China’s Medical Device China’s Medical Device MarketMarket

Jay Biggs

U.S. Department of Commerce

Office of Health and Consumer Goods

ObjectivesObjectives

Market SizeRegulatory Issues Reimbursement IssuesDepartment of Commerce Resources

to Help Boston Companies

Overview Of China’s Medical Overview Of China’s Medical Device MarketDevice Market

China has the potential to be the largest single country export markets for the U.S. medical device exporters.

Currently China is the second largest medical device market in Asia.

China’s has one of the world’s fastest growing medical device markets (10-15%) per year.

U.S. Medical Device & IVD U.S. Medical Device & IVD Exports to China (1998 – 2001)Exports to China (1998 – 2001)

$Millions$Millions

0

100

200

300

400

500

600

1998 1999 2000 2001 2002

Domestic Chinese Medical Domestic Chinese Medical IndustryIndustry

Supplies 50 – 60% of Chinese medical device needs

Focus is low level of technology – but rising

Vast majority are small firms (SMEs)Most producers do not meet GMP

requirements

Medical Device Regulatory Medical Device Regulatory System in ChinaSystem in China

China’s regulatory device system is complex, not yet transparent or consistent.

Recently (March 2003) China’s State Food and Drug Administration (SFDA) responsibilities expanded to include Food and cosmetics.

Medical Device Regulatory Medical Device Regulatory System in ChinaSystem in China ((cont.)cont.)

All imported medical devices to be sold in China must be registered with the SFDA

Type-testing is required for class II and III medical devices before registration

Medical Device Regulatory Medical Device Regulatory System in ChinaSystem in China ((cont.)cont.)

Clinical trials are required to be included in registration applications for certain class II and III products

Registration RequirementsRegistration Requirementsi.e. the nitty-grittyi.e. the nitty-gritty

Qualification Certificate for the manufacturer

Qualification certificate of applicant (if not the same as manufacturer)

Certificate from Country of Origin indicating device can be used in that country

Registration RequirementsRegistration Requirements ((cont.)cont.)

Technical specifications and indication of how these specifications are tested

Instruction manual (in Chinese)

Type-test report

Registration RequirementsRegistration Requirements ((cont.)cont.)

Clinical trial reports (at least two clinical trials within past year)– Local clinical trials may be required for

implantable productsStatement guaranteeing product qualityLetter authorizing after-sale service

agency and a letter of commitment including the business license of agent

Registration RequirementsRegistration Requirements ((cont.)cont.)

Statement of authenticity of materials submitted

Other documents as may be required by SFDA

Application Timeline

New Registration ProceduresNew Registration Procedures

August 2004 New SFDA Registration RegsSubmit technical specifications at same

time as rest of product registrationMay use own technical specifications,

without first getting SFDA approval.SFDA reviews entire application package

and issues import license.

CCC Mark Application ProcessCCC Mark Application Process

For electro-medical products a CCC mark is required

A quick summary of the CCC mark requirements can be found at: http://www.mac.doc.gov/China/Docs/BusinessGuides/cccguide.htm

Chinese Hospital SystemChinese Hospital System

Virtually no private hospitals in China

Vast majority of hospitals administered by the Ministry of Health

Public hospitals have a high degree of operating autonomy

Chinese Hospital SystemChinese Hospital System ((cont.)cont.)

Hospitals are generally expected to generate revenue to cover 70 – 90 percent of their operating expenses

Provincial Health Departments set staff salaries and patient charges for basic services, Larger “profit-oriented” hospitals frequently have funds to purchase advanced medical technologies

Medical Device ReimbursementMedical Device Reimbursement

China’s reimbursement system for medical devices is at an early stage of development

Policies and procedures are not uniform and may vary significantly from region to region

There are several Chinese agencies involved, but they do not necessarily work in harmony

Medical Device ReimbursementMedical Device Reimbursement ((cont.)cont.)

Price limits on low-level, routine services

Urban “profit-oriented” hospital have invested in advanced medical devices to to generate patient revenue

Ministry of Health is trying to contain costs

Agencies Involved in Agencies Involved in Reimbursement Reimbursement

Ministry of Health – Administers rural health insurance system– Administers public hospitals – Bidding/tendering system

Ministry of Labor and Social Security– Administers urban health insurance

system

Agencies Involved in Agencies Involved in Reimbursement Reimbursement ((cont.)cont.)

