Working with the KFDA and HIRA: Obtaining Medical Device Approval and Reimbursement in Korea

Transcription

1 Korea In-Country Caretaker (ICC) Service Working with the KFDA and HIRA: Obtaining Medical Device Approval and Reimbursement in Korea July 17, 2009 Synex Consulting, Ltd. Seoul, Korea South Korea Copyright 2009 Synex Consulting, Ltd. All rights reserved. This content is protected by Republic of Korea and International copyright laws and may not be copied, reprinted, published, translated, resold, hosted, or otherwise distributed by any means without explicit permission. Disclaimer: the information contained in this report is the opinion of Synex Consulting, Ltd. It is provided for general information purposes only, and does not constitute professional advice. We believe the contents to be true and accurate at the date of writing but can give no assurances or warranties regarding the accuracy, currency, or applicability of any of the contents in relation to specific situations and particular circumstances.

2 Young Kim 2002 present President Synex Consulting, Ltd. Seoul, Korea Senior Commercial Specialist Healthcare Industries American Embassy/U.S. Department of Commerce Seoul, Korea 2

3 Contents Country Overview Regulatory Approval Process Reimbursement Approval Process Take Home Messages 3

4 Geography Located in the Northeastern part of Asia Land Space: 98,480 sq km, slightly larger than the state of Indiana -Extends about 300 km from east to west -About 500km from the northern end to the southern end Capital City: Seoul South Korea 4

5 Healthcare Market Indicators Year Remarks Population Millions Rank around the 22 nd largest in the World Elderly population 65+ Millions % of population Average life expectancy at birth Years USA 77.8 in 2005 Median age Years Gross Domestic Production (GDP) US$ billions Rank around the 13 th largest in the World GDP per capita US$ 20, Health expenditure per capita US$ 1, OECD Average US$2,759 Health expenditure as % of GDP % OECD Average US$2,759 Acute care beds per 1000 Population USA 3.2 in 2005 Physicians per 1000 population USA 2.4 in 2005 Source: OECD Health Data 2007, The World in

6 Major Markets The five largest cities represent about 60% of the total hospital beds of the country Seoul and Kyonggi (38%) Pusan (9%) Daegu (5%) Kwangju (4%) Daijeon (4%) The Seoul and Kyonggi area (called Seoul Metropolitan Area) represent about 60% of the imported high technology medical device market. 6

7 Performances of Major Device Firms No Firm Revenue in 2008 (Million USD) Comments 1 Johnson & Johnson Medical Korea GE Medical System Korea Philips Korea Johnson & Johnson Korea Gambro Korea Medtronic Korea Tyco healthcare Korea Boston Scientific Korea Siemens Korea - - Stryker Korea - Revenue of the time from May 2007 to April 2008 Revenue of the time from Oct to Sep Major company/not available in public notice Major company/not available in public notice Source: Financial Supervisory Service 7

8 Product Approval Process

9 Glossary KFDA: Korea Food & Drug Administration The Korean equivalent to the U.S. FDA. MOHW oversees the KFDA. HIRA: Health Insurance Review and Assessment Service The government agency for reimbursement approvals in the public healthcare insurance in Korea. MOHW oversees HIRA. MOHW MOHW: Ministry of Health and Welfare KFDA HIRA The government agency responsible for overall policy directions on regulatory and reimbursement of medical devices. Regulatory Affairs Reimbursement Affairs 9

10 KFDA Responsible for the public safety of food, drugs, medical devices and radiological health. Founded in Began regulating medical devices in With 1,500 employees, it is headquartered in Seoul and district offices in six large cities. Five Centers Food Safety Drug Safety Biologics and Herbal Drugs Medical Devices Hazard Prevention Policy Medical Device Safety Centers have about 100 employees. 10

11 Organization Bureau of Medical Device Safety Medical Device Review Office Medical Device Safety Policy Division Makes all regulations, requirements and procedures; Medical Supplies Division Medical Device Surveillance Division Monitor devices in market, adverse event reporting, misleading claims, consumer safety issues. Diagnostic Device Division Medical Device Quality Division Audit GMP compliance on device manufacturers Therapeutic Device Division 11

