China’s NMPA Requests Public Comments on its First Medical Device Law – Three Key Points

China’s National Medical Products Administration (NMPA) is soliciting public comments on the draft Medical Device Administrative Law (MDAL), the first statute of its kind, until September 28, 2024.  The draft MDAL has three key points:

• The introduction of incentives to launching new products in China;
• Greater importance to compliance with China’s compulsory product standards; and
• Increased liability of the local legal deputy of foreign marketing authorizations holders.

1. Incentives to launching new products in China

• Under the existing Medical Device Regulation (MDR, also known as Order 739), an imported medical device must be approved in the country of origin before it can be approved in China, unless the product at issue is an innovative device.  The draft MDAL proposes to remove this requirement for country-of-origin approval (Article 47).  An imported medical device can undergo the regulatory review and approval process in China in parallel to the same in other countries and shorten the time to market in China.
• Marketing authorizations of medical devices, unlike drugs, cannot be transferred between different entities under the Order 739. The draft MDAL explicitly states that marketing authorizations can be assigned and the NMPA will issue specific implementing measures (Article 58).  R&D-based medical device companies can sell the right to their products along with the marketing authorizations in the form of an asset sale. 
• The draft MDAL encourages the NMPA, the National Health Commission (NHC) and the National Health and Security Administration (NHSA) to coordinate on policies that will stimulate innovation (Article 6).  The NHSA will be expected to allow price negotiation when listing innovative medical devices for reimbursement.  The NHC will direct healthcare institutions to prioritize their procurement of innovative devices. 

2. Importance of China’s compulsory product standards

• Unlike regulators in the US and EU, the NMPA has been using compulsory product standards as a bar of entry for domestic and imported medical devices.  The draft MDAL creates a dedicated chapter on product standards and reinforces the significance of the compulsory standards.  Notably, high risk implants that do not comply with the compulsory standards or any devices that do not conform to compulsory standards and cause injuries to patients will lead to an increased penalty (Article 168). Manufacturing or knowingly selling products that fail to conform to compulsory standards will be subject to punitive damages (Article 174).

3. Increased liability of local legal deputy in China

• Foreign marketing authorization holders (MAH) must appoint an onshore legal entity in China as its local legal deputy.  The local legal deputy of foreign MAHs had historically been the de facto MAH of imported devices in China.  The existing MDR distinguishes the responsibilities of a local legal deputy from the foreign MAH’s and imposes a lesser liability on the local legal deputy.
• The draft MDAL reverses the course of action and holds the local legal deputy and the foreign MAH jointly liable for total product life-cycle compliance, including adverse event reporting and monitoring, product recalls, post-approval studies, establishment and continuous operation of an effective quality management system, and cooperation with the regulatory authorities during post-approval enforcement (Article 88).  The local legal deputy will be subject to the same administrative penalties as what a foreign MAH would have been subject to if the foreign MAH fails to comply with the MDAL (Article 167). 

In addition to the above highlights, the draft MDAL also attempts to enhance the NMPA’s oversight throughout the total product life cycle.  Refurbished medical equipment will be prohibited from being imported, distributed and used at hospitals (Articles 105, 134, and 151).  The NMPA will routinely conduct risk-based post-approval inspections and audits (Article 118).  

Post-approval change management will be a critical area of compliance under the draft MDAL.  Failure to obtain a pre-approval for major changes can result in administrative fines between 15 to 30 times of the value of affected products.  In egregious cases, the legal representative and responsible company employees can be subject to lifetime debarment and criminal detention. 

The draft MDAL, once finalized, will undoubtedly transform the competitive landscape in China.  Medical device companies that are interested in marketing their products in China are strongly encouraged to carefully review the draft MDAL and timely provide their recommendations to the NMPA. 

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