark, the Netherlands, Norway, and Sweden submitted a proposal to the European Chemicals Agency (ECHA) on restricting the use of PFAS under the Registration, Evaluation, Authorisation and Restriction of Chemical substances (REACH) regulation.
The proposal for a ban on the future manufacture, use, import and marketing of PFAS within the EU suggested two alternative regulatory approaches:
- Option 1: A total ban of PFAS above threshold amounts after a limited 18-month transition period
- Option 2: A similar ban but with limited exemptions or phase-ins for certain categories of PFAS use, of either a 5-year or 12-year window following the end of the 18-month transition period
Option 2 is most likely as the European Commission must consider the socioeconomic consequences of such a ban. This route intends to prevent market exits of key medical devices in the EU and gives manufacturers time to understand the potential restriction and how they might overcome it. Under Option 2, manufacturers and importers of PFAS-containing articles and formulators of PFAS mixtures that wish to use the exemption allowances would be required to submit annual reports justifying their derogations and identifying types and quantities of PFAS placed on the market in the previous year. For medical device applications of PFAS, this option entails a sunset date after 13.5 years (composed of 18 months of transition and 12 years of exemption) for the implementation of the ,restriction for medical devices
Table. 2 Medical Devices Will Have A Derogation Period Of 12 Years
A public consultation began in March 2023 and closed in September 2023. The ECHA received a high volume of responses, with over 4,400 organisations, companies and individuals having submitted comments and information on the proposal. A response on the consultation is expected in Q1 of 2024.
An EU-level restriction on a widely used material such as PFAS can lead to disruption in the supply of medical equipment and devices, which may include implantable medical devices and catheter tubes. PFAS-alternative manufacturers look set to gain from this ban as manufacturers of medical devices with PFAS applications must seek alternatives to PFAS by the end of the exemption period to stay on the market. Marwood can assist investors in these sectors in navigating the changing regulatory landscape and identifying the best opportunities and potential pitfalls as this ban moves forward.
Medical Device Manufacturers Who Seek PFAS-Alternatives Sooner Will Be Better Positioned In The Market
This ban may lead to many PFAS being taken off the market – a similar event to when perfluorooctanoic acid (PFOA) and its related compounds were banned under the EU’s Persistent Organic Pollutants (POPs) Regulation in 2020. It is expected that no general exemptions will be made to the likely ban of PFAS but rather a derogation period after a transition period for medical devices. While such an exemption period may give manufacturers some time to source for alternatives, this ban may still cause setbacks in the medical device supply chain as PFAS-alternative materials are still emerging.
Creating a medical device supply chain is a lengthy and arduous process. Guaranteeing the materials used in every step of this process is crucial in providing a sustainable supply of devices that are intended to be on the market for a long time. Implementing a PFAS ban will be disruptive to manufacturers. While a 13.5-year transition and derogation period may give manufacturers time to replace PFAS applications in their products, PFAS-alternatives are still a growing market.
Replacing PFAS in medical devices is a difficult process and requires perfect compatibility with the product. For some medical devices, an alternative may not even be on the market at the present time.
Challenges that manufacturers may face include:
- Sourcing PFAS-alternatives that are compatible with existing materials used in the product
- Keeping the PFAS replacement within its existing price margin whilst avoiding higher costs of production
Buyers are likely to prefer medical devices with PFA-free components to avoid a disruption in their supply chain. With one of the largest manufacturers of PFAS, 3M, to discontinue its production of PFAS by 2025, timing has become a key variable in winning this race.
Manufacturers able to find suitable alternatives to PFAS as soon as possible while keeping production costs low will stand to gain in this competitive environment. The sooner medical device manufacturers acquire PFAS-alternatives and integrate them into their supply chain; the more attractive these devices will be when undergoing regulatory approval, marketing authorisation and public procurement. Manufacturers who are unable to keep up with the pace of change may find themselves out of the race.
