Introduction Ask a senior manager of a medtech company in China what keeps her or him awake at night and regulatory changes will invariably be among the first things mentioned. In McKinsey's 2016 survey of medtech chief executive officers, regulation topped the list of critical issues medtech leaders face. State Council Order 650 (the Regulations on the Supervision and Administration of Medical Devices), which stands out as a landmark policy update, correlates to this high level of regulatory attention. Since its announcement in 2014, State Council Order 650 has introduced a series of profound changes to the industry and impacted local and multinational corporation medtech players in China. On a functional level, regulatory affairs leaders have been the group most exposed to State Council Order 650, while simultaneously taking an important role in shaping the implementation and interpretation of the new policies. As in previous years, the annual China regulatory affairs roundtable provided a forum for regulatory affairs leaders from local and multinational corporation medtech companies and sparked insightful discussions on regulatory changes and best practices for operating within the new regulatory paradigm. This update builds on the relevant discussions from the regulatory affairs roundtable and provides an overview of the major regulatory changes and their impact on the industry. It discusses implications for the role and standing of the regulatory affairs function in medical device companies and how it must evolve in anticipation of future trends. Regulatory environment update Sweeping regulatory changes have affected China's medical device industry since State Council Order 650's implementation. In the past two years, the China Food and Drug Administration (CFDA) has issued dozens of guidelines for technical reviews and mandatory standards for medical devices, urging the industry to upgrade device safety and effectiveness. The CFDA has also implemented a number of measures to streamline product approval and foster innovation. More recently, the CFDA issued Good Clinical Practice for Medical Devices, a new revision imposing higher compliance standards on the conduct of clinical trials by medical device companies. Now more than a year into the implementation of the new regulation, the following areas have emerged as having a particularly high impact on the industry and thus need to be understood thoroughly by medtech organisations: comprehensive clinical trial requirements; streamlined product approvals; strengthened good manufacturing practice (GMP) audits (locally and abroad); and intensified postmarket enforcement. Comprehensive clinical trial requirements In August 2014 the CFDA released the Catalogue of Class III Medical Devices Subject to Clinical Trial Authorisations (CTAs), significantly prolonging the clinical trial timeline of eight types of highrisk device. The statutory timeline for obtaining a CTA is 60 to 100 working days, while regulatory affairs leaders' realworld experience suggests that it frequently takes six to nine months. Further, a sponsor must collect ethics committee approvals from all study sites before submitting the CTA application, which can be a lengthy process. For an imported product, the sponsor must also obtain the marketing authorisation issued by a foreign authority and include it in the CTA submission. The combination of these factors can delay the initiation of clinical trials in China substantially and prevent simultaneous crossborder development of innovative devices. At the other end of the spectrum, clinical trials may now be omitted in certain circumstances. Based on CFDA guideline released in May 2015 (the Technical Guideline Governing Medical Device Clinical Evaluation), clinical trials can be waived on a casebycase basis if the safety and effectiveness of a device can be demonstrated through nonclinical performance evaluations or clinical data from studies of a predicate device approved in China. However, one year after the launch of the clinical evaluation report mechanism, most roundtable delegates noted that, in practice, it remains challenging to obtain trial waivers. Streamlined product approvals The CFDA now allows the automatic renewal of licences if there are no changes to the approved product. This mechanism is supposed to expedite licence renewal. However, several roundtable delegates suggested that there is a lack of clear CFDA guidance regarding what product changes require a reapplication or amendment submission. Some believe that an amendment submission is required for any changes to the listed items on the product licence, while others believe it is required only when the changes affect the safety and effectiveness of the device. Companies also differ as to whether they may proceed with amendment submissions in parallel to licence renewals. Another CFDA effort to streamline product approval was the introduction of a fasttrack pathway for innovative medical devices on March 1 2014. Under the fasttrack system, products designated as innovative are given priority in the registration queue and applicants have more opportunities for consultation with examiners and experts. Fasttracked products are also expected to be reviewed and approved by the CFDA somewhat faster. Strengthened GMP audits The CFDA replaced the 2011 GMP regulations for medical devices with an updated version that came into effect in March 2015. All device manufacturers are expected to meet China's GMP standards throughout their product development and manufacturing cycles, whether they manufacture in China or overseas. With the new GMP standards, the CFDA committed more personnel and resources to quality system inspections. Intensified postmarket enforcement With the rollout of the new regulations, the CFDA also significantly stepped up its postmarket enforcement efforts. In 2014 it launched a sixmonth enforcement campaign targeting five common areas of noncompliance in the medtech industry. In 2015 it launched another eightmonth enforcement campaign targeting noncompliance in invitro diagnostics. During these enforcement campaigns, the CFDA and local food and drug administrations (FDAs) could conduct periodic quality sampling and companies could be penalised if their products were found to be inconsistent with the registered technical specifications. This is of concern, as medtech products often undergo incremental technical changes that may not be submitted for approval in China promptly. The inconsistencies between the product and the specifications in CFDA registration information and labels can be targeted and