December 4, 2024

At the recently held 49th Ministerial Meeting on Pending State Affairs (which included the Minister of Health and Welfare and the Minister of Food and Drug Safety), presided over by the Prime Minister, improvement measures for

expediting the market entry of innovative medical devices were discussed. As a result, the MOHW and MFDS announced the establishment of a new system for "Immediate Market Entry of Health Technology". Additionally, the MOHW has mandated a pre-registration for Medical Device Contract Sales Organizations (CSO) in attempt to maintain order in medical device distribution and sales. The MFDS also announced a legislative notice regarding the second amendment to the Enforcement Rules of the Digital Medical Products Act for re-legislation.

The details are as follows.

On November 21, 2024, during the 49th Ministerial Meeting on Pending State Affairs presided over by the Prime Minister, it was announced that a new system of "Immediate Market Entry for Health Technology" will be established for innovative medical devices. They stated that the related legislation will be completed by the second half of 2025. (MOHW Press Release, November 21, 2024)

Medical devices currently under consideration for the "Immediate Market Entry for Health Technology" include digital therapeutics (DTx), in-vitro diagnostic devices, AI-assisted diagnostic devices, and medical robots. The MFDS stated that through future amendments to product notifications, approximately 140 items will initially be designated as eligible for this system, with plans for further expansion.

For reference, under the "Immediate Market Entry for Health Technology" system, after obtaining the MFDS product approval, if the Health Insurance Review & Assessment Service’s review of the relevant health technology deems that the health technology is a subject for a new health technology assessment, it would immediately be able to enter the market as non-reimbursables for three years. After this three-year period, it must undergo a new health technology assessment in accordance with the Medical Service Act. While this system is similar to the existing Deferred Assessment System for new health technologies, it differs in that it eliminates the need for the National Evidence-based Healthcare Collaborating Agency (NECA) to designate the technology for deferred assessment.

2. Introduction of Mandatory Registration and Training Requirements for Medical Device Contract Sales Organizations (CSO)

In order to deter medical device companies from providing economic benefits to healthcare professionals or healthcare institutions for the purpose of promoting medical device sales, the Medical Service Act and the Medical Devices Act were amended in 2011 to impose sanctions not only to medical device companies providing the rebates, but also to those healthcare professionals or healthcare institution workers who received economic benefits (criminal fines and administrative sanctions (e.g., suspension of business, license suspension, etc.)).

However, the above-mentioned laws limit the entities that can be penalized for providing rebates to "medical device manufacturers, importers, sellers, lenders, or repairers" licensed in accordance with the Medical Devices Act. As a result, there was no clear legal basis in the healthcare-related laws to penalize the provision of rebates through "medical device contract sales organizations," who act as intermediaries for sales and marketing on behalf of medical device companies.

Consequently, the "Regulations on Maintaining Order in Medical Device Distribution and Sales (MOHW Ordinance)" has been drafted, scheduled to take effect on February 9, 2025, which mandates the registration of medical device contract sales organizations (CSO) and clearly establishes the requirements for training, sales delegation contracts, expense reporting, sanctions, etc.

3. Second Proposed Amendments for Enforcement Decree and Enforcement Rules of the Digital Medical Products Act

The Enforcement Decree and Enforcement Rules of the Digital Medical Products Act, which are scheduled to take effect on January 24, 2025, have already been amended twice prior to their implementation. This is deemed to be part of the MFDS's efforts to address deficiencies identified via their internal review process before the enforcement of the regulations.

The main points of the second revision include clarifying the procedures for onsite inspections to verify compliance with digital medical device software quality management standards and the actions to be taken in the event of violations. Specifically, manufacturers of digital medical device software can obtain the KGMP certification through document review without an onsite audit; however, the MFDS can conduct periodic or random spot inspections, and in the case where a violation listed below has been identified, the MFDS can immediately revoke the KGMP certification (Article 30, Paragraph 6 of the Enforcement Rules of the Digital Medical Products Act). Therefore, it is strongly recommended to review the digital medical device software quality management standards, which will soon be published as administrative rules, and reflect them in the company’s quality management system.

1) Certification obtained through false or fraudulent means, or failure to comply with quality management standards

Please consider these updates when developing your medical device approval, insurance reimbursement and distribution strategies. As a specialized consulting firm in the medical device field, MDREX promptly identifies domestic medical device regulations and supports manufacturers and importers in regulatory compliance. For assistance with medical device regulations and market entry, please contact MDREX at pro@mdrex.co.kr