Healthcare: Medical Devices 2023 Comparisons

In Taiwan, there are various product safety regulatory regimes for products such as medical devices, healthcare products, like cosmetics and food (including nutrition supplements), pharmaceuticals and controlled pharmaceuticals. The relevant legislation generally covers the following aspects: manufacture, market access, marketing and sale, post-marketing surveillance, product claims and so on. The Taiwan Food and Drug Administration (TFDA) of the Ministry of Health and Welfare (MOHW) is the primary regulatory body for these areas.

Both pharmaceuticals and medical devices were jointly regulated by the Pharmaceutical Affairs Act (PAA) in the past. Given the different nature of pharmaceuticals and medical devices, and aligning with the international trend, the dedicated Medical Devices Act (MDA) was passed and came into effect from May 2021, at which time the provisions relating to medical devices under the PAA ceased to be effective. The MOHW and the TFDA also promulgated various subordinated regulations to provide further implementation and management details of the MDA.

The term of “medical device”, as defined in the MDA, shall refer to any instrument, machine, apparatus, material, software, reagent for in vitro use, and related articles thereof, whose design and use achieve one of the following primary intended functions in or on the human body by means other than pharmacological, immunological, metabolic, or chemical means: (i) diagnosis, treatment, alleviation, or direct prevention of human diseases; (ii) adjustment or improvement of the structure and function of the human body; and (iii) control of conception. Medical devices, including medical instruments and software-based medical devices (artificial intelligence/augmented reality/virtual reality, etc) falling within the definition of medical devices, are regulated by the MDA and the relevant regulations. If personal protective equipment (PPE) is medical PPE, it will be classified as a medical device and the MDA and the relevant regulations will govern and apply to it.

The ambit of definition of medical device under the MDA is wide. Sometimes it is unclear whether or not certain cutting-edge technology utilised in, or associated with, the medical device and/or in relation to any of the above purposes for medical devices constitutes the medical device, and a prior confirmation with the competent governmental agency and/or legal assessment by legal counsel is encouraged.

Cosmetics

The Cosmetic Hygiene and Safety Act (CHSA) is the primary law regulating cosmetics. Cosmetics are defined under the CHSA as any product applied externally to human body, teeth, or oral cavity mucous membranes with sole or main purpose to moisturise hair and skin, stimulate the sense of smell, improve body odours, change appearance, or cleanse the body. However, if such product shall be classified as a “pharmaceutical” under other laws and regulations, it shall be precluded from the ambit of the definition of cosmetics.

Biocides

In Taiwan, there is no specific law to regulate biocides. Instead, they are regulated under a decentralised regulatory regime. When a biocide product is used on the human body for a medical purpose, it is related to human health and the PAA or MDA will govern and apply, depending on how such product is categorised. However, if the biocide is used for the environment, rather than the human body, the Environmental Agents Control Act will govern and the competent governmental authority will be the Environmental Protection Administration, Executive Yuan, rather than the TFDA.

Food

The Act Governing Food Safety and Sanitation (FSSA) is the primary law for food. The FSSA refers to food as any good provided to humans for eating, drinking or chewing, and the raw materials of such good. The FSSA governs and applies to all foods, including gene edited products, and it provides the requirements for food enterprises, manufacturing process, registration mechanism, source tracing, product labelling and advertisement management, food inspection and audit, etc.

If the food in question is a nutritional supplement and is identified as a “health food”, it is regulated by a specific law; the Health Food Control Act (HFCA). Under the HFCA, the term “health food” refers to a food with health care effects, having been labelled or advertised with such effects. “Health care effect” shall mean an effect that has been scientifically proven to be capable of improving human health, and decreasing the harms and risks of diseases, but not for medical treatment or the remedy of human disease. For clarity, “health care effects” shall be limited to those announced by the MOHW and the health food product shall be subject to the prior review and test registration by the governmental authority before manufacturing or importing such product. Further, the manufacturer of a health food product shall meet the applicable GMP requirements. Both the HFCA and the FSSA govern health foods.

Pharmaceuticals

The PAA is the primary law to regulate pharmaceutical affairs in Taiwan. The PAA governed both pharmaceuticals and medical devices until May 2021 when the MDA came into effect. The PPA now only governs pharmaceutical affairs. Under the PPA, a pharmaceutical is defined as the active pharmaceutical ingredient and preparation of any of the following drugs:

• drugs listed in the Chinese Pharmacopoeia, or in the Pharmacopoeia of other countries, the official National Formularies or any of their supplements recognised by the MOHW;
• drugs which are not included in the preceding point but are used in diagnosing, curing, alleviating or preventing the diseases of human beings;
• other drugs which are sufficient to affect the body structure and physiological functions of humans; and
• drugs used in preparing any drug listed in above three items.

The PAA regulates business licences (manufacturer and dealer), over-the-counter pharmacies, product approval for each pharmaceutical and prior inspection registration, patent linkage of drugs, sale and manufacture of drugs, management of controlled drugs, advertisement, audit and supervision management, and punishment of violation, etc. The MOHW and the TFDA also promulgate various regulations to further manage and govern the implementation process and details. For controlled drugs, the Controlled Drug Management Act (CDMA) will prevail, but the PAA will still apply for those matters where the CDMA is silent.

