Recent Revisions in Japan’s Pharmaceutical Affairs Law for Medical Devices

On July 25, 2002, the Japanese House of Representatives passed and enacted the revised Pharmaceutical Affairs Law (PAL). The original PAL dates back to 1943, with subsequent revisions in 1948, 1960, and 1979. However, the basic purpose of the law has remained the same: to ensure the safety, efficacy, and quality of medical products in Japan.

The latest revisions to the PAL are meant to address the enhancements in the development and safety of new medical products in the 21 st century. According to the Ministry of Health, Labor and Welfare (MHLW), the revised PAL is intended to strengthen the safety measures related to medical devices, enhance government regulations with respect to the application of biotechnology and genome technology in developing medical products and fortify post marketing safety measures and the review system for approval and license while taking international conformity into account.

The revised PAL is a done deal, but MHLW has yet to flesh out many of the regulation-level details. Thus, many of the proposed changes are currently in high-level “Parliamentary Act” form. The ministry will announce regulation-level details gradually over the next several years through what they call enabling notifications.

The full implementation of the PAL revisions is scheduled for completion by April 2005. However, regulations related to the biologically derived products were to be implemented from April to July of 2003. Various other enforcement ordinances will also be issued between July 2003 and April of 2005. This article will focus on revisions that have been made public and examine their effects on the medical products regulatory environment in Japan.

Reorganization of Authoritative Bodies in the MHLW

In addition to the Japanese PAL revisions, the MHLW is also reorganizing the structure of the authoritative bodies in the ministry as part of the government’s reform efforts. The MHLW signed a bill at the end of 2002 establishing an independent administrative institution that will merge the Organization for Pharmaceutical Safety and Research (OPSR, also known as Kiko), the Pharmaceuticals and Medical Devices Evaluation Center (PMDEC) — which is under the auspices of the National Institute of Health Sciences — and the Japan Association for the Advancement of Medical Equipment (JAAME).

Prior to their unification, OPSR/Kiko and the PMDEC operated as separate government entities. OPSR/Kiko was responsible for reviewing safety and efficacy of pharmaceuticals, and the PMDEC had similar responsibilities for medical devices. JAAME was an independent association working in conjunction with MHLW, focusing on “me-too,” or derivative medical devices.

The new institution, tentatively referred to as the Comprehensive Organization for Medicines and Medical Equipments, will be established in April 2004, and its primary mission will be to ensure the quality, safety, and efficacy of medicines and medical equipment in Japan. The organization will also be responsible for improving national health by addressing health problems caused by adverse drug reactions (ADRs) and infections from biological products and promoting development in pharmaceutical technology through product reviews and fundamental research.

Revision of Measures for Safety Related to Medical Devices

One of the main revisions of the PAL will be the recategorization of medical devices. The Japanese medical devices classification system will be revised in the PAL to take into account the risks associated with the use of medical equipment. The new definitions for each class of medical device will be made available in the near future.

Although the proposed reclassification may appear to be a simple reduction of the current four-class structure into three, the effects of the revision will be substantial. Medical devices will be recategorized based on the amount of control required by the government to ensure patient safety in medical product distribution and use. The three new categories of medical devices will be as follows:

  • Kodo-kanri Iryo Kiki (medical equipment requiring advanced controls): This class is anticipated to correspond to Classes III and IV of the current national classification.
  • Kanri Iryo Kiki (medical equipment requiring controls): This is anticipated to correspond to Class II of the national classification.
  • Ippan Iryo Kiki (general medical equipment): This is anticipated to correspond to Class I of the national classification.

Third-Party Certification

The PAL revision introduces a third-party certification system for low-risk medical equipment. Products designated by the MHLW as “medical equipment requiring controls,” or “designated medical equipment requiring controls,” will shift from ministerial level approval to approval by designated third parties.

Medical devices that previous fell into Risk Class II and are designated as “medical equipment requiring controls” will only need to receive certification of compliance with specifications by a third-party certification organization. Certification standards will be based on basic requirements, technical standards, and the Japan Industrial Standards (JIS). However, details regarding what specific products will qualify as “designated medical equipment requiring controls” and the procedures for certification have yet to be announced. The MHLW will assign a new agency, the New Independent Administrative Agency, to appoint appropriate bodies to conduct third-party review.

