China Becomes Vastly Improved Player

The People’s Republic of China, by some estimates, has already surpassed Japan to become the second largest medical device market in the world after the U.S. Medical device market experts estimate that the medical device market in China will grow between 15 to 20 percent annually over the next five years. Despite a recent drop in economic growth, China’s economy is still on the upswing, and so is its medical device market. One could say that it is out of control. On the contrary, it’s not.

China is home to nearly one-fifth of the world’s population, and with 1.3 billion people and an expanding middle class, it has witnessed an almost unbelievable rise in healthcare consumption. More citizens are spending more money on healthcare, including sophisticated medical devices. No wonder U.S. companies want to play the import/export game with this rising star.

Competition for China’s medical device market is aggressive, and more Chinese medical device manufacturers enter the market every day. The idea that Chinese-made products are inferior is changing dramatically. In spite of quality assurance problems and events like the 2008 heparin scare, overall quality systems in China are much better than they were five or six years ago. Most Chinese medical device companies and component suppliers alike are ISO 13485 and ISO 9001:2008 certified, respectively, and a rising majority meets U.S. FDA and European Union manufacturing standards.

In the past, Chinese medical device manufacturers produced mostly Class I and Class II devices. Today, they are making more sophisticated Class III devices. This is due for the most part to the adoption of global manufacturing standards. I have conducted third-party audits in China for more than 11 years, and the companies that I visit have come a long way to achieve and maintain regulatory and quality compliance. You still have to know what to look for because of cultural differences, but for the most part, quality management systems in China are straight up compliant. I have also noticed that the quality and regulatory paradigm has accelerated into a mode of excellence due to the innovation of Western-trained Chinese returnees. Many Chinese math, science and engineering Ph.D.s who cannot secure H1-B visas in the U.S. return to China, where they are snapped up by local device and component companies. These individuals are bringing technological control with them—not just technology, but controls to foster process excellence.

Medical Device Administration in China

In China, the State Food and Drug Administration (SFDA) supervises the medical device sector at the national level. In practice, the SFDA delegates a lot of administrative powers to its local branches. The food and drug administrations of the provinces, autonomous regions and municipalities directly under the central government (local FDAs) are authorized to issue specific licenses and product registration certificates to medical device companies. One of the characteristics of China’s market is that different local FDAs may have their own specific examination and approval requirements that go beyond national requirements. This can make things complicated. Not to worry, because if you are interested in doing business in a specific region of China with specific requirements, the Chinese company with which you are working will make the registration and listing process happen on your behalf. Believe me.

Classification of Medical Devices in China: Risk-Based and Closely Harmonized with the U.S. FDA

According to the definition provided in China’s medical device law, a medical device is a tool, apparatus, material or other good, including but not limited to software, that is independently or jointly used on the human body. In order to effectively supervise and manage the medical device market, the SFDA classifies various medical devices into three classes (i.e., Class I, Class II and Class III – just like the U.S.).

The classes were determined according to their properties and risk, uses and other aspects, essentially based on the risk to the user. Depending upon the classification into which the device falls, before the medical device can be placed on the market, different procedures and requirements apply in order to obtain relevant licenses and certificates.

Specifically, Class I medical devices refer to those under routine administration for their safety and efficacy, such as rehabilitation techniques, disinfecting devices and apparatus. Class II devices include those that must be controlled for their safety and efficacy, such as weak laser in vitro treatment instruments, blood assay devices and apparatus. Class III are those implanted into the human body, or used for life support or sustenance, that pose potential risk to human life, such as implanted artificial internal organs and infant care devices. Class III medical devices are subject to the strictest controls for safety and efficacy. These harmonized device classifications, unlike the Medical Device Directive in the EU, make it much easier to correlate everything from data to intended use between U.S. and Chinese companies. This small point, by itself, opens doors for doing business in a more efficient and effective manner.

Certification of Medical Devices in China

Generally, any business entity engaged in medical device manufacturing or trading (distribution or sale) must obtain specific licenses in addition to the normal business licenses. Application for a manufacturing or trading license is made with certain competent authorities in China. In addition, the medical device must be registered with the SFDA. In practice, Class I medical devices are subject to record-filing procedures approved by an authorized local FDA. Class II devices are registered at the provincial level FDA. Class III medical devices are subject to a more rigorous approach that includes going through a prior examination process and then approval from the central SFDA. Completion of the required steps, if approval is forthcoming, results in registration of the device as a medical device.

As a general rule, Chinese companies engaged in production of a medical device must meet certain conditions, including in particular:

  • Having professional technicians, a production site and physical conditions, as well as production equipment, that are suitable for the production of the medical device
  • Having a department or personnel in place, along with inspection equipment to conduct quality inspections of the medical device produced by the enterprise

Because the registration process for each class and within each provincial FDA is somewhat different, a high level overview of the critical steps for Class II and Class III medical device registration is as follows. (From my experience, the registration of Class I devices is more about paper shuffling than regulatory affairs.)