Blood Products

In Taiwan, blood products are subject to the Plasma Derivatives Act (PDA). A blood product under the PDA is called “plasma derivative” which refers to a pharmaceutical product of a certain form of dosage prepared and processed from human plasma. Under the PDA, blood products shall come from domestic blood donations. If the domestic blood donations are not sufficient, it is exceptionally permitted that the blood product manufacturer imports overseas blood products after approval by the MOHW. The law explicitly classifies a blood product as a kind of pharmaceutical. For those matters not regulated in the PDA, the PAA, the Medical Care Act and laws and regulations in relation to pharmaceuticals and medical care will govern and apply.

Psychedelics

Narcotic drugs and their derivative products that are addictive, encourage abusive use, pose potential danger to society, and other substances and their products that affect psychological behaviour, are prohibited by the Narcotics Hazard Prevention Act. A person violating this act will be subject to severe criminal punishment, the most severe of which may be death or life imprisonment. However, to the extent regulated for medical and scientific purposes by other laws, the use of narcotics and their derivative products will be permitted as an exception.

The CDMA regulates the administration and control of controlled drugs, such as addictive narcotic drugs, psychotropic drugs and other drugs which are subject to the need for strengthened management. Under the CDMA, controlled drugs are subject to stricter requirements than non-controlled drugs and psychedelics can only be used subject to compliance with statutory requirements. Medical care institutes and physicians are qualified to issue prescriptions containing psychedelics. Pharmacies must check the health insurance card of the patient before providing the psychedelics, to avoid abuse.

Cannabidiol (CBD) Used for Medicinal Purposes

Under the interpretation published by the MOHW, it is prohibited to use CBD as a material or ingredient of any food. Otherwise, the violating person will be subject to punishment under the FSSA.

Further, according to the MOHW, CBD shall be subject to different laws and regulations depending on its components. In the case of a product containing CBD only, it may not directly constitute a controlled drug. Instead, it will be governed by the PAA, depending on the drug product prescription, component, ingredient volume, use method and volume, proposed indications and to the extent it meets the definition of pharmaceutical under the PAA, as mentioned above. Nevertheless, the MOHW further indicates that there is no drug product containing CBD approved so far. As such, none of these drugs can be manufactured, imported or distributed in Taiwan. If CBD is needed based on a physician’s evaluation, it could be exceptionally imported after such special case is approved by the competent authority. Furthermore, when the CBD drug product contains the THC in excess of 10ug/g (10ppm) or otherwise meets the criteria of a controlled drug, the CDMA will apply more severe requirements and procedures which must be followed.

A new drug (or so-called brand drug) shall be subject to comprehensive clinical trials prior to launching on the market. The relevant regulations include the PAA, the Enforcement Regulations of the PAA, the Medical Care Act, the Pharmaceutical Good Manufacturing Practice Regulations, the Regulations for Good Clinical Practice, the Regulations on Human Trials, etc. Clinical trials include multiple phases and the new drug applicant shall complete these trials and submit relevant results and data when it applies for a new drug permit with the competent authority.

To the contrary, for generic drugs, the product procedure is abbreviated and the applicant is not required to submit clinical trial data.

Following the global e-healthcare and digital health trend, Taiwan also notes the development of combined technology and healthcare, and tries to clarify, supplement and enhance the applicable product safety regulatory regimes. The TFDA has launched a platform for AL/ML medical devices, where the public and relevant enterprises can access relevant regulatory information, including the guidance to verify whether something constitutes a medical device and, if it does, the quality management requirements and product approval applicable to the medical device utilising AI, ML and/or any other new technology, as well as preliminary consultation services for relevant issues and questions.

Medical Apps

Products such as healthcare-related apps can, depending on their features and capabilities, be classified as medical devices under the MDA and, in such case, the compliance requirements under the MDA will apply. The TFDA promulgated the Medical Software Classification Guidance in 2015 and updated it in 2020 and 2022 to provide the reference standard to verify whether medical software, including medical apps, classifies as a medical device under the MDA. According to this Guidance, “medical software” refers to software having the function to collect, store, analyse, reveal and/or convert human health status, physiological parameters, medical record, etc, whether or not it is for medical facility use, personal house care use and/or telemedicine use. The TFDA states that not all medical software will be classified as a medical device and whether or not it shall be classified as a medical device shall be determined based on its function, purpose, use method and function. The following aspects are the evaluation parameters provided by the TFDA:

• whether it meets the definition of medical device of the MDA;
• whether it falls under any items listed in the medical device list under the Regulations Governing the Classification of Medical Devices;
• whether it claims any diagnosis or treatment function or it claims to facilitate any diagnosis or treatment;
• whether it has any significance to disease treatment;
• whether it has any contribution to disease diagnosis; and
• whether it has any potential danger to human life and health.

Under this Guidance, the TFDA further provides that certain health management apps used to reveal, record and store height, weight, blood pressure, heartbeat and blood sugar level, and/or to record and calculate diet, calorie consumption, step counts, menstrual cycle, where their function is to assist in weight management, physical fitness, recreation use, relaxation or stress management, mental acuity and sleep management, rather than medical function, are not medical devises. However, if the software or app is used to proceed the data generated from medical devices, such as a subordinated software or app for transmitting data generated from electronic blood pressure measures or blood sugar level measures, such software or app will still be classified as a medical device. Given this Guidance only provides the reference standard and does not and cannot exhaust and classify all circumstances and applications, a prior consultation and confirmation with the competent governmental agency and/or legal assessment by legal counsel is encouraged.

