A Sampling of Medical Device Regulatory Issues in Asia


Despite Asia’s short term economic crisis, Asia will bounce back soon and still be a dominant factor in the 21st century. Similarly, there will be many opportunities for international medical companies in Asia. Before an international medical company can sell its products in Asia, however, unique and difficult regulatory issues will need to be dealt with. This article focuses on four regulatory issues in Japan, Taiwan and Korea.

I. Direct Versus Indirect Medical Device Registration in Japan

What are the advantages of direct versus indirect registration in Japan?

Direct registration of medical devices in Japan is accomplished either by: 1) a manufacturer’s own office in Japan; or 2) if the manufacturer has no Japanese office, via an In-Country Caretaker (ICC). If the device(s) is registered indirectly (i.e., in the name of a Japanese distributor, not in the U.S. manufacturer’s name) and the U.S. manufacturer wishes to transfer device registration to a new distributor and have direct registration, there are two ways, (both of which are expensive): 1) an “unfriendly” transfer and re-registration of the product(s) from scratch; or 2) a “friendly” transfer and re-registration, using the old documentation. In the long run, it is often cheaper for a U.S. manufacturer to register directly from the beginning.

While initial direct registration costs or re-registering for direct registration via an ICC or by the manufacturer having its own office in Japan, are high, there are major advantages. The most important is that the manufacturer controls its Japanese distributor(s) and the product’s marketing, rather than the Japanese distributor controlling the product and its marketing. Also, the manufacturer can appoint multiple distributors from the start.

First, unfriendly transfers are expensive, including lost sales during re-registration (in Japan, sales cannot be started without a valid registration). Sales following re-registration will be lower due to lost credibility during re-registration. Me-too products can be re-registered quickly; unique products take two years, sometimes requiring clinical trials.

Second, a friendly transfer is also expensive. The major cost is paying off the old distributor for previous work done, including: 1) initial registration; and 2) product time, energy and costs spent. There is also compensation for future income loss and the distributor’s inventory to be purchased at cost. The current distributor, for negotiations purposes, will probably calculate the (higher) cost of an unfriendly transfer and use that figure to start the “friendly” negotiations.

For both friendly and unfriendly transfers, buying out an existing registration means buying the distributor’s interest. That is hard because valuing a Japanese company is complex. Japanese mergers & acquisitions are uncommon; Japan utilizes different accounting practices; and there are cultural differences. If the old distributor is kept even after direct re-registration, there are dangers, including continued inadequate performance. However, such arrangements may turn out to be unavoidable due to high costs, marketing considerations and/or timing and product issues.

After re-registration, on-going “watchdog” regulatory work will be required by the manufacturer’s office or the ICC to insure compliance with Japanese requirements, just as in the U.S. If direct registration is through an ICC, an annual fee is required.

II. Registration and Copying of Medical Devices in Taiwan

Are company and product information AND a plant master file required for registration in Taiwan prior to selling a medical device there?

U.S. companies wishing to export and sell medical devices to Taiwan must submit required information for registration to the appropriate Taiwanese authorities. Product and company information are required as part of such a packet. There are questions, though, whether a manufacturer’s plant master file (PMF) is also required.

Taiwan is currently revising its registration requirements applicable to the so-called plant master file (PMF), for both domestic and imported medical devices. Taiwan’s English language version contains a requirement for submission of PMF information, but the government’s Chinese language version does not. It appears that the government has mistranslated one of the versions, but the Taiwan Ministry of Health says it is currently trying to clarify which version is correct.

Taiwan has proposed that, beginning January 1, 2004, domestic medical device companies must meet the country’s Good Manufacturing Practice (GMP) guidelines, including submission of a PMF. Foreign companies, however, must meet GMP guidelines by filing a PMF by January 1, 1999. Taiwan’s Industrial Technology Research Institute (ITRI) would be responsible for reviewing the foreign company’s filing. The U.S. medical industry, including the Health Industry Manufacturing Association (HIMA) and others, have protested this five-year discrimination as unfair and unnecessary discrimination. They suggest, instead, the same starting date for everyone and that U.S. manufacturers submit, rather than a PMF, a certificate of compliance (such as ISO 9001/2 and the U.S. FDA inspection report). Taiwan was seeking to give its domestic industry a break.

As a result of this pressure, Taiwan changed the regulation’s effective date for both domestic manufacturers and exporters to Taiwan to 1/1/1999, and made clear that U.S. manufacturers do not have to include the PMF in the registration package — thus, that thus, that the absence of PMF material would not adversely affect the registration application.

In addition, for manufacturing facilities in the U.S., manufacturers may be exempted from submitting PMFs and submit instead: 1) FDA’s Establishment Inspection Reports (EIRs); b) FDA’s Certificate to Foreign Government; and c) an ISO 13485 Certificate.

For plants outside the U.S., manufacturers have to submit a PMF when applying for pre-marketing DOH approval. The British Trade and Cultural Office, the French Trade Commission and the German Trade Office have all requested the same treatment as accorded the U.S. by Taiwan’s Department of Health (DOH).

DOH has also agreed to provide an English translation of its new list of proposed documents for the foreign manufacturers’ PMF submission, but has yet to decide which documents are required.

If a plant master file is required for registration, how can product information be kept confidential and exposure minimized?

Second Question: When companies have asked the Taiwan government about PMF confidentiality, Taiwan has not promised confidentiality. To secure assurances of confidentiality, U.S. companies should consider submitting requests through the American Institute of Taiwan (AIT-similar to the U.S. Department of Commerce). Government to government communications are more effective in Taiwan than company to government communications.

