The Ministry of Health and Family Welfare recently notified the Medical Devices Rules, 2017. Many medical device businesses have welcomed the new regulations; the Drugs and Cosmetics Act, 1940 – designed for the pharmaceutical industry – had previously regulated the fast growing industry.
Industry experts estimate that approximately 80 percent of the medical devices in India are imported, a significant share of a market that is valued at over US$10 billion. While this market has grown from a US$6.3 billion value in 2013, the industry’s dependence on imports has gotten worse: India imported 70 percent of its medical devices in 2015.
India’s dependence on imports represents a good opportunity for foreign manufacturers who would like to sell to customers in India. But foreign SMEs should consider the many government incentives for setting up in India, which also allows businesses to avoid import taxes and duties, such as the four percent additive tax for most devices or customs duties ranging from nine to 15 percent.
Regardless of the location of your business, the government’s decoupling of the medical devices industry from pharmaceutical regulations may finally stimulate growth in the domestic industry, which has been a goal for the government since it opened the industry up to 100 percent foreign direct investment (FDI) in 2015.
New classification scheme
Authorities previously regulated for only 15 categories of medical devices. In an attempt to streamline domestic regulations with best practices established by the Global Harmonisation Task Force (GHTF), a now defunct international advisory council, the health ministry will regulate medical devices across four risk-based classifications:
- Class A (low risk);
- Class B (low to moderate risk);
- Class C (moderate to high risk);
- Class D (high risk).
Regulations for the manufacture, sale, or distribution of medical devices are now based on these classifications and are proportionate to the level of risk associated with the medical device. Under the Medical Devices Rules, 2017, regulations for classes A and B are broadly similar, while classes C and D also enjoy some regulatory parity.
Several industry experts have noted that this classification scheme is similar to classifications used by the EU. These experts note that the A and B classes are similar to the Class I and Class IIa groupings used to classify and assess risks associated with medical devices in the EU.
Licensing and accreditation norms eased
As part of an initiative to improve the ease of doing business, the new rules allow medical device manufacturers to apply for many licenses and accreditations through digital platforms. This is designed to limit the number of touch points between bureaucrats and businesspeople.
Further, many licenses will now remain valid until the medical device manufacturer cancels the license. Some observers suggest that this measure will allow regulators and medical device manufacturers to focus on maintaining compliant operations, rather than routine licensing requirements.
This interest in compliant operations will likely be further aided by another unique measure in the new rules: the government will notify third party bodies to audit the manufacture, sale, or distribution of medical devices for compliance to the new rules.
Outsourcing compliance audits to government appointed institutes or firms might concern some medical device manufacturers, but the government only intends to outsource audits for low risk products, and third party auditors can be expected to be less reactionary than public sector officials.
Clinical trials streamlined
Medical device manufacturers previously submitted to a four-phase clinical trial process that is more common for pharmaceutical products. India’s new regulations have limited the clinical trial process for new medical devices to two-phases.
According to industry observers, the first phase of the new clinical trial process will focus on safety and performance on a small number of subjects, while the second phase of the trial process expands to a larger number of subjects.
However, the Central Drugs Standard Control Organization (CDSCO), which is primarily dependent on the Drugs and Cosmetics Act, 1940 for its authority, will continue to manage the trial process, including guidelines for medical management and compensation for clinical subjects.
A big step forward
The reforms underscore an already healthy ecosystem that the government has sought to nurture, including funding for medical device parks, effluent treatment plants, and test centers. Media reports state the facilities will be located in Gujarat, Haryana, Maharashtra, and Andhra Pradesh states.
Government and industry officials have reportedly begun discussing the need for a new government ministry to work with the industry. The domestic medical industry has also lobbied for an ethical marketing regime and dis-incentivizing imports that are re-labeled and sold as a domestic product.
Still, these initiatives are unlikely to make as big an impact as the Medical Devices Rules, 2017. The reforms contained within the new rules streamline key industry reforms with best international practices, an important move given the healthcare industry’s growth prospectus – from US$100 billion in 2015 to US$280 billion in 2020.
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