Telemedicine

The Rules of Medical Diagnosis and Treatment by Telecommunications was promulgated under the authorisation of the Physician Act in 2018, as the general rules to provide requirements and management in relation to telemedicine for mountainous areas, outlying islands, and remote areas designated by the authority, as well as for urgent circumstances. During the COVID-19 pandemic, the MOHW stated that the situation constituted urgent circumstances to resolve statutory restrictions and to provide timely medical treatment to those infected with COVID-19, by way of telemedicine. This measure not only avoids worsening cluster infection in medical facilities but also provides a convenient and timely medical treatment to the infected. The MOHW further enhanced the function and coverage of telemedicine for certain patients, for example those immobilised in care centres and those under special medical plans. The MOHW plans to further resolve the health insurance card swiping issue and to consolidate the electronic payment channel to enhance telemedicine for those in need.

Wearables

Wearables may be classified as medical devices depending on their features and capabilities. Accordingly, they shall be subject to the regulatory regimes relating to medical devices.

Stem Cells

In 2018, the MOHW promulgated the Regulations Governing Specific Medical Treatment, Inspection, Test and Medical Instrument Implementation or Use based on the authorisation of the Medical Care Act. Under these Regulations, the MOHW opened a limited door for stem cell treatment within the limited scope permitted by it – eg, autoimmunity cell treatment for treatment-refractory cancer patients and adipose-derived stem cell treatment for extensive burn wounds. In February 2023, the Administrative Yuan, which is the top administrative governmental agency, and the MOHW, one of the ministries supervised thereby, further proposed to the Legislative Yuan (the Congress) the Regenerative Medicine Act and the Regenerative Medicine Product Act, both of which aim to establish a more comprehensive management of regenerative medicine treatment and to provide complete protection to patients. However, these draft acts have drawn some criticism – eg, lacking the corresponding supervision density and protection mechanisms, either for overall procedure and requirements or for certain controversial issues, and are still under the review and discussion by the Legislative Yuan.

Medicines and Medical Devices

Products combining medicines and medical devices are called combination products. The MOHW issued the Guidance of Classification for Combination Products in January 2016. Under this Guidance, decisions about whether a combination product is a medicine or a medical device will be based on the primary mode of action of such product. If the primary mode of action of the product depends on the medicine part, such product shall be classified as a medicine. On the other hand, if the primary mode of action of the product depends on the medical device part, the product shall be classified as a medical device.

The TFDA is the competent authority in respect of combination products. For example, the TFDA issued the Guidance for Drug-Eluting Coronary Stents and indicated that the primary mode of action is the stent delivery system and the balloon catheter contained therein, and the medicine is auxiliary. Therefore, the TFDA classified the drug-eluting coronary stent as a medical device. The manufacturer or the importer could file a classification application to the TFDA to seek the TFDA’s decision prior to the product approval application or the manufacturer or importer may classify based on its own understanding and knowledge first, and the TFDA will review the proposed classification when it reviews the product approval application.

Cosmetics and Medical Devices

For more than a decade, it has been popular among the younger generation in Taiwan to use colour contact lenses, even though they do not have myopia. Initially, it was not clear whether such colour contact lenses should be classified as medical devices or just as cosmetic products, when they did not have a myopia correction function. In August 2013, the TFDA made an announcement and indicated that colour contact lenses are medical devices which will be directly in contact with the human cornea, and requested that they shall be in compliance with the relevant laws and regulations, irrespective of whether they have a myopia correction function or not. Such rules remain unchanged and are still good laws.

Cosmetics, Biocides and Medicines

Numerous products claim to have essential oils included or added therein. The TFDA made an announcement in November 2013 to set up basic guidance for essential oil products and further promulgated the Guidance Governing Classification of Essential Oil Products in December 2019. According to the Guidance, the essential oil products shall be classified pursuant to the following standards:

• if it has treatment function – it may be classified as medicine;
• if it has no treatment function, but:
1. meets the ambit of a cosmetic – it will be classified as a cosmetic;
2. has an environmental biocide function and is used for environmental hygiene, rather than the human body – it will be classified as an environmental agent; and
3. used as an interior fragrance, rather than for the human body and without an environmental agent function – it will be classified as a general commodity.

Medicines and Food

The MOHW sets up certain criteria to classify medicines and healthcare products. For example, if the product contains nutritional supplements, such as vitamins, under the threshold provided by the authority, the product will be classified as food. However, if the nutritional supplements are in excess of the threshold provided by the authority, the product will be classified as a medicine and shall be comply with the regulatory regime of medicines. As for food further labelled as a health food, please see 1.2 Healthcare Products.

In Taiwan, healthcare products are mainly and generally categorised and regulated under the following four categories:

• medical devices;
• pharmaceuticals;
• cosmetics; and
• food.

Prior to providing further elaboration in relation to the rules and obligations of design and manufacture in relevant regulatory regimes, as a general rule, a company shall have a Taiwan presence to operate a business and hold a business licence for healthcare products. Therefore, if a foreign company would like to manufacture or import healthcare products for sale in Taiwan, a Taiwan branch or a subsidiary will be required. Otherwise, it shall appoint a third-party domestic entity to do so.

