Background

Reflecting the Indian economy’s globally feted growth in recent years, its healthcare industry and market for medical devices have witnessed a significant upswing. Some estimates suggest that the Indian healthcare industry may grow to around USD 238.76 billion by 2020. The Indian medical technology industry (covering devices as well as software, re-agents etc. but excluding medicines) has been estimated to reach around USD 5 billion in 2012 with an annual growth of up to 15% (as reported by Confederation of Indian Industry and Deloitte in 2010 in “Medical Technology in India – Riding the growth curve”).

The Indian healthcare system has made significant strides since India’s independence in 1947, particularly in addressing life expectancy, infant mortality rate and containment/eradication of previously virulent diseases. India is globally the third largest producer (by volume) of pharmaceutical drugs (as noted on the official website of the Indian Government’s Department of Pharmaceuticals) and already attracts sizeable numbers of “medical tourists” from Europe and North America due to the availability of world class doctors and facilities at relatively low cost. However, paradoxically, access to quality healthcare in India remains very limited for the general public, particularly outside its large cities and for the economically disadvantaged. In this context, the Indian government’s healthcare policies and the regulatory framework governing the manufacture and sale of medical devices assumes importance. This article discusses certain key elements of the current legal and regulatory framework as well as proposed legislative and policy initiatives.

Existing Regime

The regulation of medical devices in India emerged rather slowly over the last few decades. The primary law dealing with medical devices is the Drugs and Cosmetics Act, 1940 and the accompanying Drugs and Cosmetics Rules, 1945 (collectively, “Drugs Act”).

While the Drugs Act is principally a statute dealing with pharmaceutical/medicinal formulations, in 1983, the definition of ‘drug’ under the Drugs Act was expanded to include devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings. The specific devices covered by the Drugs Act are notified by the Indian Government. The Drugs Act covers a product’s supply chain from manufacturing to testing, distribution and sale, including, inter alia, registration of the manufacturing premises (in India or elsewhere), import license, sale and distribution license, clinical trial requirements, compliance with labeling and manufacturing standards and requirements.

The (very limited) initial list of regulated devices has been expanded over the years to include about thirty items including (i) In–vitro diagnostic devices for HIV, (ii) Cardiac Stents and Orthopedic Stents, (iii) Catheters, (iv) Intra Ocular Lenses, (v) Bone Cement, (vi) Heart Valves and (vii) Internal Prosthetic Replacements.

Evidently, the list still remains quite small, leaving out a multitude of medical devices, including commonly marketed items like gluco-meters used in homes as well as hospitals for checking blood sugar levels, and high-value medical devices like pace-makers. Such devices are not specifically within the scope of the Drugs Act and appear to fall into a grey area (as opposed to the detailed regulations for such devices in certain jurisdictions).

A review of the Drugs Act also reveals that drugs and pharmaceuticals are regulated by provisions aimed at addressing public health and safety concerns. These include provisions that deal with the adulteration of drugs and spurious drugs, but would not cover devices. As a result, important public health and safety aspects of medical devices remain largely unaddressed. So, while the Drugs and Cosmetics Rules, 1945 contain a few schedules dedicated to medical devices (including Schedule M-III relating to requirements of factory premises for medical devices and Schedule R-1 relating to quality specifications of specified devices), they are inadequate in dealing with the wide variety of medical devices being marketed in a fast growing sector.

Another feature of India’s regulation of drugs/medical devices is that it is divided between authorities under (A) the central government of India (“GOI”) and (B) the various State governments (India currently comprises 28 States). This arises from the federal system in India, as reflected in India’s Constitution (which contains 3 lists demarcating matters to be legislated and implemented by GOI and the State governments). “Drugs” features on the “Concurrent List”, i.e., matters on which both the GOI and State governments have competence. Interestingly, since “Public health and sanitation; hospitals and dispensaries” is listed under the “State List”, healthcare is primarily a matter under the State governments.

