In this article, Milind Talegaonkar pursuing M.A, in Business Law from NUJS, Kolkata discusses Laws relating to Medical Devices in India.

Overview

The Indian Medical Devices market is currently valued at around US$ 10 billion and is predicted to touch US$ 25 billion by 2025 [1]. There are over 800 Indian manufacturers and the size of market ranks fourth in Asia. The current phase can be called transitory as many regulatory changes are yet to come into force and many others are nearing their promulgation. We begin to study the need for regulation and then move on to the discussion on the present laws addressing those needs.

Regulatory needs surrounding the Medical Devices Industry

The Medical Devices industry requires regulation for addressing the following:

1. Standards of Device Quality and safety
2. Medical Accreditation
3. Prices, Availability and Distribution
4. International Trade (Imports and Exports)
5. Taxation / Incentives
6. Foreign Investment
7. Package and labelling requirements
8. Therapeutic claims and validation mechanisms
9. Control over manufacturing conditions
10. Shelf life determination and declaration
11. Recall of defectives and non-conforming batches

Discussion on the Applicable laws

Prices, Availability and Distribution

As of now the price of coronary stents, condoms, and intra-uterus devices are under price control. Stents were included in the NLEM by way of Notification No. X – 11035/344/2015 – DFQC dated 19th July 2016. Thereafter, these were incorporated into Schedule I of the Drug Prices Control Order, 2013 (DPCO-2013) on 21st December 2016 vide notification No. S.O. 4100 (E). By way of Order S.O. 412 (E) dated 13th February 2017 the ceiling prices of following categories of Coronary Stents were notified:

Sr.	Coronary Stents (Sl. 31 in Schedule I of DPCO, 2013)	Unit (In Number)	Ceiling Price (In Rs.)
1	Bare Metal Stents	1	7260
2	Drug Eluting Stents (DES) including metallic DES and Bioresorbable Vascular Scaffold (BVS)/ Biodegradable Stents	1	29600

The noteworthy features of DPCO-2013 promulgated under the Essential Commodities Act are:

1. The ceiling prices become effective from the date of ceiling notification. The 15 days period allowed in such notifications is not intended for selling at the erstwhile prices but is merely to facilitate recall, re-labelling and re-issue of such stocks.
2. The unsold stock bearing old prices requires a recall and relabeling to bring it in conformity with the notified ceilings;
3. The term manufacturer includes in its ambit the marketers as well;
4. The manufacturers selling above the ceiling prices are required to bring down their prices in conformity with the mandate of the applicable ceiling notification;
5. The manufacturers selling below the ceiling prices cannot increase their price to the ceiling prices and they are required to freeze their prices to the values prevailing at the time of ceiling notification;
6. The yearly increase in prices is permitted in conformity with the wholesale price index (WPI) notified. It is basically the annual wholesale price index of all commodities as announced by the Department of Industrial Policy and Promotion, Government of India, from time to time. In case of negative WPI, the prices have to be decreased;
7. Form-V is required to be issued to the trade channel, the state drug controllers notifying them about the DPCO compliant prices, as initially notified or changed from year to year as per WPI;
8. Form-II is required to be filed within 15 days of the date of revision of the prices under DPCO.
9. The scheduled DPCO products production and availability are monitored by the Government based on Form-III submissions.
10. The discontinuation of scheduled DPCO product by any manufacturer requires giving public notice and an intimation to the Government in Form-IV at least six months prior to the discontinuation. The Government in public interest may direct the continuation of production or import for a period not exceeding one year. After notification of price ceiling of Coronary Stents, several companies had approached NPPA for notifying their intent to discontinue its marketing. However, NPPA has rejected them  on grounds like:

• Application not having been made on statutory form IV;
• Order directing continuation of supplies being already in force;
• Advised to formally produce data and justify its different pricing;

11. Existing manufacturers cannot cease or reduce production of scheduled DPCO products without prior permission.
12. In cases of non-compliances, the National Pharmaceutical Pricing Authority is authorized to issue overcharge notices and recover the overcharged amount together with interest and penalty, if any.
13. The Ceiling Prices of coronary stents as they stand revised by S.O. 1041 (E) dated 1st April 2017 considering the WPI @ 1.97186% for the year 2016 over 2015 are set out below:

