Over the last several years, the economies of countries in Asia have fared very differently. While some have done well, others have grown only modestly. Among Asia’s economies, China and South Korea lead the pack. China’s gross domestic product (GDP) grew 7.3% in 2001, and has averaged about 8% growth over the last 15 years. Korea had one of the hottest stock markets in the world in 2001, and its GDP is projected to grow by 5% in 2002. By contrast, Singapore and Taiwan, the other two Asian “tigers,” are still experiencing some economic difficulties and modest GDP increases. Japan, too, is mired in economic stagnation: for the last 10 years, its economy has been completely flat. Despite this mixed economic environment, Asia’s consumers continue to demand high-quality healthcare products. Thus, there is still plenty of incentive for manufacturers in the United States to pursue these markets.
Despite the sluggishness of the country’s economy, the Japanese government is still very wealthy. It continues to foot the country’s healthcare bills through universal health insurance. And at approximately US$23 billion in 2001, the size of the Japanese medical device market is enormous.
The healthcare system in Japan is dramatically different from that of the United States. The average hospital stay in Japan is 38 days, versus 2.7 days in the United States. For the most part, Japanese doctors are still revered by society, much as U.S. doctors were before the rise of managed care. More money is spent on prescription drugs in Japan than in the United States (an average annual expenditure per customer of US$225 in Japan versus $75 in the US). In some respects, Japanese healthcare workers also have greater feelings of moral responsibility toward their work than many others throughout the world. For Japanese physicians, healthcare providers, and medical regulatory officials, their duties go beyond merely doing their job; they are protecting the health and well-being of the Japanese people. For this reason, the regulatory procedures and documents needed to register new medical products in Japan are often more extensive than what is required in the West.
Before marketing its products in Japan, a medical device manufacturer must first obtain two types of documents from the Ministry of Health, Labor and Welfare (MHLW), the kyoka (license) and the shonin (approval).
A kyoka essentially grants a medical device manufacturer or a distributor permission to market its product in Japan. It is required for each manufacturing plant and representative office in Japan.
A shonin is granted to a device manufacturer once the MHLW is satisfied with the safety and efficacy of a medical device. It is required for each specific product that the medical device manufacturer markets in Japan.
When reviewing their shonin, foreign medical manufacturers must ensure that the Japanese version of the document, when translated into English, accurately describes their products and features. It is also important to ensure that partial amendments to their original shonin remain current with any new versions or upgrades of their medical devices. This can be done either directly from the foreign manufacturer’s office in Japan or by means of an in-country caretaker (to be discussed below).
Sometimes a foreign company receives a shonin and, after introducing its device in the marketplace, continues to rely on the original approval even after the product has already undergone several upgrades. If a problem were to develop (a person is injured or dies from using the device) and the MHLW were to discover any difference between the original shonin and the upgraded device (e.g., differences in color, shape, features, etc.), the MHLW could well clamp down on the manufacturer. In a worst-case scenario, the MHLW might even close down the foreign business.
The in-country caretaker (ICC) system is one of the important medical regulations in Japan. The ICC system helps foreign medical companies who do not have local offices in Japan to register their products in Japan in their own company name – not the distributor’s name. This approach makes it easier for companies to switch distributors, if necessary. The role of the ICC includes the following responsibilities:
- Overseeing the preparation of documentation required for registration.
- Acting as a negotiator on the foreign manufacturer’s behalf with the MHLW during the registration process.
- Ensuring both the initial and ongoing safety and efficacy of imported products.
- Providing the foreign company’s importers and distributors with necessary information.
The MHLW recently announced major changes that will significantly change and dismantle the ICC system as it exists today. Effective April 2003, foreign sales approval will be subject to the following new requirements:
- A foreign manufacturer must appoint a representative who has a license to sell medical devices in Japan.
- The foreign manufacturer and its Japanese representative will be jointly responsible for regulatory compliance with regard to import procedures, GMPs, and postmarketing surveillance.
- 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 will place a heavy burden on existing ICCs, many of which are small firms without the capacity to take on this greater role. To survive, most ICCs will have to begin working together with medical representatives (importers). However, there will be a three-year grace period for the full implementation of these new rules. The final details of these new requirements are also still being worked out by the MHLW.
