China Mainland - Medical Devices

Updated/posted: January 2011 Validated by: (in process)

DECISION MAKERS AND DECISION-MAKING PROCESSES

DIAGRAM

BACKGROUND DECISION-MAKERS AND INFLUENCERS REGULATORY PATHWAY/MARKET APPROVAL PROCESS REIMBURSEMENT AND COVERAGE/PAYMENT FLOW MAP AND
PROCUREMENT PROCESS

DATA REQUIREMENTS (HTA, PAYMENT DECISIONS) ACRONYMS SUGGESTED READING USEFUL LINKS
REFERENCE

AUTHORS & CONTRIBUTORS

China Mainland - Medical Devices

BACKGROUND

China health care delivery system is challenged by providing services for the most populous country with 1.3 billion people and a majority of rural residents. Health care delivery follows a parallel three-tiered structure established in the 1950s for rural and urban areas. In urban area, there are public hospitals which are operated independently in different level (provincial, city or district) and 1st -tired hospitals are mostly transformed to community health center in recent years. Few private hospitals exist in China. In rural area, county hospital, township hospital and clinics compose the three-tiered structure. There are also health surveillance institutions of various levels, such as CDCs. The total China health expenditure is 1128.95 billion RMB (US $ 164.77) in 2007 and this number is increasing in the last few years. The percentage of health expenditure paid by government, employer contributions (society) and out of pocket is 20%, 35%, 45% respectively. (ministry of health, 2009 yellow book) available at: http://www.moh.gov.cn/publicfiles/business/htmlfiles/zwgkzt/ptjnj/200908/42635.htm To address the escalating health expenditure, system inefficiency, and low insurance coverage, China implemented several health insurance reforms in the last few years. Besides commercial medical insurance, current health care system consists of three main social insurance programs: Urban Employee Basic Medical Insurance (UEBMI) for the urban employed (1997), Urban Resident Basic Medical Insurance (URBMI) for urban residents without formal Employment, New Cooperative Medical Scheme (NCMS) for the rural population (2003). Figure 1: Health Insurance programs

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Source: Ministry of Health, 2009 Yellow Book. http://www.moh.gov.cn/publicfiles/business/htmlfiles/zwgkzt/ptjnj/200908/42635.htm Financing health insurance is different for each program. Take Shanghai URBMI for example, three different accounts are used for collecting fund and pay for specific health service. Fig 2 URBMI Funding Source (Shanghai)

Source: Shanghai Medical Insurance Bureau http://ybj.sh.gov.cn/index.jsp Lin Yang (2004), Study on expenditure containment of Shanghai Urban Medical Insurance System, Shanghai Jiao Tong University. (In Chinese) DESCRIPTION OF MEDICAL DEVICE INDUSTRY The value of Chinas medical device market is expected to be US$28 billion by 2014 -- more than double the data from 2006. The increasing demand for home-use devices or high-quality implants and China new policy on expanding health coverage in rural areas bring this growth in the market of medical device. The domestic market for medical devices is still highly fragmented. Most of medical device manufacturers have limited market share and operate on a small scale with only a handful of profitable products. There are only four Chinese medical device companies traded on global exchanges. Domestic device makers are working to develop high-quality devices at a cost basis 30% lower than that of foreign competitors. Foreign companies have a comparative advantage in terms of technology and presently control 90% of the high-end device market, especially large medical device manufacturers from Japan, Germany, and the USA. Although the government is emphasizing low cost devices for rural projects, major hospitals in China still demand the best foreign equipment. Moreover,

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Chinese consumers are also wary of domestic brand and have increasing demand for foreign medical device when considering quality. Source: http://www.knowledgeatwharton.com.cn/index.cfm?fa=viewArticle&articleID=2082&languageid=1 TO TOP
DECISION-MAKERS AND INFLUENCERS

COMPETENT AUTHORITY SFDA (State Food and Drug Administration) is current national authority for medical device in China. According to the current regulation issued in 2000 by State Council, medical device are categorized into three classes, and for products in each class, they must comply with different standards and requirements for registration certificates and licenses under different authorities. Classification Class I Definition Safety and effectiveness can be ensured through routine administration; Further control is required to ensure their safety and effectiveness Registration Authority Municipal Department

Class II

Provincial and municipal Department SFDA

Class III

Medical device that are implanted into the human body, or used for life support or sustenance, or pose potential risk to the human body and thus must be strictly controlled in respect to safety and effectiveness.

