Legal and Practical Issues on Import of Medical Devices - India

1. The applicable law

In India, the manufacture, import, sale, and distribution of medical devices is regulated under the Drugs & Cosmetic Act 1940 (“D&C Act”) and rules made thereunder and specifically, the Medical Devices Rules 2017 (“MD Rules”). The Central Drug Standards Control Organization (“CDSCO”), set up by the Ministry of Health and Family Welfare (“MoHFW”), is India’s chief regulatory body for pharmaceuticals and medical devices. The MoHFW is authorized under the MD Rules, read with the D&C Act and rules, to notify medical devices and regulate their manufacture, import, sale, and distribution in India. These regulated medical devices are substances and devices which are notified from time to time by the MoHFW under Sections 3(b)(i), 3(b)(ii) and 3(b)(iv) of the D&C Act. Until recently, medical devices that were not notified, were not regulated under Indian laws, and hence these devices could be manufactured, imported, sold and distributed in India like any other product. 

Until very recently, there were only a limited number of regulated medical devices (twenty four in number), and additional thirteen medical devices were proposed to be notified and regulated from a specified date under the MD Rules (collectively “Notified Medical Devices”, and as set out in Annexure 1 of this article). This regime underwent a tectonic shift on 11 February 2020, when the MoHFW released two key notifications. Through the first notification (“Definition Notification”), the MoHFW introduced an all-encompassing definition of medical devices under Section 3(b)(iv) of the D&C Act. The revised definition reads as follows:

• diagnosis,   prevention, monitoring, treatment or alleviation of any disease or disorder;

• diagnosis,   monitoring, treatment, alleviation or assistance for, any injury or   disability;
  

• investigation,   replacement or modification or support of the anatomy or of a physiological   process;
  

• supporting   or sustaining life;

•  disinfection   of medical devices; and
  

•  control   of conception.

The Definition Notification has expanded the scope of regulated medical devices from existing thirty seven, to approximately all devices that can be categorized by a lay-man as ‘medical devices’. This definition is extensive and subjective and is aimed at including all medical devices being sold in the Indian market. This approach is a stark alteration to the approach adopted by the government so far, wherein, only a minimal number of notified medical devices were regulated, and all other medical devices were unregulated. Given the wording of the definition and absence of a specific list of medical devices, it appears that all medical devices (whether or not notified by the MoHFW in the past) are automatically placed under regulation by virtue of the Definition Notification. In other words, all medical devices fall under the regulatory purview of the MD Rules. For sake of clarity, we have made reference in this article to all regulated medical devices, other than the Notified Medical Devices, as “Non-Notified Medical Devices”.

The other change introduced on 11 February 2020 was an amendment to the MD Rules (“Amendment Notification”), by way of which Chapter IIIA has been added in the MD Rules. The Amendment Notification states that all Non-Notified Medical Devices are required to be registered with the Drugs Controller General of India (“DCGI”). The Amendment Notification is ancillary to the Definition Notification, as the Amendment Notification aims to set out the regulatory framework for such Non-Notified Medical Devices which to date have remained unregulated.

The Amendment Notification and the Definition Notification have come into effect from 1 April 2020.

2. Risk-based classification of medical devices

The MD Rules have been framed on the lines of the guidelines formulated by the International Medical Device Regulators Forum, which ensures that the norms governing medical devices in India are at-par with those followed in other jurisdictions. Regulated medical devices have been classified into four categories under the MD Rules, with Class A devices being lowest in terms of risk and Class D devices being the highest.

Unlike other countries that give liberty to manufacturers / importers to classify their product for the purpose of registration, the MD Rules do not provide this liberty and the manufacturers / importers will have to follow the classification decided by CDSCO.

3. Product standards for medical devices.

The medical devices being imported in India must mandatorily conform to the standards prescribed in the MD Rules. The standards laid down by the Bureau of Indian Standards (“BIS”) or as may be notified by the MoHFW are the prescribed standards. In case a no relevant standard has been laid down by BIS or MoHFW, then the standard laid down by International Organisation for Standardisation or the International Electro Technical Commission or any other pharmacopoeial standards shall apply. If such standards are also not available, then the validated manufacturer’s standards shall become binding.

