On March 31, 2014, the Chinese State Council unveiled its amended “Regulations for the Supervisions and Administration of Medical Devices,” aka State Council Decree No. 650. The amended decree, which went into effect on June 1, 2014, will be enforced by the U.S. Food and Drug Administration’s counterpart in China, the China Food and Drug Administration (CFDA), formerly known as the State Food and Drug Administration (SFDA). While many industry observers have characterized the CFDA as being unnecessarily complicated and intentionally ambiguous, the modernization of its fourteen-year-old medical device law suggests that Chinese regulators are finally making strides to facilitate the device approval process, while simultaneously cracking down on overpricing and corporate malpractice. In this post, we’ll compare the updated decree to the original and discuss how the new regulations will impact manufacturers hoping to break into China’s lucrative medical device market.
The New Decree is Comprised of Eight Chapters, 80 Articles
The updated decree, which comprises eight chapters and 80 articles, has new regulations in the following areas: product registration and recording, production, distribution and application, incident and recall, supervision and inspection, and legal liability. You can access the decree on The People’s Republic of China website but some of the key changes are listed below.
Product Registration and Recording
The new regulations classify medical devices into three segments, depending upon risk, with higher risk products being subjected to greater scrutiny. The classifications are as follows:
Under the old decree, all devices, regardless of class, required registration certificates in order to gain market admittance. Under the new decree, Class I medical devices will be administered by recording, which means that CFDA will record the product materials for inspection. If the application material fulfills the requirements, the CFDA will accept the application immediately—no registration certificate required—significantly reducing administration time. This is true whether the device is imported or manufactured in China.
- Class I Medical Devices are those for which safety and effectiveness can be ensured through routine administration;
- Class II Medical Devices are those for which further control is required to ensure their safety and effectiveness; and
- Class III Medical Devices are those which are implanted into the human body, or used for life support or sustenance, or pose potential risk to the human body and thus must be strictly controlled in respect to safety and effectiveness. (1)
Class II and III devices will continue to be administrated by product registration. However, under the new decree, registration change approval is no longer required—provided the changes to the registered devices are not substantial and do not effect product safety and efficacy; simply filing the changes with the CFDA will suffice. Similarly, the new regulation has eliminated the need for clinical trial approval for Class II devices, requiring only a filing with authorities. Some Class II and III devices will be able to bypass the clinical trial process entirely, and rely on data gleaned from clinical trials of similar types of devices to demonstrate product safety and efficacy.
The 2000 decree required device makers to acquire a production permit (aka manufacturer license) prior to applying for product registration. The 2014 decree allows manufacturers of Class II and III devices to first register the product and then acquire the production permit. This is significant because it allows the manufacturer to devote more of its resources to product development while avoiding costly capital expenses, such as the construction of production facilities or acquisition of expensive equipment, in the often cash-strapped preparation stage.
The new regulation makes life easier for Class I device manufacturers, as well, by allowing them to file for manufacturing recording at the city level rather than at the provincial level.
Distribution and Use
In the past, companies distributing Class I medical devices were required to file for record with the CFDA, and Class II manufacturers were required to obtain a license for distribution. According to the new decree, no special requirements are needed for distributing Class I medical devices, and Class II device distributors may now file with the CFDA at the county level. While the new decree simplifies the distribution process in some ways, it also requires distributors to assume more responsibility in areas such as quality control and purchase inspection. Similarly, the medical institutions using the devices are required to establish their own purchase and inspection policies, as well as policies for recording purchases and inspections. Wholesalers of Class II and III devices and retailers of Class III devices are required to establish sales records. (2)
Increased Post-Market Scrutiny and Penalties
While the old decree failed to address post-market concerns such as adverse event monitoring, registered product re-evaluations, and product recalls, the updated decree fully endorses 2008 regulations jointly introduced by the SFDA, the CFDA’s predecessor, and the Ministry of Health (MOH) on adverse event monitoring and re-evaluating medical devices, as well as the MOH’s “Provisional Administrative Measures on the Recall of Defective Medical Devices” regulation issued in 2011. The new decree further empowers the CFDA to establish a supervision system for incidents and product recall, which allows for on-site random sampling and inspection, document review, and production shutdown for non-compliance.
The new rules increase the range of possible punishments and the level of fines for the most serious violations. For example, the fine for illegally manufacturing or selling medical device equipment has been raised to 20 times the value of the goods. This is a substantial increase from the five times the value cap established in 2000.
Putting the Cart before the Horse
Despite the recently improved regulatory framework, many device manufactures worry that the approval process will still take too long. Others charge that the new framework, while welcome and necessary, is putting the cart before the horse, explaining that more emphasis must be placed on the need for companies to establish and implement good quality management systems before those systems can be regulated for compliance. Even Lin Xianyong, former director of the SFDA’s medical device safety supervision department, acknowledged China’s “lack of a strong sense of quality management” during his candid discussion of the systems flaws at the 2012 MEDTECH China exhibition and conference. (3)
Whether the new laws will remedy this flaw remains to be seen; however, one thing is clear: learning to navigate the new regulations will have significant implications for device companies hoping to tap into China’s medical device market, which is projected to grow from $357 billion in 2011 to $1 trillion in 2020. (4)
Lisa Weeks, a marketing communications specialist at MasterControl, writes extensively about technology, the life sciences, and other regulated environments. Her two decades of marketing and advertising experience include work with McNeil Pharmaceuticals, SAP AG, SCA Mölnlycke Health Care, Crozer-Keystone Health Systems, and NovaCare Rehabilitation/Select Med.
(1) “Regulations for the Supervision and Administration of Medical Devices” (regulation pdf), Emergo Group, www.emergogroup.com, accessed on June 3, 2014, available from the Internet http://www.emergogroup.com/resources/regulations-china
(2) David J.D. Dai, China Overhauls Regulation on the Medical Device Industry,” The National Law Review, www.natlawreview.com, April, 21, 2014, available from the Internet http://www.natlawreview.com/article/china-overhauls-regulation-medical-device-industry
(3) Helen Zhang, “SFDA Official Makes Candid Comments about China’s Medical Device Regulations,” medtechinsider [online], October 8, 2012; available from the Internet http://medtechinsider.com/archives/29096
(4) Lisa Weeks, “Five Trends Transforming the Medical Device Industry in 2014,” GxP Lifeline [online], June 5, 2014, available from the Internet