Broadly, the regulatory machinery consists of the Central Drugs Standard Control Organization (“CDSCO”), under the Drugs Controller General of India (“DCGI”), Ministry of Health and Family Welfare, GOI. This is the central regulatory agency, which works in conjunction with the State Drug Control Organizations to administer the provisions of the Drugs Act. The Drugs and Technical Advisory Board (“DTAB”) is another nodal agency, set up under the provisions of the Drugs Act to advise the GOI and State governments regarding technical matters relating to the Drugs Act. Further, the Ministry of Health and Family Welfare has established numerous Medical Device Advisory Committees (“MDACs”) dealing with various categories of medical devices (e.g., reproductive & urology devices, ophthalmic devices, etc.). Their primary objective is to advise and assist the DCGI in reviewing applications for new medical devices covered under the Drugs Act, and clinical trials regarding the same. Additionally, the MDACs also have the power to identify devices that need to be regulated/notified by the GOI and prepare guidelines for research and development of new medical devices relevant to India.

There is a further division of responsibilities within this regulatory machinery. The regulation of manufacture, sale and distribution of drugs and regulated devices is primarily the concern of the State authorities while the central agencies (primarily CDSCO and DGCI) are responsible for approval of new drugs, clinical trials, laying down the standards, control over the quality of imported drugs and regulated devices, coordination of the activities of State authorities, etc.

The co-existence of multiple regulatory agencies makes the tracking and understanding of regulatory landscape and developments a cumbersome and daunting task. Added to this, the notification based approach has made the development of regulation very ad-hoc. Often industry players need to reach out to the regulator(s) to seek clarifications. Such a situation gives rise to uncertainty for manufacturers and distributors of most types of medical devices and also compromises protection of public safety and health. This certainly does not bode well for the medical devices market (that is poised to grow exponentially) and customers/users. Unwittingly, this splitting of powers between the GOI and State governments has also created some challenges in the effective regulation of medical devices since any centralized dedicated regulation of medical devices can easily upset this delicate balancing of responsibilities.

That there is a great need for comprehensive regulation of medical devices in India is not in question. As has been noted by Association of Indian Medical Device Industry (“AIMED”), medical devices form an entirely different category as opposed to medicines. In our view, attempting to regulate them through a legislation originally drafted in respect of medical drugs/pharmaceuticals will inevitably be a difficult exercise, given the varied nature of medical devices and the fact that an entirely different set of quality/safety standards would apply to them (as opposed to drugs). In recognition of this need, several efforts have been made to address the situation.

Key Efforts

Certain amendments to the Drugs Act were proposed by way of the Drugs and Cosmetics (Amendment) Bill 2007 (“2007 Amendment Bill”). It includes a proposal to amend the definition of ‘drug’ in order to expand its scope and include various types of medical devices, including any “medical device, medicated device, instrument, apparatus, appliance, material, software necessary for their application, intended for internal or external use in human beings or animals, whether used alone or in combination, as may be specified from time to time by the Central Government …for the purpose of diagnosis, prevention, monitoring, treatment or mitigation of any disease or disorder; diagnosis, monitoring, treatment, alleviation of or compensation for, any injury or handicap; investigation, replacement or modification of anatomy or physiology; or control of conception, and which does not achieve its intended action primarily by any pharmacological or immunological or metabolical process…” While this proposed definition of ‘drug’ aims to cover a broad spectrum of medical devices generally, it falls short of being a significant step forward as it continues to depend on the specific notification of such devices.

Another proposal in the 2007 Amendment Bill is to replace one of the central regulatory bodies, i.e. the DTAB with another agency, the Central Drugs Authority, to advise the GOI and State governments on matters relating to both allopathic and Indian systems of medicine. DTAB currently advises the government on technical matters relating to the Drugs Act, which includes medical devices; however, there is a lack of clarity on how a substitute nodal body such as the proposed Central Drugs Authority would impact or even address some ongoing challenges and issues in relation to the regulation of medical devices.