challenged by local enforcement authorities. Medtech companies can face financial penalties in the range of 10 to 20 times the sales of the products in question. Given the high stakes regarding clinical trials, approval timelines, manufacturing quality standards and enforcement risks, medical device manufacturers must fully understand the existing regulations and implementation rules. Further, after the last round of systematic regulatory changes, most regulatory leaders believe that the regulations will keep evolving under the umbrella of State Council Order 650. A widespread concern is that the future regulatory landscape remains a moving target: according to survey results, many regulatory affairs leaders expect continuous regulatory changes in the next three to five years (55% of the respondents). Further, most believe that the new device regulations will continue to be interpreted differently and implemented by individual provinces or cities (85%). On both counts, the answers indicating expected uncertainty have increased significantly since 2015, which indicates that State Council Order 650's implementation has yet to become steady and predictable. Unaddressed issues and challenges Among the regulatory changes, clinical evaluation is consistently rated as the most relevant topic by participating regulatory affairs leaders. Interpreting and following the highly complex clinical trial authorisation and exemption policies have presented the most challenges to their work. Regulatory affairs leaders have also expressed their concerns about: the costs and benefits associated with fasttrack applications; the differences between the China GMP and International Organisation for Standardisation (ISO) standards; and the unpredictability of postmarket enforcement. Lengthy and complex clinical trial application process The clinical trial application process in China is time consuming: according to regulatory affairs leaders surveyed, the average processing time (including queuing time) ranges from one to twoandahalf years, depending on the complexity of the clinical trial, with a median time of 21 months (Figure 1). Stringent and inflexible requirements – as well as the capacity constraint at the CFDA and the Centre For Medical Device Evaluation – are the root causes of the long wait time. For example, ethical committee approval is required for all centres participating in the trial, and obtaining such approval from all public hospitals can often be a tedious process. Leveraging clinical evaluation reports to apply for the waiver of a clinical trial has been challenging. Companies can seldom gain authorisation and access to competitors' predicate device data. Most known trial exemptions have arisen in a few limited scenarios, such as the localised version of an established approved imported device or incrementally upgraded versions of an approved device of the same applicant. It is unclear whether the CFDA in practice recognises crosscompany data referencing during the clinical evaluation, as admitted under the 510(K) review regime of the US Food and Drug Administration. Despite the challenges, many companies reserve clinical evaluation reports as the first option, while being prepared for local clinical studies. In the meantime, they also feel the need to push for more clarity and lobby for a more standardised process. Balancing IP protection against time to market Given the long processing time, an increasing number of companies are considering fasttrack approval. According to a survey, 70% of participants are considering applying for fasttrack status for future registrations (up from 40% in 2015). Conversely, many multinational corporations are concerned about IP protection and found it difficult to apply for patents in China or initiate domestic operations. This is evident by the low proportion of approved applications to date from multinational corporations (among the 55 fasttrack applications approved by April 2016, only four were from multinational corporations). However, in practice, the benefits of fast tracking remain unclear. Based on roundtable participants' feedback, the fasttrack process cannot always reduce the uncertainties in the CFDA's product review or deliver substantial time savings. For example, it may still be difficult to obtain detailed guidance from reviewers on the registration or study requirements of a designated device. Even if time is saved in the CFDA's review phase, this is viewed as less significant, as the new devices must undergo fullscale studies and a foreign marketing authorisation is needed for initiating studies on an imported device in China. Adapting manufacturing operations to China's latest GMP standards After the CFDA rolled out new device GMPs, domestic manufacturers perceived an increase in the frequency and stringency of GMP inspections, which can be conducted from time to time by the CFDA and municipal and provincial FDAs. For import manufacturers, the CFDA also announced its plan to rollout postapproval GMP audits of around 30 overseas device companies in 2016 – a sharp increase from the two companies that received audits in 2015. The industry observed that the priorities and standards set out in the Chinese GMPs can differ from those under ISO standard 13485. Compliance with the requirements of Chinese device GMPs is now a common area of concern for both Chinese and foreign players. Postmarket enforcement inconsistencies Postmarket compliance is increasingly challenging because local enforcement authorities can interpret statutory requirements inconsistently. The local FDAs' discretion in interpreting regulations and identifying and characterising misconduct significantly affects and varies the scale of the penalties. Regulatory affairs leaders have expressed concerns about a more aggressive enforcement style in some pilot regions where local FDAs have merged with other agencies such as the Administration of Industry and Commerce. The fact that the CFDA's regulatory requirements may sometimes conflict with those of other supervising ministries (eg, the Administration of Quality Supervision, Inspection and Quarantine) and Customs – for things such as product labelling – is also of concern. Coping with evolving regulatory environment In "China's medical device market: new policies, higher stakes" – published after the 2015 China medtech regulatory affairs roundtable – the following priorities for achieving excellence in regulatory affairs were identified: developing seamless interactions between local regulatory affairs and the global team; becoming a valuable partner to regulatory bodies; and building