China’s new regulation on medical devices

China’s new Regulation on the Supervising and Administration of Medical Device (the “New Regulation”) took effect on 1 June 2021. The New Regulations are a third revision of the regulations which were first promulgated in April of 2000 and represent a significant step towards aligning with prevalent international practice.

The most important changes under the New Regulation focus on the reform of the current medical device application, review and approval process, encouraging innovation in the industry as well as formalizing the mechanism taking research and development to commercialisation.

The most important changes made in the New Regulation are likely to have a significant positive impact for international players in the medical device industry and are summarized as follows.

Self-inspection reports permitted for Class II and Class III medical device.

For medical device registration or filing purposes, the applicant is required to submit a product inspection report. Under the New Regulation, for registration of Class II and Class III medical devices, it is permitted for the applicant to submit self-inspection reports conducted by the applicant. Under the previous set of rules an inspection report issued by a certified third-party medical device inspection institution was required.

This change under the New Regulation will help alleviate the problem of limited capacity amongst certified third-party medical device inspection institutions and the rapidly growing demand for inspection within the industry. There are very few certified inspection institutions who are capable of conducting due inspection of innovative medical devices. It is anticipated that the registration process for Class II and Class III medical devices will be greatly expedited, especially for enterprises with strong inspection capability.

Clinical evaluation exemptions in specific scenarios.

The New Regulation seeks to strike a better balance of clinical needs and risks by recognising more efficient approval pathways which include:

• an outright exemption from clinical evaluation for medical devices with explicit working mechanism, stable designs, mature manufacturing technique, and for same type medical devices that have been used for clinical purpose in the market for years without serious adverse events, where the regulation/filing for such medical device should be with the same medical use purpose as the existing one as well as other scenarios where the medical devices could be certified as safe and effective through ways other than clinical evaluation;

• conditional approval for urgently needed medical devices used to treat rare or critical diseases where an effective treatment is not available as well as to respond to public health incidents.

In particular the exemption to clinical evaluation means the burden on applicants for registration/filing of medical devices will alleviated as under the old rules, clinical evaluation was mandatory for medical device registration/filing and had to be conducted through either expensive clinical experiments or comparison analysis with same type devices.

Exemption for imported innovative medical devices.

Under the old rules, upon submission of registration/filing application for an imported medical device, the new medical device needed to already have been approved for sales/use in the market of the jurisdiction where the applicant is registered or where the device is manufactured. This requirement is now exempted under the New Regulation for imported innovative medical device, and is likely to be a very important privilege afforded to offshore R&D enterprises in the industry.

It is worth noting that the PRC government has encouraged medical device innovation and provided for a fast-track review process for innovative medical devices to both domestic and foreign applicants since 2014. However, it seems that few imported medical devices actually benefitted from this fast-track pathway and based on our observation the main reason may be that the innovative medical device need to be patented in China.

There are likely to be more detailed implementation rules which set out in practice how the central government encourages importation of innovative medical devices.

Implementation of MAH mechanism.

China has gradually been aligning with international practice by adopting a marketing authorization holder (MAH) scheme for both drugs and medical devices. After trialling a pilot MAH mechanism for medical devices in the Shanghai Free Trade Zone in 2017 and then expanding to 21 provinces in 2019, the New Regulation will officially establish a MAH scheme enabling more flexibility between the research and manufacturing capability of innovative medical device products.

Under the new official MAH mechanism, the MAH, which is the holder of the medical device registration or filing, will be allowed to either manufacture medical devices by themselves or through commissioning one or more qualified manufactures. The MAH should be responsible for the quality of the medical devices manufactured by the engaged manufacturer. This MAH mechanism is not applicable to high risk implantable medical devices.

With the MAH mechanism, the R&D organizations and academic research institutions might also be classed as MAHs without needing to possess any manufacturing facilities, by which the Chinese government are encouraging more R&D-focused companies to seek regulatory approval for their medical device products in China.

Reporting obligations for online sales of medical devices

The New Regulation also seeks to address the proliferation of medical devices being distributed via online platforms. Specifically, online operators are required to report such online business to the local authority, unless the medical devices being distributed are in the lower risk categories where safety and effectiveness are not affected during the distribution process.

Also E-commerce platform operators who provide online trading services to distributors, are required to examine distributors’ business permits and recordation information. The platform operators should also administer the daily online operation of the distributors.

Summary

This shift of focus from pre-approval administration to post-approval administration by the National Medical Products Administration (the NMPA) has resulted in legal liabilities and penalties under the New Regulation being increased. Therefore all medical device companies will need to pay close attention to their quality management and internal control systems in order to comply with the new requirements.

Overall the New Regulations represent a positive and welcome change to the existing regime by creating more efficiencies and flexibility in the pathway from research and development to commercialisation of medical devices in China. It is our anticipation that detailed implementation rules will follow in the footsteps of the New Regulation.