Chang-Hong Whitney04.12.07
The National People’s Congress (NPC) is an annual event that gathers delegates from all over China to discuss major policy and social issues. Reports filed at this meeting and opinions expressed by delegates often are reflected in policies that are formulated at later dates; therefore, what occurs at this gathering can have significant implications for times to come. Healthcare policies, medical insurance and management of medical products were the “hot” topics of the 2006 NPC. This year was no different, as healthcare took center stage amid other key issues such as education, energy and legal systems. Following are a few of the healthcare issues that were up for discussion at the NPC.
As has been noted in this column previously, China is set to formulate a nationwide healthcare insurance system that would cover all citizens. Trial implementation of collective healthcare insurance programs already have been occurring in a few provinces within China’s rural areas, where groups of farmers have been sharing medical expenses with noticeable success. This format of rural healthcare insurance is expected to spread to 80% of the counties nationwide.
When this program rolls out to other areas, neighborhood health clinics and primary health facilities will be established in various cities to provide early diagnosis and treatment for common diseases. These front-line facilities will join a new insurance program, which is built on the Chinese “catastrophe” medical insurance program, which previously was established to support patients with chronic disease, such as cancer. China also will focus on controlling and managing transmittable diseases such as hepatitis A and encephalitis by including vaccines for 15 common transmittable diseases in the free immunization program.
Along with general healthcare initiatives, the discussion focused on the price of medical devices and equipment in China. In the past, hospitals could charge high additional fees for procedures that involved the use of medical equipment that was imported from foreign countries rather than equipment made domestically. In some regards, this pricing structure has accelerated the demand for foreign products, especially since patients were encouraged to use imported products for their diagnostic quality, performance and reliability. However, the benefits of this technology have been weighed against costs now that it has become apparent that the high fees have added a tremendous economic burden to patients and their families who want the best medical care. In fact, many of these individuals have been pushed into poverty. Adding to this problem, many patients who cannot afford to pay for this equipment may die from disease that otherwise could have been treated.
Addressing and attempting to correct this situation is the Ministry of Health and National Development and Reform Commission, a macroeconomic management agency under the State Council that studies and formulates policies for economic and social development; maintains a balance of economic aggregates; and guides the overall restructuring of the economic system. This commission issued a directional notice urging the reduction of payment charges for some advanced medical equipment, such as computed tomography and magnetic resonance imaging systems. In addition, the notice removed the pricing preference among healthcare providers for foreign products.
Also noteworthy is that the Ministry of Health reinstated control over healthcare facilities’ purchases of larger (ie, more expensive) equipment by requesting that all new purchases be approved prior to buying equipment through the public bidding process. With the renewed focus on encouraging the purchase of economical, practical equipment that are sufficient for primary healthcare, this measure has the potential to change the dynamics of purchasing in the medical market by shrinking the high-end market.
This may sound like good news for Chinese companies, who tend to make the lower-cost equipment and who would have been able to enjoy the long-awaited surge of demand. Unfortunately, their reputation and public trust have been by a few major incidents caused by defective products. One defective antibiotic drug, approved by China’s State Food and Drug Administration (SFDA), caused more than 40 deaths nationwide before the agency ordered a recall.
Riddled with scandals in 2005 and 2006, the SFDA has suffered tremendous public scrutiny and ridicule. At last month’s NPC meeting, the SFDA was determined to reinvent its policies and procedures, adjust its management procedures and replace some of its key management positions. To improve post-market surveillance, the agency is likely to unveil its new adverse-incident policy and reporting procedures this year. The top-level policy, “Regulations for Supervision and Management of Medical Devices,” will be reviewed and possibly will see the inclusion of supervision and punishment clauses, a demand for compliance with national technical standards as well as a requirement that all documents—including graphic user interface on control panels—must be in Chinese language.
In 2007, the SFDA also will enhance its policy in drug administration and approvals; this will help reinvent drug approval policies, production supervision and distribution management and supervision. On March 9, the agency released its first draft of a new drug registration procedure. The new IVD regulation, which has been in discussion for two years, is expected to be released soon as well. Another new regulation for IVD distribution companies has also been published for public comments.
To improve its relationship and candor with the public, the SFDA is going to draft and implement three internal policies: (1) a policy outlining key evaluator responsibilities in the registration evaluation process; (2) a notification policy that ensures the status of each evaluation step will be shown to both applicants and the public; and (3) a punishment policy for those who disregard their responsibilities during the process. The agency is determined to improve its exposure and reputation to the public.
Without a doubt, 2007 already has been off to a productive start and will continue to be a very active year for the SFDA, Ministry of Health and everyone else involved with the healthcare and medical device industries. It appears more policies will continue to emerge, and Chinese citizens hope that their country’s officials will re-examine procedures for better management. In the meantime, some tightening already is occurring even as certain loopholes are being patched up.