Sr.	Coronary Stents (Sl. 31 in Schedule I of DPCO, 2013)	Unit (In Number)	Ceiling Price (In Rs.)
1	Bare Metal Stents	1	7400
2	Drug Eluting Stents (DES) including metallic DES and Bioresorbable Vascular Scaffold (BVS)/ Biodegradable Stents	1	30180

14. Elaborate framework for ensuring collection of information about the prices and volumes of drugs and devices which are the subject of price controls is there in the form of Integrated Pharmaceutical Data-Base Management System (IPDMS).
15. Instances of overcharging and other malpractices faced in the implementation of price controls are deftly identified by way of elaborate monitoring through market surveillance, use of subscription databases like IMS. These are then followed by the issue of show-cause notices which are then followed by recovery proceedings.
16. Based on a recent study submitted to the NPPA citing exorbitant margins on the balloon and guiding catheters, it is expected that the regulator would soon take steps to bring them under price control and notify their ceiling prices.

Manufacturing Licence

A License to manufacture Medical Device in India can be obtained from the state FDA, after conduct of a joint inspection from the State FDA and CDSCO. However, for notified devices, DCGI’s approval is needed. One of the essential information for obtaining a device manufacturing license is the implementation of Good Manufacturing Practices (GMP) as per Schedule M of the Drugs and Cosmetics Act. License is usually valid for 5 years and is renewable.

Foreign Investment

Consolidated FDI Policy circular effective from 7th June 2016 provides 100% FDI in the manufacturing of Medical Devices for both green-fields as well as brownfield projects. However, the definition of Medical Devices follows the Drugs and Cosmetics Act. With the notification of MDR-2017, which has an overriding effect over the Drugs and Cosmetics Rules, 1945, a greater certainty has emerged in this sector.

Standards of Quality and Safety

The Bureau of Indian Standards (BIS) is the regulator in India on the subject of quality and safety of the medical devices and equipment. BIS is a member of the international organisation for standardisation (ISO). The ISO is an international non-governmental organization which is independent and has a membership of 163 national standards bodies. Through its members the ISO brings together experts to share knowledge and develop voluntary, consensus-based, market relevant International Standards that support innovation and provide solutions to global challenges. The scope of Medical Equipment & Hospital Planning Division Council of the BIS, as approved by its Subject Advisory Committee, aims to standardise in the fields of Medical Equipment, Laboratory Instruments and Equipment, Surgical Dressings, Artificial limbs, Rehabilitation Equipment Diagnostic Kits, Veterinary Surgery instruments Dental Equipment. In some of the cases the Indian Standards could be the total adoption of ISO /IEC while in some others, assistance may have been taken of ISO/IEC Standards for formulation of Indian Standards. By way of a cursory look at the list of standards one can divide them into following broad areas [2]:

1. Surgical Instruments
2. Orthopaedic Instruments, Implants And Accessories
3. Obstetric And Gynaecological Instruments
4. Ear, Nose And Throat Surgery Instruments
5. Ophthalmic Instruments And Appliances
6. Thoracic And Cardiovascular Surgery Instruments
7. Neurosurgery Instruments Implants And Accessories
8. Dentistry
9. Artificial Limbs, Rehabilitation Appliances And Equipment For The Disabled
10. Medical Laboratory Instruments
11. Anaesthetic, Resuscitation And Allied Equipment
12. Hospital Equipment
13. Veterinary And Surgical Instruments
14. Electromedical Equipment
15. Surgical Dressings & Disposable Products
16. Imaging & Radiotherapy Equipment
17. Immuno-Biological Diagnostic Kits
18. Medical Biotechnology And Nanotechnology

A typical standard would usually cover parameters like shape and dimensions, material, workmanship and finish, tests to be subjected to, service conditions, controls and functions, calibration, marking, packing and the like. With the coming into force of the MDR-2017 the medical devices shall be required to confirm to the standards laid down by the Bureau of Indian Standards. In cases where no standards for medical devices are specified, the standards laid down by the International Organisation for Standardisation (ISO) or the International Electrotechnical Commission (IEC) or any other pharmacopoeial standards shall have to be complied with. In case no standards are available, validated Manufacturers standards shall be applicable.