As provided in 1. Applicable Product Safety Regulatory Regimes, there are different regulatory regimes to govern different kinds of healthcare products. The relevant laws and regulations set up regulatory rules and obligations for the design and manufacture of healthcare products, as set out below.

Medical Devices

Under the MDA, “medical device manufacturer” means a person who engages in (i) the manufacture, packaging, labelling, sterilisation or final inspection and release of medical devices; or (ii) the design of medical devices and marketing such medical devices in its own name. Under the MDA, a medical device manufacturer generally shall:

• complete the factory registration, unless the manufacturing site meets any exceptional exemption under the Factory Management Act (FMA);
• obtain a medical device manufacturer licence and join the medical device industry association;
• be subject to the pre-conditions of establishing the medical device quality management system for governing the site facility, equipment, human management, production, quality control, etc, according to the regulations prescribed based on the ISO 13485 standard (QMS Regulations; the review of such quality management system is referred to as the QMS review) and obtaining a manufacturing approval after passing the inspection of the foregoing by the competent authority, unless the manufacturer is exempted from obtaining the manufacturing approval for specific medical devices announced by the competent authority; and
• obtain product approval (or so-called market approval) of each medical device or, with respect to certain categories of medical devices designated by the authority, complete online registration for each medical device instead.

When reviewing the factory registration application, the factory registration competent authority will work with other government sectors not only to review the factory requirements under the FMA, such as environmental protection obligations and the land use zoning of the factory, but also to inspect the facilities, equipment and sanitary conditions of the proposed factory to make sure it meets the requirements under the MDA and QSM regulations.

Overseas manufacturers shall be also subject to QMS review. Prior to the independent MDA taking effect, medical devices were governed by the PAA, under which the manufacturer was subject to GMP review. For purposes of transitioning to a new regulatory regime, medical device manufacturers who obtained GMP certification under the PAA can be assured that this could remain in effect until expiration; six to twelve months prior to expiry, manufacturers shall transfer and apply for QMS review and obtain the manufacturing approval under the MDA.

Pharmaceuticals

Under the PAA, “pharmaceutical manufacturer” means a person who engages in manufacturing and processing of pharmaceuticals, wholesaling and exporting its pharmaceutical products, and importing raw materials of pharmaceuticals for its own use. The regulatory logic, spirit and density for pharmaceutical manufacturers are similar to those for medical device manufacturers. Under the PAA, a pharmaceutical manufacturer generally shall:

• complete the factory registration under the FMA;
• obtain a pharmaceutical manufacturer licence;
• obtain a manufacturing approval after the GMP review by the competent authority; and
• obtain product approval (or so-called market approval) for each pharmaceutical.

The GMP standards are formulated with reference to the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme (PIC/S). Overseas manufacturers shall be subject to GMP review as well.

Cosmetics

A company seeking to manufacture cosmetics in Taiwan will not be subject to obtaining a manufacturer licence.

To set up a systemic management of cosmetics, the CHSA was substantially amended in 2019. Under the CHSA, a cosmetics manufacturer or importer shall complete product registration and set up product information files prior to launching the product to market. The product information files shall include basic information and an assessment report of the product, such as the product stability test report, microbiological test report, antimicrobial effectiveness test report, functional assessment, and product safety report. However, in order to give cosmetics business operators reasonable lead time to apply with the new CHSA, the authority announced the phase-by-phase adoption of different categories of cosmetics. Product registration applicable to general cosmetics commenced from 1 July 2021 and, as of 1 July 2024, such registration requirement shall govern and apply to all cosmetics product falling within the scope of cosmetics subject to the registration requirement. The product files requirement will apply to specific-purpose cosmetics from 1 July 2024 first and, as of 1 July 2026, shall govern and apply to all cosmetics falling within the scope of cosmetics subject to such product files requirements.

Factory registration may be required for cosmetics manufacturing sites. In addition, the CHSA introduces and includes the GMP requirement, which will be implemented phase-by-phase from 1 July 2024. Nevertheless, the CHSA only requests the cosmetics manufacturer, including overseas manufacturer, to comply with the cosmetics GMP requirement, and the competent authority shall have authority to audit the compliance circumstance, but it will not link to any manufacture approval.

Foods

In general, food business operators, including but not limited to food manufacturers, shall complete the registration of the food business operator before commencing the food business and comply with the Good Hygiene Practice for Food (GHP). In addition, food business operators may also be subject to the following requirements under the FSSA, depending on the category of foods and their business size:

• to establish and implement a food safety monitoring plan;
• to conduct inspection of the raw materials, semi-products or end products;
• to establish a Hazard Analysis and Critical Control Point (HACCP);
• to establish a tracking system for tracing the source and report the tracking information to the competent authority;
• to purchase and maintain product liability insurance in compliance with the applicable statutory requirements; and
• for certain types of foods and genetically modified food raw materials, to apply for health risk assessment by, file product registration with, and obtain a permit from TFDA.

In addition, the food manufacturing site will be subject to the factory registration under the FMA. Further, the food factory shall also comply with the Standards of Construction and Equipment of a Food Factory.

