As 2019 draws to a close without the achievement of several hoped-for advances in regulatory procedures for medical devices, multinational companies in the sector are looking to the new year for some significant breakthroughs.
Topping the wish list is passage of the draft Medical Devices Act, which would create dedicated legislation to govern the industry in Taiwan for the first time. Until now, medical devices have been regulated under the Pharmaceutical Affairs Act, whose provisions – aimed chiefly at drugs – are not always appropriate for devices. One difference is that medical devices, unlike pharmaceuticals, are classified and managed according to their level of risk. Another is the diversification among types of devices and the rapid speed of technological change.
The executive branch forwarded its bill to the Legislative Yuan on December 15, 2017, and it passed a first reading two weeks later. But the measure was not voted on further. If not passed during the current legislative term that ends early next year, the bill would need to be reintroduced in the following session.
Although enactment of the law is expected to lead to revisions in more than two dozen different regulations, the new statute’s acceptance of the concept of “legal manufacturer” is considered as the most important change for the industry.
Under existing regulations, Taiwan has considered the responsible party for a medical device to be the factory where it was produced. Increasingly, however, actual production is outsourced to a contract manufacturer, often in a different country.
“More and more, the big multinational medical device companies have been reducing their manufacturing footprint,” says Michael Blomeyer, president of New Deantronics Taiwan, a medical device contract manufacturer. He notes that they prefer the flexibility of easily adding or dropping product lines to reflect changes in technologies and markets.
In contrast to Taiwan’s longstanding interpretation, the U.S., European Union, and other advanced countries have considered that responsibility for regulatory compliance should lie not with the production site but rather with the brand entity that is accountable for design and conducts the marketing of the product. In those jurisdictions, the “legal manufacturer” rather than the physical manufacturer is the one held responsible for performance quality, as well as product safety and efficacy.
A shift to that principle would enhance Taiwan’s harmonization with modern international regulatory practice and would help rationalize the regulatory process, resolving many of the difficulties companies currently face in meeting legal requirements.
Another of the Taiwan-based multinational industry’s hopes for 2020 is revitalization of the U.S.-Taiwan bilateral trade negotiation platform known as TIFA – short for the Trade and Investment Framework Agreement. Generally, those TIFA talks take place once a year, but because its agenda this year has been overwhelmed with trade issues with China, the Office of the U.S. Trade Representative has not had time to schedule trade talks with Taiwan.
Whenever those talks finally resume, however, medical device issues will assuredly have a prominent place on the agenda. Whether the product is made in the U.S. or elsewhere, American companies account for the lion’s share of the estimated US$2.5 billion worth of medical devices annually imported into Taiwan.
Early every year, USTR lays out its range of outstanding issues with each U.S. trading partner in a document called the National Trade Estimate Report on Foreign Trade Barriers. The Taiwan portion of the 2019 edition released this March includes a lengthy section detailing ways in which U.S. medical device manufacturers have been disadvantaged by Taiwan’s time-consuming procedures for product license approvals and pricing reviews.
Due to regulatory hurdles, new medical devices are often launched in Taiwan long after they have been on the market in other countries. “Time-to-market is especially crucial in the medical device business,” says Joanna Yao, a co-chair of AmCham Taipei’s Medical Devices Committee. “The rapid progress in technology in medical devices means that many products have a life-cycle of only a few years before they become obsolete.”
One of the key issues on the USTR list involves Taiwan’s mandatory manufacturing facility registration known as Quality Systems Documentation. QSD registration is required for products to enter the market and re-registration must be completed every three years thereafter.
Although the Taiwan Food & Drug Administration (TFDA) has provided for a simplified application process designed to help cut through the red tape, manufacturers have still found the process to be onerous. TFDA has agreed to accept copies of the U.S. Food and Drug Administration’s Establishment Inspection Report (EIR) on a U.S. manufacturing site in lieu of the QSD.
But TFDA requires that the EIR have been issued within the past three years, whereas the U.S. FDA conducts its facility inspections based on risk assessment rather than a set timetable.
As a result, USTR notes, “only a small fraction of U.S. products qualify for Taiwan’s simplified review using EIR documentation.” Various alternative methods of resolving the problem have been proposed. In particular, American companies have asked TFDA to accept what is known in the industry as the Medical Device Single Audit Program (MDSAP) audit report as a substitute for the U.S. FDA EIR.
So far, no solution acceptable to both governments has been found. In the meantime, industry hopes that at least the current simplified model will remain in place while discussions continue.
Another issue raised by USTR relates to the partial patient self-pay mechanism known as balance billing, which Taiwan’s National Health Insurance Administration has adopted for certain high-end devices or new technologies. USTR notes that American stakeholders “have expressed concern that the current balance billing system does not effectively distinguish among devices of differing levels of technological sophistication and effectiveness.” Besides passage of the Medical Device Act and resumption of TIFA talks, the AmCham Medical Device Committee has urged more frequent consultation between the Taiwan authorities and industry representatives to work out mutually satisfactory arrangements on outstanding issues.