12 Device Firms Need Licenses at Three Levels Level License When you apply Current Designations Validity I Product License For each and every product code About 2,000 classifications Permanent II KGMP Certification (Manufacturer); or For each of 39 device groups 39 groups 3 years Good Import Practice (GIP) Certification (Importer) III Device Business License For each of the five business types 5 Business Types: Manufacturer Permanent Importer Distributor Repairer Rental Business 12

13 Device Classifications Four classes based on potential risk to human health About 2,000 new classifications implemented in July 2009 Class Risk Levels Device Examples I Low Risk Surgical instruments II Low-Moderate Risk Hypodermic needles III High-Moderate Risk Orthopedic implants IV High Risk Implantable defibrillator 13

14 Pre-conditions for Applicant Applications must be prepared in Korean. Either manufacturer or importer can make applications. Legal entity Business registration Office space Warehouse space Quality system manager Foreign manufacturers cannot submit applications to KFDA directly. You can either allow your distributors in Korea to apply for approval or hire a third-party license holder. 14

15 Pre-Market Requirements Each and every product code must be notified or approved by KFDA prior to the first shipment to Korea Validity: Permanent (like a 510k) Class I Class II, III, IV Technical File Certificate of Product Notification Type Test Certificate of Product Approval 15

16 Approval Process Class I Notification Submit applications to a KFDA District Office Each model or code number must be submitted KFDA has 10 working days to i) accept, ii) ask for supplementary information or iii) refuse. In general, firms plan 2-3 months from preparation to notification Manufacturers or Importers Firm submits a completed Form 5 KFDA issues a certificate of product notification. KFDA District Offices General lead time including company preparation: 1-2 months 16

17 Pre-market Regulatory Process Class II, III, IV Approvals Submit applications to KFDA head office Each model or code number must be submitted for pre-market approvals Review time 510k-type application: 55 working days PMA-type application: 70 working days In general, firms plan 6-9 months to complete for a product basically same as a previously approved product, 9-12 months for a new-tomarket device Technical File (Form 7) The KFDA reviews a technical dossier Type Test A KFDA-registered third-party lab physically tests samples Certificate of Product Approval Firms submit to the KFDA headquarters a copy of approved technical files and a certificate of compliance to type types 17

18 Two Types of Technical Files General technical file: 510K-type dossier For devices basically same as previously approved products The KFDA does not require clinical study reports mostly but may require at its discretion Safety and Effectiveness Review (SER) technical file: PMA-type dossiers New indications, new developments PMA-type dossier Clinical study reports are essential Local clinical studies are not required Studies done in other countries but published in academic journals are acceptable 18

19 Pre-conditions for Imported Devices Devices made outside of Korea must have been approved in the country of legal manufacturer prior to approval in Korea A certificate must be issued by the responsible government agency of the country of manufacture Certificate to Foreign Government (CFG) issued by the U.S. FDA for U.S. products Must be an original certificate Notarization is not necessary A valid certificate issued for the last two years KFDA is taking steps to eliminate this requirement, so Korean importers can apply for product approval without certificate of product approval in the country of manufacture It is expected to be implemented later

20 Unit of Application One technical file results in one product license Medical supplies or disposables Bundling criteria Different sizes, colors within a product classification and a brand name but materials must be same Different brand names within the same product category, the same manufacturing process, the same structure and the materials When you have new codes later on, you can amend your existing product licenses to add new codes Durable equipment One application for each model Amendment to product license means replacing the previously approved product with the new product, so the product license for the old product is invalidated. 20

21 Amendment to Technical File Disposables or implantables To add new sizes or code numbers to a previously approved technical file Must be of the same classification with the previously approved products Must be using the same materials with those products covered under the previously approved technical file Turnaround time 1-2 months, if additional testing is not required. 3-5 months, if additional testing is necessary. 21

