On 11th February 2020, the Ministry of Health and Family Welfare, issued two notifications, namely a revised definition of “medical devices” and “Medical Device (Amendment) Rules 2020”. These have far reaching impacts. Today the world continues to be shadowed by a pandemic whose looming presence affects every aspect of day-to-day life.
The importance of health care devices, like ventilators, CT scanners, etc., has never been more apparent. With technologies that are so essential to quality of life and life itself, the maintenance of standards / prices cannot be compromised with.
Medical Devices are now “drugs”
Medical Devices in India are regulated under the Drugs and Cosmetics Act, 1940 (“DCA”). Before the Act came to be, only the devices enumerated, 37 in number, came within the ambit of the legislation. Through the aforementioned notification, (in effect from 1st April 2020) the scope of DCA has expanded, as the government incorporated all medical devices, categorically, into the definition of “drugs”. With the medical device industry to reach an 11 billion dollar mark this year, a lack of a comprehensive system of checks could prove to be disastrous. With international boundary lines blurring and companies looking domestically for manufacturing, there is an urgent need to ensure effective regulation of this sector.
Price Regulation
The February 2020 notification has created an impact on the price of medical devices and some key points to note are as follows:
- Under the Essential Commodities Act, 1955, the Government has the power to regulate the essential commodities.
- Drugs are essential commodity which means the Government will exercise control over the price of medical devices through the Drugs (Price Control) Order, 2013 (“DPCO”).
- The obligations under DPCO will be automatically imposed on all manufacturers and importers of medical devices.
- The National Pharmaceutical Pricing Authority (“NPPA”) interalia is entrusted with the enforcement of the provisions of DPCO among several other functions. NPPA fixes/revises the ceiling price of scheduled drugs and may also fix the ceiling price of any drug in public interest.[1] This power of NPPA will now extend to the medical devices as well.
- The manufacturers/importers of the medical devices can increase the MRP of a drug up to 10% of the MRP during the preceding 12 months which would be monitored by the Government to avoid overcharging. Increasing the MRP more than 10% would be considered as overcharging and manufacturers and importers will have to deposit the amount overcharged with interest and penalty[2].
- The manufacturer who intends to discontinue the production or availability of any scheduled formulation will be required to issue a notice to the public and intimate the same to the Government. The Government may (in public interest) direct the manufacturer to continue the production or import for a period of maximum 1 year from the intended date of such discontinuation.[3]
- The manufacturers and importers are obligated[4] under DPCO that requires mentioning of the retail sale price on the label of every stock keeping unit of medical device and equipment. It is supposed to be prefixed by the words “MRP” and suffixed by the words “inclusive of all taxes”.
The MRP of the medical devices will now be set as per the calculations under DPCO and prices will be adjusted accordingly. How viable the price ceiling or MRP will be for the manufacturers and importers shall be clear when this order is enforced. However, the limitations on manufacturers and importers have definitely increased with the applicability of DPCO. Apart from this, the penal provisions of DPCO and Essential Commodities Act, 1955 will apply in case of non-compliance.
Registration Requirements
This is where the previously regulated 37 devices differ from the new entrants. The former is an exception to the registration requirement under the amendment. This has far reaching consequences and hence considerable grace period is provided to comply with the registration and other requirements. All importers and manufacturers have to get their devices registered before 1st October 2021, failing which they cannot resume their business till licensing requirements are met. The classification of devices done by CDSCO is risk-based. Its intended use and purpose of the devices are also considered.
| Risk | Classification | Deadline for obtaining License |
| Low risk (absorbent cotton wools, surgical absorbent cotton wools, surgical dressings, alcohol swabs, etc.) | Class A | August 2022 |
| Low moderate risk (thermometer, blood pressure monitoring device, disinfectants, etc.) | Class B | August 2022 |
| Moderate high risk (implants, haemodialysis catheter etc.) | Class C | August 2023 |
| High risk (angiographic guide wire, heart valve, etc.) | Class D | August 2023 |
Consequently, printing of registration number on the label has been mandated. A risk-based classification of medical devices depicts that the government is avoiding a common formula in the ascertainment of quality. This is a welcome change as higher risks should be met with proportionate stringency.
A certificate of compliance with respect to ISO-13485 is also a mandatory requirement for registration. Hence, the importer or manufacturer will have to strictly conform with the standards under the same. Non-compliance of these requirements can result in the cancellation or suspension of registration, at any point of time. While compliance of ISO-13485 will establish confidence in the quality of medical devices manufactured, it may also impose burden on many small manufacturers to meet the set quality standards within the time provided.
Product Liability
Medical devices are primarily regulated by DCA along with Medical Devices Rules, 2017 (“MDR”). The manufacturers and sellers of the medical devices have to adhere to the standards specified in the MDR. Non-adherence can result in cancellation of the license along with other penal consequences. Compensation under MDR is provided for injury or death only during clinical investigation (clinical trial of the devices).
