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title: "The Cost of Quality - Reducing Cost of Quality for Regulated Medical Devices"
type: white-paper
publisher: Ketryx
source: "https://www.ketryx.com/assets/the-cost-of-quality"
content: text extracted from PDF (layout/tables/figures not preserved)
---

# The Cost of Quality - Reducing Cost of Quality for Regulated Medical Devices

*Source: [https://www.ketryx.com/assets/the-cost-of-quality](https://www.ketryx.com/assets/the-cost-of-quality)*

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Reducing Cost of Quality for Regulated Medical Devices eBook

Executive Summary Quality is the ability of a product to meet its requirements and customer expectations without issue. It’s the foundation of any product, from its development to its introduction to consumers. Without it, businesses waste resources and labor, lose time, jeopardize sales and market share, and risk financial penalties. Cost of Quality (CoQ) is the total cost of efforts and resources a company uses to ensure a quality product and mitigate negative consequences. Understandably, achieving quality is an involved process, requiring continual vigilance.

For safety-critical products such as medical devices, the process includes a rigorous system of regulations and standards. In the United States, the FDA requires that medical product design, manufacturing, and deployment remain under strict quality regulations and processes. Non-compliance can lead to company fines, product recalls, and revoked commercial approval. Furthermore, failure to comply with regulations can also be hazardous to patient health if a safety-critical product fails to function as intended. In this white paper, you’ll learn: How to reduce CoQ through improved software development infrastructure A three-step action plan for regulated software developers 10 ways to meet key quality controls ketryx.com 1

Cost of Quality Defined Business leader and quality control expert Armand V. Feigenbaum first described the concepts of quality costs and Total Quality Control—the solution to CoQ—in a 1956 article in the Harvard Business Review. Feigenbaum’s work led to Total Quality Management (TQM), a practice that’s been widely adopted, expanded and evolved by industries and businesses worldwide. For some perspective, the cost of quality for medical device manufacturers is 1.25-1.5x higher than aircraft engine manufacturers. 1 Some quality activities, like design controls (agreeing on a design) or testing (seeing if a product works as intended), are common to most unregulated products. However, regulated medical products have higher CoQ requirements, usually due to more rigorous requirements to guarantee the safety of a product—such as following risk analysis and performing documented quality control (QC) activities. CoQ also includes the cost of poor quality (COPQ), i.e., the cost of recalling or fixing products that do not meet requirements or customer expectations. These two categories break down further into Cost of Control and Cost of Poor Quality. Figure 1: Cost of Control Figure 2: Cost of Poor Quality ketryx.com 2 1 https://www.projectengineer.net/the-cost-of-quality/

The direct cost of quality is estimated to be 6.8-9.4% of industry sales, which was $26-36 billion for the medical device industry annually based on estimated annual sales of $380 billion in 2017. 2 In 2022, medical device industry sales were $430.2 billion, according to Statista, so the direct cost of quality was estimated to be $29-40 billion. Approximately 70% of medical products are delivered late to the market, and the average schedule overrun for medical products is 25%. 3“ Managing the Cost of Control Prevention is the most inexpensive way to remove quality costs. Early investment in software development infrastructure and tooling designed for safety-critical applications can substantially reduce the CoQ over a product’s entire lifecycle. With medical devices, essential steps include planning quality activities, creating quality IT systems, training personnel on quality procedures, and verifying product design. Additional quality costs include appraisals, which include QC and testing, testing setup and generation, internal and external audits, and repeat inspections. A good quality management system (QMS), based on the ISO 9000 family of standards, can ensure product quality by documenting every action taken from beginning to end of development, increasing the likelihood of an effective product. ketryx.com 3 2 Ted Fuhr, Evgeniya Makarova, Steve Silverman, and Vanya Telpos, “Capturing the value of good quality in medical devices,” 2017. https:// www.mckinsey.com/industries/life-sciences/our-insights/capturing-the-value-of-good-quality-in-medical-devices 3 Prasad Kunal, Mike Fogerty, Ori Ben-Moshe, and Aaron Aboagye, “Productivity drivers in Medical device and healthcare software development,” 2016. https://www.mckinsey.com/~/media/McKinsey/McKinsey%20Solutions/Numetrics/Resources/Insights%20on%20%20 Medical%20devices%20Numetrics.pdf