The Taiwan legislature has formulated several environmental protection laws for different kinds of protected objects, such as the laws governing general or business waste clearance, disposal and recycling, water pollution control, air pollution control, and soil and groundwater pollution remediation. For example, according to the Waste Disposal Act and its subordinated regulations, a pharmaceutical manufacturer whose (i) registered capital is TWD1 million or more, or (ii) monthly output of general industrial waste (such as trash generated by employees) is more than ten metric tons, or (iii) output waste includes hazardous industrial waste (such as genotoxic waste, sharp medical instrument waste and infectious waste) shall submit an industrial waste disposal plan to the agency designated by the competent authority and obtain the approval therefrom before commencing business operation.

The relevant laws and regulations provide the product labelling, advertisement and claiming restrictions. Violation will be subject to administrative sanctions.

Medical Devices

Under the MDA, only medical device manufacturers and vendors (collectively, “Medical Device Business Operators”) can advertise medical device products. Before launching the advertisement of medical device products, the approval holder or registrant of such medical device shall submit the proposed advertisement to the competent authority to obtain approval therefor.

In addition, medical device advertisements shall not be made in the following manner:

• be publicised in the name of others;
• guarantee the efficacy or functions of medical devices;
• be publicised by means of interviews or news reports; or
• be publicised by any other improper means.

Pharmaceuticals

Under the PAA, only pharmaceutical manufacturers or vendors (collectively, “Pharmaceutical Business Operators”) can advertise pharmaceutical products. Before launching the advertisement of pharmaceutical products, Pharmaceutical Business Operators shall submit the proposed advertisement to the competent authority to obtain approval therefor.

In addition, pharmaceutical advertisements are subject to the restrictions in a manner equivalent to those against medical devices – eg, the restriction that it could not be publicised in the name of others, that it could not guarantee the efficacy or functions, etc.

Cosmetics

The CHSA stipulates that the content of labels, propaganda and advertisements of cosmetics products shall not be fraudulent or exaggerated, nor claim medical efficacy.

To be more specific, cosmetics advertisements will be identified as fraudulent or exaggerated if the content of the advertisements:

• is inconsistent with the facts;
• has no or insufficient evidence base as support;
• is beyond the definition, categories and scope of cosmetics referred to in the CHSA; or
• contains words or phrases concerning the effects on physiological functions or changes in body structure, which are announced by the competent authority.

In addition, cosmetics advertisements will be identified as claiming medical efficacy if the content of the advertisements involves:

• the claims of prevention, mitigation, diagnosis or treatment of any disease, disease syndrome or symptom, or other words or phrases of having medical efficacy as announced by the competent authority; or
• the claims of having efficacy as any pharmaceutical or medical device, or other words or phrases with similar meanings.

Recently, quite a few cosmetics business operators would like to claim or address the function equivalent to the aesthetic medicine to catch the eye of consumers. Such advertisements or claims bear the risk of violating the above rules governing cosmetics advertisements.

Foods

The FSSA regulates that the content of labels, propaganda and advertisements of food products shall not be false, exaggerated or misleading or claim medical efficacy. The criteria to identify food advertisements as false, exaggerated, misleading or promoting medical efficacy are similar to those in respect of cosmetics advertisements. Further, food shall not contain or address “healthy” as a part of the product name, unless and until it qualifies as a health food under the HFCA.

Medical Devices

As provided in 2.1 Design and Manufacture, generally a market approval from the TFDA will be required for each medical device. To simplify the pre-market review process, the MDA adopts a relaxation in respect of certain medical devices, under which the market approval requirement for the manufacture and import of certain class 1 medical devices – ie, low-risk medical devices such as limb orthotics and medical crutches – has been replaced by a listing mechanism via an electronic registration system. In addition, several documents regarding safety and conformity assessments and testing will be required when the manufacturer and importer apply for the above approval or registration, which vary from different kinds of medical devices, such as the proof of compliance with the medical device quality management system criteria, inspection results for pre-clinical tests and clinical evidence data, etc.

Dealers in medical devices shall obtain a medical device dealer licence from the competent authority to sell medical devices, and can only sell products at the registered place. However, medical device manufacturers may engage in a sale and distribution business of their own medical devices without a separate medical devices dealer licence. Besides, pharmacies may retail those medical devices as published by the competent authority based on the pharmacy licence, without obtaining a separate medical device dealer licence.

In addition, dealers of certain medical devices designated by the TFDA, such as coronary artery stents, intra-uterine devices and gel-filled mammary implants, shall establish a medical device good distribution system in compliance with the regulations for good distribution practice (GDP) of medical devices, and shall apply for inspection by, and obtain a distribution permit from, the TFDA before engaging in wholesale business.

Pharmaceuticals

A market approval from the TFDA shall be obtained for the manufacture and import of drugs. Several documents regarding safety and conformity assessments and testing will be required when the manufacturer and importer apply for the above approval, which vary from different kinds of drugs.

Dealers of drugs shall obtain a drug dealer licence from the competent authority for operating such business; however, pharmacies may retail drugs and pharmaceutical manufacturers may engage in selling and distributing their own pharmaceutical products without obtaining a drug dealer licence. In addition, wholesalers, importers and exporters of drugs shall comply with the standards of western pharmaceuticals GDP, and shall obtain the western pharmaceuticals distribution permit upon the inspection and approval from TFDA.

Cosmetics

Before marketing, to ensure the safety and transparency of cosmetics products, the CHSA requires manufacturers or importers of cosmetic products to complete online product registration and establish a product information file prior to the supply, sale, giveaway, display or consumer trial of such cosmetics. Please see 2.1 Design and Manufacture.