Provincial Health and Pricing Bureaus– Review regional purchases of large

scale medical devices

– Establish reimbursement rates for medical devices

Centralized TenderingCentralized Tendering

certain orthopedic and cardiac implants8 geographic areas (Beijing, Shanghai,

Tianjin, Chongqing, Guangdong, Hubei, Zhejiang, and Liaoning).

Class III HospitalsPurchase and Payment Requirements

Rural Health InsuranceRural Health Insurance

80% of China’s 1.2 billion population live in rural areas and cannot afford health care

Coverage is not universal

Farmers pay a small fee, public funds pay the balance

Rural Health InsuranceRural Health Insurance((cont.)cont.)

Only 25 percent of China’s rural population is covered by rural health insurance

As a result, virtually all rural primary health services are provided on a fee for service basis, and non-covered patients must pay full fees

Urban Health InsuranceUrban Health Insurance Begin in 1999 Main features

1) Wide coverage

2) Cost sharing

3) Combination of funds – cost pooling and individual accounts

Urban Health InsuranceUrban Health Insurance((cont.)cont.)

Wide Coverage – All urban enterprises are required to participate

Cost Sharing – Costs are shared by employers and individuals

Each worker pays 2% of wages and employers pay 6% into the insurance fund

U.S. Department of Commerce U.S. Department of Commerce Activities In ChinaActivities In China

U.S. – China JCCT Medical Devices and Pharmaceuticals Subgroup

Co-chaired by State Food and Drug Administration

Major JCCT Subgroup IssuesMajor JCCT Subgroup Issues

Type-testing vs Quality SystemsAdverse Event Reporting SystemIVD classificationClinical Trial requirementsRe-registration of medical devices

Upcoming JCCT Subgroup Upcoming JCCT Subgroup ActivitiesActivities

Medical Devices Good Manufacturing Practice Workshop (August 22 – 24)

U.S. - China Healthcare Forum, JCCT Medical Devices and

Pharmaceuticals Task Force Meetings (August 24-25)

Pharmaceuticals Good Clinical Practices Workshop (Spring 2006)

Regulatory ProfilesRegulatory Profiles Database Database

The Department of Commerce on-line database of regulatory profiles

Aid U.S. exporters as they seek to sell their products abroad

Available on the ITA web page: – www.ita.doc.gov/td/mdequip/

regulations.html

Other Department of Other Department of Commerce ResourcesCommerce Resources

Commercial Service OfficesChina Business CenterTrade Compliance Center (TCC)

STOP: STOP: Strategy Targeting Organized Strategy Targeting Organized

PiracyPiracyProtecting intellectual property rights (IPR) is Protecting intellectual property rights (IPR) is

important to the U.S. Government important to the U.S. Government Learn about the STOP! Initiative Learn about the STOP! Initiative File a complaint, request assistance, or speak File a complaint, request assistance, or speak

to a IPR trade specialist at 1-866-999-HALTto a IPR trade specialist at 1-866-999-HALTAccess more about protecting your IPR at Access more about protecting your IPR at

www.stopfakes.govwww.stopfakes.gov

Trade Compliance Center Trade Compliance Center (TCC)(TCC)

The fastest way to report a trade barrier is on-line The fastest way to report a trade barrier is on-line at at www.export.gov/tccwww.export.gov/tcc

For further information, companies may also For further information, companies may also contact the TCC via email atcontact the TCC via email at tcc@ita.doc.gov, , phone (202) 482-1191, or fax (202) 482-6097phone (202) 482-1191, or fax (202) 482-6097

TCC Free On-line ResourcesTCC Free On-line Resourceswww.export.gov/tccwww.export.gov/tcc

Read or download the searchable texts of Read or download the searchable texts of 270 plus U.S. trade agreements270 plus U.S. trade agreementsUse the TCC Hotline to complain about a Use the TCC Hotline to complain about a trade problemtrade problemSign up for Export Alert! An early warning Sign up for Export Alert! An early warning for foreign technical regulationsfor foreign technical regulationsJoin the TCC mailing list to get updates on Join the TCC mailing list to get updates on trade related newstrade related newsUse “how to” guides for trade agreementsUse “how to” guides for trade agreementsGet market access reportsGet market access reports

Presented By:Presented By:Jay BiggsJay Biggs

Office of Health and Consumer Office of Health and Consumer Goods Goods

Phone: (202) 482-4431Fax: (202) 482-0975E-mail: jay_biggs@ita.doc.govWeb site: www.ita.doc.gov/td/mdequip/