On December 26, 2018, the Chinese agency for regulating drugs and medical devices (the National Medical Products Administration; “NMPA”) released the Announcement on Issuing the Administrative Measures for Overseas Inspections of Drugs and Medical Device (hereinafter referred to as “Regulation”) to ensure the quality and safety of drugs and medical devices developed or manufactured abroad. For the first time, a set of detailed working procedures has been laid out to equip NMPA with standardized guidance for overseas inspections. It is a decisive step of the Chinese government to build up effective post-market supervision and administration.
The primary goal of overseas inspections is to ensure that the development and manufacturing of drugs and medical devices meet the same standards applicable to domestic products in China, as mandated by law. If a product falls short of the requirements, its entry to China may be halted. It can be inferred from the release of this new Regulation, and the directives from the central government to intensify overseas inspections that foreign manufacturing sites and R&D centers will have to gear up for more frequent inspections from NMPA.
In this article, the Regulation’s background and content will be analyzed in detail, and practical recommendations to overseas MAHs , manufacturing sites and R&D centers will be presented.
1.1 International Practice and Practice in China
Overseas inspection is not a recent news for foreign pharmaceutical companies, considering that NMPA has started overseas inspections of drug companies early in the year 2011, and medical device companies in 2015. To date, NMPA has delegated 116 inspection teams to inspect 131 drug products produced in 25 countries.
Overseas inspection is a global practice for drugs and medical devices inspection. U.S. has been conducting overseas inspections for more than fifty years. The Guide to International Inspections and Travel provides FDA inspectors with standard procedures of overseas inspections. A company that fails the inspection will be issued a warning letter rejecting the shipment of its products to the US. According to statistics, China received the largest number of warning letters issued by FDA to a single country in the year 2017 and 2018. As for Australia, in addition to legislations on overseas inspections, Therapeutic Good Administration has assigned a range of international agreements with other countries to facilitate overseas inspections.
“China conducted much fewer overseas inspections compared to developed countries. In order to keep pace with all international practice, when drafting the regulation, NMPA has gained experience in a global scale.” as stated by one of its officials. Meanwhile, NMPA has been recruiting more inspectors which makes more overseas inspections feasible. In the executive meeting on April 12, 2018, the State Council explicitly required bolstering overseas inspections of drugs and medical devices. NMPA emphasized the same in July, 2019.
1.2 Practice Calls for Clearer Guidance on Overseas Inspections
China is the world's second largest healthcare market after the U.S. In the year 2017 alone, drugs and medical devices with an estimated value of 37.7 billion USD from 60 countries and regions have been imported to China. With the swelling number of imported drugs and medical devices, there is an increasing need to guarantee the quality of imported products.
Before the Regulation, overseas inspections have been conducted mainly based on general substantive laws, such as Regulations on Supervision and Administration of Medical Devices and the Good Manufacturing Practice for Drugs. However, there were no detailed rules and procedural guidance. Early in 2012, former State Food and Drug Administration formulated Administrative Measures for the Inspection of Overseas Pharmaceutical Manufacturers (Draft for Comments), which has never come into force. It has been demonstrated by the inspectors that in practice the lack of specific laws to support it makes it difficult to eliminate obstacles in law enforcement.  Another, without clear guidelines, companies were left with uncertainty.
1.3 Strengthening Post-approval Supervision
In recent years, the Chinese regulatory authorities in healthcare industry have been restructuring the regulatory framework from stringent pre-approval to rigorous post-approval supervision. They have made enormous efforts to remove obstacles to accelerate the introduction of overseas drugs and medical devices, including moving forward with implementing fast-track registration pathways for urgently needed new foreign drugs, accepting overseas clinical trial data, in addition to relaxing some statutory requirements, such as the cancellation of the compulsory inspection of chemicals in batches at the time of importation . Consequently, all these rules make post-approval supervision and administration more imperative. The overseas inspection is a vital tool to help the regulatory authorities curb the safety risks while expediting the introduction of drugs and medical devices.