In addition, unlike sellers of medical devices or pharmaceuticals, sellers of cosmetic products are not required to obtain a dealer licence from the competent authorities to sell cosmetics.

Foods

According to the FSSA, foods, food cleansers, food utensils, food containers or packaging being sold shall conform to sanitation, safety and quality standards prescribed by the TFDA. Also, food business operators, including food sellers, shall comply with several pre-market requirements, depending on the category of foods they manufacture and their business size. Please see 2.1 Design and Manufacture.

Although food sellers are not required to obtain a sales licence from competent authorities to sell foods, the FSSA stipulates that food business operators, including food sellers, shall complete registration of the food business operator before commencing such business.

In general, Taiwan’s regulatory regimes for manufacturers of medical devices, medicines, cosmetics and foods in Taiwan follow international standards, which may mitigate difficulties when manufacturers in Taiwan export and sell products to foreign countries. To promote internationalisation and harmonisation of relevant regulatory regimes, the Taiwanese legislature and the competent authority, the TFDA, have taken several measures, including but not limited to:

• amending or adopting the PAA, MDA, CHSA, FSSA, HFCA, and PDA as well as relevant regulations or interpretations to implement GMP and GDP system which follows the worldwide industry requirements;
• joining the Global Harmonization Working Party (GHWP) since 1999;
• joining Pharmaceutical Inspection Co-operation Scheme (PIC/S) since 2013;
• joining International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH) since 2018; and
• joining International Cooperation on Cosmetics Regulation (ICCR) since 2020.

Nevertheless, the governmental authority will take a proactive position to balance the domestic and international demand in relation to healthcare products manufactured domestically. With regard to limitations on export of medical devices and pharmaceuticals which are manufactured in Taiwan, the MDA and PAA stipulate that the competent authority has the power to impose restrictions on the export of medical devices and pharmaceuticals domestically manufactured to foreign countries if it determines that there is a concern about an insufficient supply to meet domestic demand. For example, during the worst outbreak period of COVID-19, the MOHW imposed certain volume restrictions to export medical masks.

Medical Devices

The MDA provides post-market supervision on medical device products, such as the following:

• product approval shall be renewed and updated pursuant to legal requirements;
• the TFDA may announce categories and items of specific medical devices with restrictions on their sale or supply type based on the corresponding potential risk;
• medical device business operators shall establish and maintain data on direct supply sources and flow of medical devices with certain risk; and
• medical device business operators shall report to TFDA if medical device products cause any serious adverse event or may be harmful to human health and safety, and undertake corrective or preventive actions.

Pharmaceuticals

The PAA provides post-market supervision on pharmaceutical products, such as the following:

• product approval shall be renewed and updated pursuant to legal requirements;
• distributors and manufacturers of the drugs designated by TFDA shall establish a traceability system to trace the source and track the flow of the drugs, and shall keep documents for at least five years;
• medical care institutions, pharmacies, manufacturers and distributors shall report any serious adverse reactions caused by the drug to the competent authorities; and
• if certain adverse events occur, the manufacturer or importer shall immediately notify distributors and recall the products and dispose of the stock in question

Cosmetics

The CHSA provides post-market supervision on cosmetic products, such as the following:

• manufacturers and importers shall proceed and update the product registration pursuant to legal requirements;
• manufacturers and importers shall store the product information files pursuant to the legal requirements;
• manufacturers, importers and sellers shall establish and maintain data on direct supply sources and flow of cosmetic products, except for those direct sale to consumers; and
• manufacturers shall comply with statutory report and recall requirements.

Foods

The FSSA provides post-market supervision on food products, such as the following:

• food business operators shall implement self-management and enact a food safety monitoring plan to ensure food sanitation and safety;
• food business operators shall update their registration and permit and recall products pursuant to the law; and
• food business operators shall keep source-related documents for raw materials, semi-finished products, and finished products.

The competent authority stipulated under the MDA, PAA, CHSA, FSSA, HFCA, and PDA is the MOHW at the central government level and the local municipal/county governments at the local government level. The TFDA of the MOHW is the principal department to execute the affairs relating to healthcare products. The laws further divide the respective powers and responsibilities of the central government and local governments. For example, a pharmaceutical manufacturer licence and drug dealer licence shall be applied to the local city/county governments, and a pharmaceutical product approval shall be applied to the central government – ie, TFDA.

The MDA, PAA, CHSA, FSSA, HFCA, and PDA give the regulators the following powers, including without limitation:

• to set up relevant regulations, rules and standards and publish interpretations;
• to review the application, and to grant or revoke licences, permits and registrations;
• to approve, correct or suspend advertisements of the product;
• to inspect factories, stores, offices and facilities on-site and the records kept by manufacturers and distributors;
• to order a suspension of supply, import or marketing and stop manufacturers or distributors from continuing current operations;
• to order a compulsory recall and destruction of the product; and
• to impose administrative sanctions against the violating person.

The Taiwanese legislature has stipulated various product safety offences and corresponding legal consequences and punishments, which include administrative and criminal penalties, in the regulatory regimes as mentioned in 1. Applicable Product Safety Regulatory Regimes. These offences include, without limitation:

• manufacturing, importing, supplying or distributing medical devices, healthcare products or medicines without the required licence, approval or registration, or failing to make corresponding update when such information has been changed;
• failure to comply with applicable statutory standards and requirements;
• using false documents or information to file applications;
• violation of advertisement and labelling requirements; and
• violation of removal or recall order from the government.