New Guidelines for Medical Devices Packaging

On January 14, 2003, the MHLW issued new guidelines for medical device packaging — The Guideline of Package Insert for Medical Devices — which aims to provide physicians and consumers with clearer, more comprehensive product and usage information to prevent potential adverse events. Companies with already approved device products must revise their product inserts to comply with the new regulations. Basic package inserts should be in compliance with the information provided on the shonin (approval) application and should include the following:

  • Date of publication and most recent revision
  • S honin number
  • Classification and generic name
  • Trade name
  • Warnings
  • Contraindications
  • Shape and structure
  • Performance, indication for use, efficacy and/or effectiveness
  • Instructions for use and/or handling
  • Cautions
  • Principle of operation
  • Clinical records
  • Method and duration of preservation
  • Handling instructions
  • Maintenance instructions
  • Condition for shonin
  • Packaging information
  • Major reference papers and where they might be obtained
  • Name and address of manufacturer and/or importer.

The name of the medical device, manufacturer’s serial number or lot number and manufacturing code will be required to be affixed to the device or its immediate packaging. This is in addition to the direct presentation of the name of the distributor and expiration date on the medical equipment that is currently required (see Figure 2).

Principal Items in the revised labeling regulation
(for medical devices in general)
(Figure 2)
After revision
Name of Manufacturer
Place label directly on medical device
Name of Medical Device
Place label directly on medical device
Manufacturing Serial Number of Lot Number
Place label directly on medical device
Contents such as weight, capacity, or quantity
Expiration period
Other information required by Ministerial Ordinance (to be studied separately)
Set for each medical device
Set for each medical device
Place label directly on medical device
Source: Ministry of Health, Labor and Welfare (MHLW)

Enhancement of the Measures for Safety After Marketing and Revision of the Approval and Licensing System

Japan’s product approval system will soon be revised to emphasize the activities of the “original vendor” and measures for safety after marketing. The current system in Japan centers product approval on manufacturing and importing. Under the revised regulations, the product approval holder will not need to be the manufacturer or even have the capacity to manufacture the device.

The current licensing system for medical device manufacturers requires the licensee to “perform manufacturing at its own manufacturing facility and to act as wholesaler.” Under the revised licensing system, the activity of an “original vendor,” i.e., the activities of distributing and marketing the product, will be separated from other acts. As a result, the possession of manufacturing facilities will not be required of medical device product approval holders under the new system, but rather, as an original vendor, their medical products may be entirely sub-contract manufactured.

The business license of an original vendor will be bound to the classification of medical products the company markets. In other words, the “original vendor” will be restricted to marketing medical products under the same classification for products they currently hold licenses. According to unofficial pronouncements, the classification of medical products will be:

  • Prescription drug;
  • Nonprescription drug;
  • Medical equipment, with sub-classification for each class for medical device;
  • So-called quasi-drug, also sub-classified by type; and
  • Cosmetics, also sub-classified by type.

Holders of business licenses as original vendors will be subject to new requirements based on the PAL revisions. Some of these new requirements may include quality control and post-marketing safety management systems. Although the details for these new requirements have yet to be released, the following are some examples of the proposed revisions:

  • Procedures will be established for executing operations for safety measures after marketing and for the record keeping of these operations.
  • Original vendors must designate a “quality control manager” and “post-marketing safety manager,” as well as a “general manager” as persons responsible for managing these quality control and post-marketing safety activities.

As discussed, the current product approval system allows approval only for the act of manufacturing a given medical device product. Under the revisions, this system will change to account for the distribution and marketing of these products, also known as original vendor approval. Compared to the current requirements for approval, the new system will have the following revisions or additions:

  • The applicant engaged in marketing and distribution must obtain a business license as an original vendor.
  • Manufacturing facilities intending to manufacture a given medical product must obtain a business license as a manufacturer.
  • Procedures for managing the manufacturing and quality control of medical products must be compliant with Good Manufacturing Practice (GMP). GMP inspections of documentation or actual site visits will be performed prior to medical product approval.