22 Need for Local Clinical Study Local clinical study is not necessary, if foreign clinical data is strong enough to demonstrate the safety and effectiveness KFDA accepts foreign clinical reports under certain conditions: Clinical study reports published on a medical journal listed on the Science Citation Index (SCI) or other recognized journals Clinical reports that have been reviewed by a government for approval in the country of manufacture An official letter from a foreign government stating such acceptance must be submitted together or other supportive documents. Other reliable reports 22

23 Technical File Review Fees Charging Organizations Types of Applications Korean Won Fees KFDA Class I Notification Review a general technical file for those devices basically same as existing devices Review a SER technical file, e.g., for New Device) US$ 20, , Issue a Certificate of Product License 10, Clinical study authorization - - *Exchange rate US$:Korean Won=1:1300 *KFDA is evaluating a user fee system for medical device approval but implementation is highly uncertain due to controversies. 23

24 Physical testing Type Test Local testing conducted by a third-party lab registered with KFDA. Test labs carry out testing on samples submitted by companies Labs determines the number of samples they need and issues a certificate of an approval of test samples for customs clearance. Acceptance of Foreign Test Report The KFDA-registered labs reviews foreign test reports and accepts them in place of local testing in case test reports meet certain requirements. Thirteen labs are registered with the KFDA as a regulatory test lab for medical devices. Type test takes 1-3 months depending on the nature of a test. 24

25 Costs of Type Tests Fees vary depending on test items Full local testing (general) Durable or electric equipment US$3,000-4,000 Disposables or implantables US$7,000-10,000 Review foreign test reports US$640 Importers can reduce costs of type tests by submitting acceptable foreign test reports *Exchange rate US$1:Korean won=1:1,300 25

26 Major Criteria for Accepting Foreign Test Reports in place of Local Testing - 1 KFDA-authorized test labs determine foreign test reported accepted in place of local testing. Electrical Test Reports Tests must be carried out to IEC standards Reports must be written in a CB scheme form Reports must be certified by a CBTL (National Certification Body Testing Lab) Biological Test Reports Tests must be carried out according to ISO, ASTM or other international standards Tests must be carried out according to GLP standards Physico-chemical Test Reports Test reports issued by ISO certified labs 26

27 Major Criteria for Accepting Foreign Test Reports in place of Local Testing - 2 Performance Test Reports Test reports issued by ISO certified labs are always accepted. Foreign test reports accepted in case the same tests cannot be repeated in Korea In case of test reports issued by manufacturers, the following information should be submitted: A full description of test protocols, acceptance criteria, etc. Raw data may be required on a case-by-case basis Signature by lab technicians and supervisors Notarization by a notary public Information accepted by the government for approval in the country of manufacture for approval only when submitted with a certificate of such fact by the government 27

28 Certificate of Product Approval Two type of product licenses Manufacture license Import license Paperwork process to receive a certificate of product approval from the KFDA Requirements A copy of approved technical file A copy of approved type test (KFDA target to eliminate in 2009) A list of facilities (KFDA target to eliminate in 2009) Free sale certificate issued by a government of the country of the legal manufacture (KFDA target to eliminate in 2009) 28

29 Post-market Requirements

30 Tracking The KFDA Commissioner has the right to designate devices for tracking within the following two criteria: Devices implanted into the human body for more than one year Life-sustaining devices used outside medical institutions Devices currently designated for tracking: Implantable pacemakers Electrodes for implantable pacemakers Artificial heart valves Implantable defibrillators Implantable infusion pumps Artificial Ventilators External pacemakers Breast implants 30

31 Voluntary Recall- Adverse Event Reporting Parties required for reporting: Manufacturers Distributors Repairers Rental firms Hospitals Veterinary clinics Reportable events Voluntary recalls Device-related death or serious adverse events Information on potential adverse events 31

