The Regulations on Supervision and Administration of Medical Devices (in Chinese《医疗器械监督管理条例》, State Council Order No. 650) (the Medical Device Regulations) were amended by China’s State Council on 31 March 2014 and will come into effect on 1 June 2014. This is the first amendment in more than a decade since the Medical Device Regulations were first promulgated in 2000, even though the amendment was initiated eight years ago in 2006. The 2014 amendment unveils reforms on the regulatory regime for medical devices market in China from various aspects.
Risk-based classification system
Under the current Medical Device Regulations, medical devices are classified into three categories based on the level of risks associated with the use of the medical device, with Class I as the safest and Class III as the most risky. Production of all three classes of medical devices has to be approved by the State Food and Drug Administration (SFDA, now renamed as the China Food and Drug Administration or CFDA) at various levels. The amended Medical Device Regulations keep the classified administration approach but relaxed the regulation by either removing some approval requirements or replacing approval by registration or filing for record requirements.
- Class I medical devices, such as masks, will no longer be required to be registered under the new Medical Device Regulations. Mere filing for record with the municipal level CFDA will suffice. Similarly, Class II medical devices, such as electrocardiograph, will no longer be required for approval before trading and will be placed by filing for record with the municipal CFDA.
- Though Class II and Class III medical devices are still subject to clinical trials during the registration process, the new Medical Device Regulations have provided for situations where the clinical trial data could be exempted. Furthermore, the approval for clinical trials on pre-marketing Class II medical devices will no longer be required, and that for Class III medical devices will also be restricted to a narrower scope than now.
According to the list of Class II and III medical devices to be exempted from clinical trial, which was published for public comment, more than 600 exempted medical devices have been included. However, we also note that some concerns of the market players, such as the lack of transparency for the protocol of the clinical trial, are still not directly addressed in the new Medical Device Regulations. It is reported that CFDA is in the process of formulating new quality control rules on clinical trials to provide clearer guidance for clinical trials conducted in PRC.
Revocation of re-registration requirement
According to the new Medical Device Regulations, when the original registration of a medical device expires, it does not have to be re-registered. Instead, a renewal registration will apply. According to the Draft Administrative Rules for the Registration of Medical Device published for public comment, the renewal review will focus on the post-approval performance of a medical device rather than all aspects of a product. This apparently will save time and cost for both the applicants and the regulators for products that have been proven safe in the market.
Changed order of approval to encourage innovation
Under the 2000 version of the Medical Device Regulations, anyone who wants to produce a medical device has to establish an entity, obtain a medical device production permit from the relevant CFDA and then register the medical device it wants to produce. The complex procedure has kept some investors from entering into the medical device market. Under the new Medical Device Regulations, entities are allowed to register their product first and then record or apply for the production permit afterwards, which is more streamlined.
Heavier punishment for violations
With more than 14 years lapsed, some of the penalties set out in the current version of the Medical Device Regulations are no longer appropriate to combat or deter the violations today. To address this issue, the new Medical Device Regulations adjusted the applicable penalties for violations of the regulations. On the one hand, the punishment is more specifically stipulated in direct response to the violating activities of each requirement in the new Medical Device Regulations; on the other hand, the consequences for the violating activities are more serious than in the current version of the Medical Device Regulations. For example, if anyone produces medical devices without obtaining proper approvals beforehand, then such person could be subject to fines up to 20 times of the value of the products it has produced and will be banned from applying for any permit related to medical devices for the next 5 years.
Stronger Post-marketing Surveillance
The current Medical Device Regulations have been criticised for focussing on the prior approval review but ignoring the post approval surveillance. Among all the efforts made to achieve a balance, the most significant improvement of the new Medical Device Regulations is to strengthen the supervision and regulation regime carried out at each stage of the industry chain of medical devices. In particular, the new Medical Device Regulations introduced mechanisms in relation to monitoring of adverse event, re-evaluation of registered medical devices and recall of defective medical devices.
While the new Medical Device Regulations wait for a formal effective date, several implementing rules have been published by CFDA for public comment, including the Administrative Rules on Medical Device Registration (Filing) (医疗器械注册（备案）管理办法), Administrative Rules on IVD Reagents Registration (Filing) (体外诊断试剂注册（备案）管理办法), Administrative Rules on Instructions, Labels and Packages of Medical Devices (医疗器械说明书、标签和包装标识管理规定), Catalogue of Clinical trial Exempted Class II Medical Devices (免于进行临床试验的第二类医疗器械目录), and Catalogue of Clinical trial Exempted Class III Medical Devices (免于进行临床试验的第三类医疗器械目录). Market players are encouraged to provide their comments on the draft rules and closely monitor the development in order for their future activities to be fully compliant with the regulations.
The medical device sector is one of the most active in China. It is reported that among the 17,000+ medical device producers, 90% are small companies with low-end technologies and annual turnover of less than 20 million yuan1. Technology upgrade and consolidations are bound to happen in the near future. Driven by the more powerful surveillance under the 2014 Regulations, we may see the rise of high-tech Chinese medical device companies and the reduction in the number of small companies through mergers and acquisitions. The rising Chinese entities are also seeking opportunities outside the country, as evidenced by Fosun Pharmaceutical’s acquisition of Alma Lasers in 2013 and MicroPort’s acquisition of Wright Medical Group earlier this year. More entities with technological strengths may want to take a shot at the medical device industry and the competition may be fiercer at the high end for the foreign investment companies who have been at the leading position for a long time.