Administrative penalties include administrative fines, suspension of manufacturing, importing, distributing, or advertising, revocation or cancellation of the approval or licence. Certain offences will lead to criminal penalties, including criminal fines, imprisonment and even life sentence, such as manufacturing or importing counterfeit or prohibited drugs or defective medical devices.

The authorities are not subject to mandatory disclosure of enforcement circumstance, except for few limited aspects – eg, the administrative sanctions in relation to violation of advertisement requirements of healthcare products with relevant limited details of the violation action will be disclosed by local competent authority. According to the information published by the Taipei City Government, a well-known contact lenses manufacturer was fined by the Taipei City Government in the total amount of TWD1.17 million in 2022 for its advertisement of a contact lenses product, which is categorised as a medical device under the MDA, without obtaining prior approval for such advertisement from the competent authority. It is the highest record of administrative monetary fines imposed by the Taipei City Government against the violating party for single violation in 2022. Except for the violation of advertisement requirements, the public cannot access the other enforcement circumstance unless and until the administrative sanction is argued by the punished party and the administrative appeal authority and/or the court makes any further decision as to the argument, since such decisions generally are subject to disclosure requirements.

In general, product liability claims in respect of the products as mentioned in 1. Applicable Product Safety Regulatory Regimes may be brought based on the breach of contract and tort under the Civil Code. However, in product liability cases arising from or related to consumer relationship, the Consumer Protection Act (CPA), which eases the difficulty for consumers to make product liability claims against the product manufacturer, importer, distributor or service provider (the “Business Operator”), will govern.

The CPA imposes strict liability, or liability without fault, on the Business Operator, and provides several favours towards consumers, especially in the litigation procedure, such as:

• requiring the Business Operator, as the defendant, to bear the burden of proof to prove the products or services meet and comply with the reasonably expected safety requirements of contemporary technical and professional standards;
• reversing the burden of proof which requires the Business Operator to prove it has not been intentional or negligent in respect of the damage being claimed;
• imposing joint and several liability on Business Operators; and
• entitling consumers to claim for punitive damages up to five times the amount of actual damages if such injuries are caused by wilful misconduct of the Business Operator; three times if caused by gross negligence; or one time if caused by negligence.

Similarly, the MDA and FSSA, etc, also provide favours towards end-users or consumers of medical products or foods in the litigation procedure – eg, if the end-users or consumers find it difficult or are unable to prove the monetary value of the actual damage, they may request the court to determine the compensation in an amount of at least TWD1,000 for each case of damage per person caused by defective medical devices, or an amount between TWD500 and TWD300,000 for those caused by toxic, adulterated or counterfeited foods, based on the severity of the damage.

In addition, the Taiwanese government has established the Drug Injury Relief Fund since 1999. The source of the Fund will be the imposition from drug manufacturers and importers, late payment penalties, income from subrogation claims, donations, interest generated by the Fund, and other relevant income. According to the Drug Injury Relief Act, victims suffering injury from using legal drugs or their successors may apply for relief from the Fund within three years from the date when the applicant became aware of such drug injury. After paying the relief, the competent authority may exercise a subrogation right against the responsible party to request compensation.

Courts in Taiwan may exercise jurisdiction over claims which have a nexus with Taiwan, such as the defendant resides or has a place of business in Taiwan, the property or asset involved is located in Taiwan, or the tortious act or the consumer relationship occurred in Taiwan. The courts may still choose not to exercise jurisdiction over a case for the reasons of fairness between the parties, legitimacy and justice of the adjudication, speedy and economical procedures, reasonable allocation of jurisdiction, convenience of litigation for the parties, and relevance of the case, etc.

According to the Code of Civil Procedure, the general rule of litigation expenses applying to civil litigation cases, including product liability claims, is that litigation expenses shall be borne by the losing party. However, in the case where each party partially wins and loses, the court will, at its discretion, order both parties to bear litigation expenses in proportion, or one party to bear all litigation expenses alone, or both parties to bear their own litigation expenses incurred respectively. Litigation expenses include court fees, daily fees and travel expenses for witness and expert witness, etc. Attorney’s fees, to the extent specified in the Code of the Civil Procedure, will be included in the litigation expenses.

The CPA provides special rules of litigation expenses for consumer dispute cases, including:

• where, in the litigation brought by a consumer protection group whose claim against the Business Operator is assigned from 20 or more injured consumers, court fees for the portion of the claim exceeding TWD600,000 shall be exempted; and
• where, in the litigation brought by a consumer protection group or consumer ombudsman requiring the court to stop or prohibit the Business Operator from continuing its illegal act in violation of the CPA, court fees shall be exempted.

If a person deems that the administrative sanction made by the competent authority is illegal or improper, they can file an administrative appeal to the superior authority of the competent authority. The administrative appeal will be reviewed by an administrative appeals commission of the superior authority, which consists of senior officials, fair-minded people in society, scholars or experts. If such person is still subject to an unfavourable result under the administrative appeal decision or the administrative appeal commission could not make a decision within the statutory time limit, they can then file a lawsuit to the administrative court to revoke the unfavourable administrative decision.