While there is some risk of state-of-the-art technology information and other material being copied or otherwise misappropriated in Taiwan, the risk is relatively small because the Taiwanese market is small, the investment required to copy is substantial and now Taiwan has effective patent enforcement and seriously discourages copying, including severe penalties. Of course, foreign manufacturers must take the trouble to secure patents and other protection recognized under Taiwan law.

III. Medical Device Registration in Korea

What documents, especially pertaining to GMP, must U.S. medical companies submit for product registration in Korea?

Submission in Korea of GMP documents or documents demonstrating U.S., Korean or international GMP compliance will help to meet regulatory registration requirements to sell imported medical device products in Korea.

Korea introduced a new medical device regulatory registration system on September 1, 1997, to be phased in over two years. Medical devices imported before this date can continue to be imported under the pre-existing system, but all devices imported during the transitional period must comply by September 1, 1999. The new regulations include: 1) GMP requirements and quality control standards; 2) designation requirements for medical devices; 3) guidelines for preparing applications for approval of standards and testing methods for devices; 4) testing requirements and requirements for approving the compliance of quality control standards; 5)guidelines for approving device licenses and the manufacture or import of devices; 6) requirements for administering imported medical devices; and 7) requirements for reviewing the safety/effectiveness of medical devices.

To import medical devices into Korea, one must first obtain a Medical Device Importer’s License through the appropriate city government, showing, among other things, that one will not deviate from existing medical device regulations. Second, all device importers must obtain a Quality System Approval by September 1, 1999 from the Korean Academy of Industrial Technology (KAITECH), whose approval is based on: 1) accurate maintenance records regarding imported devices; 2) quality assurance for personnel and test facilities; and 3) the quality of personnel and equipment used for after-sales services. KAITECH judges quality management standards using its “Quality Management Standards for Imported Medical Devices (QMS) Regulations.” Finally, device importers must undergo a KAITECH compliance inspection every two years. U.S. manufacturers are exempt if they present updated GMP documents demonstrating continued compliance with U.S. GMP, usually in the form of FDA audit records.

Korea’s increased emphasis on improving safety and quality of medical devices does not, however, mean that the entire new regulatory framework is more restrictive. For example, the new regulations abolish a previous requirement requiring testing every shipment of 11 medical device categories. The new classification test is much easier and more efficient. As noted, foreign-made medical devices can be exempted from local testing requirements if the U.S. manufacturer demonstrates that its quality standards are equal to or greater than the Korean GMP. This can be done by presenting foreign compliance GMP documents and other test data. Since most of Korea’s medical device importers (U.S., Europe, Japan) already follow international standards such as ISO 9000 or GMP, they will find their position improved under the new system.

IV. Classifying Pharmaceutical Products in Japan

How are Dermatology Products Classified in Japan?

Dermatological pharmaceutical products in Japan fall into three categories:

• Drugs, including prescription, non-prescription and proprietary products;
• Quasi-Drugs; and
• Cosmetics.

In Japan, the official Japanese Pharmacopaeia recognizes drugs as products intended to be used in the diagnosis, treatment or prevention of disease. Thus, for example, drugs cannot be equipment, items or instruments.

As noted above, within the drug category, there are three sub-categories: Prescription Drug, further defined as those drugs the dispensation, application and control of which must be under the direct supervision of a medical doctor, and Non-prescription and Proprietary Drugs, defined as those drugs purchased by the public directly from pharmacies, drugstores, etc. and used by the consumer based on his or her own judgement. In principle, the effects of non-prescription drugs should be mild and the ingredients and quantities within a range that assures safety and efficacy. The directions for intended use must be kept within the scope of preventing or treating minor diseases or to maintain and improve health, and the directions for use and dosage must be easily understandable and should not be easily subject to misuse or abuse.

Quasi-drugs are those the use of which is defined as being for a fixed purpose, that have a mild effect on the body, and that, naturally, are not equipment of instruments. Examples of quasi-drugs are cotton products for sanitary use; hair dyes; items for permanent waves, prevention of acne, chapping itchy skin rash and chilblain; skin and mouth disinfectant products; and bath preparations. In addition, classified in this category as medical cosmetics are shampoos and rinses used for the prevention of dandruff and itching, skin lotions, creams, milky lotions, hand creams, and cosmetic oils used for the prevention of heat rash, frostbite, chaps, cracks and pimples.

Which of the three categories a product falls into is determined by the product’s purpose and ingredients. If the purpose of a product is the prevention of acne, for example, then such product could be classified as either a quasi-drug or a cosmetic. Classification would then be dependent on the ingredients. If the purpose of the product, on the other hand, is treatment of acne, then such product would be classified as a drug. The ingredients and the relative strength of the product would determine whether it is a prescription or non-prescription drug. If the product contains steroids or antibiotics, for example, then it is normally classified as a prescription drug.

In dealing with Japanese governmental and quasi-governmental agencies with responsibilities in this area, obtaining clarification of regulations or policy can be tricky because examining officials have a great deal of discretion and normally do not hold such discussions. This is particularly true of matters pertaining to the ingredients and use of new products. Another unusual aspect of classification of new products in Japan is the reluctance of agency officials to make a public record of their decisions. As with any large organization, governmental or private, obtaining an official determination for any new product is not easy and is subject to change until the final decision is officially made.

However, for guidance, there are a number of manuals available that spell out, in general terms, steps to be followed to obtain governmental approval for the sale of medical products. It is highly unlikely that a senior official will discuss a new application or even respond to inquiries regarding new products, applications or ingredients. It is worth noting, in closing, that this approach, of course, reserves an official “bail-out” position for the government should any serious problem develop. In such situations, junior level officials can be either transferred or reprimanded, thus saving face for more senior officials.