32 Adverse Event Reporting Reporting Time Window Death or life-threatening adverse events Initial report within 7 days Additional follow-up report for detailed information within 8 days Events extending the length of hospital stay, disability or reduction of function that cannot be recovered, adverse reactions causing congenital deformity or abnormality Report within 15 days Voluntary recall Report within 30 days 32

33 Clinical Trials Recent Policy Initiative

34 Background A new government policy to encourage foreign device firms to do clinical studies in Korea KFDA requires hospitals and medical doctors to comply with GCP for patient protection and quality studies. As of May 2009, a total of 64 university hospitals qualified by KFDA as medical device clinical trial centers. 64 Medical Device Clinical Trial Centers Qualified by KFDA 34

35 Device Clinical Studies Approved by KFDA Year Filed Approved Success Rate(%) Total (May 18, 2009) 35

36 Opportunities Advantages to conducting device research in Korea: Quality investigators, mostly U.S. trained. Patients are very open to clinical studies Cost is reasonable Broad experience in global pharmaceutical studies KFDA and other government agencies are supportive 36

37 New Initiatives in 2009

38 Elimination of CFG for Approvals Present Foreign-made devices should be approved in the country of legal manufacturer before they can be approved by KFDA. E.g., devices distributed by U.S. firms (legal manufacturer) but no notification or approval in the U.S., they cannot be approved by KFDA since it is not approved to market in the U.S. Later 2009 KFDA will eliminate such requirement for submission of CFG or Free Sale Certificate (FSC) of the country of the legal manufacturer for KFDA approval. E.g., those U.S. devices with CE mark only but no 510(k) can be approved by KFDA. 38

39 Streamline Review Process Present Two step process KFDA reviews technical files, and third-party labs review and determine acceptance of foreign test reports to exempt local testing. Later 2009 KFDA reviews more foreign test reports during the process of reviewing technical dossier. Firms can complete both review of technical dossier and test reports in one-step. 39

40 KFDA Audit on Foreign Manufacturers Present No authority for KFDA to inspect foreign facilities. In 2009, the agency recruited firms that will receive KFDA GMP audits voluntarily for pilot programs. Firms are responsible for travel costs of KFDA auditors. Later 2009 The agency plans to make a GMP inspection a requirement beginning

41 Reimbursement Approval

42 National Health Insurance (NHI) Compulsory public health insurance covering the entire population The sole national insurer in Korea operated by the central government All income-earning citizens must contribute certain percentages of incomes. All hospitals and clinics must be reimbursed by the NHI reimbursement plan. Patients co-pay percent of the published amount of fees for covered services or products Patients pay full costs for uncovered services or products 42

43 Three Agencies Ministry of Health and Welfare (MOHW) Decides reimbursement policies and guidelines Announces reimbursement coverage decisions and prices Health Insurance Review Agency (HIRA) Accepts and reviews applications for reimbursement approvals submitted by device suppliers Recommends reimbursement/non-reimbursement Recommends prices, in case of reimbursement recommended Clears reimbursement claims submitted by hospitals or pharmacies National Health Insurance Corporation (NHIC) Collects premiums Pays hospitals or pharmacies 43

44 Needs for Reimbursement Approval Device suppliers submit applications to HIRA for devices reimbursed as product fees, e.g., Stent Pacemaker Firms are supposed to submit an application for approval within 30 days of KFDA approval No need to apply for devices for which costs of devices are deemed included in service fees, e.g., Syringes MRI CT 44

45 Compile Application Applications must be prepared in Korean. Form 16 Information on applicant (importer, distributor) Approved indications or effectiveness Major materials and content levels Packing units, propose price, expected annual sales, etc. Supportive Documents A copy of the KFDA product license Rationales of the proposed price Materials on cost-effectiveness (including comparative analysis and strengths and weaknesses with competitors products) Status of uses inside or outside of Korea (year of first application in the market, names of medical institutions, number of cases) Explanations of components, user manuals Academic research reports or other relevant information 45

