In a Memorandum Opinion and Order (“MO&O”) released this week, the Federal Communications Commission (“FCC” or “Commission”) affirmed that medical device manufacturers may recover certain manufacturing, research, development and handling costs for clinical trials involving their experimental devices.  Prior to this clarification, it was unclear as to whether such costs were legally recoverable, or constituted marketing of unauthorized radiofrequency (“RF”) devices in violation of FCC’s rules.

The FCC’s rules generally prohibit the operation and marketing of RF equipment prior to testing and authorization, as approved by the Commission. “Marketing” of an RF device,  as defined by the FCC, includes sale or lease, offering for sale or lease, distribution or advertising for sale or lease.  According to the FCC, recovering costs for use of an unauthorized RF device in a clinical trial constitutes marketing.

The FCC’s rules carve out some exceptions to this marketing prohibition, including “market trials” for RF device manufacturers who have obtained a temporary experimental license from the Commission.  The recently-implemented “market trial rule” permits marketing of pre-authorized RF devices under certain conditions, e.g.,an experimental licensee may sell equipment to another licensee (manufacturer to licensed service provider) and lease equipment to trial participants for purposes of an experimental trial.   The rule strictly limits the number of devices that may be marketed and also requires that all equipment must be retrieved or rendered inoperable after the trial.             

In the MO&O, the Commission held that, regarding RF devices necessitating an experimental license for the conduct of a clinical trial, the market trial rule allows for cost recovery for manufacturers of devices used in those trials.  The FCC’s intent is to provide manufacturers of experimental RF devices a means to offset costs associated with developing and testing such devices.

A related purpose of the MO&O is to coordinate the FCC’s rules with those of the Food and Drug Administration (“FDA”). Under FDA rules, RF device manufacturers may act as “sponsors” of clinical trials; sponsors are permitted to recover various costs associated with FDA-defined “investigational devices.”  The FDA allows sponsors to charge “investigators” for such devices and the costs are typically passed on to the clinical trial subjects.   But, sponsors may not commercialize their devices by charging more than is necessary for manufacturing, research, development, and handling of the devices used in the trials.

If you have any questions about FCC experimental licenses or cost recovery for RF devices used in clinical trials or other experiments, please contact Ronald E. Quirk, Jr., req@commlawgroup.com or 703-714-1305.  

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