Medical Accreditation

Since a long time in India, there has existed a regulatory vacuum in so far as the medical devices are concerned. Only a handful of devices were notified and considered regulated under the drugs and cosmetics act and all the others remained unregulated. The newly notified Medical Devices Rules 2017 (MDR-2017) which shall come into effect from 1st January 2018 attempts to address this gap. The accreditation requirement is voluntary till the MDR-2017 comes into effect. Accreditations serve to address patient safety, and provide enhanced consumer protection and also instil confidence among consumers/users. It is expected that once fully functional, it will significantly curb the trading of sub-standard products or devices of dubious origins which is a prevalent and unhealthy phenomenon in the Indian market. As of now a voluntary ICMED scheme is operational and has two levels of certification:-

• ICMED 9000 certification that is ISO 9001 plus some additional requirements
• ICMED 13485 which is ISO 13485 plus some additional requirements.

More details about the requirement of accreditation appear in the section dedicated to MDR-2017.

Make in India Initiative

In pursuit of its ‘Make in India’ initiative a Task Force was constituted under the chairmanship of the Secretary, Department of Pharmaceuticals (DoP) to address the concerns relating to the domestic production of advanced medical devices and pharmaceutical manufacturing equipment in the country. Based on the recommendations of the said committee the following initiatives, by way of issue of Notification Nos. 4/2016-Customs and 5/2016-Customs, both dated 19.01.2016, have been taken:

1. Increase of Import Duties on Medical Devices

The rate of basic customs duty on certain specified medical device has been increased from 5% to 7.5%. Moreover, the exemption from additional customs duty (SAD) on these medical devices has also been withdrawn, and these imports will now attract 4% SAD.

2. Reduction of Import duties on the Raw Materials, Parts or Accessories of Medical Devices

With a view to boost the domestic manufacturing of Medical devices the basic customs duty has been lowered to 2.5% on the raw Materials, parts or accessories of Medical Devices. Full exemption from SAD on raw materials, parts and accessories for manufacture of medical devices, falling under headings 9018 to 9022 has also been provided or continued.

Single Window Project for Customs Clearance of Import Consignments

Drugs and notified devices capable of dual use etc need to be examined by the Assistant Drug Controllers office (“ADC”) based at notified Customs stations. Thus, the import of 22 types of notified medical devices is regulated. As trade facilitation measure a Single Window Interface for Trade has been conceptualised and implemented with a view to reducing the dwell time and the cost of doing business. The notified medical devices requiring ADC clearance can only be imported at the ports notified by the CDSCO / DCGI.   

GST and Medical Devices

The GST rate on Medical Devices has been pegged at 12%[3].

MSME Exemptions and Concessions

Medical Devices Park

Based on the recommendations of the Task Force on Promotion of Domestic Production of High End Medical Devices, the Government has declared its intent to set up Medical Devices Parks in the Country. The status of various projects are discussed herein:

1. Andhra Pradesh

The units located in Andhra Pradesh MedTech Zone Limited (AMTZ) Zone at Visakhapatnam enjoy the following Income Tax benefits[4] subject to fulfilling the stipulated conditions:

• Additional Depreciation available u/s 32(1)(iia) – 35%
• Additional Depreciation u/s 32 AD – 15%
• Investment Allowance u/s 32 AC – 15%
• Normal Depreciation(other than lifesaving) u/s 32 – 15%
• Normal Depreciation(life saving) u/s 32 – 50%

As of now around 28 companies have booked for location of their units in AMTZ which includes names like Panacea Medical Technologies Pvt. Ltd, and Biosense Technologies Private Limited. Apart from the above, Stamp duty and registration fee exemption is also available on lease or purchase of land/buildings in the AMTZ as per notifications [5].