Source: Regulations for the Supervision and Administration of Medical Devices, Decree 276 of the State Council, issued on January 4, 2000, effective since April 1, 2000 www.sfda.gov.cn TECHNOLOGY ASSESSMENT ORGANIZATIONS AQSIQ (General Administration of Quality Supervision, Inspection and Quarantine of Peoples Republic of China) AQSIQ is a ministerial administrative organ directly under the State Council which is in charge of Quality Supervision, Inspection and Quarantine. There are 35 CIOs (Entry-Exit Inspection and Quarantine Bureaus) and 31 provincial bureau of quality and technology supervision under AQSIQ. One important mission of AQSIQ is to carry out inspection and supervision on import and export commodity and its packaging and transportation means. Imported medical device assessment is mainly conducted by CIOs which administers the China Compulsory Certificate (CCC) program, a quality certification that is mandatory for a range of specified products, including diagnostic X-ray equipment, hemodialysis equipment, implantable cardiac pacemakers, and other medical devices. These tests are extremely similar to the tests the SFDA required in registration process. In the fall of 2008, the SFDA and AQSIQ jointly agreed on CCC marking and SFDA medical device registration will now share a single testing process, with no duplication of tests or fees. This strategy greatly released manufacturers burden and make utility of inspection resources more efficient. http://www.aqsiq.gov.cn/zwgk/zjjs/ SFDA- Department of Medical Device Supervision As part of SFDA, department of Medical Device Supervision plays a significant role in HTA during registration and

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post-market phases. The main responsibility of Department of Medical Device Supervision is to register medical device, draw up good practices for clinical trials, production and distribution of medical devices, supervise these practice and organize the adverse events monitoring, and medical device reevaluation. http://eng.sfda.gov.cn/eng/ SFDA- Ten Medical Device Quality Surveillance and Test Institutes There are ten core medical device quality surveillance and test institutes located in different cities. They are directly administrated by SFDA and provide HTA service of medical device in different dimension. (1) Medical Device Quality Surveillance and Test Institute: biological materials, artificial organs and tissue engineering. (2) Tianjin Medical Device Quality Surveillance and Test Institute: orthopedic materials and equipment, medical equipment of physical therapy; (3) Shenyang Medical Device Quality Surveillance and Test Institute: X-ray diagnostic equipment (including CT) and accessories, medical refrigerated products; (4) Hangzhou Medical Device Quality Surveillance and Test Institute: optical equipment, medical laser equipment, medical equipment of deep hypothermia therapy; (5) Beijing Medical Device Quality Surveillance and Test Institute: IVD, radiotherapy equipment; (6) Jinan Medical Device Quality Surveillance and Test Institute: medical polymer materials, sanitary materials; (7)Guangzhou Medical Device Quality Surveillance and Test Institute: Dental equipment, disinfection equipment etc; (8) Dental Materials Quality Surveillance and Test Institute in Peking University: Dental materials; (9) Shanghai Medical Device Quality Surveillance and Test Institute: anesthesia and respiratory equipment, surgical instruments etc. (10) Wuhan Medical Device Quality Surveillance and Test Institute: ultrasonic diagnostic equipment. TO TOP
REGULATORY PATHWAY/MARKET APPROVAL PROCESS

Registration procedures differ for domestic and imported medical device and registration certificate or license of medical device is only effective for four years; when it expires manufacturers must register it again. Some experts argued the same procedure and requirement for re-registration is inefficient and costly. In 2008, the number of medical devices successfully registered in Class I, II, III was 2117, 2172, 1485 respectively, the successful reregistered number of class I and II is 1583 and 2234 respectively. In addition, the number of imported medical devices approved is 3683, this number kept increasing in past three years. (SFDA Annual Report) REGISTRATION PROCEDURE FOR DOMESTIC MEDICAL DEVICE:

A: Class III (license for manufacturing trial) B: Class I (license for manufacturing or re-registration)

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C: Class II (license for manufacturing trial) and Class II, III (license for manufacturing or re-registration) REGISTRATION PROCEDURE FOR IMPORTED MEDICAL DEVICE:

Resource: Xianqiang Mi (2008), Management of Medical Device Supervision in China (in Chinese) ADDITIONAL REGULATION FOR IVD REAGENTS In late 2008, the SFDA issued new rules and procedures for determination of effective coverage of IVD Quality System Audit ((SFDAM [2007]229). IVDs are divided into 23 categories and IVDs in different categories must process quality system audits that are designed and implemented separately. In addition, IVDs with different risk classifications have different audits applied to them. Source: www.sfda.gov.cn TO TOP
REIMBURSEMENT AND COVERAGE/PAYMENT FLOW MAP AND PROCUREMENT PROCESS

TENDERING PROCESS--- LARGE SCALE EQUIPMENT CENTRALIZED TENDERING Since 1999, China has adopted a tendering method as a significant part of medical device procurement process because this method could bring more transparency and safeguards to ensure access for patients and quality of the medical technology. Since 2005, in order to reduce the corruption, the Ministry of Health (MOH) and the State council set up a procurement restriction on large scale equipments which are priced over 5 million RMB ($730,000). Under the restriction, individual hospitals and other private medical organizations are strictly forbidden to purchase any large scale equipment if it is a used and imported product. Government also interferes in the procurement process by collective purchasing and tendering of large scale medical equipment, and then reallocating the medical device to the hospitals or organizations. In 2005, MOH implemented a pilot program in eight areas (Beijing, Shanghai, Zhejiang, Tianjin, Hubei, Guangdong, Chongqing, and Liaoning) which targeted orthopedic and cardiac implants for the major hospitals. This program was designed to favor companies which are operating without distributors (a process which was facilitated by Chinas accession to the WTO), because Chinese officials believe that distributors contribute to high prices and corruption. In 2007, a system of comprehensive centralized tendering was adopted in all provinces. Source:

Regulations for the Supervision and Administration of Large Scale Equipment, issued by Ministry of Health
of the Peoples Republic of China, effective since 1st March, 2005

Medical device reimbursement in China, International Trade Administration Report,

/pwsyw/200907/41673.htm

2007http://www.trade.gov/td/health/Medical%20Reimbursement%20in%20China%202007.pdf

Ministry of Health of the Peoples Republic of China Http://www.moh.gov.vn/publicfiles/bussiness/htmlfiles

GENERAL PRICING AND REIMBURSEMENT APPROVAL PROCESS Pricing and reimbursement of medical device is regulated by the National Development and Reform Commission (NDRC) and the Ministry of Health (MOH). Reimbursement mechanisms and pricing is complicated since it is designed to meet different requirements at provincial/ municipal level. In general, reimbursement schemes treat

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the medical device differently by classifying them into two types: implantable or disposables. Only medical devices which are approved and put in the pricing formulary regulated by government could get reimbursed under the medical insurance coverage. Because of variety, we take Shanghai for example to explain pricing and reimbursement process. Shanghai pricing process In 2003, Shanghai government promotes its new pricing system and set the price ceiling for registered medical devices. To be included in an application for a local retail price, distributors need to provide import prices and other supporting data directly to the Shanghai Medical Device Association which is responsible for coding medical device. After that, the application is transferred to the Shanghai Pricing Bureau, which is in charge for setting the highest allowable price for medical device, making final decision and making the highest allowable price to public. It is worth mentioning that, once the highest allowable price is set, the medical device would be put into the Pricing management formula and qualified to get reimbursement, otherwise the medical device is excluded from the insurance coverage.

