Executive Briefing: Vol. 01 The "Phantom" Listing Risk: Governance & Liability in Legacy FDA Portfolios Verified Analysis: 21 CFR 807 FDA DRLM M&A Diligence Executive Summary "Phantom" listings represent a latent liability in medical device portfolios—active FDA registrations for products that are no longer manufactured, creating risk during M&A due diligence, establishment inspections, and post-market surveillance. Under 21 CFR Part 807 , device manufacturers and initial importers are required to register their establishments and list each device they place into commercial distribution with the U.S. Food and Drug Administration (FDA). When those records are not updated as portfolios evolve, the official FDA view of the business drifts away from reality. Devices that have been retired, divested, or moved to another legal manufacturer remain “alive” in public databases, while some revenue-critical SKUs may be under-documented or associated with the wrong site or role. FDA has emphasized that incomplete or inaccurate registration and listing information can contribute to devices being misbranded under section 502(o) of the Federal Food, Drug, and Cosmetic Act, with enforcement consequences that include refusal of import, warning letters, and disruption of distribution. A consistent message across FDA regulations and implementation rules is that the Agency relies on complete and accurate registration and listing as the backbone for risk-based inspection, recall management, and post-market signal evaluation ( FDA Device Registration & Listing Overview ). The Hidden Liability of "Ghost" Data At the most basic level, a “phantom” listing is an FDA device listing that remains active in the Device Registration and Listing Module (DRLM) even though the underlying SKU has been retired, transferred, or completely redesigned. The database still shows the device as available under a specific establishment, product code, and role—even when the commercial catalog and technical file say otherwise. This disconnect is not simply cosmetic. Registration and listing data feed directly into FDA’s risk-based inspection planning, field alert response, and recall classification processes ( FDA Post-market Requirements ). When the Agency plans an establishment inspection, the scope is often anchored to the firm’s active product listing profile. If that profile includes “ghost” devices, investigators may expect to see manufacturing controls, risk files, and complaint handling for products that, in reality, have not been built for years. The result is unnecessary friction: time wasted during inspections explaining legacy history, scrambling to reconstruct records, and, in some cases, receiving Form FDA 483 observations for inadequate controls over registration and listing or incomplete technical documentation. Analysis Profile Focus Compliance Risk Data Source FDA DRLM Review Cycle Annual Req. FIG 1.1: Data Drift Correlation in M&A Legacy Listings vs. Post-Acquisition Integration Source: FDA DRLM Database Analysis (2024) – bit.ly/fda-drlm When Phantom Listings Surface Consider a composite but realistic scenario shaped by public FDA expectations and inspection trends. A mid-sized European manufacturer acquires a U.S. respiratory portfolio from a larger multinational. Commercially, the integration appears smooth: SKUs are migrated into the buyer’s ERP, sales teams are trained, and obsolete product lines are quietly retired. From a regulatory data perspective, however, little changes. Years later, FDA’s DRLM still shows multiple “Active” listings under the seller’s legacy establishment for SKUs that have not been manufactured in half a decade. During a subsequent pre-acquisition diligence by a private equity (PE) fund, the investors run a simple cross-check: public FDA listings vs. the target’s current catalog and revenue file. The result is a long list of “phantom” devices, mismatched roles, and establishments that appear to be legal manufacturers, even though all production has moved to a different site. The issue quickly escalates from a back-office cleanup item to a valuation lever in the deal model. In parallel, an FDA establishment inspection—initiated based on the legacy listing profile—arrives at one of the historic U.S. sites. Investigators expect to see quality system documentation, device master records, and servicing records for devices that the site no longer touches. The firm spends valuable inspection time walking through old transfers, divestitures, and discontinued lines instead of demonstrating control over the current portfolio. The story ends with corrective actions, a prolonged integration workstream, and a deal that closes—but with a haircut and expanded escrow tied to regulatory clean-up. The Anatomy of Regulatory Debt Regulatory debt is the compliance analogue of technical debt: short-term decisions that accelerate commercial execution but create structural clean-up work later. Phantom listings typically arise during three specific corporate events: M&A Transitions: Legacy listings remain under the seller’s establishment, or both seller and buyer list the same device for overlapping periods, creating ambiguity about who is responsible for current post-market obligations. Portfolio Rationalization: Product families are removed from brochures or GPO contracts, but the decommissioning of associated listings is never formally triggered in any SOP. Site Consolidations: Manufacturing moves to a new facility, but the original site continues to appear in DRLM as “Manufacturer” or “Specification Developer”, confusing both regulators and internal stakeholders. 