2. Tamilnadu

The “Mini Ratna” PSU HLL Lifecare is to sub-lease its land for the purpose of establishing a medical devices manufacturing park. The location of the park will be at Chengalpattu (outskirts of Chennai) and shall have an expanse of about 330.10 acres.

3. Telangana

This Medical Devices Park will be based at Sultanpur village of Patancheru Mandal in Medak, near Hyderabad City and will focus on Research and Development (R&D), innovation and manufacturing. It is a Telangana Government initiative.

4. Gujarat

The location identified for the project is Sanand. A Detailed Project Report has been submitted to the Centre and a favourable response on the same is awaited.

5. Maharashtra

The location identified for the project is Mihan, Nagpur and estimated to have a size of 200 acres in the SEZ.

Labelling and Packaging Requirements

In accordance with the requirements of the Drugs and Cosmetics Act read with the Legal Metrology Act and the rules respectively framed thereunder the following information needs to appear on the Label/package of the Medical Devices:

1.    Trade name;
2.    Proper name i.e. the generic;
3.    Net content per unit selling pack
4.    The Name and address of the  Manufacturer;
5.    Batch number/Lot number
6.    Manufacturing license number (for indigenously manufactured products)
7.    Date of manufacture
8.    Date of expiry
9.    Storage conditions
10.  Pharmacopoeia /law requirement if any
11.  Import license number (for imported products)
12.  Importer’s name and marketing firm’s address
13.  Maximum retails price (inclusive of all taxes)

Medical Devices Rules, 2017

MDR-2017 is by far the most extensive comprehensive rules on the subject. These have been enacted under the Drugs and Cosmetics Act. It is rather interesting to note that only 22 devices were notified under the provisions of the Drugs and Cosmetics Act, 1940 and the rules framed thereunder prior to 31st January 2017. The notified medical devices are enumerated below:

1. Disposable Hypodermic Syringes;
2. Disposable Hypodermic needles;
3. Disposable perfusion sets;
4. In vitro diagnostic devices of HIV, Bag and HCV;
5. Catheters;
6. Intraocular lenses;
7. I.V.Cannulae;
8. Bone Cements;
9. Heart Valves;
10. Scalp Vein Set;
11. Orthopaedic Implants;
12. Internal Prosthetic Replacements;
13. Blood Grouping Sera;
14. Ligatures, sutures and staplers;
15. Tubal rings;
16.  Surgical dressings;
17. Umbilical tapes;
18. Blood / Blood component bags;
19. Drug eluting stents;
20. Cardiac Stents (BMS);
21. Condoms;
22. Intra Uterus Devices

With the notification of the Medical Devices Rules 2017 the regulation of medical devices has undergone a sea change. The various facets of the MDR-2017 are discussed below [6]:

Risk based Classification

The new rules specifically define ‘Medical devices’ and also classify them into 4 categories based on their associated risks as mentioned below:

• Class A (low risk),
• Class B (low moderate risk),
• Class C (moderate high risk) and
• Class D (high risk)

The coverage of these rules governing devices could range from the simplest of devices such as thermometers or disposable gloves to implantable devices such as stents and artificial joints. All the manufacturers of medical devices shall have to comply with the risk proportionate regulatory requirements which have been specified in the MDR-2017.

Licensing for Imports and Manufacturing

A differentiating feature of the licences to be issued for imports or manufacture of medical devices is the perpetual validity of the issued Licences as against the renewable 5 year term licences. This, of course, is subject to the license being suspended, terminated or surrendered earlier in terms of the MDR-2107. The MDR-2017 seeks to encourage self-certification and to that end permit Class A manufacturers to apply and receive manufacturing licenses before the audit of their unit. However, even in these cases, an audit has to be conducted by an NABCB accredited body, after getting the approval. The State licensing authorities have been authorised in terms of MDR-2017 to grant licenses in respect of Class A and also the Class B device manufacturers. Class C and Class D medical devices manufacturers’ category will be regulated by the Central Licensing Authorities who can seek the assistance of experts and other notified bodies on need basis.

