BBI Washington Editor
WASHINGTON — Doing business in Japan in the coming years will be as burdensome as grappling with the bureaucracy of the FDA, a representative of that country told membership of the Advanced Medical Technology Association (AdvaMed; Washington) at the organization's annual Global Horizons for Medical Technology conference last month.
Just as the U.S. continues its ongoing struggle with regulatory reform of the healthcare industry, so too is Japan, and changes there will come as early as next year. The country's main regulatory law for drugs and devices, the Pharmaceutical Affairs Law (PAL), is going through a major overhaul, said Kazuhisa Takahashi, attache for the Ministry of Health, Labor and Welfare to the Embassy of Japan (Washington). Takahashi was one of three panelists who discussed developments in medical technology and reimbursement and approval of new technology at the conference.
The PAL establishes regulations for the manufacturing and distribution of medical devices to ensure their quality, safety and efficacy, Takahashi said. The legislative package was submitted to the Regular Diet parliament session in Japan in May and approved in July. A series of notifications will be sent out by August 2003, and the full implementation of the regulations should be completed by April 2005, he said.
The last series of revisions in Japan's regulatory laws occurred in 1994, Takahashi noted. The major changes are the introduction of a classification system corresponding to the health risk of medical devices, similar to the FDA's classification system, and the introduction of a third-party certification system for low-risk devices. Under the risk classifications, general medical devices are considered extremely low risk; controlled medical devices are deemed low risk; and specially controlled medical devices are either middle or high-risk.
The revisions are a work in progress with many details yet to be worked out, reported Michael Gropp, vice president of global regulatory and public policy for Guidant (Indianapolis, Indiana). "Unlike the U.S., there is no formal mechanism for notice and comment periods like the Federal Register," he said. The Japanese market accounted for $24.8 billion of the global business in 2000, he said, citing data from AdvaMed and its European counterpart, Eucomed (Brussels, Belgium).
The PAL revisions have three major objectives, Gropp said. First, they serve as a substantial revision of medical device regulations. Second, they consolidate safety measures for biological products. Lastly, they provide an approval system and enhance the post-marketing surveillance efforts.
The revisions are coming at a crucial time for Japan, he said, and several factors are contributing to the need for them: An aging population, a stagnant economy and historically low funding levels for healthcare in comparison to the U.S. and Europe.
The good news in the revisions is that they are based on efforts by the Global Harmonization Task Force, which began in 1992 as an informal group of regulators and industry representatives, Gropp said, and accounts for 85% of the global trade. The task force creates a harmonized definition of medical devices and establishes a risk-based classification, he added. Japan, a founding member of the task force, currently serves as chair of the group. "The chair rotates between member countries, and Japan is represented by the Ministry of Health, Labor and Welfare as well as the Japan Federation of Medical Devices Association," he said.
Perhaps the biggest change for U.S.-based importers will be the elimination of the current dual marketing authorization system and the creation of a marketing authorization holder, which must demonstrate "adequate" quality assurance controls over the manufacturing location or company, he explained. Existing authorizations will have to be converted to the new system, Gropp added.
A new independent administrative agency will be created and will begin operation in April 2004, he noted. "The new agency will regulate pharmaceutical, medical devices and biologics activities. [It] will be a re-deployment of existing resources because Japan has restrictions on the amount of staffing and resources the ministry can have." The agency will be funded through industry fees and will include a health hazard relief fund for patients who are adversely affected by devices not approved for widespread use, much like the humanitarian use exemptions in place with the FDA, he said.
The changes will be implemented at a slower pace than some manufacturers would like, Gropp said, adding that "the old saying is true in this case: be careful what you wish for — you might just get it."
Changes to the reimbursement system will be slower to put in place, according to Chuck Brynelsen, president of Asia Pacific operations for Medtronic (Minneapolis, Minnesota). Brynelsen also serves as chairman of the medical device and diagnostics subcommittee for the American Chamber of Commerce in Japan. He told conference attendees that the medical technology industry is perceived in Japan as being part of the healthcare problem rather than a solution. "The chamber is launching a PR campaign, along with AdvaMed, to promote the value of advanced medical technology," he said. "It will show that medical technology is one of the solutions to Japan's healthcare issues by reducing healthcare costs and improving productivity through shorter hospital stays."
