China Regulatory Officials Now Can Perform Unannounced Inspections on Device Manufacturers

On June 18, China’s equivalent to the U.S. Food and Drug Administration, the State Food and Drug Administration (SFDA), announced new “Working Procedures for Unannounced Inspection of Medical Device Manufacturers (interim).” The new procedure is in accordance with regulations already put in place by the agency, officials said.

The English version of SFDA’s website states that the working procedures were introduced to “strengthen the supervision to the production of medical devices, and standardize medical device supervision and inspection.” The procedures came into effect on the date of their announcement.

According to CMS China, a global legal and tax consultation company, the first unannounced inspection program started in on April 24, 2006: The SFDA published an unannounced inspection provision regarding good manufacturing practices (GMP) for pharmaceutical products titled “The Interim Provision on Unannounced Inspections over GMP of Pharmaceuticals.” Under this provision, which is still in place, the SFDA make unannounced visits to ensure pharmaceutical companies are satisfying GMP requirements.

The newly published procedure for medical device manufacturers relies on the “Measures for Supervision and Administration of Medical Device Production,” which took effect in 2004, and the “Interim Provision on the Daily Supervision Management of Medical Device Manufacturing,” effective as of 2006. These provisions set out broad circumstances under which inspections may be conducted. They also impose an “enterprise credit system,” a series of files on manufacturers recording all of the observations made by local/provincial SFDA supervisors. This enterprise credit system will now be used as evidence to launch any unannounced inspection.

Manufacturers that may be subject to an unannounced inspection are companies:

• That are suspected of illegal actions;
• That have had a serious product quality accident;
• Whose products are proven to be of unfit quality in a spot check by the SFDA;
• That lack a quality management system; and
• Whose credit system shows an unsatisfactory history of record keeping.

A final inspection report will be submitted to the local or provincial branch of the SFDA presiding over the unannounced inspection. During or after the inspection, the inspecting team may hand over the case to the local authorities for them to pursue an administrative liability sanction.

According to the framework legislation, this liability sanction may include a revocation of the manufacturer’s 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 authorities will rely on these new provisions to also inspect medical device trading companies in China. Because the 2006 provision for pharmaceutical companies eventually was broadened to pharmaceutical trading companies, this should be anticipated for device manufacturers too. However, some local agencies have informed CMS China that it doesn’t seem likely trading companies will be targeted, especially since the procedure has not yet been completely implemented at the same level as the regime for the inspection of pharmaceuticals.