China State Council Releases Order 739, Creating New Market Access Opportunities for Global Medical Device and IVD Manufacturers

Background

China’s top administrative authority, the PRC State Council, issued the new regulation of Supervision and Administration of Medical Devices—or or State Council Order Number 739—on February 9, 2021. This order replaces the existing State Council Order Number 680 and takes effect on June 1, 2021.

Over the years, remarkable progress has been made in the evolution and development of the Supervision and Administration of Medical Devices regulation. The first version of this order was initially promulgated in 2000 (State Council Order 276), followed by a major overhaul in 2014 (State Council Order 650) and a second overhaul in 2017 to upgrade the regulation to State Council Order 680.

The 43 pages of Order 739 are constituted of eight chapters:

• General Provisions
• Medical Devices Registration and Filing
• Production of Medical Devices
• Distribution and Usage of Medical Devices
• Adverse Events and Recall
• Supervision and Inspection
• Legal Liability
• Supplementary Provisions

Comparing Order 680 with Order 739, the later consists of 107 articles, 27 newly added and 70 modified. While Order 739 follows most of the legislative structure of Order 680, the underlying regulatory philosophy has become more progressive, marking the beginning of China’s medical device regulatory reform.

Analysis of Notable Changes

1. Continued Rollout of the Marketing Authorization Holder (MAH) Policy

Order 739 implements an MAH regime for medical devices with major implications for developers (research institutions and companies) who have limited manufacturing capabilities. Developers may now focus on product R&D with ownership and control of marketing and outsourced production to one or multiple qualified contract manufacturing organization(s). This continued rollout is one effective way to incentivize research institutions and IVD/medical device Sponsors to develop innovative products within the Chinese marketplace with robust and fundamental support of the national government. However, it is worthy to note that MAHs bear the responsibilities of the safety and effectiveness of devices during the entire product lifecycle.

They must:

• Establish a quality management system (QMS);
• Perform post-market performance follow-up and risk control;
• Carry out adverse event (AE) monitoring; and
• Re-evaluate and establish a product tracing and recall system.

As a result, NAMSA anticipates that resource allocation within industry will be optimized through New Order 739. Additionally, MAH policy enables R&D departments to concentrate on prototype development and innovation while contract manufacturers will serve a major role within manufacturing and QMS compliance.

The National Medical Products Administration (NMPA) initiated this MAH Pilot Program in 2017 with Shanghai, Guangdong and Tianjin acting as the first trial locations. After great progress of regional implementation, NMPA extended the pilot program to another 18 provinces in China in 2019. This policy has achieved laudable achievements from its implementation and was formalized into the Articles of Order 739.

2. Encouraging and Supporting Innovation

One of the remarkable strengths throughout Order 739 is the continued encouragement of future innovation. Articles eight and nine declare that the national body will promulgate an industry plan of medical devices to prioritize innovation into development. The intent is to fully support innovation from different aspects, including R&D funding, government bidding and procurement and medical insurance reimbursement. Any “Innovation Device” is eligible to win priority review and expedited access to the China market.

An Innovation Device is defined as a ‘product with cutting edge technology, significant clinical application and its own China patent.’ These device types can begin China Innovative Device application without the approval of the country-of-origin. [Note: one normal imported registration of a non-innovative device should have pre-existing marketing authorization from the country-of-origin for NMPA submission (Article 15).] An implication of this reform is that NMPA offers equal opportunity between a foreign company and a domestic company. Because of this, an overseas company can synchronize the marketing access of its innovative product at least in the country of origin and in China.

3. Product Registration and Regulatory Review

a. Type Test

NMPA does not mandate any specific type of testing to a NMPA certified Type Testing Center per Order 739 (Article 13), which was previously mandatory per Order 680. An overseas manufacturer can either perform the type testing by itself or optionally choose one Type Testing Center to perform the test as of June 1, 2021. NMPA will issue a technical guidance on how to perform type testing by a manufacturer and how to develop the type testing report to support and supplement this significant initiative in the near future.