Costs of quality can add up quickly. But time, arguably the most critical resource for a company, is difficult to save. In many cases, the timeline for regulated product development itself becomes a financial burden. For medical devices marketed in the United States, postmarket surveillance (PMS) activities include assuring the FDA that a product’s external failures are minimal and, if they occur, are caught and investigated early. Not only can these financial mistakes be costly, but also, depending on the medical product, the health and safety of communities can be at risk. Other times, they include financial costs, such as the price of executing recalls, processing and investigating complaints, or handling data leakage or loss. In the worst case, medical product failures can lead to patient harm. In all cases, manufacturers have used costly resources to create a product, and now more time, labor, and money must be used to address complaints and fix issues. Figure 4: Software has become the biggest cause of medical device recalls, indicating an issue with software development and quality in the industry, according to McKinsey & Co. According to Statista4, medical device sales are projected to be $470.6 billion in 2023. Assuming software accounts for 22% of recalls, and recalls cost the industry 1.9-2.5% of sales, then software- related recalls in medical devices could cost the industry up to $2.5 billion in 2023. “ ketryx.com 4 4 https://www.statista.com/outlook/hmo/medical-technology/worldwide#revenue

Controlling Costs within Regulated Product Development Introducing Ketryx Companies spend years studying compliance regulations and developing software to meet requirements they do not fully understand. Progress is slow and expensive, and each step in regulated development requires tests and more research. Knowing what regulations and tools are necessary can save company resources and aid developers with safe and fast development. Ketryx is a purpose-built Application Lifecycle Management platform designed specifically to address FDA regulations for medical device software. By connecting your software development infrastructure across your Quality systems, workflows, and other tools, it can help companies bring products to market 3x faster. There are many steps between a medical device idea and introducing it to consumers. Ketryx can guide companies down the long, complex road with software pre-programmed to be FDA-compliant, while reducing overall costs. The Ketryx framework overlays, connects and works with your current software infrastructure and tools, integrating smoothly into your operations with minimal learning curve for developers and QA team members. ketryx.com 5 Figure 5: Herb Krasner, “The Cost of Poor Software Quality in the US: A 2022 Report, ” Consortium for Information & Software Quality , December 15, 2022, www.it-cisq.org. https://www.it-cisq.org/wp-content/uploads/sites/6/2022/11/CPSQ-Report-Nov-22-2.pdf

QMS/ALM Setup1 Building high-quality software means creating validated processes and infrastructure to support the creation of high-quality products. These processes include your QMS, your Application Lifecycle Management (ALM) system, and other tools for testing, document control, traceability, and communication. Building this software from scratch requires time, labor, and resources that can burden a team with unnecessary and complex obstacles. The Ketryx platform is the first and only connected lifecycle management software for MedTechs, designed to move teams forward with the right tools while remaining FDA-compliant. ketryx.com 6 Requirements Creation and Management2 Building a high-quality software product means following product requirements for marketing, safety, systems, and software. This data must be documented, validated, and stored in a controlled electronic record (for medical software, see CFR 21 Part 11), resulting in a Design History File (DHF). Ketryx offers pre-built pathways for faster product creation and management to help companies navigate early stages of software design. Ketryx helps ensure product quality and lowers CoQ in 10 ways: Risk Management3 Moving product development forward without knowing the risks can cost time and resources if an issue is discovered later in the project. Ketryx integrates risk management into every step of the software lifecycle. This documented process calculates and alerts to the potential hazards of any device and offers ways to set controls to proactively prevent those issues. With Ketryx software, users can identify risks and create FDA-required risk management files.

ketryx.com 7 Change Control Communication 4 5 For many regulated companies, change control is a source of significant cost. Changing design, implementing change, or modifying processes in a regulated product development environment require time, money, and labor to complete. Companies must perform these documented change control procedures, including proper risk analysis, value analysis, and testing, to ensure product safety. Ketryx stores product quality data in a decentralized manner, tying code to specifications and testing. This design provides users with greater control over their software change control across the product lifecycle. Ketryx reduces quality overhead and lowers costs by ensuring that changes to a product or system are introduced in a controlled and coordinated manner. Software development is a dynamic, collaborative effort. It requires constant interaction among stakeholders and iterative updating of requirements, design, and tests. With Ketryx, communication is easy, auditable, and guided. Use your favorite task management or instant messaging applications to communicate with your team about regulated development. Test Generation and Management6 Quality Control (QC) helps create a high-quality product. For medical software, implementing and documenting QC requires the creation of testing suites from the unit level to the product level. Such testing takes significant time to develop. Ketryx software helps your team build and manage tests as part of your lifecycle management, eliminating needless re-testing, and assuring that you comply with FDA regulations, standards, and guidance across all stages.

