CHINESE GOVERNMENT RESPONDS TO PRICE FLUCTUATIONS OF MEDICAL PRODUCTS DUE TO SARS OUTBREAK
In response to the recent price fluctuations of medical products in China due to the SARS (Severe Acute Respiratory Syndrome) outbreak, the Chinese government released a circular in April 2003 announcing that measures will be taken to prevent price gouging on medical products.

China’s State Development and Reform Commission (SDRC), the government body responsible for price supervision and price changes for drugs, medical equipment, food and other resources related to public health, is requiring all local price authorities to be vigilant of any price fluctuations on these goods. The SDRC states that it will take any appropriate measures to stabilize prices. Legal sanctions may also be imposed to restore market order.

Medications treating cold or flu related symptoms have been flying off shelves in all parts of China. A concoction produced by Tongrentan, Beijing’s most well-known Chinese traditional medicine shop, called “Eight Ingredients Anti-SARS Dose” has sold over 30,000 bottles in one day. To prevent price increases due to excessive demand, the Beijing Drug Administration has imposed price ceilings on Chinese medicines of 9 to 12 RMB (US$1.00 to 1.40) depending on the type of remedy.

A spokesman for the Beijing Drug Administration added, “We are also censoring the content of advertisements of drugs and health products to filter out messages exaggerating their effectiveness against flu. We are going to sample these products to avoid any inferior quality caused by mass production.”

The SDRC is also encouraging consumers to report any irregular movements in prices of medical products by calling a nationwide hotline phone number.

MEDICAL DEVICE REGISTRATION IN JAPAN: ME-TOO OR PARTIAL AMENDMENT?
Once a company registers its medical device product in Japan, there is often a question of whether to register their new or upgraded products as partial amendments to their existing shonin or under a new me-too product application. According to the Ministry of Health, Labor and Welfare (MHLW), “a new application is required for each case of a change in type.” The term, “change in type” can be better understood as a “change in model.” The following examples are considered changes in type by the MHLW:

• Addition of new function
• Change in the series of catalog numbers (i.e. 4000 Series vs. 4200 Series)
• A significant change in name (i.e. Scanner C400 vs. VF2000)
• Difference in appearance

The following are not considered changes in type:

• The same function and effects
• Changes in catalog numbers are restricted to sub-numbers (i.e. No. 3000-01 vs. No. 3000-02)
• The apparatus has the same basic name and has a different sub-name (i.e. Heart Monitor 2000-A1 vs. Heart Monitor 2000-A2)
• The change is a result of deletion or simplification of a product’s functions

Oftentimes, a foreign medical device manufacturer changes a product’s name for marketing purposes without realizing that this results in the requirement of a new shonin (product registration) application. Thus, companies must be cautious in their marketing decisions for they may have regulatory implications in Japan.

If the new or upgraded product is determined to be a change in type from the previous product, the company must apply for a new me-too product shonin. If no change is determined, the product can be registered as a partial amendment to the original shonin. In their official statements, the Japan Association for the Advancement of Medical Equipment (JAAME) estimates that the evaluation time for a partial change application is two months and for a me-too device application it is approximately four months. However, in reality, the review time is longer (about 6 months) for both types of applications and the time-to-approval is about the same.

NEW MEDICAL DEVICE ACT IN THAILAND EXPECTED BY 2007
The Ministry of Public Health in Thailand announced in late 2002 that it is drafting a new Medical Device Act. The new act will include revised registration requirements as well as regulations on product liability. The act will also outline the licensing requirements of manufacturers and distributors and their required fees. The new Medical Device Act is expected to be implemented by 2007. Currently, deliberations are taking place between the Thai Food and Drug Administration (FDA) and the medical device industry in Thailand before the new act is finally submitted to the parliament for approval. Once the new act is in force, all previous registrations will remain current and valid until their individual expiration dates.

The first Medical Device Act in Thailand was instituted in 1988. The act required that all medical devices, including condoms and surgical gloves, be registered with the government. Medical devices were divided into three classes (Class I, II, and III). The new Medical Device Act will be generally based upon the European Union’s Medical Device Directive.

NATIONAL HEALTH INSURANCE BUREAU CUTS SUBSIDIES FOR PRESCRIPTION DRUGS IN TAIWAN
On March 1, 2003, the Taiwanese National Health Insurance Bureau (NHIB) slashed as much as 50% of the subsidies it pays to hospitals for prescription medicines. In order to lower the budget deficit currently troubling the National Health Insurance program, the cut in subsidies is expected to save the bureau approximately NT$6 billion (US$172 million) annually. This is the third time that the NHIB has cut subsides and it is the largest cut thus far. The last subsidy cuts occurred in 2000 and 2001.

According to Shen Mao-ting, deputy director of the NHIB, the price cuts will range from 30% to 50% and will mostly affect drugs with expired patents. Some of the medicines which will be included in the subsidy cuts are: antibiotics, anti-depression drugs, as well as drugs to treat high blood pressure, diarrhea, and heart disease.

Although the price cuts are expected to reduce the costs incurred by the government, the lowered subsides on many drugs is expected to affect the decisions made by hospitals and doctors when prescribing medication to patients. In order to ensure that profits are not greatly reduced due to the subsidy cuts, most hospitals are instructing their doctors to prescribe cheaper alternatives. Vice president of Shin Kong Wu Ho Su Memorial Hospital, Hong Ching-fu, said that if the hospital did not adopt any measures, they would stand to lose one third of the hospital profits as a result of the subsidy cuts. To offset any loss in profits, many hospitals are also planning to bargain with their existing suppliers for cheaper prices or look for other distributors with lower prices.

The measures taken by healthcare providers to maintain their profits may adversely affect patients and their well-being. Lowered drug prices may compromise the quality and efficacy of drugs. Patients who are biased against locally manufactured drugs and believe they cause more side effects than imports may also become dissatisfied.