II. PROCEDURAL AND SUBSTANTIVE REGULATIONS FOR OVERSEAS INSPECTION
2.1 Targets of Overseas Inspections
All MAHs, manufacturing sites and R&D centers of drugs and medical devices imported or intended to be imported to China shall be subject to the Regulation. When necessary, inspections can be extended to cover the production sites, suppliers, or other contractual parties of raw materials, auxiliary materials, and packaging materials, etc.
NMPA determines the annual inspection targets by means of risk evaluation and random selections in accordance with the suggestions on inspected drugs and medical devices, R&D sites and manufacturing sites from relevant departments. In particular, priority consideration shall be given to certain risk factors  including
a) potential risks found during review and approval process;
b) risks in the quality management system indicated in inspections or batch release;
c) potential product safety risks indicated by the monitoring of adverse reactions and adverse events;
d) acts in violation of laws or regulations indicated by complaints, tip-off or through other channels;
e) adverse records of MAH (i.e. the marketing authorization holder of drug and medical device registrant or filing applicant);
f) major problems in a MAH’s quality management system found by on-site inspection by an overseas regulator;
g) re-inspection is required after rectification.
Also, where other laws and administrative regulations prescribe otherwise for such overseas inspection. For example, where the Medical Device Supervision and Administration Department finds it necessary to check the quality management system overseas when organizing the technical evaluation on imported medical devices, it shall organize the technical inspection institutions of the quality management system to check the quality management system. 
2.2 Main Procedures of Overseas Inspections
NMPA, Center for Food and Drugs Inspection of NMPA (“Inspection Center”) and the companies inspected bear different responsibilities in overseas inspections.
2.3 Main Responsibilities of the Companies Inspected
Before inspection, MAH is given limited time to submit Site Master Files and other materials required. Once the inspection time has been decided, MAH cannot change the time unless it can provide reasonable explanation to the Inspection Center. The Regulation requires MAH to appoint a Chinese agency, which is in responsible for liaisons between MAH and NMPA (Inspection Center) and assistance with the overseas inspection.
During inspection, the site inspected shall
- introduce the product registration, production, and quality management situations to the inspection team；
- identify the person in charge of the inspection site;
- maintain the normal condition of operation during inspection, and allow the inspection team to have full access to relevant sites and areas to better examine the facilities and equipment;
- arrange dynamic manufacturing process of inspected product;
- promptly provide necessary documents, records, electronic data and other information for analysis;
- provide accurate answers to the questions raised by the inspection team.
After inspection, MAH shall
- rectify the deficiencies pointed out by the inspection team within 50 working days;
- in case the deviation cannot be rectified within 50 working days, provide detailed rectification plan and status updates to the Inspection Center until it has been rectified;
- when products recall is needed, the agent in China appointed by the MAH shall comply immediately. MAHs are required to have product traceability system in place for efficient products recall when needed. The Chinese agency shall be in-charge of product recall.
2.4 Substantive Quality Related Requirements
The aim of the inspections is to guarantee the authenticity, reliability and compliance of the relevant overseas processes of development and production of drugs and medical devices. To ensure favorable results after the on-site inspection, the MAHs, manufacturing factories and R&D centers overseas shall strictly follow the statutory requirements and standards of P.R.C. 
The inspection results announced by NMPA were analyzed. In addition to some problems that may lead to failure after evaluation, such as uncontrollable product quality and serious data reliability issues, the main deviations found in quality control and quality assurance from the past inspections are summarized below.
2.5 Consequence and Penalties
After on-site inspection, the Inspection Center will send the Notice of Overseas Inspection Result to the company inspected. After rectification measures are adopted by the company, subject to the principles of risk assessment, the Inspection Center will conduct comprehensive evaluation, taking into comprehensive consideration the severity of the deviations, as well as the product category. The comprehensive evaluation results  usually could be,
a) Acceptable, when no defect was found through on-site inspection;
b) Acceptable after rectification, when the rectification measures against all major and general defects found through on-site inspection indicate that the company was able to take effective measures to make rectification and organize production in accordance with laws, regulations and technical specifications;
i. there was an issue of authenticity; key factors affecting product quality were inconsistent with the registered items; the rectification measures were insufficient to solve the serious or major defects; the rectification plan was unattainable; or any other factors cannot conform to laws, regulations and technical specifications; or
ii. when the company has been deemed deferring, hindering, restricting or refusing the inspection any time before or during the inspection, e.g. failure to provide documents within time limitation, postponing inspections two times, restricting the inspection team from entering into certain manufacturing area, or other scenarios deemed not cooperating with the inspection.
