China Accelerates Medical Device Regulatory Reform With New Medical Device Regulations

14 May 2021

On 18 March 2021, the State Council of China issued the new Medical Device Administration Regulations (“MDAR 2021”), which will come into effect on 1 June 2021.

The new MDAR 2021 will require changes to related legislation and the National Medical Products Administration (“NMPA”) started this process by issuing four draft rules on 26 March 2021: (1) Medical Device Registration Rules (Draft); (2) In Vitro Diagnostic Reagent Registration Rules (Draft); (3) Medical Device Production Rules (Draft); and (4) Medical Device Business Operation Rules (Draft). Public consultation on these draft rules related to the MDAR 2021 closed on 25 April 2021 and it is as yet unclear as to whether these rules will be updated by the time the MDAR 2021 goes into effect. The MDAR 2021 represents a significant update from the MDAR 2017, including 27 new and 70 amended articles. We set out in this article the key changes to the regulations.

1. A medical device marketing authorization holder (“MAH”) system
    

   The formal introduction of a medical device MAH system is a significant part of the MDAR 2021. Under the system, the MAH will be classed as a registrant for Class II and III devices and as a recording person for Class I devices. The role of the MAH is outlined in Article 13 and institutes a responsibility to manage the whole life cycle of the medical device. This requires the MAH to be responsible for the product’s safety and efficacy from research through the production, business operation and clinical use.
    

   Further responsibilities of the MAH have been outlined in Article 20, which includes the need to establish and maintain a proper quality management system, to formulate and implement post-marketing and risk control mechanisms, to monitor adverse events and to establish and conduct product tracing and recall systems. Further information on the requirement to monitor adverse events and the personnel required is provided for in Article 62. Importantly for foreign companies, they may still hold the MAH but must appoint a Chinese entity (which may be a wholly owned Chinese subsidiary of the parent company) to fulfil these responsibilities within the Chinese market.
    

   Another requirement of the MAH relates to the manufacture of the product. Article 34 allows the MAH to either manufacture the medical device themselves or to use a third party contract manufacturer to make the product under agreement. However, as was also required under the current MDAR, high risk, implanted medical devices must be made by the MAH. Based on Article 43, if the MAH is selling its own registered/recorded medical device, it does not need to obtain a separate medical device business operation approval or recordal.
    

2. Optimization of the registration/recordal process and use of medical devices
    

   The MDAR 2021 introduces several new provisions aimed at facilitating the marketing authorization process and for optimizing the requirements of use for certain medical devices in China. We outline the major changes below:
    

   < >Innovative imported medical devices are exempted from submitting overseas marketing approvalPriority review for innovative medical devicesConditional approval systemEmergency use systemCompassionate useUse of IVDs developed by medical institutionsImportation of a medical device for urgent clinical needClarification on clinical evaluation and clinical trial
    

   The MDAR 2021 clarifies what is meant by the terms clinical evaluation and clinical trial. Article 24 indicates that a clinical evaluation must be conducted for all medical device registrations (Class II and III) and recordals (Class I). However, the clinical evaluation may be exempted if: (1) the medical device submitted for registration/recordal has a clear mechanism of action, a fixed design, a mature manufacturing process and a conventional use. The same product must also have been marketed and used for many years without serious adverse events, or (2) non-clinical evaluation can prove its safety and efficacy. The NMPA will formulate medical device clinical evaluation guidelines to provide more details.
    

   A regular topic of discussion about medical device registration has been what data may be used in a clinical evaluation. To this end, Article 25 further specifies that the data used in the clinical evaluation to demonstrate safety and effectiveness may be obtained from either (1) a clinical trial or (2) the analysis of the clinical literature that provides clinical data on the same product (as defined by product characteristics). However, if the existing clinical literature and published clinical data are not considered sufficient to demonstrate the safety and effectiveness of the device, a clinical trial will be required.
    

   For clinical trials, a significant bottleneck in China had been the process of trial approval. Article 27 seeks to improve this situation with the introduction of a deemed approval for clinical trials if the NMPA does not notify the sponsor of its decision within 60 working days of accepting the application. Other requirements of the clinical trial process are included in Article 28, including the mandatory requirements of ethics review and informed consent for clinical trial participants. The MDAR 2021 also stipulates that there be no charge for patients involved in clinical trials.
    

3. Improvement of the medical device regulatory system
    

   MDAR 2021 also includes several general provisions to improve the regulatory system in China. For example, in line with other global markets (USA, EU, Japan, Australia etc) Article 38 indicates the implementation of the unique device identifier (“UDI”) system (for details of UDI in China, please see our previous article – Medical Device UDI System Goes Live in China on 1 January 2021). The MDAR 2021 also places restrictions on who may sell medical devices online, with Article 46 confirming that only the MAH or a medical device business operator (with the appropriate license) may do so. Article 57 explicitly forbids the importation of used medical devices which are either expired, invalid or obsolete. Article 69 introduces extended inspection powers for the NMPA and local MPAs allowing them to inspect any entities or individuals in relation to medical device research, production, business operation and use.
    

4. Increased penalties punishment
    

   The MDAR 2021 has comprehensively increased the penalties for unlawful acts. Specifically, in addition to penalties levied against a business entity, individuals responsible for the illegal behaviour (e.g. the legal representative) may also be subject to punishment. This may include confiscation of income earned from the entity, a fine equivalent of up to 3 times income, and potential disqualification from engaging in medical device production and/or business operation for a certain period of time (e.g. 5 years, 10 years or life). There has also been changes to punishments for entities, with an increase in the penalty cap and also in the potential disqualification time of an entity. As an example, the penalty cap and disqualification time for manufacturing or selling unregistered Class II or III devices have been increased from 20 times product value and 5 years to 30 times product value and 10 years respectively.

   A specific penalty provision that should be noted by foreign MAHs is that if they refuse to abide by the administrative punishment decision determined by the Chinese authorities, the foreign entity may be prohibited from importing medical devices into China for 10 years. 
    

As medical product regulatory reform has been an important policy initiative in China over recent years, the new MDAR 2021 is another step in this process. It is anticipated that this will not be the only medical device regulatory change and we expect additional guidelines will be issued in the near future.
 

Alison Wong, Partner, Bird & Bird