Medical Device Link.

A New Standards Policy: A New Era?

The U.S. medical device industry now has a document that could be a blueprint for global market success—if it is used to build something.

Cliff Henke

We've heard this one before: the United States says that it is really, truly serious about creating a coherent standards-development policy that puts the nation in the strongest possible position vis-à-vis international bodies, but then it doesn't happen. Now a new standards policy has been announced. Will this time be any different?

Standards development is decidedly not a sexy subject. It is like the bill-paying aspect of marriage—not the best part, but a necessary part without which the rest might not survive. Though standards development may seem as plain as bread and butter, it is undeniably an important matter.

"About 80% of global merchandise trade is affected by standards and by regulations that embody standards," says Raymond G. Kammer, director of the National Institute of Standards and Technology (NIST). "In terms of the U.S.-European economic relationship, standards influence an estimated $200 billion in transatlantic trade."

Veterans of U.S. standards-setting efforts have long been frustrated by the nonchalance of their countrymen regarding the importance of standards to the prospect of succeeding in world trade arenas. Few top managers—even those of companies enjoying great success as exporters—understand how vital standards are, nor do they see what an increasingly important role standards are playing in the regulation of commerce throughout the world and in international trade. Moreover, some of the very features of the U.S. economic system that contribute to its might—decentralization, flexibility, openness, and a tolerance for thinking outside the box—have undermined past efforts to develop a national standards policy.

Now it is supposed to be different. This time, said officials present at the September 2000 announcement by the American National Standards Institute (ANSI) of a National Standards Strategy (NSS) for the United States, America will adopt a policy that plays to its economic strengths but will still be globally competitive. The new national strategy was also the subject of a congressional hearing held by the technology subcommittee of the House Science Committee shortly after ANSI's launch.

Stephen P. Oksala, director of standards management at Unisys (Washington, DC) and chairman of the NSS development group, declared, "The purpose of a national strategy is to succeed in a changing world while maintaining the strengths that have served us in the past. We face new challenges in health, safety, consumer issues, and protection of the environment, as well as in the explosion of world trade and rapid changes in technology and communications."

What's also different this time, Oksala added, is that a standards strategy is so much more critical to the economic survival of U.S. business. "As other regions of the world promote their own technologies and practices, the United States must 'step it up' to be competitive," he said.

Before taking a look at the new standards policy to see how it benefits U.S. industry, let us examine the current system to understand why it needs improvement.

Previous U.S. Standards Policy and Strategy

Prior to the development of the NSS, U.S. standards policy and strategy could best be characterized by the phrase "lack thereof." It simply did not exist.

This is not to say that Americans do not use standards. In fact, the truth may be just the opposite, says Representative Constance A. Morella (R–MD), chair of the House Subcommittee on Technology. "In the United States alone, over 30,000 voluntary standards have been developed by more than 400 organizations," she points out. "In addition, there are a large number of procurement specifications, mandatory codes, and regulations containing standards developed and adopted by agencies of the federal government." In other words, coordination and promotion may be the problems.

To address the lack of national leadership, Congress passed the National Technology Transfer and Advancement Act of 1995. Section 12 of this law requires federal agencies to use and promote, to the extent possible, voluntary consensus standards. Only recently, however, have government agencies really begun to embrace this mandate. For example, the Interagency Committee on Standards Policy (ICSP), chaired by NIST, was created in the late 1990s to foster reliance on voluntary standards. A NIST report issued last year concluded that federal agencies are already doing so. In addition, federal regulators are withdrawing competing federal standards and refraining from developing agency-unique standards.

"In part, certain problems result from the sometimes substantial costs of participation in standards development, making it difficult for small firms and nonindustry representatives to be active in the process," says Morella. "The standards themselves may cause problems, particularly in trying to satisfy the concerns of the many diverse interests active in the U.S. standards arena."

Business attitudes have also impeded efforts at standards coordination and promotion. Because of the intense focus on the bottom line that characterized business in the 1990s, many companies reduced their participation in formal standards processes in order to cut costs. Others in industry have decided that the formal standards process is just too complicated and time-consuming to keep up with the speed at which the technology of the marketplace is changing. Instead, many companies turned to more-informal working groups and consortia to address their standards issues.

Martin C. Libicki, a senior policy analyst at the Rand Corp. (Arlington, VA), says that there is no better example of both the strengths and weaknesses of America's standards approach than U.S. leadership in global e-commerce. "Fundamentally, our research suggests that the standards ecology is healthy and is capable of handling the foreseeable next steps into e-commerce," he says. However, he sees a challenge in devising standard terms for e-commerce content now that there is general agreement about the grammar—that is, extensible mark-up language (XML). "Everyone recognizes how to mark out price in a document," he notes, "but there is no agreement about exactly what 'price' means: is it wholesale or retail? Dependent on quality of service? Subject to which terms and limitations? And so on. Hence the cliché: the wonderful thing about standards is how many there are to choose from. E-commerce consortia are constantly being formed, and a veritable Babel of tag sets is emerging."

