Guidelines on Compliance of Laws for Marketing Authorization Holders and Manufactures

I. Basic Concepts

1. Responsibilities of Authorized Companies

Business operators conducting marketing, manufacturing, sales, etc., of pharmaceuticals, quasi-pharmaceuticals, medical devices and regenerative medicine products (hereinafter referred to as “Pharmaceuticals, etc..”) under permission or registration of Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (Act No. 145 of 1960, hereinafter referred to as “Pharmaceutical and Medical Device Act”, “PMD Act” or “Act”) are companies (hereinafter referred to as “Authorized Companies”) that conduct manufacturing, import, sales, etc. of Pharmaceuticals, etc.. that might affect lives and health of people and if Authorized Companies violate pharmaceutical laws and regulations (PMD Act, Narcotics and Psychotropics Control Act (Act No.14 of 1953)), Poisonous and Deleterious Substances Control Act (Act No.303 of 1950) and pharmaceutical affairs as set forth in each item of Order for Enforcement of the Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (Cabinet Order No.11 of 1961. The same applies hereinafter), health and hygiene hazards are likely to occur or spread due to distributions or improper use of Pharmaceuticals, etc. that have safety and efficacy concerns. Authorized Companies have the responsibility to conduct business operations complying with pharmaceutical laws and regulations with a high sense of morality as business operators dealing with such life-related products.

2. Occurrence of Violation of Laws and Issues toward Compliance

Cases of law violations that have occurred recently are thought to be caused by the lack of compliance awareness of officers of Authorized Companies and the absence of the establishment of the system regarding compliance. (See Attachment 1 “Cases of Law Violations”) In preventing such law violations and securing that Authorized Companies conduct business operations complying with laws and regulations, the following issues have been cited. • As the responsibilities that each of responsible persons including the Marketing Director, that is to be appointed based on the PMD Act (hereinafter referred to as “Responsible persons”) and officers should take as well as the mutual relationship are not clarified under the PMD Act, there seems to be a situation that Responsible Persons do not state their opinions properly or a reality that officers leave the responsibilities in the hands of Responsible Persons, making the improvement cycle for compliance hard to function. •　Though Authorized Companies must conduct their business operations complying with the PMD Act, it is likely that persons who are responsible for compliance as well as the establishment and operation of internal systems for compliance are unclarified within Authorized Companies.