Manufacturers should keep a close eye on regulation changes at both the central and local levels as post-market surveillance activities heat up. Compliance with Chinese regulations will be essential to maintain continuing sales and positive market presence in China, especially amid all the change occurring within the healthcare landscape.
Universal Insurance Coverage
As has been noted in this column previously, China is set to formulate a nationwide healthcare insurance system that would cover all citizens. Trial implementation of collective healthcare insurance programs already have been occurring in a few provinces within China’s rural areas, where groups of farmers have been sharing medical expenses with noticeable success. This format of rural healthcare insurance is expected to spread to 80% of the counties nationwide.
When this program rolls out to other areas, neighborhood health clinics and primary health facilities will be established in various cities to provide early diagnosis and treatment for common diseases. These front-line facilities will join a new insurance program, which is built on the Chinese “catastrophe” medical insurance program, which previously was established to support patients with chronic disease, such as cancer. China also will focus on controlling and managing transmittable diseases such as hepatitis A and encephalitis by including vaccines for 15 common transmittable diseases in the free immunization program.
Initiatives Surrounding Medical Products
Along with general healthcare initiatives, the discussion focused on the price of medical devices and equipment in China. In the past, hospitals could charge high additional fees for procedures that involved the use of medical equipment that was imported from foreign countries rather than equipment made domestically. In some regards, this pricing structure has accelerated the demand for foreign products, especially since patients were encouraged to use imported products for their diagnostic quality, performance and reliability. However, the benefits of this technology have been weighed against costs now that it has become apparent that the high fees have added a tremendous economic burden to patients and their families who want the best medical care. In fact, many of these individuals have been pushed into poverty. Adding to this problem, many patients who cannot afford to pay for this equipment may die from disease that otherwise could have been treated.
Addressing and attempting to correct this situation is the Ministry of Health and National Development and Reform Commission, a macroeconomic management agency under the State Council that studies and formulates policies for economic and social development; maintains a balance of economic aggregates; and guides the overall restructuring of the economic system. This commission issued a directional notice urging the reduction of payment charges for some advanced medical equipment, such as computed tomography and magnetic resonance imaging systems. In addition, the notice removed the pricing preference among healthcare providers for foreign products.
Also noteworthy is that the Ministry of Health reinstated control over healthcare facilities’ purchases of larger (ie, more expensive) equipment by requesting that all new purchases be approved prior to buying equipment through the public bidding process. With the renewed focus on encouraging the purchase of economical, practical equipment that are sufficient for primary healthcare, this measure has the potential to change the dynamics of purchasing in the medical market by shrinking the high-end market.
This may sound like good news for Chinese companies, who tend to make the lower-cost equipment and who would have been able to enjoy the long-awaited surge of demand. Unfortunately, their reputation and public trust have been by a few major incidents caused by defective products. One defective antibiotic drug, approved by China’s State Food and Drug Administration (SFDA), caused more than 40 deaths nationwide before the agency ordered a recall.
Speaking of the SFDA…
Riddled with scandals in 2005 and 2006, the SFDA has suffered tremendous public scrutiny and ridicule. At last month’s NPC meeting, the SFDA was determined to reinvent its policies and procedures, adjust its management procedures and replace some of its key management positions. To improve post-market surveillance, the agency is likely to unveil its new adverse-incident policy and reporting procedures this year. The top-level policy, “Regulations for Supervision and Management of Medical Devices,” will be reviewed and possibly will see the inclusion of supervision and punishment clauses, a demand for compliance with national technical standards as well as a requirement that all documents—including graphic user interface on control panels—must be in Chinese language.
In 2007, the SFDA also will enhance its policy in drug administration and approvals; this will help reinvent drug approval policies, production supervision and distribution management and supervision. On March 9, the agency released its first draft of a new drug registration procedure. The new IVD regulation, which has been in discussion for two years, is expected to be released soon as well. Another new regulation for IVD distribution companies has also been published for public comments.
To improve its relationship and candor with the public, the SFDA is going to draft and implement three internal policies: (1) a policy outlining key evaluator responsibilities in the registration evaluation process; (2) a notification policy that ensures the status of each evaluation step will be shown to both applicants and the public; and (3) a punishment policy for those who disregard their responsibilities during the process. The agency is determined to improve its exposure and reputation to the public.
Busy Times Ahead
Without a doubt, 2007 already has been off to a productive start and will continue to be a very active year for the SFDA, Ministry of Health and everyone else involved with the healthcare and medical device industries. It appears more policies will continue to emerge, and Chinese citizens hope that their country’s officials will re-examine procedures for better management. In the meantime, some tightening already is occurring even as certain loopholes are being patched up.
Manufacturers should keep a close eye on regulation changes at both the central and local levels as post-market surveillance activities heat up. Compliance with Chinese regulations will be essential to maintain continuing sales and positive market presence in China, especially amid all the change occurring within the healthcare landscape.