To expand their sales in the Asian medical markets, medical companies need to stay abreast of the new and changing regulatory environments for drugs, devices and In Vitro Diagnostics (IVDs). New or improved regulations are implemented frequently in Asia, including changes in GMP standards, drug price controls and medical device regulatory systems. This article discusses some of the recent and more significant changes in the region’s medical regulations. Countries impacted by these new regulations and covered in this article include Japan, Hong Kong, China, Malaysia, Taiwan and Vietnam.
Many Asian nations are experiencing increased Gross Domestic Product (GDP), per capita income and overall wealth. People are living longer and demanding better medical products and safer healthcare services. Some Asian governments are prepared to spend more money for higher healthcare standards. Moreover, many of these countries are placing a greater emphasis on international standards in order to expand their medical market globally.
China’s economy is growing at a rate of almost 10% per year and salaries are increasing dramatically in the bigger cities. Following China’s entry into the World Trade Organization (WTO), the State Food and Drug Administration (SFDA) is making greater efforts to create a better regulatory environment. For example, China has implemented new laws to regulate drug prices and now requires that all drug manufacturers be GMP certified. Both the medical device and pharmaceutical industries are growing at approximately 10% annually and are valued at more than US$25 billion. Likewise, India is implementing similar changes with a rapidly expanding economy and a 12% medical device market growth.
Japan, Korea and Taiwan are experiencing slower economic growth, but are still developing new medical regulations as the demand for better and more advanced healthcare continues to rise. Japan, with the world’s second largest medical market, has recently undergone significant changes in its pharmaceutical and medical device regulatory processes with the implementation of its new Pharmaceuticals and Medical Devices Agency (PMDA) and Pharmaceutical Affairs Law (PAL), which took effect 1 April 2005. Taiwan also has changed its pharmaceutical patent protection law to more closely reflect WTO standards.
For the past several years, the structure of Japan’s Ministry of Health, Labor and Welfare (MHLW) has undergone numerous changes, altering the regulatory system for pharmaceuticals and medical devices. In April 2004, the Pharmaceuticals and Medical Devices Agency (PMDA) was established to create a more efficient and transparent review process to bring safer and more reliable medical products to the Japanese market.
Since 2002, MHLW has also introduced significant changes to its Pharmaceutical Affairs Law (PAL), and on 1 April 2005, those revisions were fully implemented. This “New PAL” will further regulate medical devices in Japan by promoting global harmonization and reinforcing safety measures. Among the changes are a new risk-based classification system, a Summary Technical Documentation (STED) format for the application process, a new ISO GMP regulation, and introduction of the Marketing Authorization Holder (MAH) concept.
Marketing Authorization Holders
Under the New PAL, the MAH system will greatly impact foreign medical device manufacturers entering the Japanese market or already established there. Previously, the In-Country Caretaker (ICC) system allowed foreign companies without local Japanese offices to register their products in Japan. From April 2005, the MAH system has replaced the ICC system. The ICC system required a manufacturer to obtain a license (kyoka) and approval (shonin) for each product. The manufacturer produced the devices and also released them onto the market. The MAH system will separate these two responsibilities; the production will be done by the manufacturer and the MAH will act as an enhanced regulatory control mechanism to give final permission for product release. MHLW separated these two responsibilities and increased quality and safety controls to make device regulation more similar to that for drugs.
All existing ICCs can go through a simple application process to become MAHs. Based upon an announcement released 17 January 2005, current ICCs were to submit a one-page application by 10 February 2005 to be designated as MAHs without undergoing an inspection. ICCs that did not plan to become MAHs were required to submit a letter to that effect 4 February 2005. MHLW emphasized that ICCs in that situation should find replacement MAHs for their medical device customers. ICCs that did not meet the February deadline may still become MAHs, but will be subject to a lengthier application process and a probable inspection from MHLW or prefectural government.