Product Registration Change

Previously, an evaluation committee — known as a bukai — existed outside of the MHLW. The bukai was a section meeting composed of industry experts, held at the request of the MHLW. A bukai often consisted of doctors, scientists, and educators with experience in a particular medical product being evaluated.

Under the PAL revisions, the system will change to one referred to as an “expert discussion.” This change has given MHLW the sole authority to decide product approval. In the past, the ministry was required to implement the decision of the bukai; it did not have the authority to make an approval decision. Due to the change, the MHLW can now make approval determinations on its own, however, it can still request outside advice. One exception is for new devices, which calls for the Pharmaceutical Affairs Food and Sanitation Committee (PAFSC) to be the final step of the approval process. The PAFSC will most likely not hold a role similar to the bukai. Instead, it is expected that in most cases the decisions of the MHLW will just pass through the PAFSC.

In-Country Caretaker

The In-Country Caretakers (ICCs) system is a direct application whereby a Japanese representative or entity acts as a foreign company’s in-country representative, processes applications in Japanese and handles inquiries from relevant parties, including MHLW. Under the PAL revisions, the role of the ICC will be replaced by a “selected original vendor” in order to enhance the measures for safety after marketing.

Since 1985, Japan’s ICC system has allowed foreign medical manufacturers without local offices in Japan to register products directly in their own names (Japanese law does not allow foreign medical companies without a local presence in Japan to register their products in their own names unless an ICC is used). Although generally more costly than indirect registration through a distributor, registration through an ICC offers foreign manufacturers distinct advantages, most notably, more control over marketing strategies and the ability to change distributors at will. In recent years, foreign companies entering the Japanese market have increasingly recognized the value of the ICC system and have retained ICC companies to assist them in their efforts to enter the local market.

Despite the benefits of the ICC system, the MHLW announced in 2002 major changes that will significantly dismantle the ICC system as it exists today. Effective April 2003, foreign sales approval became subject to the following new requirements:

  • A foreign manufacturer must appoint a representative in Japan. The representative must hold a license to sell medical devices.
  • The foreign manufacturer and its representative will be jointly responsible for regulatory compliance with regard to import procedures, GMP, and Post-Marketing Surveillance (PMS).
  • The representative must be able to adequately perform both the regulatory functions traditionally performed by an ICC, as well as the testing, warehousing, and tracking duties traditionally performed by the importer.

These new requirements place a heavy burden on existing ICCs, many of which are small firms without the capacity to take on this greater role. However, there will be a three-year grace period (from April 2002) for the implementation of these new rules (until April 2005).

Clinical Studies

The revised Japanese PAL will also apply to clinical studies sponsored by physicians or medical institutions. Clinical studies managed by independent physicians or medical institutions intended for use in an approval application will be included in the definition of “clinical trial” in the revised PAL. Currently, there is no legal recognition of physician-sponsored Investigational Device (IDE) or Investigational Drug (IND) application in Japan. The PAL revisions will provide the legal basis for a physician to become a sponsor-investigator and receive investigational devices and drugs for use in a clinical study. In addition, Good Clinical Practice (GCP) will now be applicable to clinical studies sponsored by medical institutions or independent physicians. GCP will also increase the number of clinical trials required for medical devices in Japan. Under the old GCP, 60 patients at two sites often would suffice. However, with the new GCP, no minimum number of trials will be mentioned, rather, the number of clinical trials will be determined by statistical data — as is the case in the US — and the number of clinical trials will most likely increase.