46 Evaluation Step 1: Comparator Selection HIRA chooses from the current NHI reimbursement list a subcategory where similar products are already listed (comparative products) Step 2: Compare Features and Benefits The agency compares the features and benefits of the proposed products to a comparative product(s). Step 3: Recommend prices 46

47 Pricing Rules Basically same device with existing devices 10% reduction Same price with lowest price Significantly improved devices Same price with highest price Innovative devices New category Value appraisal 47

48 Pricing Rules Same purpose of use with preexisting devices Equivalent materials, shapes or sizes Significant improvement Same price of the highest-price product among its category Insignificant improvement One product in the category Price up to 90% of the price of the highestprice in the category New Medical Devices Two or more Products in the category Lowest price among similar products Different purpose of use from pre-existing devices Different materials, shapes or sizes Value appraisal In case of a substantial improvement, its price may exceed the rate of the most similar product Price based on manufacturing costs (or FOB), clinical outcome and economic effects 48

49 Reimbursement Approval Process Turnaround time: 5-6 months Month 0 Month 1 Month 2-3 Month 4 Month 5-6 Drug Manufacturer/ Importer 1 Apply HIRA Medical Device Management Department Technical Review 3 Recommendations MOHW Health Insurance Benefits Planning Team Policy Review 5 Official Announcement Submit for recommendations 2 Provide recommendations Submit for a final approval 4 Final approval Medical Device Expert Committee Health Insurance Deliberation and Arbitration Committee 49

50 HIRA Medical Device Expert Committee Organizations National Health Insurance Corporation (Insurer) Number of Seats Health Insurance Review Agency (HIRA) 1 Ministry of Health and Welfare (MOHW) 1 Korea Food & Drug Administration (KFDA) 1 Korea Medical Association 1 Korea Hospital Association 1 Korea Dental Association 1 Korea Dental Materials Association 1 Consumer Groups 2 Academia 2 Korea Medical Device Industry Association 1 Total 2 14 seats 50

51 What is important for better pricing Emphasize costs rather than quality Improved benefits to patients are the most important, e.g., Clinical outcome Less invasiveness Reduced time for surgery or recovery Reduced stay in hospital Reduced costs of drugs or other devices HIRA does not recognize improvements in surgical conveniences Proposed reimbursement prices should not exceed 1.78 times FOB price Submit a copy of customs clearance document to support an import price 51

52 New Devices Devices for a new purpose of use, with new materials or concepts of design: Appraise the value of the product and add a new technology premium on the top of the price same as the highest-price product in the sub-category Only a few products have been approved for percent premiums since the introduction of this new regulation in March Only a few devices obtained a premium pricing through the value appraisal process. 52

53 Value Appraisal Form Appraisal Criteria Specific Appraisal Items Major Elements to Consider Improvement Level Clinical Usefulness Therapeutic Effects - Is this product offering an improvement in therapeutic outcomes? (Safety/accuracy/level of invasiveness, improvement in materials, improvement in shapes, etc.) - Is this product reducing complications and adverse events or infection rates? - Is this product reducing recurrence, re-intervention? etc. Improved quality of life (including convenience to patients) - Is this product improving a normal life, such as improvement in the level of maintaining an independent life? -Is this product increasing benefits to patients such as reduction of discomfort by improving the level of anatomical conformity? etc. (including improvements in sizes or shapes of products Cost- Effectiveness Reduction in medicines or other therapeutic materials -Is this product offering extended durability such as through expanded longevity of implants? -Is this product reducing costs for medicine and other treatment supplies? Reduction in operating time or treatment period -Is this product reducing the length of hospital stay? -Is this product reducing a period of treatments? -Is this product reducing a period of operating time by making operations easier? 53

54 Official Announcement of Reimbursement Approvals MOHW publishes an official announcement electronically at its homepage every month Begin effective from the first day of the following month. The official announcements include the following information: Upon a non-reimbursement decision, firms are legally allowed to sell at market prices 54