  • Formulate and submit formal standards for the medical device
  • File for medical device testing approval
  • CCC testing for specialized medical devices—in China, certain medical devices must be certified with China Compulsory Certification (CCC). Seven medical devices require CCC: electrocardiographs, hemodialysis equipment, extracorporeal blood circuits for blood purification equipment, hollow fiber dialyzers, implantable cardiac pacemakers, medical x-ray diagnostic equipment and artificial heart/lung machines.
  • Apply for clinical trials approval—under China’s medical device regime, new medical devices falling within Class II and III require clinical trials before the submission of a product registration to SFDA or local FDAs. The results of the clinical trials must demonstrate the safety and efficacy of the medical device (not unlike the U.S. FDA).
  • Apply for medical device manufacturing quality control evaluation report

Note: The applicant must also apply for SFDA, or provincial FDA, approval for a medical device quality control evaluation report. In the application, the applicant must clearly specify its manufacturing process along with a blueprint of its manufacturing site. The plan must be detailed and identify clear critical quality control points. Testing for quality at these points must be done according to statistical requirements and carefully recorded. In addition, the manufacturer of the raw materials used in the production of the medical device must often present a formal quality guarantee document. The approval process requires an onsite visit by the SFDA or provincial FDA in which they evaluate numerous criteria. This approval must be documented in writing and provided under seal of the relevant authorities.

From the FDA’s Standpoint: Bringing Devices from China into the U.S. Market

Chinese companies engaged in the manufacture, preparation, propagation, compounding or processing of a device that is imported, or offered for import, into the U.S. must register their establishments and provide FDA with the name of the U.S. agent representing their establishment. Foreign establishments must also continue to file device listing forms for medical devices they are exporting to the U.S. FDA is also authorized to enter into cooperative agreements with foreign countries to ensure that non-compliant products are refused entry into the U.S.

A working agreement exists between FDA and the U.S. Customs and Border Protection for the cooperative enforcement of Section 801 of the FFD&C Act. Most cooperative action centers on violations of the FD&C Act, particularly noncompliance with FDA import requirements, are when FDA determines it necessary to sample imported devices to assure their safety and effectiveness.

The first process includes the importer or filer submitting the necessary entry information to the local U.S. Customs district office. For those entries not filed electronically, a paper entry consisting of the commercial invoice, customs entry forms or documentation would need to be provided by the importer or filer. Most importers ask that domestic customhouse brokers complete these forms and make the submissions on their behalf. However, this does not always result in the immediate release into U.S. commercial channels. Also, submitting these forms does not release the importer from responsibility to assure FDA that the premarketing or other requirements have been met. When an entry is filed with U.S. Customs, a copy of the entry is also provided to the local FDA district office.

For a device to be legally entered in commercial distribution in the U.S., the following basic requirements must be met:

  • The device site of manufacture must be registered with FDA on Form FDA 2891
  • Unless exempted by regulation or by having been on the market prior to May 28, 1976 (before the Medical Device Amendments to the FFD&C Act), commercial U.S. distribution of the device must be authorized by FDA through either a premarket notification [510(k)] or a premarket approval (PMA) application depending on the device classification
  • The device must meet the labeling requirements of 21 CFR Part 801
  • Unless exempted by regulation, the device must be manufactured in accordance with Good Manufacturing Practices (GMP) contained in the Quality Systems Regulation (QSR) of 21 CFR Part 820
  • The device must be listed with FDA on Form FDA 2892

Conclusion

China’s medical device market is growing very fast and the competition is fierce. In many cases, Chinese-made products can now compete with Western devices. FDA has an office in China now and, proactively, this has been viewed as a move in the right direction for both countries.

Western medical device companies still sell some sophisticated products that Chinese device manufacturers cannot make yet. As long as the Western device companies can maintain this strong technical advantage, they will continue to increase sales for top of the line products. But Chinese medical device companies are quickly catching up in terms of innovation (and copying).

Western device manufacturers are now also engaged in a battle with Chinese medical device firms outside of China. Large Chinese device makers are increasingly exporting to emerging markets like Brazil, India and Russia—countries where Western firms have also been trying to boost sales. In the near-term, foreign medical device companies still have an edge in China for sophisticated medical devices. Most Chinese people who have money still prefer Western-made medical devices. However, for the average Chinese consumer making $5,000 per year, the use of devices made at local Chinese medical device companies will continue to grow beyond imagination.


John Gagliardi has had success over the past 43 years in the Medical Device and Pharmaceutical industries because of his practical approach to process-orientation and business. He has been actively involved in research and development, quality assurance, training, operations, process architecture, FDA inspections and regulatory affairs. John specializes in building systems in a compliant and business-ready manner. John can be reached by email.

MidWest Process Innovation, LLC
513-573-0085
www.midwestprocessinnovation.com

 

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