An implication of this reform is that NMPA provides more flexible paths of type testing to the industry and it becomes more important for overseas manufacturers to deeply understand China national and industry standards. Overseas manufacturers should keep an eye on China standardization to ensure continued compliance. It is unclear at the moment how the self-type testing process will be implemented in practice and to what extent companies will benefit.

b. Clinical Evidence

Order 739 will allow versatile clinical evidence to support product safety and effectiveness. Such evaluations can be based on clinical trial data and/or analysis of clinical literature and clinical data on predicate devices. One of the most notable changes is that NMPA is bringing new flexibility to clinical evidence pathways.

Per Article 25, conducting a clinical trial for a device is based on pre-analysis on the existing non-clinical trial data (i.e., an official clinical trial for NMPA registration purposes). If data is inadequate to support product safety and effectiveness, the clinical evaluation can only be based on clinical scientific data (for instance, internal and/or external, published and/ or non-published clinical data). However, NMPA released a catalogue of six class III categories of medical devices mandating clinical trials on Sep 18, 2020 (NMPA Notification No. 61, 2020)), including some high-risk implantable devices. These include, but are not limited to, implantable cardiac pacemakers, implantable cardiac defibrillators, implementable blood pumps, implantable drug infusion pumps, artificial heart valves and stents.

Additionally, NMPA is currently considering a risk-based approach for clinical evaluations. Article 24 of Order 739 stipulates devices which satisfy the following criteria are eligible to be exempt from clinical evaluations:

• Devices for which there is an identical type of device on the market with well-established product features/characters and post-market safety record following many years of clinical use; and
• Devices that can be evaluated effectively through non-clinical data.

Article 26 of Order 739 supports Chinese clinical sites in carrying out clinical trials and encourages sites to perform clinical studies for innovative devices. As the capabilities of the clinical trial program are part of criteria review of a clinical site’s classification and ranking, one implication of this measure would greatly incentivize clinical sites to develop and strengthen their clinical trial program(s). Additionally, Sponsors will likely and consequently receive positive support from study sites.

Article 29 of Order 739 reflects that NMPA also provides new flexibility in relation to medical devices used to treat life-threatening diseases. Expanded use (sympathetic use) means investigational devices that are undergoing clinical trials for severely life-threatening diseases without effective treatments could potentially be offered to other non-enrolled patients with these conditions; this patient data can be used to support NMPA registration.

c. Regulatory Review

Order 739 officially sets forth the following expedited approval paths under respective circumstances:

• A prioritized review and approval pathway for innovative medical devices (Article 8), as discussed in Section 2 above, including:

– Conditional approvals will be made available for devices treating rare diseases, or orphan indications, as well as life-threatening diseases that do not have an effective treatment method or that are utilized in response to public health emergencies. These devices are eligible for conditional approval in an expedited way based on early-stage data. Typically NMPA will leave the homework in the issued license with respects to those unfinished necessary post-market clinical trials and/or post market performance follow-up and other studies. The expectation is that NMPA will request the Sponsor to complete these studies before the next renewal application.

– EUA: In view of the COVID-19 Pandemic, NMPA defines the Emergency Use Authorization (EUA) path in Order 739. At the request of the National Health Commission (NHC), and in response to public health emergencies, the NMPA can issue an EUA within a defined scope and period.

– Implied Approval of License Renewal: A medical device registration certificate is valid for five years. A manufacturer must submit a medical device re-registration application six months before the expiry of the five-year period. If the renewal application is not approved by the time the license expires, the application will be deemed approved per Article 22.

– LDT: Medical institutions will be allowed to use their lab-developed tests (LDTs) for their own clinical purposes if the clinical needs cannot be met by approved IVD reagents. The NMPA and NHC will jointly develop the actual rules of LDT in separate guidance.