4. Registration and license requirements for import of medical devices (prescribed under MD Rules)

For import of Non-Notified Medical Devices for the next few months, the MD Rules through Amendment Notification have recently introduced norms for obtaining online registration from the DCGI. The registration is presently optional but shall become compulsory from 1 October 2021. The applicant will be required to furnish basic information about himself and the device, a certificate of compliance with respect to ISO 13485 standard accredited by National Accreditation Board for Certification Bodies or International Accreditation Forum in respect of such medical device, free sale certificate from the country of origin and an undertaking that the information furnished by the applicant is true and authentic. The process, though recent, appears to be straightforward.

For import of Notified Medical Devices, the applicant (“Applicant”) is required to obtain a ‘license’ (and not a ‘registration’, as discussed above). The registration regime appears to have been introduced as a temporary measure for regulation of Non-Notified Medical Devices. With passage of time, even importers of Non-Notified Medical Devices will be required to mandatorily obtain a license (notwithstanding their ‘registration’ as an importer). With effect from 11 August 2022, importers of Class A and Class B Non-Notified Medical Devices will be required to mandatorily obtain a license, whereas importers of Class C and Class D Non-Notified Medical Devices will be required to mandatorily obtain a license with effect from 11 August 2023.

The Applicant for an import license may be an individual or an organization already in possession of a licence to manufacture for sale or distribution under MD Rules or wholesale license for sale or distribution under D&C Act and rules. An overseas manufacturer can also get an India based nominee to obtain a license and undertake import of medical device in India. To give effect to such a relationship, the overseas manufacturer will have to issue a power of attorney in favour of the Indian applicant. In order to apply for the import license, the Applicant must either have a license to manufacture for sale or distribution, or a wholesale license for sale or distribution, as specified under the MD Rules. Depending on the risk-classification of the device, the prescribed authority for issuing manufacturing license is either the DCGI or the drugs department of the relevant state government. Wholesale license for sale and distribution are issued by the drugs department of the relevant state government.

The Applicant will be required to make an application for grant of import licence for medical device to the DCGI through an online portal [https://cdscomdonline.gov.in/NewMedDev/Homepage] in Form MD-14. The application fee is set-out in the Second Schedule of the MD Rules. It ranges from USD 50 to USD 6,000, depending on factors like purpose, risk-classification, number of manufacturing sites, etc. The license shall be valid until perpetuity, so long as the Applicant makes payment of the prescribed renewal fee after completion of 5 years from the date of issue of license.

DCGI, by itself or an appointed third party, has the right to inspect the overseas manufacturing facility as part of application scrutiny. For obtaining a license to import Class C and Class D medical devices from China, the Applicant will have to establish safety and effectiveness through clinical investigation in India. In the case of Class A and Class B medical devices, the Applicant will have to establish the safety and effectiveness through published safety and performance data or through clinical investigation in China and a free sale certificate from China.

After examination of documents, DCGI may either grant a license in Form MD-15 or reject the application. The MD Rules specify an outer time limit of nine months (from date of application) for giving its final verdict. In the event of rejection, the Applicant may appeal to the MoHFW within a period of forty five days and the MoHFW , may, after such enquiry into the matter, as considered necessary, pass orders in relation thereto within ninety days from the date of appeal.

5. Compliance requirements for registration-holders and license holders (prescribed under MD Rules)

The compliance requirements for an import registration are limited. The importer is only required to mention the registration number on the label of the medical device. Nevertheless, the DCGI has the authority to cancel the registration number or suspend it for a period if the registrant has failed to comply with any provision of the MD Rules.

The compliances are relatively more for a ‘license’ holder. An import license holder has to undertake the following ongoing / event-based compliances:

The prices of medical devices have recently come under the regulation of the Government. With effect from 1 April 2020, medical devices have to be retailed in India as per the pricing mechanics set out by the Government. With this change, the Government has taken away the pricing flexibility that the medical device industry enjoyed previously in the Indian market.

6. Registration and compliance requirements for import of medical devices (prescribed under other laws)

An importer of medical devices is also required to comply and obtain registrations under other Indian laws, that are otherwise generally applicable to all importers. These include obtaining an importer-exporter code, filing tax returns, complying with employee welfare laws, etc.