On April 1, 2002, a new Foreign Reference Pricing System took effect in Japan. The new policy cuts the reimbursement prices for medical products such as pacemakers, balloon catheters, and orthopedic implants to no more than one-and-a-half times a predetermined “foreign price” for the products. This is significantly less than the amounts previous reimbursement amounts. Many U.S. observers believe that the new policy violates the 1986 Market-Orient Sector-Selective Agreement, which requires the Japanese government to discuss with the United States any changes in policy that might seriously affect bilateral trade. Several U.S. senators and representatives have urged Japanese Prime Minister Junichiro Koizumi to speak with the MHLW to withdraw foreign reference pricing. However, no specific progress has been announced on this issue thus far.
On the surface, the Japanese good clinical practices (GCP) guidelines are fairly standard and straightforward. The GCPs outline the basic duties and requirements for medical institutions, physicians, the institutional review boards, and clinical trial sponsors. The biggest difference between the Japanese GCPs and the United States may be the role of the chief investigator. In Japan, the chief investigator is responsible for supervising the entire course of a clinical trial, as well as the physicians involved in the trial. Even for clinical trial data obtained outside of Japan, it is necessary to obtain the signature of a chief investigator to attest to the reliability of the data and to prove the compliance and efficacy of the medical product. This must be done even when the foreign clinical data has been accepted on a preliminary basis by the MHLW. The chief investigator must be the main physician who is responsible for the final clinical data report. However, a chief investigator does not have to be a Japanese doctor and, at least in theory, the MHLW will accept a foreign doctor’s signature.
The most important thing to understand regarding clinical trials in Japan is that few things are set in stone. The exact number of test subjects and trial sites is subject to the interpretation of the examining officer of the MHLW, and varies with each product and examiner. Decisions on a company’s clinical trials can vary widely, depending on which MHLW examiner is consulted, his or her mood, and other subjective factors. Different examiners may recommend vastly different numbers of case studies for exactly the same product. After giving a preliminary opinion, the same examiner may arrive at a completely different conclusion days later. Or he or she may decide that more studies are needed, even if no new information is presented. However, a company should never say to a MHLW examiner, “But last week you said…,” because the examiner will most likely take it amiss.
Acceptance of foreign clinical data in Japan is still difficult, but the situation is improving. Deregulation has increased the number of products for which foreign clinical data are accepted during the approval process (although much progress still needs to be made). The percentage of foreign clinical data found to be acceptable each year has gradually increased but is still less than 20%. However, there are certain strategies that can help to facilitate the acceptance of foreign clinical data into Japan and to avoid costly duplication:
- Include Asian and/or Japanese patients in your US clinical trials.
- Determine which Japanese GCPs are applicable to the clinical trial, and obtain a preliminary MHLW ruling that the planned clinical trial protocols are acceptable.
- Conducting a limited number of clinical trials in Japan.
In the United States, patient disclosure and informed consent for clinical trials are widely accepted and practiced. Patients in the United States often see clinical studies involving new medical products as the only way to find new treatments for illness or disease. In Japan, the exact opposite is true. Many clinical trial participants are often unaware of the procedures or treatments being administered to them. This situation results from the lack of public information regarding the significance of clinical trials, as well as a lack of patient disclosure. Until recently, clinical trials were considered taboo in Japanese culture; physicians who participated in them were often stigmatized. This has created a huge barrier for clinical trial testing in Japan. In recent years, however, there are emerging initiatives, in the forms of TV commercials and informational websites, to better educate the Japanese public about the merits of clinical trials. (For more information on this subject, please see the sidebar above on informed consent in Japan.)
China is the second largest medical device market in Asia, worth more than US$2.2 billion in 2001. The State Pharmaceutical Administration of China, or SPAC, was the regulatory body that unified the medical device registration system throughout the country , in 1997 . Two years later, however, SPAC was dismantled and replaced with the State Drug Administration (SDA). The SDA was charge d with the registration and monitoring of imported medical devices. The scope and functions of the SDA are very similar to that of FDA in the United States. Some of the agency’s responsibilities include
- Developing, revising, and promulgating legal standards for medical devices .