A MAH must designate up to three people as controllers, who will be responsible for overseeing the product manufacturing, distribution and release. The first controller is a General Manager to oversee the overall product marketing, quality and safety. The second, the Quality Assurance Controller, is in charge of Good Quality Practice (GQP). His responsibilities include ensuring that the manufacturer abides by the appropriate shipping and receiving methods, notifying MHLW of any changes in manufacturing or in-process controls, developing release criteria for each product, and handling communications for any recalls. The Post-Marketing Safety Controller is number three, accountable for Good Vigilance Practice (GVP). This controller monitors the safety of products released onto the market, providing reports to the appropriate health authorities on any adverse incidents, recalls, etc. For Class I products, only one controller is required to perform all of the functions. A MAH for Class II products requires two people to carry out the functions. Class III and IV products must have three people, one designated for each role.
All companies selling products in Japan are required to have a MAH. It must be located in Japan and able to purchase or import products from a manufacturer, sell products to sales organizations and, sometimes, temporarily store products in a licensed establishment. Companies have the option of using a distributor or importer, a third party or designating themselves as the MAH. In this last case, a company may designate a subsidiary, branch or representative office in Japan, as long as the MAH meets the aforementioned requirements.
IVD draft regulation
At the end of 2004, MHLW published a draft regulation on the requirements for IVD marketing authorization approval. MHLW will grant product approval based upon one of four IVD categories: Category 1, new products; Category 2, products for which approval criteria have been previously established and the product meets these criteria; Category 3, products for which approval criteria have yet to be established; and Category 4, an IVD product for which approval criteria have been established, but the product does not follow these criteria.
The marketing authorization approval application must include supporting documents that demonstrate the product’s scientific soundness, ethics and reliability. Documents required vary by product category and will include some or all of the following: course of discovery and overseas usage status; setting specifications; stability; performance; risk analysis; manufacturing methodology; and clinical studies. Any technical documents should be in Japanese; otherwise, a Japanese summary of the document should be included along with the original document (in its original language). This IVD regulation, though only a draft, demonstrates the direction MHLW is moving with IVDs.
Medical Device Administrative Control System
To prepare medical device companies for the transition toward a long-term regulatory control process in Hong Kong, the Department of Health (DOH) launched the Medical Device Administrative Control System (MDACS) in November 2004. This voluntary, risk-based scheme for regulating medical devices is based upon recommendations from the Global Harmonization Task Force (GHTF). MDACS will be implemented in phases and managed by the Medical Device Control Office (MDCO). The three main components are: a Listing System; an Adverse Incident Reporting System to help DOH monitor adverse incidents involving medical devices; and a requirement that manufacturers designate a Local Responsible Person (LRP). The new system will allow DOH to gather more feedback from device companies, educate companies on potential regulation requirements, and increase public awareness of medical device safety regulations and standards.
Under the Listing System, manufacturers and importers can list their devices with DOH, as long as the devices meet MDACS requirements. No application fee is required. Starting in November 2004, Class IV devices became eligible for listing; Class II and III devices will be eligible in future phases. A listing includes the device’s make and model, manufacturer name and contact information and LRP. Class I devices and IVDs will not be included in the system.
The LRP serves as the liaison between the manufacturer, importer, government and medical device users. A manufacturer without a registered place of business in Hong Kong must designate an individual as an LRP who is a legal person incorporated there, or a natural or legal person with a business registration. Manufacturers who have a registered place of business in Hong Kong are not required to designate an LRP, but may designate themselves instead.
A LRP is responsible for submitting the application to include a device in the Listing System. MDCO will review the application and notify the LRP of the device’s approval, rejection or conditional approval approximately three months after it is submitted. Conditional approvals require the manufacturer to perform particular post-market surveillance studies. Approved and conditionally-approved devices will be assigned listing numbers and included in MDACS’ Listing System.
Following China’s 2001 entry into the WTO and under pressure from the international drug community, SFDA implemented a regulation on 1 July 2004 requiring GMP certification for all of the country’s pharmaceutical manufacturing sites. At that time, approximately half of the 6,000 drug manufacturers in China already had been GMP certified; the other 3,000 manufacturers were granted a six-month grace period to upgrade their technology so they would meet the new standards.
SFDA issued another notice in October 2004 announcing future GMP requirements for IVD reagents, medicinal gases and Chinese crude drugs. Manufacturers of IVD reagents (administered as drugs) are obligated to meet GMP standards by 1 January 2006. Beginning 1 January 2007, medicinal gas manufacturers also must have GMP certification. Finally, producers of cut crude drugs for Chinese medicine will need to obtain GMP certification by 1 January 2008. Any manufacturers who fail to meet GMP standards by their respective deadlines will be forced to stop production and face severe penalties.
