Foreign medical device manufacturers that lack a Japanese subsidiary, or that prefer not to have their registration in the distributor’s name, must appoint a Japan-based company to hold their device registrations. Under the Pharmaceuticals and Medical Devices Act (PMD Act), foreign device manufacturers can use one of two third-party structures: an independent third-party Marketing Authorization Holder (MAH) that holds the registration in its own name, or an independent third-party Designated Marketing Authorization Holder (DMAH) that holds the registration in the manufacturer’s name.

The Role of an Independent Third-Party MAH

An MAH is a company located in Japan that has a Marketing Authorization license under the PMD Act. The MAH submits applications in its own name and holds the registration for the foreign manufacturer. The required MAH license depends on device class: Type 3 covers Class I general medical devices, Type 2 covers Class II controlled medical devices, and Type 1 covers Class III and Class IV specially controlled medical devices. The MAH maintains quality assurance (GQP), post-market safety (GVP), and a quality management system (QMS). It also releases products to licensed distributors after a quality check is done, reports adverse events, manages recalls, and serves as the contact point for the Pharmaceuticals and Medical Devices Agency (PMDA) and prefectural authorities.

The Role of an Independent Third-Party DMAH

Japan’s foreign special approval system also allows a foreign manufacturer to obtain a registration or approval in its own name, not the DMAH’s name. To use this system, the manufacturer appoints a Japanese company that holds a DMAH license. This local Japanese company is the DMAH. The DMAH files the application, and the resulting registration is in the manufacturer’s name. In addition, only the DMAH can release the product to the Japanese distributor after a quality check of the product is completed.

Like MAH licenses, DMAH licenses come in three types. The DMAH carries out the same in-country compliance work as a conventional MAH, including regulatory submissions, quality oversight, and safety reporting. However, the manufacturer retains legal obligations of its own. The DMAH structure applies to devices that require third-party certification (Ninsho) or PMDA approval (Shonin). Class I devices enter the market through a notification that only a Japanese MAH, not a DMAH, files.

Other Potential Scenarios for MAHs and DMAHs in Japan: Besides Utilizing an Independent Third Party

Besides an independent third-party DMAH or MAH, these licenses can be held for a manufacturer by a subsidiary of the manufacturer or a Japanese distributor. A manufacturer that operates a Japanese subsidiary can obtain an MAH license and keep its registrations in-house. Its device registrations then stay with the subsidiary regardless of which distributors it uses. The manufacturer can add or change distributors without transferring any registrations and can also use multiple distributors simultaneously. However, the subsidiary must employ qualified regulatory and quality personnel and operate GQP, GVP, and QMS programs, which require fixed staffing, office space, and other compliance expenses.

Distributors can also take on the MAH or DMAH role at no added cost, since product sales will hopefully cover their in-house regulatory expenses. However, this option comes with a major drawback. If the manufacturer moves to a new distributor, the original distributor may resist handing over the registration without compensation. In this case, the manufacturer can try to buy back the registration, but this buy-back may be costly. Alternatively, the manufacturer can re-register from scratch, which can be costly and time-consuming. If the manufacturer needs to re-register from scratch and is off the market for a period of time, competitors may tell buyers that the company is an unreliable supplier, which will likely be detrimental to its Japan business.

Factors in Selecting a Structure

Manufacturers typically weigh four factors when selecting a MAH/DMAH structure. The first factor is distribution strategy. A manufacturer that plans to use multiple distributors, or expects to change distributors, should hold its own approvals and appoint an independent third-party MAH/DMAH or establish its own Japanese subsidiary.

The second factor is cost, which ranges from little or no fee for a distributor MAH. For an independent third-party DMAH, there are several service fees, including the initial registration fee, monthly DMAH fee, and warehouse fee. For a Japanese subsidiary, personnel, rent, and operating costs can get very expensive, and this option is generally not recommended unless the Japan market opportunity is over several million USD in sales.

The third factor is control of technical documents. When the manufacturer holds its own approvals via a subsidiary or independent third-party DMAH, it has more control of its registration documents and key intellectual property. When a manufacturer allows its distributor to register the device, the distributor will have access to key regulatory documents and will often see some of the manufacturer’s intellectual property. In short, using a distributor to register is cheaper, but may be less secure.

The fourth factor is the contract between the manufacturer and its MAH, DMAH, or distributor. The agreement should define information sharing, adverse event reporting, recall responsibilities, and the handling of existing or in-process registrations if the relationship ends. Manufacturers should also plan how post-market safety monitoring will continue during any transition. If a device manufacturer decides to utilize a distributor as its MAH/DMAH, it should always have a buy-back provision in its distribution agreement to handle the registration if a break-up is needed.

Conclusion

If the foreign device company does not set up its own subsidiary in Japan, it can hold its own approvals under the foreign special approval system and appoint an independent third-party DMAH, which allows it to change or add distributors without transferring registrations. A manufacturer that uses a distributor as its MAH reduces entry costs but relinquishes control to that distributor. Foreign device manufacturers need to understand and evaluate all the issues above to make the right choice when picking an MAH/DMAH in Japan.

Written by: Ames Gross – President and Founder, Pacific Bridge Medical (PBM)
Mr. Gross founded PBM in 1988 and has helped hundreds of medical companies with regulatory and business development issues in Asia. He is recognized nationally and internationally as a leader in the Asian medical markets. Mr. Gross has a BA degree, Phi Beta Kappa, from the University of Pennsylvania and an MBA from Columbia University.