- Establishing catalogs for the classified regulation of medical device products .
- Registration, testing, and administration of all medical devices .
- Issuance of product registration certificates and production licenses .
- Quality system and product safety certification .
In addition to the SDA, other Chinese government agencies have jurisdiction over the regulation of certain medical devices. One of these other government agencies, the State Administration for Entry-Exit Inspection and Quarantine , issues safety licenses for import s it calls consumer products, which include x-ray equipment, dialysis equipment, blood purification equipment, electrocardiographs, implantable pacemakers, and ultrasound equipment.
Medical device regulation is still evolving in China . For example, beginning on May 1, 2002, the China Compulsory Certification (CCC) mark is replacing the old China Commission for Conformity Certification of Electrical Equipment (CCEE) and China Commodity Inspection Bureau (CCIB) marks. The CCC system will replace the previous certification s chemes as the new safety licensing system for certain types of products , including medical devices, latex products, and electrical tools. The integration of the two previous marking systems is in line with China’s commitments for entry into the W orld T rade O rganization. There will be a transition period of one year for converting products previously certified under CCEE and CCIB to CCC. Both CCEE and CCIB marks will be invalid after May 1, 2003.
In 2001, South Korea ’s medical device market was the third largest in the region (after Japan and China) estimated at over US $1.2 billion. The market is projected to grow at an average annual rate of about 10% over the next three year s . The growth in the medical device market is thought to be driven by three main factors:
1 . T he implementation of the National Health Insurance Act on July 1, 2000, which provided improved healthcare insurance coverage for South Koreans .
2 . T he aging population (by 2005, approximately 11% of the population will be more than 55 years old) .
3 . T he country’s developed infrastructure (such as private hospital networks) which provides great incentive for market entry and expansion by foreign manufacturers.
The main regulatory body in charge of overseeing medical devices in South Korea is the Korea Food & Drug Administration (KFDA) , established in 1996. Through the Medical Devices & Radiation Health Department, the KFDA performs inspections and quality assurance audits and conducts research on medical devices. Since its establishment, however, the agency has developed few specific medical device regulations . While some specific requirements are outlined for product registration in Korea (documentation, technical review, and type tests , among others), there are a few details about requirements for approvals for specific types of products . The result has been much confusion among foreign medical device manufacturers.
To address this situation , the Korean National Assembly is expected to draft legislation called the Medical Devices Act to be introduced into legislation in late 2002 or early 2003. The act aims to better codify more – specific regulatory procedures and requirements. It would be distinct from the current Pharmaceutical Affairs Law under which much of Korea’s medical devices regulations have been developed. Some of the changes proposed under the new a ct include the following:
- Adjustment and clarification of the definitions of products subject to medical device regulation s.
- Inclusion of medical software under KFDA regulation .
- Addition of specific provisions regarding used or reprocessed and leased devices .
- Transform ation of the classification scheme from three tiers to four tiers.
- Implement ation of new postmarket surveillance regulations
Taiwan ’s medical device market was estimated at more than US $700 million in 2001. Regulation of medical devices in Taiwan follows a three – level classification system similar to that of the U.S. FDA . The government body that regulates medical devices in Taiwan is the Bureau of Pharmaceutical Affairs, which is under the Department of Health (DOH). The DOH implements a q uality s ystem d ocumentation (QSD) system to register medical devices in the country. This system requires device manufacturers to pass a so-called paper audit before their medical devices can be registered. QSD is part of Taiwan’s g ood m anufacturing p ractices (GMP) system, implemented for medical devices in early 1999. Under Taiwan’s GMP requirements , domestic device manufacturers are subject to site inspection, while importers must pass a QSD review. Registration dossiers for medical devices will be rejected outright if submitted prior to obtaining GMP/QSD approval.
Newly built factories and new medical device applications for premarket approval must comply with GMP guidelines. However, a five-year grace period has been established for devices already registered on the market. This grace period will end on February 10, 2004, when full compliance with Taiwan’s GMP s becomes mandatory for all factories and devices.