ketryx.com 8 Verification & Validation Activities7 Verification and Validation (V&V) certifies that a product meets its requirements, specifications, and intended use. V&V ensures quality through each stage of development. Ketryx integrates an FDA-grade V&V system into your software lifecycle for faster results, helping you track device documentation before and after a product goes to market. Figure 6: The FDA 484 warning letter. Configuration Management8 Product configuration defines a set of hardware and software configurations needed to have the product operate within its design requirements. For general-purpose software systems, the hardware configuration may be straightforward and simple to describe. However, software configuration might not be. Software manufacturers need to monitor configuration across a whole ecosystem of components, including their cloud assets and deployment, regional provisioning, and open-source software dependencies (aka SOUP items). Ketryx automates monitoring and metadata capture, all while providing easy-to- read dashboards to ensure that all configurations are up to FDA standards.

ketryx.com 9 Corrective and Preventative Actions (CAPAs) Postmarket Surveillance 9 10 Corrective and preventative actions (CAPAs) are activities and actions that address the root cause of anomalies in a product. As CAPAs are likely to result in a change to the design, implementation, or label of a product, these actions can be a long and challenging process due to the strict requirements for any changes in high-quality products. CAPAs are considered to be one of the main costs over a medical product’s lifecycle. The Ketryx solution, which emphasizes traceability within testing, compliance and Quality Control, can save labor and resources by ensuring traceability is done right from the beginning of the dev process. For a commercial company selling products in the U.S., postmarket surveillance (PMS) is a critical part of the Total Product Life Cycle (TPLC). PMS involves gathering information about a product that is on the market, such as patient complaints or user feedback or studies, analyzing the information, investigating any issues or trends, and addressing those concerns. The FDA pays particular attention to postmarket surveillance activities during audits. For software products, postmarket data is a critical source of knowledge, often called product observability. Accessing these data trends helps developers identify the root cause of problems faster and initiate preventative actions sooner. This information is also used to modify the product for future releases. Ketryx traces complaints and consolidates them in a single easy-to-use dashboard, making it easier to follow postmarket surveillance trends.

ketryx.com 10 A CoQ Action Plan for Regulated Software Development For a regulated software company, reducing the CoQ brings major strategic benefits. It can reduce the number of developers needed for every job, save money, and increase development velocity. While the payoff varies from product to product and regulation to regulation, three principles guide the work and can reduce cost: Understand your compliance requirements Manufacturers sometimes try to comply with regulations and standards for which they are not required. This effort needlessly burdens staff. Knowing and understanding which regulations apply to your device is critical to saving time and money. 1 Optimize development processes Developing software is hard and time-consuming. Developing regulated software presents additional challenges to this difficult task. Ensure that stakeholders across your software development lifecycle can access built-for-purpose tools that improve their work and communication. 2 In [an] economic evaluation study using data from public and proprietary sources, an analytical cost model found that the estimated mean expected capitalized development cost per [novel] therapeutic complex medical device was $522 million [vs. $54 million, the previous estimate, excluding any post- approval studies that might be required]. The nonclinical development stage accounted for 85% of this cost, whereas the US Food and Drug Administration submission, review, and approval stage comprised 0.5%. 5 “ The lesson: the devil (nearly 10X) is in the details of the non-clinical development stage, making intelligent automation of this stage critical. 5 Aylin Sertkaya, PhD1; Rebecca DeVries, ScD1; Amber Jessup, PhD2,3,4; Trinidad Beleche, PhD3,4 Estimated Cost of Developing a Therapeutic Complex Medical Device in the US JAMA Network Open. 2022;5(9):e2231609. doi:10.1001/jamanetworkopen.2022.31609

ketryx.com 11 About Ketryx Ketryx is the first and only Connected Lifecycle Management software for MedTech that seamlessly creates traceability across the application lifecycle. Compliant by Design, Ketryx embeds guardrails to eliminate the manual, error-prone cutting and pasting from traditional disconnected medical systems to reduce the risk of defects while delivering enhanced patient outcomes. © Ketryx Corporation, 2023. Takeaway By connecting current software development infrastructure to existing systems and processes, Ketryx enables MedTechs to leverage modern technologies like AI and cloud while allowing developers to continue to use the tools they love. MedTechs can bring greater insight, efficiency and predictability to development, reducing Cost of Quality. Empower your developers with the right tools Developers form the core of software product development. Provide your developers with tools that work not just for regular development, but for your company’s regulated development processes. The key to a high-quality regulated product is connecting developers to the quality processes and automated tools they need from the beginning. Regulated software development teams deal with unclear communications about compliance regulations as they create products, making product development a slow, often expensive, process.

Ketryx’s compliant-by-design platform increases development velocity by freeing the developer from worries about regulations. Ketryx streamlines the creation of safe and reliable products, turning any developer into a regulated developer with minimal effort. 3