3. Compliance Systems Required by the PMD Act

Based on these issues, in the act that partially amends the PMD Act (Act No. 63 of 2019), provisions on compliance systems, etc. of Authorized Companies were developed (hereinafter referred to as “this amendment”). In this amendment, Authorized Companies are obliged to establish a system to comply with laws and regulations on pharmaceutical affairs. This demands that the process for compliance should function with control environment that values compliance established, that business operations should be conducted based on the norms developed and adequately publicized by Authorized Companies, then that remedial actions should be taken based on the problems recognized through supervising business operations. Also, as persons who proactively act and take responsibilities in order to establish a compliance system within Authorized Companies and comply with laws and regulations on pharmaceutical affairs, among officers of Authorized Companies, officers responsible for business operations regarding pharmaceutical affairs (hereinafter referred to as “Responsible Officers”) have been positioned in PMD Act and their responsibilities have been clarified. Moreover, as the role of Responsible Persons who have the responsibility to manage the essential part of Authorized Companies’ business operations is important for Authorized Companies’ compliance, Authorized Companies have been obliged to appoint persons with necessary capability and experience as Responsible Persons to manage such business operations. Additionally, as opinions of Responsible Persons who are in a position to effectively learn the problems are important for Authorized Companies’ compliance, Authorized Companies have been obliged to take necessary measures for compliance, valuing opinions of Responsible Persons. This guideline provides guidelines for marketing authorization holders and manufacturers of pharmaceuticals (hereinafter referred to as “MAH”) among Authorized Companies when they consider initiatives to establish such compliance systems and implement them. (See Attachment 2 for provisions on compliance systems, etc. of MAH developed by this amendment). Specific initiatives are expected to be implemented according to business categories and sizes of MAH. II.   Compliance Systems of MAH (Act Article 18-2, Article 23-2-15-2, Related to Article 23-35-2) 1. Perspectives on Development of Compliance Systems MAH must conduct business operations regarding pharmaceutical affairs and sales of Pharmaceuticals, etc. complying with provisions of laws and regulations on pharmaceutical affairs. In order for MAH to ensure compliance in an organization, it is necessary to establish and operate a mechanism (compliance system) in which Responsible Officers and employees (hereinafter referred to as “Officers and Employees”) should comply with laws and regulations to conduct business operations properly. Responsible Officers are in a position to take responsibilities for compliance of MAH and it is the responsibility of Responsible Officers to establish and operate a compliance system. What forms the basis for compliance system is that the consciousness to conduct business operations making compliance a top priority has been rooted in all the Officers and Employees and in order to instill such consciousness, it is necessary for Responsible Officers to take the lead and show a positive attitude toward the thorough compliance as well as send a message taking every opportunity that it is important to prioritize compliance in conducting business operations. Therefore, MAH as well as Responsible Officers must show employees guidelines for compliance. Specifically, they should incorporate the importance of compliance clearly into code of conduct, etc. of the company and continuously send these to employees. Also, clarifying the authority and scope of responsibilities that Responsible Officers have regarding business operations of MAH is important for Responsible Officers to deeply realize that they have the responsibilities to play a leading role for thorough compliance when they act and eventually this will show employees their positive response to compliance. Therefore, MAH must define the authority of Responsible Officers and the scope of business operations and organizations in which business operations are divided as well as publicize the contents in the company regulations. On that basis, Responsible Officers are required to show leadership in order to establish the following compliance systems and properly operate them. Also, if the measures regarding establishing compliance system are deemed to be insufficient, note that the company can be subject to an improvement order (Act Article 72-2-2). 2. Development of Systems to Ensure Appropriate Operations of MAH (Act Article 18-2, paragraph (1), item (ii), paragraph (3), item (ii) of the same Article, Article 23-2-15-2, paragraph (1), item (ii), paragraph (3), item (ii) of the same Article, Article 23-35-2, paragraph (1), item (ii), Related to paragraph (3), item (ii) of the same Article). (1) System to Ensure Compliance of Business Operations of MAH (i) Development of Rules that Officers and Employees must Comply with In order for MAH to properly conduct business operations complying with laws and regulations, it is necessary to clearly stipulate the norms that Officers and Employees including MAH must comply in company regulations. First of all, it is necessary to define the mechanism of decision making to conduct business operations properly. This includes the scope of persons who have the authority to conduct decision making and the authority and criteria necessary for decision making as well as clarification of the in-house procedures leading to decision making. Next, it is necessary to define the mechanism in which each of the Officers and Employees to conduct business operations properly according to decision making. This includes the clarification of the persons who have the authority to command and control, the scope of such authority, the method of command and control and procedures of business operations. The mechanism of these decision making and business operation must be reviewed as needed in response to the results of supervising business operations and amendment of laws and regulations, etc. (ii) Education, Training to and Evaluation of Officers and Employees In order to ensure that Officers and Employees conduct business operations complying with laws and regulations, it is necessary to publicize the contents of company regulations developed based on laws and regulations. To do this, it is helpful to have Officers and Employees take training programs, etc. that are carried out on a planned and continuous basis and other training programs carried