On March 7th, 2014, the State Council issued the Regulation on the Supervision and Administration of Medical Devices (“Regulation”). On July 30th, 2014, China Food and Drug Administration issued the Measures for the Management, Supervision and Administration over Retail of Medical Devices (“Measure”). On December 12th, 2014, China Food and Drug Administration issued the Standards for Quality Control of Medical Devices (“Standard”). The series of regulatory actions demonstrates China’s efforts to strengthen administration of manufacturers and retailers of medical devices and equipment.

I. Improve the quality management systems

1. According to the Regulations, medical devices production enterprises shall establish and improve the quality management systems adaptive to the medical devices, ensure the effective operation of such medical devices, and conduct regular self-inspection of the operation of the quality management system.

2. According to the Measures, the food and drug supervision and administration departments shall supervise and inspect the effective operation of quality management systems of medical device production enterprises. Further, it is the responsibility of these departments to ensure the production and operation conditions of medical device enterprises consistently comply with the statutory requirements..

3. According to the Standards, medical devices production enterprises shall establish a quality management system, quality management documents, staffing of the enterprises, production equipment conditions, production process control and risk prevention, and other matters.

II. Greater liability for enterprises

1. The Regulations establish a monitoring system to collect, analyze, evaluate and control the adverse events of medical devices. It is appropriate that self-inspection results are reported to the State Council.

2. According to the Measures, medical devices production enterprises shall ensure the certification of the agent when they appoint the agent to transport, store or sale medical devices.

3. According to the Standards, a legal representative or other business executive is the person held primarily responsible for quality management of the medical devices production enterprises.

III. More severe punishment for illegal acts

  1. According to the Regulations, the food and drug supervision and administration departments will impose a fine of more than 10 times but less than 20 times the amount of the “value” for the illegal acts. This broadens the scope of punishment, as the old regulations only imposed fines of two to five times the “illegal proceeds”.
  2. According to the Measures, any illegal act engaged in by medical device production enterprises during any stage of production or management is punishable. If a medical device production enterprise buys medical devices from an unauthorized company, the buyer will also be punished.
  3. According to the Standards, the medical devices production enterprises will be punished according to the gravity of the illegal acts. The most severe punishment is that the original certificate issuing department revokes its medical device registration certificate, medical device production license and medical device operation permit.

The three regulations outlined above became effective in 2014, leading to a change in the PRC medical device industry. These regulations not only provide guidelines to the production and selling of medical device, but also enhance the operating costs of illegal medical device production enterprises, including but not limited to equipment replacement cost and fine, by strengthening administrative sanctions. Consequently, the next few years will witness a revolution in the medical device industry whereby the enterprises, which comply with legal requirements in light of production and selling, will likely dominate the market.