During the COVID-19 outbreak period, two Taiwan biotech companies tried to obtain emergency use authorisation (EUA) for their COVID-19 vaccine candidate. The first successfully went through the whole EUA procedure in July 2021. In August 2021, the second filed an application to the MOHW for EUA for its COVID-19 vaccine candidate. After assessing the efficacy of the vaccine candidate, the MOHW determined that the vaccine candidate failed to reach the efficacy evaluation criteria and therefore dismissed the application. The company appealed the MOHW’s decision to the Executive Yuan, which is the superior authority of the MOHW, pursuant to the above rules of administrative appeal in October 2021. However, the Executive Yuan concurred with the decision of the MOHW and dismissed the appeal in September 2022.

The CPA regulates the class actions for consumer disputes and such rules also govern the healthcare products listed in 1. Applicable Product Safety Regulatory Regimes. The main content of such class action mechanism is provided below.

• Class Actions – the qualified consumer protection group may file a class action against the Business Operator in its own name after it has been assigned the claims from 20 or more injured consumers by the same incident. The consumer protection group shall deliver the compensation received in accordance with the court’s final judgment to the consumers who have assigned their claims thereto. For example, in July 2020, dozens of people were confirmed to have heavy metal poisoning from the medications, containing cinnabar and lead tetroxide, prescribed by two Chinese medicine clinics in Taiwan. In this regard, a consumer protection group, the Consumers’ Foundation, Chinese Taipei (CFCT), filed a class action for the damages, amounting to around TWD1.27 billion, against two doctors and one representative of the drug dealer. This case is still pending under the trial procedure.
• The consumer protection officer or the consumer protection group may file a litigation requesting the court to stop or prohibit the act of the Business Operator who seriously violates the provisions under the CPA.

With respect to the consumer disputes, the laws provide optional (rather than mandatory) alternative dispute resolution (ADR) mechanisms. For example, under the CPA, if a consumer chooses not to directly initiate a civil lawsuit on a consumer dispute, the consumer may consider the following ADR mechanisms:

• filing a complaint with the Business Operator, consumer protection group or consumer service centre or the branch office;
• if the complaint has not been properly responded to, filing a further complaint with the consumer ombudsman of the local government; or
• if the complaint is not properly responded to pursuant to the above mechanism, applying for a mediation with the consumer dispute mediation commission established by the local government, whose members may consist of government representatives, consumer ombudsmen, representatives of consumer protection groups, representatives of the industry where the Business Operator belongs, scholars and experts. The first point of complaint is a pre-condition to the mediation, while the second point of compliant is not, which means the consumer could directly kick off the mediation procedure after their compliant has not been properly responded under the first bullet point above. The mediation approved by the court has the same effect and enforceability as a final judgment made by the court.

If a consumer chooses to directly file a civil lawsuit on a consumer dispute, there are also some ADR mechanisms available to them when the case is pending at the court. For example, during the civil proceedings, if the parties intend to settle the dispute, they may jointly apply to the court for a settlement plan. If parties agree with the settlement plan, the court will make a settlement transcript and deliver such to the parties. Such settlement transcript has the same effect and enforceability as a final judgment made by the court.

Sometimes an administrative action (such as the administrative inspection or investigation) by regulatory authorities may lead to the initiation of civil and/or criminal proceedings. To take the prominent poisoning case mentioned in 4.6 Class Actions, Representative Actions or Co-ordinated Proceedings as an example, this case was first investigated by the health bureau of the local government after it was notified by the victims. After that, the prosecutors started criminal investigations, and the CFCT started collecting the victims and assisting them in filing a civil class action.

In addition, each authority may, at its discretion, refer to the facts found by other authorities as the factual basis to make decisions. For example, in the above case, the health bureau of the local government referred to the facts discovered by and provided in the prosecutor’s indictment to determine that the drug dealer violated the PAA to manufacture counterfeit drugs, and therefore made the sanction to revoke its drug dealer licence.

The authors are not aware of any significant policy developments in Taiwan with regard to product safety and liability of products referred to in 1. Applicable Product Safety Regulatory Regimes.

The Taiwan government has actively promoted the legislation of regenerative medicine in recent years. Regenerative medicine focuses on the development of therapies, by using genes, cells and their derivatives to treat, repair or replace human cells, tissues and organs. As provided in 1.4 Technologies and Digital Health, the draft Regenerative Medicine Act and the Regenerative Medicine Product Act have drawn some criticism and are still under the discussion and review of the Legislative Yuan. Nevertheless, the Legislative Yuan has noted the need for, and significance of, regenerative medicine, as well as its benefit to human health, and expressed that the drafts will be further discussed.

As introduced in 1. Applicable Product Safety Regulatory Regimes, the Taiwanese government has been aware of developments of software-based medical devices (artificial intelligence/augmented reality/virtual reality, etc) and therefore makes some amendments from time to time to relevant regulations in order to include new types of products into the scope of medical devices and set up relevant and proper management mechanisms.

In addition, Taiwan has also noted the AI trend and issues arising from the generative AI topic. There are preliminary discussions around setting up a fundamental law governing AI, which aims to establish fundamental rules for monitoring AI, such as privacy protection, ethical standards, transparency and related responsibilities. However, so far there is no specific legislation or proposal.