Manufacturers Of PFAS-alternatives Suitable For Use in Medical Devices Will Be In Demand
PFAS-alternatives are likely to be highly sought after in a post-PFAS era. While manufacturers that use PFAS in their medical devices may find themselves in a sticky situation with this ban, manufacturers of PFAS-alternatives, which may include polymers like polyether ether ketone (PEEK), may see a growth in demand if the PFAS-free components are compatible with use in medical devices.
Alternative polymers must be biocompatible, corrosion resistant, cost effective, customisable for versatile uses in the pharmaceutical device industry, and have regulatory approval. Potential PFAS applications in medical devices may include seals, lubricants, filters, or surface treatments. For example, metered dose inhalers used for treatment of respiratory illnesses may include PFAS coatings within the cannister. The European Federation of Pharmaceutical Industries and Associations (EFPIA) cites that changes to the coating for an application like the coating of a cannister would require reformulation, stability studies and regulatory approval by health authorities to ensure compatibility.
Therefore, manufacturers of PFAS-alternatives who are able to align and market themselves as fit for use in the medical device industry will be greatly rewarded. This is an emerging sector with vast amounts of innovation. Investors interested in this space may look towards emerging PFAS-alternative materials and PFAS-free medical devices to stay one step ahead of a PFAS wipeout.
PFAS are on the way out and eco-friendly alternatives are next in line to ascend the throne. Investors can expect a response to the consultation in Q1 of 2024 with the likely restriction to enter into force in 2025. Additionally, the full effect of this ban on medical devices will likely take 13.5 years to come to fruition, which includes an 18-month transition period and a 12-year derogation period. This would give manufacturers time to source alternatives to replace the existing PFAS applications in their products. However, the next decade presents a competitive period for these manufacturers. Those that are able to find compatible alternatives first will see the risk of being taken off the market drastically reduced and be able to place their products on the market with less regulatory and logistical hindrance.
On the other hand, manufacturers of PFAS-alternatives fit for use in medical devices will likely see a surge in demand in the next decade. This presents opportunities for investors in PFA-free medical device assets. Investors in this space will benefit from understanding the upcoming changes in regulations and the impact of this on assets of interest. Marwood’s London Team can assist investors in navigating the regulatory changes in this sector and analysing the potential impact it may have on existing or potential assets.
 This table includes a non-exhaustive list of applications considered in the proposal
ABOUT THE AUTHORS
Ting Yi Wong is an Analyst at the Marwood Group. In her role, Ms. Wong has worked across projects undertaking quantitative and qualitative research and analysis of UK and international health and social care data and is able to provide in-language research for Mandarin projects. Ms. Wong achieved her undergraduate degree in Biomedical Science (Hons) at the University of Dundee in 2020 and an LLM in Medical Law and Ethics in 2021 at the University of Edinburgh. Ms. Wong also has previous experience working in medical communications for projects in the UK and Asia-Pacific region.
Rosa Juarez is a Director of UK and European Healthcare Advisory at the Marwood Group. Ms. Juarez has worked on a range of projects across health and social care in the UK and major European countries, providing insights on regulatory, reimbursement and policy outlook for investor clients. Prior to joining the Marwood Group, she held senior management positions within England’s National Health Service, with key responsibilities including strategic, operational and financial planning. Ms. Juarez holds a Master’s degree in international health policy from the London School of Economics and Political Science
Dr Vikas Yadav is a Director of UK and European Healthcare Advisory at the Marwood Group. He started his career as an Orthopedic surgeon practicing in India and the UK NHS for 10 years before making a switch to consulting. He has assisted dozens of private equity clients exploring healthcare-related assets. In his last role before joining Marwood Group, he was a Senior Manager in Aetna International’s Population Health business leading strategic projects, business development and marketing. Dr. Yadav holds an MBBS and Master of Surgery degree in Orthopaedics from Banaras Hindu University in India and an MBA from INSEAD in France.
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