A new medical device classification system was announced in June 2000 , a transition period is in effect until June 20, 2005. The new system will divide medical devices into 16 product categories ranging from clinical chemistry to general hospital use to radiology. The classification system is three – tiered , with Class I devices being the least risky and Class III devices posing the highe st risks.
The medical device industry in Singapore was worth more than US$250 million in 2001. The regulatory system for medical device registration there is changing. On April 1, 2001, the Health Sciences Authority was unveiled. The agency provides a one-stop, multi-disciplinary body to regulate healthcare products. It integrates the following departments of the Ministry of Health: the Center for Drug Evaluation, the Institute of Science and Forensic Medicine, the National Pharmaceutical Administration, the Center for Medical Device Regulation (CMDR) and the Singapore Blood Transfusion Service.
Another change in the works is mandatory product registration , expected to take effect over the next two years. As a first step, however, the CDMR will only subject high-risk, Class III medical devices on the market in Singapore to a new system of voluntary notification and registration.
There are four levels of medical device classifications in the new system: Class I (lowest risk), Class IIa, Class IIb, and Class III . Risk factors are determined by the product’s local and systemic effects, the body system affected, the degree of the device’s invasiveness, and the duration of the device contact with the body.
The CMDR is also reviewing medical device regulations in the U nited S tates, Europe, Australia, and Japan in order to formulate its own regulatory standards. Currently, medical devices that are approved for use in th ose countries are generally accepted into the Singaporean market when appropriate certificates are available. The C DMR plans to adopt “consensus standards and requirements on safety, quality , and performance which satisfy the regulatory requirements of developed countries.” The medical device regulations are expected to be implemented in Singapore by late 2002 or early 2003.
The regulatory systems in each Asian country differ , often significantly. T herefore, the means by which foreign manufacturers operate in each country should differ too. For example, a foreign medical device manufacturer with its own office in Tokyo, must be aware of the rigidity and bureaucracy of the MHLW and the conservative nature of its own Japanese staff when registering a medical device in Japan. The manufacturer must follow the specified rules and procedures as closely as possible and refrain from pressuring regulatory officials .
The same approach, however, isn’t necessary with the SDA in China , where things are often based on evolving regulations interpreted by more- flexible officials who can be politely pushed. In China, who you know is still almost as important as what documents you submit.
To make initial contacts anywhere in Asia, it is essential to travel there in person to introduce your company, business plan, and regulatory strategy. Impersonal emails, faxes, or voicemail are not good starting points in establishing long-term business relationships with the key regulatory bodies in Asia. And asking for recommendations on how to proceed on the regulatory front often works better than saying what you did in the United States.
If your company has its own office in an Asian country, it is necessary to build good relations with local regulatory officials. Use common sense and follow local business practices. If you do not have an office in Asia, picking the right distributor or partner is critical. Normally, a good local distributor or partner will have in-house regulatory personnel who can efficiently maneuver through the local regulatory procedures on your behalf. Similarly, mediocre distributors normally have ineffective in-house regulatory people. For this reason, it is important for international sales and marketing executives to work with their own in-house regulatory people from the start when building distributor networks. The most important thing to realize is that, regardless of which country you are dealing with, relationships are critical. Much of Asia is a place where business is done through personal relationships, not threats or lawsuits. It is necessary to understand that Asian cultures value intimate relationships for the trust and cooperation they build between business partners. Visible effort must be made so that the Asian counterparts are assured of your commitment and reliability.
|Growth Rates in Asia (Measured in Real GDP % Change)|
Source: IMF World Economic Outlook, May 2002
General recommendations to carry out effective informed consent for clinical trials in Japan:
- Explain the purpose of the study clearly and simply.
- Distinguish the investigational treatment from standard care .
- Avoid overstating the potential benefit of the investigational treatment .
- Focus on physical and nonphysical risks associated with the investigational treatment as a whole .
- Estimate broadly the likelihood of the risks associated with the investigational treatment .
- Provide supplementary documents that are easy to read and culturally sensitive , and continue to provide these materials throughout the lifetime of the study .