Classification system for drug companies
To strengthen the supervision of pharmaceutical companies in China, SFDA issued the Interim Provisions for Drug Safety Credit Classification in September 2004. The new regulation categorizes domestic and foreign drug companies by credit levels, based upon their compliance with drug laws and regulations. Drug administration officials will inspect manufacturing sites, distribution sites and R&D facilities. Following the inspection, the location will be assigned one of four categories: initial compliance or made an improvement and now in compliance; received a warning due to noncompliance; received a second warning due to noncompliance; and has received numerous warnings and has made no effort to comply. The assigned category will increase or decrease the company’s credit rating.
SFDA set up an archive of Credit Information Files to record credit ratings. The credit ratings of noncompliant companies will be decreased. All warnings will decrease credit ratings, and companies receiving them will be subject to higher supervision and inspection levels by local drug administration officials. Conversely, companies that comply with laws and regulations will be assigned to the top category, and will have fewer inspections and receive priority in administrative approval processes. Drug companies with unfavorable records can be promoted to a higher level if they have no violations for one year.
Hologram requirement for pharmaceuticals
To strengthen its pharmaceutical market and address the issue of unregistered pharmaceutical products, Malaysia’s Ministry of Health (MOH) announced the Directive on the Use of the Hologram Security Device. This new regulation requires all pharmaceuticals on sale in Malaysia, including health supplements, traditional products and OTC external personal care products, to have a hologram security tag, called a Meditag,TM affixed to their packaging. Mediharta Sdn Bhd is the only hologram manufacturer authorized to sell, distribute and keep records of the holograms.
The new hologram requirement is being be implemented in two phases. Phase one began 1 January 2005 and requires a Meditag ™ on all non-injectables. Phase two starts on 1 July 2005 and requires hologram labeling for injectables. Temperature-sensitive products requiring cold chain maintenance, such as vaccines and biologicals, are not required to have a Meditag.TM Likewise, cosmetics are exempt from the hologram requirement.
The local manufacturer, repacker (for products imported to Malaysia and packed locally) or importer is responsible for affixing the MeditagsTM to the external packaging of each product. Overseas manufacturers have the option of affixing MeditagsTM at their facilities prior to export to Malaysia. Each hologram is approximately 8mm x 16mm (3/8in x 6/8 in) and will have a unique serial number that can be traced to the licensed manufacturer or importer. The MeditagsTM cost RM0.056 (US 1.5 cents) each and may be purchased by the roll or the sheet.
Manufacturers with drugs on the shelves without MeditagsTM after January (non-injectables) or July (injectables) 2005, will not be penalized or required to recall the products. However, manufacturers not demonstrating an attempt to meet the new requirement may have their product registration (and, hence, sales) suspended by MOH until they are compliant.
Device classification changes
In December 2004, Taiwan’s Department of Health (DOH) published new regulations altering their medical device classification system. Previously, devices were separated into three classes and some Class I products only required Quality System Documentation (QSD) registration and were exempt from product registration. The revised regulation adds new subcategories, reclassifying some devices. Additionally, some previously exempt Class I products now require product registration. Class II and III products continue to require both QSD and product registration.
Simplified QSD requirements
DOH published an announcement on the Exchange of Letter (EOL) with the Quality Auditing of Third Parties of the European Union (EU). From December 2004, DOH will recognize the following six notified bodies within the EU: TÜV PS, TÜV Rhineland, mdc, NSAI, BSI and G-Med. Manufacturing plants in the EU certified by one of these parties will have simplified QSD registration requirements (like US plants that have been inspected by the FDA).
Patent protection laws
In response to pressure from the US government, Taiwan recently decided to take measures to regulate and protect data from foreign pharmaceutical companies. On 22 September 2004, Taiwan’s government approved draft amendments to their Pharmaceutical Affairs Law. These amendments give foreign pharmaceutical companies five years of protection of pharmaceutical tests and new product studies, as well as three years’ protection of improvements to existing products. The US had hoped for protection of six to seven years, as WTO’s standard data exclusivity protection period is six years.