An overview of the proposed amendments vide the 2007 Amendment Bill, currently pending in the Indian Parliament, shows that these amendments would not be a significant change in direction from the substantive approach to medical devices in the current Drugs Act. The root issues as have been noted by legal commentators and industry, i.e., the problems inherent to using a legislation originally meant for dugs/pharmaceuticals to regulate medical devices, would remain unaddressed.

A more meaningful effort is the draft Medical Devices Regulation Bill, 2006 (“MDR Bill”), proposed by the Department of Science & Technology, GOI, as a consolidated and comprehensive set of regulations specific to medical devices. In contrast to the regime under the Drugs Act, the MDR Bill is intended as a comprehensive and dedicated regulation of medical devices with special focus on public health and safety aspects. The MDR Bill seeks the establishment of a national level regulator aimed at establishing and maintaining a national system of controls for the quality and safety of medical devices. It covers important aspects right from design, standards and manufacturing to testing, packaging, labeling, import, sale, use, and disposal requirements. Importantly, the definition of a ‘medical device’ in the MDR Bill is in line with internationally accepted norms. The complexity of and wide variety of medical devices is recognized and the classification of devices (and regulation) is according to the level of risk associated with them. The approach is to put in place a principle based substantive law rather than mere procedure and license based regulation. This proposal continues to languish due to objections by various States to its provisions, including a perceived dilution of the powers of State regulatory agencies.

Another effort for a comprehensive regulation has been made by the DTAB, which formulated a revised set of guidelines intended to replace and expand the existing Schedule M-III under the Drugs and Cosmetics Rules, 1945. The proposed Schedule M-III proposes regulations for inspection and monitoring of medical devices that in some respects even betters the standard proposed by the MDR Bill, e.g., it provides explicit provisions allowing for the withdrawal of devices that may compromise the health and/or safety of patients or users even after it is installed, maintained and used as per prescribed regulations). It also expands the scope of the definition of ‘drug’ under the Drugs Act by providing broader criteria by which various types medical devices will be deemed to be included within the definition of ‘drugs’ under the Drugs Act. Further, like in the MDR Bill, this proposed schedule also seeks to classify medical devices according to risk levels associated with the use of such devices (e.g.: thermometers would be classified as low risk devices while heart-valves would be ‘high-risk’ devices) – the monitoring and regulatory requirements for medical devices would be calibrated accordingly.

However, while the proposed Schedule M-III was formulated in 2009, it seems to have stagnated. An expert committee was set up in 2009 to review, inter alia, the proposed Schedule M-III and recommend a suitable course of action in relation to the regulation of medical devices but could not take it further – the AIMED and other industry players have made a number of submissions to the DTAB in this regard but there has been little discernible progress. Also, the issue with regulating medical devices through the Drugs Act is not addressed as this proposal seeks to use the existing statutory framework. To our mind, this would not address the fundamental gap in the present system of governing medical devices as ‘deemed’ drugs and pharmaceutical formulations. Therefore, the case for having a comprehensive and full-fledged statute to provide governance and regulation of medical devices in India remains strong.

Unfortunately, any major step forward presents difficult challenges. On the one hand, there is a clear need for a focused and dedicated legislation for regulating medical devices in India, and on the other hand, the creation of a centralized regulatory framework causes a perceived dilution in the separate powers of the GOI and State governments.

There is a great need for policy makers and law makers to step up the efforts to meaningfully set out regulations for medical devices in India. Given the interest and media coverage that this issue has received recently, it is hoped that the concerned powers will make a sustained effort to resolve the difficult issues (including the particular challenge of consensus building among the States and GOI) and pass a dedicated law through the Parliament.

Debashish Sankhari is a Partner in the M&A practice at AZB & Partners and has experience in corporate/advisory and commercial transactions in a broad range of sectors. Shuchi Sinha is a Senior Associate working in the M&A and debt finance practice at AZB & Partners, and has advised clients on investments/financing for various industries including pharmaceuticals, healthcare diagnostics and medical services.

 

 

By Debashish Sankhari and Shuchi Sinha