Change of the Reimbursement Application System for Medical Devices

The Japanese government has also moved towards changes in the reimbursement system for medical devices. MHLW’s Notification Iseihatsu 0213012 of February 13, 2002 describes the latest change in the application system for reimbursement for medical devices. According to this notification, applicants may choose from four categories of reimbursement; however, applicants may no longer claim more favorable prices that were permitted prior to the execution of this notification. The only exceptions are for the C1 and C2 categories, described below. The four reimbursement categories — A, B, C and F (A1 and A2 and C1 and C2 are subcategories of A and C) — are as follows:

  • A1: The medical procedure utilizing the medical device is considered to match a procedure for which fees are reimbursed. In this case, the device is not separately reimbursable.
  • A2: The medical procedure utilizing the medical device is considered to match a classification of procedures that allows a specific procedural fee reimbursement for the device (a procedure that allows for an additional component fee to cover an optional medical device under the main procedure’s fee).
  • B: The medical device is considered to match the functional classification of a medical device that has a specified reimbursement level.
  • C1: The medical device is entitled to a new functional classification and specified reimbursement level.
  • C2: The medical procedure using the medical device is entitled to a new procedural fee.
  • F: Neither of the corresponding medical device nor the medical procedure utilizing the corresponding medical device matches any reimbursable category.

There is a different application form for each of the categories above. The MHLW will review the application and will announce the evaluation result in the form of a yes or no decision. Applicants are able to challenge a medical device’s assignment to any of the above categories.

If the application category falls under A1, A2 or B, then the procedural fee for categories A1 and A2 or the reimbursement price of medical devices under category B is determined according to existing lists of procedural fees and medical device prices. The A1 category does not allow for reimbursement of medical devices. Instead, the cost for medical devices is included in the procedural fee. The usage of the medical devices in the A1 category is covered in the hospital’s overhead. For these three categories (A1, A2, and B) of reimbursement applications, the classification of the medical device is declared at the approval stage of the application and the reimbursement for the device is bound to that approved classification. In this system, the reimbursement prices for medical devices in the same classification are equal, even if the former price or manufacturing cost is different.

Only categories C1 and C2 allow for the creation of new procedural fees or new reimbursement prices for medical devices. If an applicant needs to obtain a new price level for a medical device due to manufacturing cost, the applicant must apply under one of these categories. The success rate of applications filed under the C1 or C2 categories depends upon how the applicant highlights the features and advantages of their medical device vis-à-vis existing medical devices in the market during their negotiations with the MHLW. In general, once a reimbursement rate is established, it is very difficult to increase reimbursement in Japan unless one can statistically prove that the new device can benefit the Japanese government (i.e., save the government money).

New Good Laboratory Practice Standards

The Japanese Ministry of Health, Labor and Welfare (MHLW) recently announced the establishment of a new Good Laboratory Practice (GLP) regulation for medical device testing in Japan. The new GLP will take effect on October 1, 2003 and will regulate pre-clinical trial data collection in order to ensure high data quality. The GLP will define the duties of the applicant in conducting preclinical tests on medical devices. The new GLP also specifies that reports submitted as part of the application for medical device approval must coincide with the final test results and be endorsed by the appropriate person from the quality assurance department. The new GLP requires that the following be submitted for medical device applications:

  • The certificate of the person in charge of endorsing the final test results, and a statement that certifies that the report is based on the final test results.
  • A statement certifying that the test data was collected in accordance to the new GLP standard by the responsible supervisor or technician. Foreign data must also be certified with a statement indicating that the data collection was made in accordance with GLP standards equivalent to those of the Japanese GLP. If the clinical trials were not performed in accordance with the Japanese GLP, a statement must be submitted specifying any deviation from the Japanese GLP and its possible effects on the data obtained.
  • A foreign government or public institution must certify foreign data to be submitted to the MHLW. The foreign authority must state that the data was collected in accordance with the foreign government’s GLP.

The MHLW also reserves the right to audit the test facility of companies periodically to ensure that they are in compliance with GLP.


The new revisions of the Japanese PAL will significantly alter the medical product regulatory environment in Japan. The PAL changes will also affect the decisions and strategies of foreign medical product manufacturers when entering the Japanese marketplace. While the revisions may initially disrupt the current flow of regulatory procedures, these changes will hopefully help Japan’s medical regulatory system “manage” the medical products of the future as well as enhance safety for consumers. In the long run, the revisions will bring Japan’s medical regulations closer in line with international standards. In the meantime, medical manufacturers in Japan must keep abreast of the current and upcoming PAL revisions in order to navigate the medical regulatory environment successfully in Japan.