A regulatory update on Asia's smaller medical device markets: some often-overlooked markets are ripe for device opportunities, but manufacturers must keep in mind certain regulatory issues.
When medical companies think of bringing their products to Asian markets, they typically think of larger countries such as China, Japan or Korea. However, other smaller Asian countries, such as Singapore and Malaysia, can be worthwhile destinations as well. Even Hong Kong, which is part of China, has a separate healthcare system and generally is considered its own market. Although they have smaller populations, these markets all have well-developed healthcare systems and are receptive to advanced products. In addition, their medical device markets are growing rapidly and, in many instances, are more easily accessible to foreign manufacturers. Before venturing into these territories, however, regulatory professionals will need to keep track of current changes in regulations to be successful. This article discusses recent regulatory developments in Singapore, Malaysia, Hong Kong, the Philippines and Taiwan.
The Singapore Parliament recently passed the Health Products Bill, which regulates all health products. It seeks to regulate the manufacture, import, supply, presentation and advertisement of medical products and active ingredients used in the manufacture of medical products.
Singapore previously had voluntary registration for medical devices, but this new bill requires registration and licenses for the manufacture, import and supply of all medical products. Manufacturers would need a manufacturing license in addition to product registration, while importers would need to apply for an importer's license and product registration. Wholesalers must hold a valid wholesaler's license and can supply registered medical products only.
Previous registration of a health product would be valid as long as the registrant continues to pay the appropriate retention fees to the government and the registration is otherwise not suspended or cancelled.
The new bill also regulates medical product advertising, with penalties for false or misleading claims. Manufacturers, importers, suppliers or registrants of medical products must report any defects or adverse events related to their product. Other safety measures and quality assurances include holding importers, manufacturers and wholesalers accountable for the import or sale of medical products that are counterfeit, tampered with, unwholesome or adulterated.
The Health Sciences Authority (HSA) is the main regulatory body responsible for the administration and enforcement of this bill. The HSA will keep records and maintain a register of licensees and all registered health products.
Singapore also has focused on developing its medical device sourcing market. As a number of Singapore-based companies move into medical device production, government agencies are identifying the sector as a key growth area. Products that local companies have recently moved into include airway devices, infusion pumps and gas detection equipment. These companies are seeking to establish OEM relationships with existing Western medical device firms.
Singapore's trade promotion agency, International Enterprise Singapore (IES), believes local enterprise has advantages over other locations in quality control, intellectual property protection and engineering talent. To help encourage and facilitate sourcing relationships, IES has organized a number of trips between Europe and Singapore to bring together local and Western firms. Also, IES, the Singapore Economic Development Board as well as the Standards, Productivity and Innovation Board have created the Medtech Local Supplier Group, which facilitated a number of supply agreements last year.
Since January 2006, Malaysia has had a voluntary registration system for medical devices and their manufacturers. As in Singapore, this has been intended to pave the way for a mandatory system by familiarizing the industry with some of its future requirements.
In August 2007, the Ministry of Health circulated a draft for comments outlining a mandatory medical device regulatory system. Although this draft contains few specifics, it appears that regulators have planned for the system to generally be based on global standards from the beginning. The draft frequently refers to Global Harmonization Task Force (GHTF) documents.
According to the draft, the new regulations will cover all stages of bringing medical devices to market, including design and development, clinical trials, manufacture, distribution, advertising, adverse event monitoring, use and maintenance as well as disposal. For products to receive marketing approval, the manufacturer may submit regulatory approvals from the US FDA, European Union, Australia, Canada or Japan, or from conformity assessment bodies. As in other major countries, low-risk devices simply may be notified to the government instead of reviewed and approved. Foreign manufacturers also will need to retain local representatives to retain their registrations.
In sum, Malaysia clearly is moving toward requiring significant regulatory compliance for medical device business.
Hong Kong currently has no mandatory registration for medical devices, but manufacturers and importers can opt for voluntary registration under the Medical Device Administrative Control System (MDACS). The government intends to make the MDACS a mandatory system in the near future. At present, demonstrating compliance to accepted standards of safety and efficacy can help a product's marketability in Hong Kong.
For products voluntarily listed in the MDACS, conformity assessment during both design and manufacturing is now a requirement. Manufacturers can demonstrate their compliance with an audit conducted by a conformity assessment body, a third-party assessor recognized by the Medical Device Control Office (MDCO). They also can meet the requirement by providing current, valid marketing approvals for a founding member of the GHTF (mainly Australia, Canada, the European Union, Japan and the United States).
Conformity assessment, in the new system, includes information on technical features of products, the quality management system and the post-market surveillance system. The details differ depending on the device's classification. The MDCO uses a four-class system, ranging from Class I (lowest risk) to Class IV (highest risk).
The MDCO also has established a voluntary listing system for local medical device manufacturers and importers. Manufacturers can be listed as long as they implement and maintain a quality management system and have a business registration in Hong Kong.