'Daunting tasks' in Europe
Manufacturers of medical devices face a half-dozen challenges in the European marketplace, and each is a daunting task in and of itself, due to a certain extent on influences from the pharmaceutical industry. That's the reality for doing business in the European med-tech arena these days, according to Barry Wilson, senior vice president and president of international operations at Medtronic and also chairman of Eucomed.
Wilson assured conference attendees that, despite the challenges, Europe cannot be overlooked or downplayed. That area of the world is an active venue for about 7,000 med-tech companies, more than 350,000 employees and about Euro 40 billion in revenues annually, he said.
The stiffer regulations called for in the pharmaceutical industry have resulted in more regulation for all of medical technology in Europe, Wilson said, but he listed six other challenges facing those developing devices and device-related technologies.
The first is getting products to the market more rapidly. About 50% of the revenues of most innovative device companies is generated from products less than a year old, he noted. But he said that, with that growth, the market is becoming equally difficult to navigate. Barriers to getting products to the marketplace, Wilson said, include revisions to regulatory processes and stricter requirements for clinical trials, such as higher costs and longer research periods.
The second large challenge is in ensuring equal access to this marketplace by eliminating its considerable hurdles. But creating an even playing field for all is difficult, he said, since countries are testing the limits of individual authority by adding additional regulations. As just one example, France is in the process of establishing individual market restrictions on certain products for aortic abdominal aneurysm and brachytherapy, Wilson noted.
Regional health authorities are popping up in Italy and Spain as well, he said, warning that coming changes in the healthcare systems in the United Kingdom and Germany will only delay the introduction of new technologies to the marketplace.
The third challenge — one perfectly parallel to the U.S. environment — is obtaining adequate funding. Here the difficulties include the differences in reimbursement systems from country to country in Europe, as well as tighter budget pressures for those countries that adopted the Euro currency system, Wilson said. And he noted a proliferation of bureaucratic add-ons increasing these difficulties in further. "In Germany, they created four new institutes that govern the reimbursement for new technologies."
Major reforms are needed, he stressed, to eliminate the discrepancy between the medical technology and pharmaceutical sectors. These work as "silos," Wilson said, between hospitals, pharmaceuticals and medical technology to exacerbate the reimbursement problem. "There's an average of 18% of budgets dedicated to pharmaceutical spending vs. an average of 6% for medical technology," he noted.
The fourth large challenge comes in dealing with the new environment of patient power in Europe and how that power is being flexed. In addition to the information and education offered by the medical technology companies themselves, the role of the Internet has empowered patients tremendously, Wilson said. Additionally, he noted an increased movement by both industry and government authorities alike to encourage more patient involvement in the healthcare delivery equation.
The fifth challenge is to improve the image of medical technology in Europe. "Everybody knows pharmaceuticals because of the high profile and the pricing issues," he said. And so medical technology needs to spread its image by showing that it saves lives and improves the quality of life, he advised.
To that end, Eucomed is enhancing its contacts at the European Parliament and at the European Commission level, Wilson said.
Lastly, better access to medical devices needs to be provided to the citizens of Europe. "We need to begin to produce low-technology products locally and import the higher-tech ones, but there are challenges with infrastructure, training of the employees and prices as well," he said.
To tackle these six challenges, he listed four key strategies:
- A more united industry worldwide, which could be driven by stronger relationships between AdvaMed and Eucomed.
- Improved cooperation between various national associations, member state health authorities and Eucomed.
- More constructive engagement with European and national regulators.
- Greater corporate involvement in national and transnational associations.
If "challenge" is indeed a synonym for "opportunity," as many maintain, then Europe clearly is rife with opportunity for medical technology manufacturers in the U.S.