The amendments will ensure that any data provided by pharmaceutical companies for product registration purposes will not be used by any other person or company for three or five years, depending upon the product’s status. As a result, Taiwan’s domestic pharmaceutical industry will lose an estimated NT$4 billion (US$120 million) annually in drug production. In addition, the country’s national health insurance program may face increased expenses exceeding NT$3 billion (US$88 million).
Postmarketing Surveillance regulation
In September 2004, DOH released new regulations on Postmarketing Surveillance (PMS) of new drugs and designated medical devices. The new regulations require all drug manufacturers and some device manufacturers to submit Product Safety Update Reports (PSURs) within five years of approval for drugs and within three years of licensing for designated medical devices.
Vietnam is one of the newest pharmaceutical markets in Asia; currently, approximately 90% of Vietnam’s pharmaceutical market is supplied by foreign companies. However, conducting business in Vietnam is difficult, especially in the pharmaceutical industry. Vietnamese pharmaceutical regulations are unclear and tend to be implemented on a case-by-case basis, with little overall coordination. Moreover, foreign companies sometimes are regarded with suspicion or distrust.
The first companies to enter the Vietnamese pharmaceutical market were forced to enter into joint ventures with local pharmaceutical companies. Now, 100% foreign subsidiaries are permitted, leading a large number of major pharmaceutical companies to establish businesses there.
Alternatively, a company that does not wish to start a subsidiary in Vietnam, but want to export to the country, can obtain a trading license and market its products through a Vietnamese trading company.
In order to qualify for a trading license, a company must meet the following requirements:
• Possess a GMP certificate or license issued by the country from which products will be shipped, demonstrating that the firm is permitted to import, export, trade and store pharmaceuticals. If the license does not specify these functions, MOH will inspect the site and assess functions performed there, at the applicant’s expense.
• Be established in its country of origin as a pharmaceutical manufacturer or trader.
• Have three years of experience operating as a pharmaceutical manufacturer or trader.
• Audited accounts for the past financial year must demonstrate annual turnovers of: US$15 million for a pharmaceutical trader; US$5 million per year for a pharmaceutical manufacturer; and US$3 million per year for a traditional medicine manufacturer.
Companies that have trading licenses can register their products directly in the company name, although such licenses are physically “held” by their local representatives.
Drug price controls
Foreign-invested enterprises play a large role in the Vietnamese pharmaceutical industry. During the past year, many of these companies have increased prices multiple times, taking advantage of loose regulations. By the end of 2004, drug prices had risen 9% over 2003. Many Vietnamese citizens are struggling to pay those prices.
To combat this, Vietnam’s Drug Administration Department issued a new regulation in January 2005 that prevents foreign drug companies from raising their prices without permission from the MOH. This new rule encourages foreign companies manufacturing and trading drugs in Vietnam to keep their prices stable. Moreover, even in an urgent situation, companies still will be required to obtain MOH permission, providing specific details of the planned price increase.
In order to ensure higher standards for pharmaceutical products, Vietnam’s MOH has begun implementing new GMP regulations. These regulations are based upon WHO standards and will take full effect for pharmaceutical manufacturing sites in 2006 and pharmaceutical material companies in 2010. This move is expected to increase export opportunities for Vietnamese pharmaceutical companies, since most countries accept internationally-recognized pharmaceutical GMP standards.
The first GMP regulation in Vietnam went into effect in November 2004, and stipulates that all pharmaceutical manufacturing sites built after that date comply with WHO GMP requirements before obtaining two-year manufacturing licenses. Vietnam’s Department of Pharmaceutical Management (DPM) will conduct GMP inspections and grant GMP certificates. Pharmaceutical manufacturing sites that already comply with Association of Southeast Asian Nations (ASEAN) GMP standards may continue production. However, once their ASEAN GMP certification expires, manufacturers must obtain WHO GMP certification.
Medical product manufacturers need to stay abreast of Asia’s changing drug, device and IVD regulations. By monitoring such changes and altering company strategy as needed, manufacturers will continue to maximize their chances of entering the Asian market.