The import of medical devices is similar to the import of any other goods in the territory of the country. The importer is required to file a bill of entry along with supporting documents, and also pay the specified custom duty. The custom officials examine the goods against the bill of entry, and thereafter permit entry of goods into India.

The importer can freely remit monies for making payments for imports into India. As part of the procedure, the importer will have to furnish sufficient documents so that the remitting Indian bank is assured of receipt of all the requisite details and that the remittance is for bona fide trade transactions as per applicable laws in force. Remittances against imports should be completed not later than six months from the date of shipment, except in cases where amounts are withheld towards guarantee of performance. In special circumstances, banks may permit settlement of import dues delayed for the reason of disputes, financial difficulties, etc.

Like other countries, India is also battling the outbreak of COVID-19. As of 22 April 2020, approx. 20,000 people have been infected with COVID-19 in India, resulting in death of approx. 650. The Indian Government realizes the urgent need to provide special conditions for regulating medical devices used to diagnose, prevent and treat COVID-19, such as diagnostic tests, ventilators, and personal protective equipment - including masks, face shields, respirators, gowns, and gloves. The need of these special conditions arises because India does not have the domestic capability to cater to the skyrocketing demand of such medical devices. India depends heavily on devices imported from countries like China to plug this demand-supply gap. In this regard, the CDSCO, through a notice dated 19 March 2020, has stated that applications to import in-vitro diagnostic kit for sale and distribution would be processed on priority through expedited review / accelerated approval. Further, CDSCO through its circular dated 15 April 2020 has stated that it will accept self-attested import license application without notarised and apostilled documents with an undertaking that they will submit notarised and apostilled application once situation normalises.

The Finance Ministry has also exempted the import of following devices, used for dealing with COVID-19, from levy of custom duty and health cess until 30 September 2020: ventilators, face masks and surgical masks, personal protection equipment, COVID-19 testing kits and substances used for manufacturing any of these devices. We expect more relaxations to be introduced by the Government in the coming days to maintain adequate supply of these life-saving medical devices.

India’s need for imported medical devices does not show any indications of a slow-down, notwithstanding the measures taken by the Indian government to make India a hub for the manufacture of medical devices. Chinese exporters have an important role to play in meeting the requirement of a densely populated country like India. While this presents an excellent business opportunity for Chinese exporters, care must be taken that the products supplied to India are in sync with the product quality parameters set out under the MD Rules. We have seen a few instances where medical devices imported (for instance, COVID-19 test kits) from China have come under regulatory scrutiny for malfunctioning or sub-standard quality. This is largely due to lack of awareness amongst Chinese exporters on the applicable laws on medical devices in India, which has undergone several changes in the recent past. There is no registration requirement for an exporter of medical devices; however, the import in India cannot be made till the importer in India is registered and the products supplied by the exporter comply with the technical and safety specifications laid down by the Indian government. Accordingly, Chinese exporters are advised to discuss their business plans with their Indian legal counsel, who can help them navigate through the myriad of regulations.

On a practical front, the timelines of obtaining registrations / licenses are likely to exceed the timelines prescribed under the MD Rules. This is owing to the varying workload of the relevant government department. To remain compliant, Chinese exporters should make applications in advance so that they are in receipt of their registrations / approvals within the due deadline. Especially after the Amendment Notifications, the scale of regulatory regime has been enhanced, and Chinese exporters should be well-aware of their obligations under the MD Rules. It is important to note herein that violation of the D&C Act and the MDR Rules, including failure to obtain prescribed license of registration, can attract fine or criminal prosecution.

The new changes also open up a debate on the nature of devices that come under the regulatory purview of the Indian government. The Amendment Notification appears to bring all universal items, which can be used towards diagnosis, prevention, monitoring, treatment or alleviation of diseases, injury, disability, or towards supporting life, within the ambit of registered medical devices. Could it mean that dishes used to feed patients in hospitals also come within the purview of MD Rules? Or an accounting software used by the hospital for maintaining its financial books gets classified as a registered medical devices? We will have to wait and hope that the MoHFW releases clarifications on the ambit of medical devices that are governed under the scope of MD Rules. 

—— Atul Pandey (Partner)

 Arjun Bhagi (Senior Associate)

Varun Yadav (Associate)

Khaitan & Co, New Delhi, India 

22 April 2020