Shelf Life

Unless justified otherwise, the shelf life of a medical device shall not be more than 60 months. In the case of imports the restriction shall be with reference to the residual shelf life as on the date of import.

Management of Quality

Elaborate and mandatory framework covering, inter-alia, the design and development, packaging and servicing of medical devices. The verification and assessment of the quality management systems of class A and class B category medical devices shall be done by Notified Bodies which would be accredited for this purpose by the National Accreditation Board for Certification Bodies.

Identification and Traceability

Traceability of Medical Devices. These procedures need to outline the extent of product traceability and the records required. Where traceability is a requirement as per the MDR-2017, the unique identification of the product shall have to be allotted and controlled.

The manufacturers need to secure that their agents or distributors to maintain the records of the distribution of implantable medical devices to so as to allow traceability. These records shall be available for inspection of the Authorities.

Clinical Trials

In terms of MDR-2017 the clinical trials of medical devices are to be referred to as ‘clinical investigations’. No four-phase stringent trial norms, typical to the Pharmaceutical products, will now be necessary and a two-phase process will have to be complied with. While Phase one (Pilot Clinical Investigation) will require the conduct of a pilot study on a few number of subjects to acquire specific essential information about the medical device, phase-two (Pivotal Clinical Investigation) is a definitive study, conducted on a large number of patients, in which evidence is gathered to support the safety and effectiveness of the medical device for its intended use. The Central Drugs Standard Control Organization (CDSCO) shall regulate the trials of investigative medical devices. Adequate provisions for medical condition management and requisite compensation for the subjects of the investigation are there in MDR-2017 and it provides compensation of up to INR 800,000 for people affected by an adverse investigation. The Central Drugs Standard Control Organization (CDSCO) has been empowered to regulate the trials of investigative medical devices.

Product Recall

MDR-2017 defines “recall” to mean any action taken by its manufacturer or authorised agent or supplier to remove the medical device from the market or to retrieve the medical device from any person to whom it has been supplied, because of the medical device being hazardous to health or failing to conform to any claim made by its manufacturer relating to its quality, safety or efficacy; or not meeting the requirements of the Act and these rules. The licence holder of a Medical Device is required to notify the licence issuing authority about the occurrence of any suspected unexpected serious adverse event and action taken thereon which may include any recall. Recall would be necessary if a direction to that effect is received from the Licensing Authority on the ground that any part of any lot of the medical device has been found not conforming to the Drugs and Cosmetics Act or the MDR-2017.

Conclusion

A significant thrust to the Medical Devices Sector can be seen from the actions of the Central and the State Governments. The changes being witnessed during the last three years are aimed at boosting the ‘Make in India’ initiative which in turn could lead to more employment, import substitution and export promotion. The aim is also to fill up the regulatory void in the sector and ensure availability of goods quality and affordable medical devices to the masses. It will be interesting to see if these efforts may transform into innovation of the highest order and research driven production which may help in the realisation of the vision of the Government for this industry which in its own words are “…sharpen the competitive edge and provide incentives to firms to become more efficient, innovative and competitive. All this will support entrepreneurship, market entry and economic growth that, in turn, would produce high paying, high quality jobs” [7].

References

1. Medical Device Monitor (March 2017) by SKP group;
2. Recommendations of the Task Force on the Medical Devices Sector in India 2015;
3. OPPI Position Paper on Medical Diagnostics and Medical Devices;
4. Medical Devices Rules, 2017
5. Draft National Medical Device Policy, 2015, Department of Pharmaceuticals

Endnotes

[1]https://www.ibef.org/arab-heatlh-2017/download/PR_Arab_health_IBEF_January_302017.pdf

[2] http://www.bis.org.in/sf/pow/MHDPOW.pdf

[3] http://pib.nic.in/newsite/PrintRelease.aspx?relid=162025

[4] http://www.amtz.in/images/FAQs/Income%20Tax.pdf

[5] site

[6] http://www.mondaq.com/india/x/565872/Healthcare/New+Rules+for+Medical+Devices

[7] http://pib.nic.in/newsite/PrintRelease.aspx?relid=157955