Source: Shanghai Health Bureau http://www.hs.sh.cn/website/b/32071.shtml Shanghai Reimbursement Approval Process

1. Shanghai Urban Basic Medical Insurance (UBMI)

Medical device reimbursement must follow the basic requirement for UBMI. There are different eligibility and basic package for UBEMI and UBRMI. Following illustrates how UBRMI reimbursement service of medical technology. Outpatient Deductible Reimbursement Ceiling Regular Chronic Emergency room Free checkout

1000, 700, and 500 RMB for tertiary, secondary , and primary medical institutes, respective ly

(1) Residents over 70:70% (2) Residents aged 6070: 60% (3) Residents aged 1860:50%

(1) Adults: 80 000 RMB; (2) Student and resident under 18 and not attending

(1) Residents over 70:60% (2) Residents aged 6070: 60% (3) Residents aged 1860:50 %(

Outpatient services reimbursement for10 chronic or fatal diseases

Residents aged 6070: 50%

NA

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(1000 RMB deductible, if in 1-tired hospital 60%) (4)Student s and residents under 18 and not attending school: 50%

school: 100 000

if in 1tired hospital 60%) (4)Stude nts and residents under 18 and not attending school: 50%

Source: Shanghai Medical Insurance Bureau http://ybj.sh.gov.cn/xxcx/zgdy.jsp?lm=3

2. Medical device reimbursement under UBMI

Classification Bone Fixation Inside of Spine Coinsurance * Ceiling 20,000 RMB 10,000 RMB 25,000 RMB NA

Outside of Spine Implantable medical devices for Congenital heart disease treatment Implantable medical devices for Peripheral vascular, Neurovascular disease treatment Domestic product Imported product * means coinsurance rate is according to UBMI requirements

20%

30%

NA

Source: Shanghai Health Bureau http://www.hs.sh.cn/website/b/32071.shtml Shanghai municipal labor and social security bureau http://www.12333sh.gov.cn/07zcfg/gfxwj/200912/t20091209_1104092.shtml
DATA REQUIREMENTS (HTA, PAYMENT DECISIONS)

DATA REQUIREMENT FOR REGISTRATION

China Mainland - Medical Devices

According to general registration process, each phase have specific data requirement: 1. Application preparation:

To Compile a Product Standard; Laboratory Test data (based on your chosen standard) for the Product at a SFDA recognized Testing Lab
(applicable for class II and III products);

Data of Clinical Trial in 2 Hospitals in China (applicable only for implantable products manufactured by a
foreign company which has never registered a medical device in China), or to collect Clinical Data for Product (applicable for all other class II and III products).

2. Application (application dossier (12 items))

Application Form for the registration; Qualification certificate(s) (Business License, etc.) of the applicant (manufacturer); Copy of Business License of the Application Agent and the authorization letter written by the applicant to the
agent;

Marketing authorization certificate issued by a foreign competent authority to allow the product to be
marketed in that country (or Region) as a medical device.

Adapted product standard; Instruction Manual of the device; Product Testing Report issued by a SFDA recognized testing lab (applicable for class II and III products); Clinical Test Report or clinical data; Product quality guarantee letter of the applicant; Authorization letter written by the applicant to a Representing Agent in China, letter of promise written by
the Representing Agent, and Business License or Organization Registration Certificate of the Agent; promise written by the agent, and qualification Certificate of the Agent;

Authorization letter written by the applicant to a responsible Post-marketing Service Agent in China, letter of Self-Declaration for the authenticity.
3. Audit and Assessment:

Clarify technical issues or finds the application dossier is insufficient in technical data
4. Disclose final decision DATA REQUIREMENT FOR REIMBURSEMENT DECISION (SHANGHAI MODULE WITH CHINESE DETAILS)

1. Application form 2. Evidence supporting clinical application 3. Evidence supporting specific clinical application in detail 4. Medical device certificates or license for allocation 5. Medical device certificates or license for registration by SFDA or Medical device certificates or license for 6. Other data municipal health insurance bureau required
1. 2. 3. registration by Municipal Department

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4. 5. 6.