Direct and Indirect Quality Costs in Medical Device Industry

Improving quality for medical products and equipment will significantly bring down costs for their manufacturers. As the medical device industry is consistently growing and innovating, quality management is becoming a complex challenge for the companies. A quality management system (QMS) is an underlying need for every company to ensure their devices are effective and reliable for clinical applications. Many achieve ISO 13485 certification, a distinctive standard for quality management in the medical device industry which specifies regulations for designing, developing as well as the distribution process of medical products.

Most experts claim that an explicit QMS having compliance with an eminent standard is the key for medical manufacturers to cut their overall costs. A significant portion of their costs are quality-related such as revenue losses due to delivery of poor or faulty devices, costs incurred in R&D (research and development) to improve quality and fines for medical safety noncompliance.

However, that is just the tip of the iceberg. There are many forms of costs accounted for maintaining quality and preventing any quality issues in medical devices. Here are they explained.

Direct Costs of a QMS

A significant cost is related to implementation of a strong QMS that will administer or control end-to-end aspects of production of devices. Mostly it includes the direct costs related to implementing ISO 13485 standard for their QMS. Costs involved include hiring of quality assurance consultants, getting gap analysis done, allocating resources for QMS implementation, carrying internal audits and so on. Medical manufacturers also need to engage quality personnel or special operations staff who will assess everything, from raw materials and inputs to packaging methods and storage conditions. Thus, all these involve certain costs known as direct costs for quality management.

Costs for Poor Quality Products

This includes the costs involved in dealing with defective or poor-quality products. They are mainly expenses for the recalling of devices and providing refunds to unsatisfied customers. All these result in substantial revenue loss for companies. They also need to find out immediate recovery or a response plan to address the dissatisfied customers. This is called recoverable costs and includes the costs for labors, materials and resources needed to remediate the product failures.

Indirect Quality Costs

Apart from the above direct costs, there are many indirect costs accounted by medical companies for delivering bad quality products/devices or not complying with the quality standard, so apart from revenue losses, there can be damage to the reputation of your company for supplying flawed products. Any customers or medical centers can even charge you with noncompliance lawsuits or demand heavy penalties for the risks they faced with substandard or poor products. Damage to online reputation is another cost and can affect your company at a much faster rate. Customers who encountered quality issues can submit their feedback on your website, Google listing, or social media accounts to make their grievances public. This will immensely affect your next line of sales as potential customers will be reluctant to purchase anything from your company.

Looking at all different types of costs associated with quality issues in the medical device sector, it is an utmost need for manufacturers to have a stringent framework for quality assurance. It will help them to take control of every aspect—from the prevention of quality errors to recovering any damages done by faulty devices. A QMS validated with ISO 13485 certification will help your company to prevent mistakes and inefficiencies in manufacturability that would affect the quality of end products or devices. Good quality management practices promoted by this ISO standard also calls for companies to streamline their designing and production methods, assess suppliers’ materials and processes, set critical quality attributes (CTAs) and meet them, have proper testing measures, and ensure products traceability after delivery.

With all these effective quality management practices, your medical company can ensure it is delivering superior medical devices to customers by avoiding these explicit and implicit costs. Above all, you can rest assured that you are satisfying your customers and growing your company’s revenue.