the regulatory team's capabilities. These trends were assessed at the 2016 roundtable. Clearly, localglobal interactions have been an area of focus, with over 70% of regulatory affairs leaders reporting that more (or morestructured) processes and interactions had been put in place over the past year. Over half of respondents also thought that the role and appreciation of the regulatory affairs function within the local organisation had increased and, accordingly, that the scope and focus of the regulatory affairs team had evolved. However, only 30% had made structural changes to their organisation (eg, integrating the clinical and regulatory affairs functions), and an increase in team size was the exception, rather than the norm, with 18% reporting additional hiring at the China headquarters level and only 6% at a regional or provincial level. Evidently, the quality of regulatory affairs talent is more important than the quantity, and highcalibre talent remains the true bottleneck for many organisations. Over 90% of regulatory affairs leaders think that the key to improving their organisation's readiness is training and capability building, while only 20% believe that hiring more people would be helpful in this respect. While internally focused improvements at regulatory affairs organisations are being pursued across the industry, the question remains as to whether the collaboration between companies and regulators is fully leveraged to build a better regulatory environment for China. Again, 50% of regulatory leaders surveyed believe that efforts to work with the government have increased since 2015. Simulatenously, approaches by individual companies inherently face certain constraints, as government stakeholders are, and should be, sensitive to what could be seen as lobbying efforts by individual players. For this reason, crossindustry initiatives could play an important role in engaging the government in a more meaningful way. In fact, 70% of regulatory affairs leaders believe that a thoughtful crossindustry channel approach could be a game changer in the way that medtech companies work with the government. There is also a clear concern that industry associations may not prioritise reform of the regulatory system. While trade association membership may predominantly consist of multinational corporations or local companies, it can be difficult to present unbiased views about potential regulatory changes. What can be learned from other industries? On the pharmaceutical side, the R&DBased Pharmaceutical Association Committee has had some success as an industry association. Although at face value it consists of 38 multinational corporation members, the committee has shown commitment to being a thought partner to China's government regarding its 'Healthy China' agenda. Over the years, the R&DBased Pharmaceutical Association Committee has taken on a number of important issues, including: drug safety and quality; access to innovative medicine; and the drug innovation ecosystem. It has also provided valuable input into governmentlevel discussions, often by commissioning research work and international benchmarking to independent third parties and creating highquality study reports that serve as a welcome input on regulatory decision making. The R&DBased Pharmaceutical Association Committee has also embarked on partnerships with policy research organisations in China, including the Development Research Centre of the State Council and the China Society of Economic Reform. Objectives of these initiatives were an assessment of healthcare service standards in China and a report on strategic regulatory choices within the Chinese essential drug system. Ultimately, the committee provides an example of a multinational corporationfocused organisation that has succeeded in adding value to China's regulatory stakeholders through collaboration and highquality factbased perspectives on topics of critical importance to the system. Another interesting example is the work of the Bill & Melinda Gates Foundation in the health regulatory space. Early in 2016, the foundation signed a memorandum of understanding with the CFDA, aiming to work together to enhance the Chinese regulatory system and facilitate the delivery of highquality, safe and effective medical products to people in lowincome countries. Under the memorandum of understanding, the foundation and the CFDA have agreed to support the reform and further strengthen China's medicalproduct clinical trial and marketing authorisation application review and approval system, in order to: promote drug accessibility; enhance compliance with internationally recognised GMPs by Chinese medical product manufacturers; support the elevation of China's regulatory capabilities and standards of medical products to international levels; and foster global regulatory collaboration to enhance global medical product quality, safety and efficacy. Drawing on its global network and technical expertise, the foundation will assist the CFDA in establishing a mechanism for attracting international talent to the CFDA for longterm secondments to assist, as part of the current reform, in: training regulatory professionals; and conducting research on global regulatory trends to support the alignment of Chinese standards and practices with international requirements. Implications for China's medtech industry More can be done by leveraging industry associations and investing in building distinctive, impartial perspectives on China's tough regulatory challenges. Further, partnerships with third parties like the Bill & Melinda Gates Foundation could be explored to expand ongoing efforts to transfer policymaking and processes from the pharmaceutical into the medtech arena as soon as possible. Comment Following the implementation of State Council Order 650, the medtech industry has faced a series of regulatory challenges – ranging from comprehensive clinical trial requirements, streamlined product approvals and strengthened GMP audits to intensified postmarket enforcement. Medtech companies must increase their efforts to cope with evolving regulatory challenges in order to stay ahead of the competitive curve. More importantly, medtech companies should form constructive partnerships with the Chinese regulatory authorities to foster innovation and improve access to new technologies. Good precedents include: the R&DBased Pharmaceutical Association Committee's contribution to the 'Healthy China' initiative and ongoing dialogues with Chinese think tanks; and the Bill & Melinda Gates Foundation's strategic collaboration with the CFDA on talent development.