NIST director Kammer has another view, however. He suggests that one reason American stakeholders have not been as keen as their European and Japanese counterparts to embrace standards as part of their economic strategy is that the business climate here did not warrant it as much as it did elsewhere. After all, only recently did imports and exports come to account for as much as one-third of the U.S. gross domestic product. Now, Kammer says, the world is different. Standards are growing more important as a result of several intensifying trends. One is the quickening pace of technological innovation. The growth of trade volumes, which are now outstripping growth in national economies overall, is another. And then, business operations—even those of small firms—are becoming increasingly globalized.

Such a lack of interest worries many policymakers and industry officials, especially since virtually all other major trading nations make standards a higher priority. "Our European trade partners sometimes view the international standards-setting process as an opportunity to protect their products from U.S. competition," charges Morella. She sees this as a threat to U.S. competitiveness. The international use of U.S.-developed standards to produce goods for export can result in a loss of U.S. jobs and domestic income, says the congresswoman.

It can also mean more innovation and better products—for the Europeans. According to a recent study cited in NIST documents, Europe's mobile phone systems are 18–22 months ahead of those in the United States. The study attributes Europe's fast start in part to the adoption of common standards. "There is extreme pressure for the standards community to reckon fully with the realities of the brutally competitive, extremely fast-paced global economy," Kammer relates. "This is because standards are necessary complements of modern products, processes, and services."

Growing evidence suggests that the U.S. approach is already working against American companies. A 1999 survey conducted by the National Association of Manufacturers (Washington, DC) reports that about half of U.S. small manufacturers find international standards or product certification requirements to be barriers to trade.

"While there has been much talk by the U.S. standards community about the need for a national strategy, it is only within the last two years that the community has come together to address this challenge," says Kammer. "Europe has had a standards strategy in place for some time, and it is running at full throttle. It is fair to say that European governments and industries believe that they can meet domestic needs and also create a competitive advantage in world markets by strongly influencing the content of international standards."

He points out that there is already a direct relationship between the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC) and their respective counterpart European regional standards organizations, CEN and CENELEC. Under what is called the Vienna Agreement, the relationship is so close that European regional standards are processed in parallel as ISO or IEC standards.

America's largest trading partner, Canada, unveiled its standards strategy earlier this year, one similar to that of the Europeans. Its major goal is to influence the formation and evolution of global standards that are important to Canada. Significantly, the Canadian strategy emulates Europe's and Japan's in that it both recognizes the major formal international venues for global standards development—ISO and IEC—and notes the importance of monitoring and influencing international standards development centered in the United States.

In the United States, at the federal level, the ICSP is leading a shift to greater reliance on voluntary standards, as mandated in the 1995 law. However, more and more agencies are relying on private-sector norms. In some cases this trend, along with budget-cutting efforts, has prompted a withdrawal of federal participation in voluntary standards activities. This has further undermined U.S. standards efforts because many companies have a "wait-till-the-feds-mandate" attitude. "We must act to reverse the decline," admits Kammer.

The New Policy

The new National Standards Strategy attempts to establish a framework that can be used by all stakeholders, including companies, governmental and nongovernmental organizations, standards developers, and consumers. The idea is to improve U.S. competitiveness abroad while continuing to provide strong support for domestic markets and, at the same time, addressing key quality-of-life issues such as the environment. It builds on the strengths of the U.S. system by proposing a set of strategic and tactical initiatives within the framework that can be used by all the diverse stakeholding interests to meet national and individual organizational objectives.

According to a statement by ANSI at the launch announcement, the initiatives are designed to reaffirm traditional strengths, such as industry sector–based standards, consensus, openness, and transparency, while giving additional emphasis to speed, relevance, and meeting the needs of public-interest constituencies. "ANSI, as coordinator of the U.S. standards system, has brought together public- and private-sector interests to make this happen," says Mark W. Hurwitz, president and CEO of ANSI.

Back in March 1998, NIST had challenged the U.S. standards community to develop a national strategic approach to advance U.S. interests at the international level. In September of that year, ANSI and NIST cohosted a standards summit, bringing together more than 300 participants representing a wide variety of industry sectors and public and private interests. Over the next two years, white papers and workshops defined mutual needs and shared goals and principles that could become part of a strategy. A team with members drawn from industry, trade and professional societies, the consumer community, and the federal government used this work to produce the NSS.

"This may seem like a long time," observes Oksala of Unisys, "but standardization in the United States is very different in different industry sectors. This is one of our greatest strengths, a sector-driven approach that does not rely on top-down direction and cookie-cutter structure; but it does take time to find common ground."

ANSI, industry, government, and standards developers will launch implementation initiatives "immediately," says Kammer of NIST. Such activity will continue through 2001 and beyond. In this effort, NIST will be responsible for monitoring both support for the strategy and progress on implementation activities.