– New Import Channel for Clinical and Urgently-Needed Devices: Medical institutions will be allowed to import Class 2 or Class 3 medical devices in small quantities. This will require a special import permit from the NMPA or NMPA-authorized local provincial MPA to meet urgent clinical needs.

d. Completed Lifecycle Supervision

As we have known it, NMPA has and will continue to strengthen post-market surveillance (PMS) in order to improve the supervision system and supervision efficiency. NMPA has also placed greater emphasis on the regulation of the complete product lifecycle; this has been reflected by more field inspectors at different levels.

Article 68 of Order 739 stipulates the establishment of a system for professional career inspectors. Article 69 brings the definition of expanded inspection and on-site inspections—these will not only be limited to the manufacturer site (R&D, manufacturing, distribution and usage). NMPA will expand the inspection to corresponding personnel as well as third parties, if needed. NMPA published the ‘Guidance on overseas inspection for Drugs and Devices’ on December 26, 2018 (NMPA No.101, 2018); this order specifies that overseas inspections do not apply only to the manufacturing site, but also to overseas R&D sites.

Article 38 of Order 739 stipulates a Unique Device Identification (UDI) phased implementation to assist with device data traceability in China. In order to implement General Secretary Xi Jing’s “Four Strictest” requirements on drug safety, one of the initiatives is to implement UDI to strengthen full lifecycle management and to improve supervision efficiency. Now, UDI has become the common language to solve global regulatory issues of medical devices.

Highlighted below are some important milestone achievements of UDI in China:

• July 1, 2019: NMPA and NHC jointly issue “The Pilot Work Plan of UDI System,” which opened the prelude to the construction of the UDI System in China
• August 26, 2019: NMPA issues the “UDI System Rule” indicating China’s UDI System, officially entering a new stage of law-based, rule-based, phased implementation and organizational security
• October 14, 2019: NMPA issues “Notice on Matters Related to the First Batch of UDI Implementation;” from this point, UDI is mandatory for 64 medical devices and will be implemented gradually for other products
• December 10, 2019: NMPA announces that the UDI database System is now officially online
• March 31, 2021: The UDI System will functionally open to the public for search, download and interface docking

e. Heavier Penalties

Order 739 imposes heavier penalties on violations for all medical device developer entities and key individuals for illegal acts. It also implements punishment measures to increase the cost of violations and drives serious offenders out of the market in the most extreme cases.

Production and sale of unapproved medical devices can be subject to fines in the range of 15-30 times the goods’ value (as opposed to 10-20 times the goods’ value under Order 680). The manufacture and distribution of medical devices that do not conform to mandatory standards or NMPA-approved product technical requirements could result in fines in the range of 5-20 times goods’ values, as opposed to 5-10 times the goods value under Order 680.

Order 739 also introduces personal liability on legal representatives, principal responsible persons, directly responsible supervisors or other personnel of MAHs. The illegal gains of these individuals during the period of illegal conduct can be confiscated. They will also receive an administrative fine of 30 percent to three times their income and a lifetime debarment from engaging in the medical device manufacturing and/or distribution of medical devices in the most serious cases.

Conclusion

With the recent deepening healthcare reform in China, new guidance and initiatives are expected to be released in the coming months. Such details can offer helpful insights and operation guidance to the IVD and medical device industries. In the interim, NMPA is determined to establish an increasing scientific and efficient approach to product reviews and approvals. Multinational companies operating in the life sciences space who are interested in the Chinese marketplace will need to pay close attention to keep up with rapid regulation changes to ensure continued compliance. More scientific and open legislation should bring more opportunities for multinational Sponsors to more efficiently access this marketplace.

How Can NAMSA Help?

NAMSA is the industry leader in driving successful regulatory outcomes through effective interactions with the NMPA and other APAC government authorities. NAMSA’s dedicated team of IVD and medical device specialists and scientists not only understand how to guide manufacturers through testing, clinical and regulatory requirements, but we also help Sponsors simplify the development and implementation of effective development strategies. Whether supporting IVD regulatory assessments and submissions, developing IVDR/MDR compliant technical files, designing and managing clinical trials or building ISO 13485:2016 and 21 CFR part 820 compliant quality systems… we’ve got you covered.

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