38% of Inspection Observations Weaknesses in registration and listing control often sit upstream of broader documentation gaps. When sites cannot clearly explain which products are currently in scope—and why legacy devices remain visible—inspectors are more likely to probe the completeness of design history files, risk management documentation, and complaint trending. For manufacturers, cleaning up registration and listing is a relatively low-cost way to reduce the likelihood and impact of avoidable Form FDA 483 observations tied to documentation inconsistencies. Valuation Impact For investors, cluttered listing profiles are a visible proxy for governance maturity. When DRLM data does not align with the intended portfolio, deal teams assume similar drift may exist in quality records, supplier files, or labeling controls. In practice, this can translate into lower enterprise value, expanded indemnities, or covenants requiring post-close remediation before the next growth milestone. Governance Playbook: From Clean-Up to Prevention Leadership teams that successfully mitigate “Phantom” risk treat registration and listing as a governed lifecycle process, not an administrative afterthought. A practical operating model can be built around five disciplined steps: Single Source of Truth: Establish a master data view that maps marketed SKUs and Global Trade Item Numbers (GTINs) directly to FDA listing numbers, product codes, and roles. This view should be reconciled against FDA’s public database at least annually. Supply Chain Mapping: Confirm that the roles reflected in DRLM (“Manufacturer”, “Specification Developer”, “Initial Importer”) match the real supply chain and quality agreements. Where contract manufacturers are involved, roles should align with responsibilities defined in 21 CFR Part 820 or ISO 13485-aligned quality system documentation. Decommissioning Protocol: Codify a formal trigger in design control and lifecycle procedures so that when a product is discontinued, divested, or moved to another establishment, the corresponding listing update is initiated, documented, and closed within defined timelines. M&A Integration: Add registration and listing reconciliation to Day 1 integration checklists. For each transaction, the combined portfolio should be reviewed against the DRLM profile to identify duplicate, obsolete, or misaligned entries before the first post-close inspection. Governance Rhythm: Implement a semi-annual (or at minimum annual) review of registration data that includes Regulatory Affairs, Quality, Supply Chain, and Commercial. This cross-functional review should be documented as part of management review under the quality system. Embedding Phantom-Risk Prevention into the Quality System Ultimately, eliminating phantom listings is less about one-time clean-up and more about designing a system that makes data drift unlikely. The most resilient manufacturers embed registration and listing checkpoints into existing quality system processes: design transfer, change control, portfolio rationalization, and management review. For example, when a product is obsoleted through change control, the same workflow can automatically trigger an assessment of whether its listing should be updated or retired. When a new contract manufacturer is qualified, part of the supplier onboarding checklist can include confirming that roles and establishments are correctly reflected in FDA databases. When management reviews post-market surveillance trends, they can also review whether the public portfolio footprint still matches the risk profile they believe they are managing. For PE-backed platforms and serial acquirers, this discipline also becomes a differentiator. A clean, well-governed registration and listing footprint signals to future buyers—and to FDA—that the organization understands its own portfolio and is serious about lifecycle accountability. Advisory Services Stabilize Your Regulatory Footprint Beacon Regulatory Services LLC specializes in the reconciliation of legacy portfolios for global manufacturers and PE firms. We replace administrative uncertainty with audit-ready precision—cleaning up historical listings and designing governance so that phantom listings do not re-appear. Engagement Workflow 01. Portfolio Review & Mapping 02. Gap Analysis & Risk ID 03. Remediation & Governance Request a Diagnostic Consult