Welcome everyone to another China Tech Law Newsletter post！Today our topic touches a bit on medical device rules in China, but really the practice points are about interpreting regulations, crafting advice for clients, and making judgment calls here.
Without getting into all the details, its interesting to note that China’s medical device regulations for the most part will not be so unfamiliar to someone practicing in the space outside of China, such as the US.
Last year I got an inquiry on a client’s product and whether it was a medical device or not. More precisely, they made equipment which manufactured a medical device. So at first glance, seemingly one step removed from the device itself. Normally this was a pretty clear case, and in fact we had previously advised them that there were no issues here. But the technology at issue was relatively new and evolving, and so were the regulations. Again, the technology itself made medical devices, but for one component in particular, new regulations had come out. So we decided to take a second look.
To our surprise, but in retrospect, totally expected - we found three cases where “similar” product descriptions were registered as a Class I medical device - including two cases by foreign companies.
You might think, and a younger version of myself might think, that because a new law came out suggesting our client's product would be a medical device for regulatory purposes, that our firm would immediately recommend a registration as say a Class I medical device.
This is always the tricky part about giving advice to a client. A "lazy" memo would say, yes, you should consider registering because there is some risk.
In my experience, a memo like that is simply not helpful to the client. If I had received a memo like that when I was in-house counsel, I would have found a polite way to tell the law firm we engaged something to the effect of "what the heck are we paying you very high billable hour rates for....?"
Granted in these kind of situations, we cannot say there is no risk. But at the same time, there is always risk. At this point in the analysis, you have to take a step back and not look at things in a bubble. This client was selling its solution in many countries around the world already. It had never been determined that this was a medical device before in any other jurisdiction. As I talked with our team, I reiterated, just because there is a new regulation here and we found 3 similar cases, we still needed to come up with a darn good reason to say they should register, because its going to fly in the face of what they do everywhere else. Sure, China regulations can be different, but they usually aren't that different.
So rather than say you should consider registering and leave it completely up to the client’s internal counsel, we said “out of an abundance of caution” we have to point out this risk on the interpretation. But this of course is really an invitation to have a more detailed conversation after our client reads the memo, to speak a bit more plainly about the risk. We would point out in addition that those three cases (among probably several hundred potential "close calls") were actually likely filed precisely because a lazy lawyer wrote a lazy memo to their client. This especially goes for those two foreign company registrations.
Why did we have to say all this? Okay, as usually we made our no-names calls to the regulators. First, one local NMPA regulator had said it was not a medical device. Thank you! Thank you for not being a super cautious robot in your answer! Of course, most had taken the path of least resistance and said you should file to get an interpretation, which is basically a non-answer. Thanks for nothing. Filing to get an interpretation is not an easy thing to do, takes time and cost, etc. And in this case, time the client did not have with a commercial deal pending.
I shouldn’t be too critical of the regulators’ Q&A hotline here. In many ways its often remarkable that they even bother to take and answer these questions in the first place. Given that the regulations are often broadly written in China, their advice is actually quite important. But often on tough questions, they will simply default back to the you should file an application and then you’ll know our position.
Now, knowing that the in-house lawyer has her own business unit clients internally to answer to, we need to anticipate the questions and level of resistance she will get if we box her in with memo that says she should register.
As I’ve pointed out many times in this blog, if a company decided to take no risk, it would do no business anywhere, especially in China. What would that accomplish?
As people who know me well can attest, I recycle the same jokes over and over again, and on occasion even let those tired jokes spill over into my conference calls with clients. They usually either succeed or fail spectacularly (i.e. just silence on the other end). I keep telling myself to stop, but just can't help it. Anyway, Star Wars was my favorite set of movies growing up as a kid, and I’m fond of saying in these situations to my client, your company and your product are not the droids (the regulators) are looking for (a reference of course to Obi-wan and his Jedi mind tricks).
My point is, as I’ve mentioned in other posts, regulators are not monitoring 24/7 to take companies to task which are doing things in (arguably) “gray areas”, but which if you step back and think about it have no real harm to complain about. Nor are they violating in any way the real spirit of the regulations.
Okay let me leave you with that, and that’s it for this edition of my China Tech Law Newsletter. Quick post this time as its a busy time in the office, thank you for your continued support of this blog and please remember to subscribe or reach out to me here to further connect on Linkedin if you haven’t already. Share the blog with others, and see you back here again in 14 days!
*This blog may be considered attorney advertising. It is for informational purposes only and does not constitute legal advice.