The injured party in other circumstances can opt for recourse under Consumer Protection Act, 2019 (“CPA”). CPA fills the regulatory gap for product liability in areas where MDR lacked and is thus considered as a game changer.
Product liability has been defined under CPA[5] as the “responsibility of a product manufacturer or product seller, of any product or service, to compensate for any harm caused to a consumer by such defective product manufactured or sold or by deficiency in services relating thereto”. The term was not defined under any legislation before.
A product liability action can be brought against a manufacturer or service provider or seller of a product for any harm caused due to their defective products[6]. Product service provider is a person who provides service in respect to a particular product[7]. Product seller includes persons who imports products in course of business[8]. The responsibility is thus on the importer to make sure that the product meets the standards specified.
These supply chain entities would be liable under specified instances. This makes process of attaching liability on each entity easier.
It is interesting to note that misuse of the products, non-adherence to the warnings or instructions given by the manufacturer, known risks associated with the products, user being under the influence of alcohol or unprescribed drugs while using the products are certain exceptions to the product liability action under CPA[9].
The CPA has introduced a regulator called Central Consumer Protection Authority (“CCPA”) which is entrusted to enforce, promote, and protect rights of consumers as a class[10], prevent unfair trade practices, misleading advertisements, etc. CCPA has been empowered to inquire into violations of consumer rights suo moto also. The product standards under MDR can be the parameter to check the defectiveness of a product under CPA. It appears that the new regime of consumer protection laws along with the MDR and other laws regulating drugs is beneficial to the consumers of such medical devices. The liability imposed on the supply chain entities of medical devices have definitely increased. Considering CPA is the first legislation to define product liability, it would be interesting to see how the jurisprudence would pan out in days to come.
Conclusion
While Indian pharmacies have their due credit, it comes as a surprise to many people that the healthcare technology industry is growing at a faster pace. This amendment, by establishing regulatory norms and ascertaining standards required shows that the government aims to balance quantity and quality. It also goes to the extent of punishing the perpetrators in case of violation of such norms. This expresses the legislative intent to have in place a proper medical device and equipment regulation.
The Surgical Manufacturers and Traders Association had raised concerns relating to small and micro units closing down because of excessive control and compliances imposed by the Government. They further opine that this regulation of medical devices would result in costlier imports and ultimately the products will be expensive for the consumers. Resultant increase in compliance cost is yet another plight of the industry players.
Over regulation by the Government may or may not be apparent at the moment but the coming days would make it clear not only for the industry players but also for the consumer. So, the increased protection to the consumer under CPA is going to come with a “price” or not, only time will tell.
The pandemic has been an eye opener as it has put the efficiency of the healthcare industry under the microscope. The timing of the amendment indicates that the government is ready to learn and improve. As hope blooms all around and we recover from Covid-19 situation, our warrior shall grow stronger.
– Avantika Singh (Associate Trainee)
[1] Section 19 of The Drugs (Price Control) Order, 2013, available at https://www.nppaindia.nic.in/wp content/uploads/2018/12/DPCO2013_03082016.pdf
[2] Section 20 of The Drugs (Price Control) Order, 2013, available at https://www.nppaindia.nic.in/wp-content/uploads/2018/12/DPCO2013_03082016.pdf
[3] Section 21 of The Drugs (Price Control) Order, 2013, available at https://www.nppaindia.nic.in/wp-content/uploads/2018/12/DPCO2013_03082016.pdf
[4] Section 24 and 25 of The Drugs (Price Control) Order, 2013, available at https://www.nppaindia.nic.in/wp-content/uploads/2018/12/DPCO2013_03082016.pdf
[5] Section 2 (34) of the Consumer Protection Act, 2019, available at https://consumeraffairs.nic.in/sites/default/files/CP%20Act%202019.pdf
[6] Section 83 of the Consumer Protection Act, 2019, available at https://consumeraffairs.nic.in/sites/default/files/CP%20Act%202019.pdf
[7] Section 2 (38) of the Consumer Protection Act, 2019 available at https://consumeraffairs.nic.in/sites/default/files/CP%20Act%202019.pdf
[8] Section 2(37) of the Consumer Protection Act, 2019 available at https://consumeraffairs.nic.in/sites/default/files/CP%20Act%202019.pdf
[9] Section 87 of the Consumer Protection Act, 2019, available at https://consumeraffairs.nic.in/sites/default/files/CP%20Act%202019.pdf
[10] Section 10 of the Consumer Protection Act, 2019, available at https://consumeraffairs.nic.in/sites/default/files/CP%20Act%202019.pdf
COMMERCIAL LAW BLOG 