On 18 June 2012, the State Food and Drug Administration ("SFDA") issued new regulations entitled "Interim Working Procedure of Unannounced Inspections over Manufacturing Enterprises of Medical Devices" ("Procedure"). Being the first framework regulation governing unannounced inspections for medical device manufacturers, it will undoubtedly have an important impact on all companies producing medical devices.
History review
The first unannounced inspection regime started in 2006 but this
only related to pharmaceutical manufacturers, and not companies
producing medical devices. The SFDA published an unannounced
inspection provision regarding good manufacturing practices
("GMP") for pharmaceutical products entitled "the
Interim Provision on Unannounced Inspections over GMP of
Pharmaceuticals" (the "Provision"), which came into
effect on 24 April 2006.
Under the Provision, all pharmaceutical manufacturers in China
have faced the possibility of an unexpected inspection by the
department of SFDA, (usually the Centre for Certification of Drugs)
in order to check whether their manufacturing process satisfies GMP
requirements. The confidentiality of such inspections is strictly
controlled and the target of any inspection is decided by the SFDA
at national level. The local FDA is only given information about
the inspection on the day before the inspection.
Although the Provision only applies to pharmaceutical
manufacturers, in practice, the local FDA also conducts unannounced
inspections on pharmaceutical trading companies. Local FDAs
consider that as the procedure under the Provision has been
implemented for several years and is well established, it can be
applied also to pharmaceutical trading companies.
However, the regulations are not applicable to companies producing
medical devices and so the local FDA is not obliged to conduct such
inspections based on the Provision.
New Unannounced Inspections of Medical Device Manufacturers
The newly published Procedure relies on the "Measures for
Supervision and Administration of Medical Device Production",
effective as of 20 July 2004, and the "Interim Provision on
the Daily Supervision Management of Medical Device
Manufacturing", effective as of 19 January 2006. The
implementing Procedure provides a legal basis for the conduct of
inspections on medical device manufacturers and so we would now
expect to see a rise in the number of these inspections that take
place.
The above mentioned framework of legislative provisions broadly
set out the circumstances under which the inspections shall be
carried out. They also impose an "enterprise credit
system", which is a series of files recording all of the
supervision results conducted on manufacturers. This enterprise
credit system is used as evidence to launch any unannounced
inspection.
In fact, such Procedure had been the subject of discussion
internally in SFDA for some time, aiming to standardise the
inspection process in this area. Manufacturers of all types of
medical devices may be subject to such inspections, including but
not limited to sterile medical devices, implantable medical
devices, and in vitro diagnostics.
1. Inspection team
The inspection team is usually fielded by the SFDA or provincial FDA and is made up of at least two officers. An expert team may be involved if necessary.
2. Inspected party
The following medical device manufacturers may be subject to an unannounced inspection under the Procedure:
a) An enterprise which is suspected of illegal actions;
b) An enterprise which has a serious product quality
accident;
c) An enterprise whose products are proven to be of unfit quality
in a spot check by the local FDA
d) An enterprise which lacks a quality management system;
e) An enterprise whose credit report shows that it does not have a
history of good record keeping;
f) Other reasons may also be considered by the local FDA.
3. Inspection method
The inspection method includes three steps: (a) inspection
preparation, (b) on-site inspection, and (c) measures to be taken
according to the inspection result. Three inspection sheets need to
be completed during the procedure. These sheets enable the medical
device manufacturers to understand the exact reason(s) for any
inspection and the concurrent results.
The three sheets include the information about the inspected
party, the members of the inspection team and the reason and target
of the inspection. The names of the inspection team members, all
other participating persons as well as the authorities who have
organised such inspections are recorded on these sheets. The
inspected party is also requested to sign the sheets to acknowledge
all the information of the inspection.
If any violation is found during the inspection, the inspection
team can hand over the case directly to the local FDA in charge of
this inspected party for them to pursue an administrative liability
action.
During the inspection process, the inspected party may appeal,
explain and/or correct the discovered issues immediately. Although
these issues will still be recorded on the inspection sheet, the
inspected party may reduce the risk that the inspection team
directly refers them to the local FDA to investigate matters
further.
4. Basis of such inspection
The inspection is mainly aimed to check whether a medical device manufacturer is complying with the underlying legislative Measures mentioned above, particularly for the purpose of eliminating the following issues:
- products which fail to meet the national standards, industry standards or registered product standards;
- companies operating outside the permitted scope in the manufacturing license;
- companies operating below the required production standards;
- violations of labeling and packaging requirements;
- failure to set up a system of follow-up quality supervision and monitoring of adverse incidents;
- violations of regulations with respect to advertising medical devices; and
- enterprise manufacturing medical devices without having complied with registration formalities.
5. Consequence of the inspection
A final inspection report will be submitted to the FDA presiding
over the unannounced inspection. During or after the inspection,
the inspecting team may hand over the case to the local FDA for
them to pursue the administrative liability sanction.
According to the framework legislation, this liability sanction
may include a revocation of the business license, a monetary
penalty up to five times the value of any illegal income or an
order suspending business activities.
It is still unclear whether the SFDA or the provincial FDA will
rely on these new provisions to inspect medical device trading
enterprises in China also. According to the local practice of
unannounced inspections for pharmaceutical companies, however, such
a possibility should be anticipated . Some local FDA has orally
confirmed with us that this does not seem likely for the time
being, especially since the procedure has not yet been completely
implemented at the same level as the regime for the inspection of
pharmaceuticals.
Implication
If a company receives an adverse result from such an inspection,
it will not only receive a punishment but its credit record with
the authorities will also be affected. Once the credit record is
affected, the enterprise risks receiving further inspections. All
medical device companies must therefore pay serious attention to
their compliance with the applicable rules to avoid the risk of
being inspected. If a company is inspected, it is recommended to
keep an internal record of that inspection so that it can maintain
control and supervision over such inspection matters.
Any inspection records would also be useful evidence if the
company is the subject of an acquisition. Being able to check
whether or not a target company has been subject to an inspection,
as well as its inspection record, will help to identify any
potential problems in a target company.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 30/07/2012.