Unless the inspection result is ‘Acceptable’, NMPA would take risk control measures as “penalties” depending on different circumstances, such as
- interview the company;
- ordering of rectification within a designated period;
- issuance of warning letter;
- suspension of import customs clearance and filing procedures for drugs;
- suspension of import;
- suspension of sales and use;
- continuous supervision of product recall until revocation of import approval.
In general, the Regulation standardizes the procedures of overseas inspections while imposing tougher requirements to foreign MAHs, manufacturers and R&D centers of drugs and medical devices. Being well prepared for NMPA inspection has become more essential, considering the serious consequences (e.g. import suspension/prohibition and adverse effect on the company reputation) of a negative inspection result. If your company imports Drugs and Medical Devices to the Chinese market, being well-informed and prepared are paramount.
Here are some recommendations:
Firstly, overseas development and manufacturing must always be compliant with current and changing laws and regulations in China. The foreign MAHs, manufacturers and R&D centers shall carefully examine and identify the potential gaps between different local standards, and eliminate as effectively as possible to mitigate the possible negative inspection results from NMPA.
Secondly, considering overseas inspection is a prevailing global practice, it is advisable for multinational pharmaceutical and medical device companies to have department/team in-charge of preparing for potential overseas inspections. Such department should be responsible for quality and risk control, organizing self-inspections in daily operation, preparations for potential inspections (e.g. implementing inspection SoP, providing staff trainings, and preparing all necessary documents) in advance, and coping with real on-site inspections.
What you should do if your company is due for inspection:
- timely inform all relevant departments of your company once an inspection is announced and scheduled;
- coordinate internally immediately to guarantee timely and effective communications, documents preparation and response to the Inspection Center;
- establish a special team (including Chinese agency and translators as required by the Regulation) to interact with the inspection team and answer questions;
- timely consult and seek assistances from the specialists with expertise in NMPA overseas inspections.
1. In this Article, ‘MAHs’ refers to marketing authorization holders of drugs and medical device registrants or filing applicants.
2. As commented by an official NMPA, “Up to now, as many as 47 inspection tasks could not be carried out due to the reasons for the company's refusal to inspect, take the initiative to withdraw, stop production, relocation, retreatment, refusal to cooperate with the completion of foreign affairs procedures or even due to the reason of visas.”. To better solve this issue, the Regulations refer to the Measures for the Flight Inspection of Drugs and Medical Devices and the latest regulations issued by the FDA. A variety of behaviors such as “MAHs are prevented from delaying the arrangement of the inspections twice” and the “inspected MAHs refuse to arrange for dynamic production” “extension inspection” are included in the Regulation and refusal of or obstructing the inspection can be directly judged as “fail”.
3. On April 24, 2018, NMPA issued the Notice on Matters regarding Customs Clearance and Inspection of Imported Chemicals “Imported chemical raw materials and preparations (excluding chemicals that are first sold in China) are no longer subject to compulsory inspection in batches at the time of importing. Imported chemicals are no longer subject to port inspection at the drug testing institutions established or designated by drug regulatory departments for the port”.
4. Article 9 of the Regulation.
5. Article 13 of the Regulation on Supervision and Administration of Medical Devices.
6. The applicable Chinese laws and regulations include but not limited to Pharmaceutical Administration Law of the People’s Republic of China, Good Manufacturing Practice for Drug, the Regulations on the Supervision and Administration of Medical Devices and relevant Appendix, the Measures for the Administration of Drug Registration, and the Measures for the Administration of Registration of In-Vitro Diagnostic Reagents and so on.
7. Article 27 of the Regulation.