55 Challenges Regulations are designed to disadvantage late comers that are better products To have an approval for the same price with the existing products, firms must demonstrate improvements in clinical outcomes through, e.g., clinical reports Clinical reports for most of the devices are very limited No incentives for firms to launch latest products 55

56 New Initiatives 2009

57 Exchange Rate Adjustment System New policy introduced on April 1, 2009 Price adjustment every six months reflecting an average exchange rate for the previous six months Grades Range of Exchange Rates (Won) Adjustment Rates (%) won or higher less than 700 won won or higher less than 900 won -4 0 (Base Grade) 900 won or higher less than 1,100 won 0 1 1,100 won or higher less than 1,300 won 4 2 1,300 won or higher less than 1,500 won 8 3 1,500 won or higher less than 1,700 won ,700 won or higher less than 1,900 won 16 57

58 Improvement of Pricing Regulations Present New products get lower prices, unless they submit evidence of incremental benefits over existing devices, e.g., clinical papers. Later 2009 HIRA/MOHW is considering to loosen its criteria for approving a new device at the same price with existing products by accepting, e.g., the following information in place of clinical papers. Bench Test Report Unpublished clinical data Case reports Materials explaining about benefits of the product The agency is also considering to revise its regulation, so they can increase prices of new products offering improved clinical outcomes by 50% over prices of similar products. 58

59 Re-evaluation of Reimbursement Prices Present No such system exist to re-evaluate reimbursement prices of already listed products. Later 2009 MOHW/HIRA is expected to come up with a draft regulation to introduce a new system called Re-evaluation of medical device reimbursement prices. HIRA is considering dividing 13,000 devices into three batches. Each batch goes through price re-evaluation triennially. HIRA is considering group pricing for a new criteria for reevaluating reimbursement prices. 59

60 Health Technology Assessment (HTA) - 1 Background MOHW implemented a new system called Health Technology Assessment (HTA) in August HIRA accepts applications from companies of hospitals for HTA. It takes one year to carry out a systematic review on the new technology and announces whether it is a safe and effective technology. New technologies can proceed to a reimbursement or nonreimbursement approval only after HIRA recognizes it as a safe and effective technology. Problems It delays market access of new health technology by one year. Medical devices have few clinical papers, so have been rejected in many cases. HIRA prohibits hospitals from treating patients with those rejected devices. 60

61 Health Technology Assessment (HTA) - 2 Pending Consideration HIRA is considering streamlining its HTA process for new technologies involving medical devices HIRA/MOHW is expected to announce potential changes soon. 61

62 Take-Home Messages

63 Take Home Messages - 1 Korea has a large potential for further growth in the healthcare market Its healthcare spending has outgrown that of developed countries in recent years Strong economic growths have continued in recent years GNP per capita approaches US$20,000 Population is aging rapidly Senior population of 65 years or older increasing 4.4 million in 2005 to 5.4 million by 2010 Early birds get more worms (Act now!) Purchase decisions are highly depend on relationships with individuals You need time to establish relationships with regulatory authorities and clients 63

64 Take Home Messages - 2 Language and cultural barriers are substantial Applications must be written in Korean Information crucial to business in regulation is undocumented in many cases but exists and plays critically, e.g., case precedent. Direct communication with responsible officials in English is not feasible. Well-written application is most important Experienced regulatory affairs professionals Reasonable access to KFDA or HIRA reviewers or third party organizations for pre-consultations and in-process feedback 64

65 Take Home Messages - 3 Regulatory procedures are fragmented Close communication with responsible officials and client for each and every step is essential KFDA and third-party organizations for approval HIRA and MOHW for reimbursement Device distributors are mostly small and mediumsized firms and have no real experts in-house. You need experienced regulatory professionals and distributors, who can guide you wisely 65

66 Korea In-Country Caretaker (ICC) Service Questions?

67 Korea In-Country Caretaker (ICC) Service Thank you! Synex Consulting Ltd. 10 th Floor Daejong Building Samsung-dong, Kangnam-gu Seoul , Korea Phone Fax