Importers also can apply for official listing, regardless of whether they import medical devices specified in the MDACS. The MDCO hopes that this listing will help increase medical device vigilance.
The MDCO has stated that inclusion on these lists does not imply that the importer or manufacturer has required regulatory approvals or is in compliance with applicable laws.
The Philippines' Department of Health (DOH) recently issued an administrative order that transfers some medical device regulation responsibilities from the Bureau of Food and Drugs (BFAD) to the Bureau of Health Devices and Technology (BHDT). A joint bureau memorandum issued in spring 2007 clarified in more detail what this transfer will entail.
The BHDT was created in 1999. However, the DOH's concerns about efficiency and capacity have led to administrative changes at the BHDT.
The BFAD will transfer the following responsibilities to the BHDT:
* Product registration of medical device products listed in BFAD Memorandum Circular No. 7s. 1992 (www.bfad.gov.ph/MC/mc71992.pdf)
--Listed products include endotracheal tubes, nebulizers, catheters, HIV testing kits, hepatitis testing kits, etc.
* Licensing of a medical device establishment as a distributor
In the interim, the BFAD will provide on-the-job training to the BHDT. The issuance of Licenses to Operate (LTO) a medical device establishment as a manufacturer, trader, repacker or importer of raw materials will continue to be the BFAD's responsibility until the BHDT has the appropriate resources. In addition to training sessions, the BHDT also will be involved in inspection of medical device manufacturing plants.
The BHDT will take up the handling of new applications for Certificate of Product Registration (CPR) and LTO medical device establishments filed after April 30, 2007. Applications submitted before that date, as well as their regular renewals, will remain the responsibility of the BFAD. The BHDT will not implement major changes to the current application and review system as it takes up BFAD responsibilities.
Taiwan's Bureau of National Health Insurance (BNHI) plans to change its payment system to a diagnosis-related group (DRG) system in the next year. By establishing this system, the BNHI hopes to decrease waste and improve hospital efficiency. The BNHI currently is facing severe financial problems with a deficit of about $104 million. In 2006, the BNHI borrowed $2.3 billion and owed $100 million in interest to pay for healthcare reimbursement. In 2007, the BNHI borrowed $4.8 billion. This deficit has made it difficult for the bureau to cover reimbursements to clinics and hospitals.
In a DRG system, the BNHI will set a fixed payment level for each disease requiring in-hospital care. Even if a hospital's actual cost of treatment is less than the set price, the hospital still can receive the full payment from the Taiwanese government. The BNHI hopes that with this new payment scheme, the incentive of extra money can encourage hospitals to be more efficient and improve care to patients.
However, there are concerns that a DRG system may adversely affect patients with severe, expensive-to-treat conditions. Those with terminal or chronic conditions also may suffer under the new payment system's price ceilings.
The BNHI has stated that the DRG system will not apply to treatments for AIDS, rare diseases, cancer, hemophilia and mental illnesses. Children will receive preferential payment, and hospitals will receive an 8.9% bonus for taking in patients with more serious conditions.
The DRG system will cover 182 diseases and conditions, including areas in dermatology, urology, renal care, ear/nose/throat, oral cavity, multiple traumatic injuries and subcutaneous or breast tissue. It is estimated that more than 400,000 patients will be affected by this new payment system.
The BNHI also has proposed other policies to address its financial problems, including increasing NHI premiums. The proposed increases would vary based on income levels. For example, single military servicemen, elementary school teachers and civil servants would see their premiums increase by about $1 per month. However, the premiums of high-income groups such as skilled technicians, business owners and white-collar professionals would increase by $9 per month. The BNHI has proposed a simultaneous increase in minimum monthly incomes for certain groups to offset the impact of these premium increases.
The BNHI will need to resolve its financial problems to ensure it can continue to cover reimbursement. Without reimbursement, patients will have higher out-of-pocket expenses, leaving many unable to get needed healthcare.
In the smaller Asian countries, growing market opportunities are coming together with increasing regulatory hurdles. Three markets--Singapore, Hong Kong and Malaysia--are setting up mandatory medical device registration systems. Taiwan, with a well-developed regulatory system, is seeing the strains of an aging population on a universal healthcare system. Its problems should put pressure on reimbursement prices for some time to come. These regulatory changes are not likely to significantly harm Western medical device companies doing business in Asia, but they will be crucial to understand going forward.
Ames Gross, a nationally and internationally recognized leader in Asian medical markets, is president and founder of Pacific Bridge Medical. He founded the company in 1988 and has helped more than 200 medical companies with business development and regulatory issues in Asia.
Momoko Hirose is senior associate for Pacific Bridge Medical. She works on research, writing and consulting projects.
For more information about Pacific Bridge Medical, visit www.pacificbridgemedical.com.
Ames Gross and Momoko Hirose, Pacific Bridge Medical