"We have a very good working relationship with ANSI already," Kammer continues. "This is reflected both in our agency's memorandum of understanding [MOU] with ANSI and in the broad range of joint activities we have already undertaken. The MOU formalized our mutual agreement on the need for a unified national approach to develop the best possible national and international standards. It also affirmed our organizations' shared commitment to enhance and strengthen the U.S. national voluntary consensus standards system. We will revise and extend the MOU to reflect the goals of the National Standards Strategy." His agency will likewise incorporate the NSS principles into its own standards strategy. Kammer acknowledges that one of his major goals as NIST director is to have his agency provide technical leadership for the nation's measurement and standards infrastructure.

Rand's Libicki agrees that the role of government, and specifically of NIST, is to "keep doing what it traditionally does, only more so and better." He suggests three roles that NIST could perform in support of this vision, all of which are a part of the new NSS. They are: (1) providing an expertly facilitated neutral meeting ground for the development of consensus, (2) developing test methods by which standards and conformance to standards can be measured, and (3) acting as a clearinghouse for standards development.

If all this sounds as if the NSS was developed and will be implemented without a glitch, understand that it was not easy. There is no better example of this than the medical technology sector.

"Getting this document where it is to date was a real struggle for everyone," says Bob Wurzel, an industry consultant with RDW International (Alexandria, VA) who is also a member of the ANSI board. "The struggle has been in achieving consensus on what the strategy document was going to do for us."

Although other, larger industry sectors than medical technology dominated the effort of developing the strategy, the medical device industry was represented by the Association for the Advancement of Medical Instrumentation (AAMI). Michael Miller, executive director at AAMI and a member of ANSI's industry association group, spearheaded the industry's contribution by involving his organization in reviews and discussion throughout the two-year development of the NSS.

Benefits for Medical Device Companies

So what does the National Standards Strategy mean for the medical device industry? Answers Wurzel: "We have a framework within which to work, calling for the medical device industry to come together to define and describe the sector-specific issues, criteria, and communication links necessary to make the strategy work for the sector. The jury is out, and will be out for some time, relative to the question of the impact on our ability to sell products overseas. If the national strategy somehow enhances the federal government's use of voluntary consensus standards and improves the efficiency and effectiveness of the U.S. standards systems, and we continue to harmonize standards around the world which yields harmonized standards-based regulatory schemes, there could be benefits for our industry.

"My fondest hope is for governments and those of us in the industry around the world to continue forward with some sense of urgency to achieve global harmonization as is envisioned through the efforts of the [ANSI-sponsored] global harmonization task force (GHTF). If the strategy can and does play a role in this effort, all the better."

A lot of ifs, Wurzel admits, but the NSS certainly improves the industry's chances of reaching these ends. "As the strategy document points out, we all must guard against overlap and redundancy," he notes. "And we need to figure out where and how we must work cross-sectorally to achieve some semblance of unity."

One key to such coordination is for the federal government to put action behind its good lip service and realign its regulatory approach so that it is consistent with the changing and challenging world market demands for new products and technologies. For medical devices, at least, Wurzel thinks that the momentum has been in the right direction and that governmental action is consistent with the rhetoric. "FDA, and specifically the Center for Devices and Radiological Health, has been making great efforts to simplify and expedite the approval processes, and through the GHTF effort the agency is looking carefully at how it might also harmonize those processes" with other regulatory bodies worldwide, he says.

Will the American regulatory regime ever look like Europe's or Japan's? "Probably not," Wurzel says. "But I do believe the day will come when we will approach the concept of one standard, one test, as much as our laws and legal system will allow."

The differences in fundamental philosophy between the U.S. and European approaches create a large gulf that few people believe will ever be bridged. FDA and its enabling legislation put government in charge, making Rockville the cop that enforces standards of safety and quality. The guarantor of public safety and health is thus industry's outside regulator. Europe, on the other hand, through its "new approach" directives, national legislation in each country to implement such directives, and regional standards that serve as "essential requirements" in the directives, has generated a private-sector scheme in which third-party registrars and manufacturers themselves are primarily responsible for safety and health. Government is simply an overseer of that responsibility. This difference also explains why Europeans view standards as so important: to them, the benevolent deity of the medical device industry really is in the details—of industrial consensus standards.

Conclusion

So, will the new U.S. standards policy work, and what will it take for that to happen? It's much too early to answer that question. After all, the ANSI board of directors unanimously approved the NSS only this past August. Perhaps the NSS itself is an indicator of what everyone hopes it will achieve. To Wurzel and others who both worked on developing the strategy and are striving for its full implementation, the NSS section titled "In the Longer Run" expresses a particularly important notion: "The proof of a strategy is in its execution. This document represents an architecture for achieving goals. The next step is for all concerned to address the tactical issues involved in making the strategy a reality."

"Now that we have a document, something in writing and delivered to the private and public sectors, we have to do something with it," says Wurzel. If nothing is done, the next move directing the future of U.S. medical device firms could very well be instigated by Canada, Europe, or Japan.

Cliff Henke is a freelance writer based in Southern California.

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