Legal Aspect of Indian Medical Device Sector - Indian medical device sector is considered as Asia’s fourth largest market. At present, multi-national companies prevail India’s medical device sector, which is evident from the fact that about eighty percent of the sales are generated by imported medical devices. On the contrary the domestic entities focus on low cost devices. India export more than sixty percent of their output as Indian markets are dominated by such imported medical devices. The sector is at present growing at a high pace. Most of the purchasers of medical devices are private medical institutions and hospitals. Further, the sector is witnessing strong Foreign Direct Investments inflows. This reflects the confidence and interest of global players in the Indian market.
The Drugs and Cosmetics Act, 1940 (“DCA/Act”) regulates the Indian medical device sector. The Central Government and the State Governments are responsible for the enforcement of the Act. The Central Drugs Standard Control Organization (“CDSCO”) which is headed by the Drugs Controller General of India (“DCGI”) is primarily responsible for coordinating the activities of the State Drugs Licensing Authorities, formulating policies, and ensuring uniform implementation of the Act throughout India. The Medical Device Rules, 2017 (MDR), issued under the DCA, regulate the following categories of substances –
The objective of Drugs and Cosmetics Act, 1940 (DCA), and Medical Device Rules, 2017 (MDR) is to:
Each manufacturing location requires a separate license for each Notified Medical Device at such manufacturing location. The license for manufacturing a Class A or B device is issued by the State Licensing Authority whereas the licensing to manufacture a Class C or D device is issued by the Central Licensing Authority. On the contrary, importing a Notified Medical Device into India requires additional legal formalities. The import of medical devices is governed under the provisions of the Export and Import Policy of India.
All medical devices are required to conform to the following standards, in the same order of relevance:
Moreover, MDR in its fifth schedule lays down ‘Quality Management System’ (QMS) that is to be followed during the manufacture of medical devices and in-vitro diagnostics.
The labelling of Notified Medical Devices is governed by three statutes:
The Government of India through Ministry of Health and Family Welfare notified an amendment to the Act in 2009 which attempts to strengthen the existing law against the menace of spurious and counterfeit medical devices in India. The said amendment has changed certain provisions of the Act that specifically relate to the offences of manufacture and trade of spurious Notified Medical Devices.
The penalties have been enhanced through the amendment for manufacture, sale, and distribution. Exhibiting or offering for sale or distribution of spurious or counterfeit Notified Medical Devices attracts a penalty up to INR 1,000,000 (appx. USD 16,667) or 3 times the value of the Notified Medical Device confiscated, whichever is higher and imprisonment of not less than 10 years which may extend up to life, for spurious or counterfeit Notified Medical Device leading to death or grievous hurt.
With regard to Legal Aspect of Indian Medical Device Sector in Imports and exports, it is regulated by the Foreign Trade (Development and Regulation) Act, 1992, the Customs Act, 1962 along with Export-Import Policy (EXIM Policy), issued by the Ministry of Commerce and Industry of the Government of India. The present EXIM policy also known as the Foreign Trade Policy covers the period 2015 – 2020. The objective of the EXIM policy is to improve export performance, develop export potential and create a favourable balance of payments positions.
The application of above legislation, earlier applied only to drugs, has been extended to medical devices by the Indian Courts. The Act prohibits advertisements about diagnosis, cure, mitigation or prevention of (54) diseases and enumerated disorders such as rheumatism, heart diseases, cancer, diabetes, etc.
The continuous growth of medical devices industry, raises competition law issues (anti-trust). However, the medical devices are protected under several Intellectual Property laws. The need to provide protection to medical device companies for their innovation is well recognized under the Competition Act, 2002, however the same is restricted by providing specific inclusions under Section 3(5) of the Competition Act.
The patent rights in India is governed by the Patents Act of 1970 under which the Patents Rule, 2003 have been passed. This Patents Act of 1970 provides for patenting of both, products and well as processes for a span of 20 years.
The invention of a medical device is granted patent in India. A patent right with respect to any invention is created only upon grant of the patent by the Patent Office following the procedure established by the Patents Act and the Patent Rules there under. As a conclusion to Legal Aspect of Indian Medical Device Sector it can be said that India complies a declarative system with respect to patent rights. Patents in India are granted on a ‘first to file’ basis.