5 Things You Have to Know About the "New Regulations" on Medical Devices.
The latest revised Regulations on the Supervision and Administration of Medical Devices (hereinafter referred to as the "New Regulations") have been officially implemented since June 1, 2021. They represent key changes of the legal management system in the field of medical devices. With this Q&A we would like to assist foreign-invested enterprises, especially those that have interest in doing business related to medical devices, to further understand China's regulatory policies.
1.What is the biggest change in the New Regulations compared with former one?
We think that the biggest change and highlight is that the New Regulations establish the system of Registrant or Record-filing Party of Medical Devices.
The New Regulation simplemented this time is the second major revision since the Regulations on the Supervision and Administration of Medical Devices came into force on April 1, 2000, and remained implemented for more than 20 years. During this period, China's medical device supervision system has fundamentally changed. Since 2017, the Chinese government has carried out the pilot project of the Medical Device Registrant and Record-filing Party System (i.e. MAH system in the field of medical devices) in China (Shanghai) Pilot Free Trade Zone.
On July 7, 2020, the State Council of China issued the Notice by the State Council of Effectively Replicating and Promoting the Experience from the Sixth Round of Pilot Reforms in Pilot Free Trade Zones, making it clear that the pilot project of Medical Device Registrant and Record-filing Party System will be replicated and promoted throughout the country. According to the System, Medical Device Registrant and Record-filing Party cannot only produce products by themselves, but may also entrust enterprises with corresponding production conditions to produce medical device products. This was a major change to the previous management mode, which stated that Medical Device Registrant and Record-filing Party must have production lines, so as to realize the "unbinding" of medical device product registration and production license, thus bringing more opportunities to new market players looking forward to entering China's medical device industry.
2.What changes have taken place in the provisions on illegal punishment under the New Regulations?
The New Regulations have greatly increased the level of the punishment for illegal acts such as unlicensed production and operations, and the fine has increased from "more than 10 times and less than 20 times" of the value of goods to "more than 15 times and less than 30 times" of the value of goods.
At the same time, the principle of "Individual Liability" has been incorporated into the New Regulations. Indeed, the New Regulations stipulate that the legal representative, principal, person directly in charge and other liable persons of the entity that violates the law, can be directly punished at highest as follows: that the income obtained from the entity during the period of the illegal activity shall be confiscated, a fine of not less than 30%, but not more than three times of the income obtained, shall be imposed on them, and they shall be permanently prohibited from engaging in the production or operation of medical devices.
In addition, where the overseas Medical Device Registrant and Record-filing Party of medical devices refuse to perform the decision on administrative penalty, they shall be banned from importing medical devices for ten years.
3.What kind of optimization has the Chinese government made in the administrative examination and approval process of medical devices under the New Regulations?
In order to further promote the development of China's medical device industry, the New Regulations have optimized the approval procedures and materials for the product registration and filing, as well as manufacturing licensing and operating permit, which is mainly reflected in the following aspects:
①The product inspection report for the registration can be issued by the applicant for registration and record-filing party themselves.
The product inspection report in the product registration/record-filing materials is no longer limited to "Class I product (company can provide a self-inspection report); Class II and Class III product (company shall provide the inspection report issued by the entrusted qualified medical device inspection agency)". According to the New Regulations, when applying for registration/record-filing of all products (i.e. Class I, Class II and Class III medical device products), a self-inspection report of the medical device applicant for registration and record-filing party or an inspection report issued by the entrusted qualified medical device inspection agency can be provided. As a result, the process is more convenient for the applicants and record-filing party, and also reduces the corresponding cost.
②Adding the situation, which can be exempted from clinical evaluation.
The clinical evaluation materials in the product registration/record-filing materials may be exempted from being submitted to the governement under any of the following circumstances: (1) the working mechanism is clear, design is finalized and production process is mature, the medical device of the same variety on the market has been applied in clinical practice for years with no record of a serious adverse event or the general-purpose is not changed; or (2) such medical device can be proven to be safe and effective through non-clinical evaluation. This greatly reduces the difficulty of application and the time limit of application for the applicant for registration and record-filing party of existing products.
③ Shorten the approval period of the manufacturing licensing and operating permit.
The approval period of the medical device manufacturing licensing and operating permit is shortened from 30 working days to 20 working days.
④ An implicit approval system is implemented for the applications for the renewal of registration and clinical trials.
Articles 22 and 27 of the New Regulations establish the implied approval system for the renewal of registration and clinical trials respectively, that is, if a decision has not been made within the specified time limit, it will be deemed as a permission granted. This is also conducive to urging the administrative authorities to make decisions in time and avoiding protracted situations.
4.What is the "Electronic ID Card" system for medical devices?
The"Electronic ID Card" system was formally incorporated into Article 38 of the New Regulation. According to the Announcement of National Medical Products Administration on Promulgation of the Rules on the Unique Identification System for Medical Devices, the medical devices sold and used within the territory of the People's Republic of China shall have attached to them the relevant codes. These codes composed of numbers, letters or symbols, must be featured on the products or packaging of the medical devices for the purpose of unique identification of the medical devices. Indeed, this is the description of the "Electronic ID Card" for medical devices.
At present, according to the Notice of the State Food and Drug Administration on Matters Related to the Implementation of the First Batch of Unique Identification of Medical Devices and the Notice on Further Promoting the Pilot to Implement the First Batch of Unique Identification of Medical Devices, the implementation of the first batch of unique identification of medical devices has been fully started on January 1, 2021, with a total of 69 varieties in 9 categories included in the scope of implementation (including absorbable suture, contrast catheter and other surgical instruments, as well as implantable pacemakers, implantable nerve stimulators, hip prostheses, breast implants and other implant devices).
5.What are the incentives for innovation regarding medical devices in the New Regulations?
New added Articles 8 and 9 of the New Regulations specify that China will formulate the industrial planning and policies for medical devices at the state level, and make the innovation in the field of medical devices the focus of development, giving priority to the evaluation and approval of innovative medical devices, supporting the clinical popularization and use of innovative medical devices, and promoting the high-quality development of the medical device industry. At the same time, China also will improve the innovation system for medical devices at the state level and support the basic research and applied research of medical devices, promote the popularization and application of new technologies for medical devices, and give support in respect of scientific and technological project initiation, financing, credit, procurement by public bidding, medical insurance, etc. Enterprises are supported to establish or jointly establish R&D institutions. Enterprises are encouraged to cooperate with institutions of higher learning, scientific research institutes and medical institutions to carry out the research and innovation, as well as strengthen the protection of intellectual property rights of medical devices.
The New Regulations also provide new opportunities for the overseas medical innovation companies. Namely in the past, only overseas-launched medical devices could be registered/record-filed in China. However, according to Articles 15 and 16 of the New Regulations, innovative medical devices that are not launched on the overseas market, with the supporting documents proving that such medical devices are approved to be marketed by the competent authority of the country (region) where the record-filing party is located, may be submitted. This means that in the future, innovative medical devices may be launched simultaneously in the overseas and Chinese markets, and even global products may be launched first in China.
After a brief interpretation of the New Regulations, we are full of confidence in the future of China's medical device industry. At present, various measures supporting the New Regulations are also soliciting public opinions. We believe that the implementation of the New Regulations and various supporting measures will also bring more opportunities to Israeli companies with high innovation ability in the field of medical devices. Thus, we look forward to seeing more Israeli innovative companies being highly successful in the Chinese market in the future.
This article is written by IsCham member - A&Z Law Firm. For any further questions or inquiries concerning the issues raised in this article, you are welcome to contact Andrew Zhang at firstname.lastname@example.org.