out based on the results of supervising and amendment of laws and regulations as well as set up a section and a contact in which Officers and Employees can consult about the contents and application of laws and regulations as well as company regulations. Additionally, in order to motivate Officers and Employees to conduct business operations complying with laws and regulations, it is also important for Officers and Employees to understand the laws and regulations and company regulations as well as confirm and evaluate the compliance situation as MAH. (iii) Preparation, Management and Retention of Business Records In order to be able to retroactively confirm whether the contents of decision making and business execution by Officers and Employees were reported properly, it is necessary to establish a system to have the contents recorded timely and accurately. To do so, it is necessary to stipulate company regulations on document management including preparation, management and retention of business records and operate them properly. It is also important to take proper security measures such as making a system in which records cannot be altered retroactively, etc. (2) System regarding Business Operation Supervision of Officers and Employees In order to ensure appropriate operation of MAH, it is necessary to confirm whether Officer and Employees conduct business operations complying with laws and regulations and company regulations, establish a system regarding supervision to take improvement measures where appropriate and make it function. To do so, as it is required that Responsible Officers should understand the decision making and the situation of business operations by Officers and Employees appropriately and take improvement measures as appropriate and it is important to give necessary reports to Responsible Officers regarding the establishment of a system to monitor business operations of Officers and Employees as well as the situation of their business operations. To establish such system, internal audit should be carried out that is based on an internal audit plan developed considering risks related to compliance by an internal audit division independent of a division to conduct business operations and then a system should be established in which compliance-related problems can be reported to Responsible officers as well as an effective whistleblowing system in which procedures of whistleblowing and protection of a whistleblower are clarified. Also, it is important to make a system in which sufficient information gathering, etc. is conducted by auditors, etc. as well as to ensure the effectiveness of auditing. Additionally, as set forth in Article 4-2, in order to conduct effective supervision of business operations, it is also important to establish a system in which supervision and opinion statement by marketing director, manufacturing supervisor and technical supervisor (hereinafter referred to “Marketing Director”) who are in a position to most effectively learn the problems in compliance regarding manufacturing control, quality control and post-marketing safety control are conducted properly. (3) Other Systems It is helpful to appoint an officer in charge of compliance (compliance officer) of MAH as a whole, from perspectives that it promotes proactive initiatives regarding company-wide compliance and shows Officers and Employees the attitude to value compliance. Also, it is desirable to appoint a compliance offer in each department as a person who plays a key role of compliance based on an understanding the characteristics of each department of MAH. Additionally, according to the size of MAH, when it is judged that company-wide initiatives regarding compliance are needed, it is also helpful to set up a compliance supervisory department as a department in charge that leads initiatives regarding compliance under the supervision of a compliance officer. If MAH have appointed outside directors, it is important to utilize the supervisory functions including encouraging them to understand the compliance system of MAH as well as using the system in which reports regarding problems of compliance from employees and each department can reach outside directors. 3. Clarification of Authority of the Marketing Director (Act Article 18-2, paragraph (1), item (i), paragraph (3), item (i) of the same Article, Article 23-2-15-2, paragraph (1), item (i), paragraph (3), item (i) of the same Article, Article 23-35-2, paragraph (1), item (i), Related to paragraph (3), item (1) of the same Article) In order for MAH to conduct business operations of the Marketing Director smoothly and effectively, with the understanding of quality assurance supervisors, domestic quality assurance administrators and safety control managers as well as other persons engaged in business operations regarding manufacturing control, quality control and post-marketing safety control, it is necessary to define the scope of the authority of Marketing Director and publicize the contents within the company. •  Authority regarding instructions and supervisions of business operations to quality assurance managers, domestic quality assurance administrators, safety control managers and other persons engaged in business operations regarding manufacturing control, quality control and post-marketing safety control. •　Authority regarding disposing of, collecting and suspending sales of Pharmaceuticals, etc., information revision of cautions, etc., information delivery to medical professionals or reports to the Minister of Health, Labour and Welfare as well as decision and implementation of measures regarding other manufacturing control, quality control and post-marketing safety control •　Authority regarding management and supervision to manufacturers, overseas manufacturers and other persons who conduct business operations regarding manufacturing (including tests and inspections) •   Authority regarding manufacturing control, quality control and post-marketing safety control Likewise, it is necessary for manufacturers to define the scope of the authority that manufacturing supervisors or technical supervisors have and publicize the contents within the company.

4. Measures to Comply with Ministerial Ordinance GQP, Ministerial Ordinance

GVP, Ministerial ordinance QMS, Ministerial ordinance GMP and Ministerial ordinance GCTP (Act Article 18-2, paragraph (1), item (iii), paragraph (3), item (iii) of the same Article, Article 23-2-15-2, paragraph (1), item (iii), Article 23-35-2, paragraph (1), item (iii), Related to paragraph (3), item (iii) of the same Article) (1) Granting Necessary Authority to MAH Ministerial ordinance GQP, Ministerial ordinance GVP, Ministerial ordinance QMS, Ministerial ordinance GMP and Ministerial ordinance GCPT (hereinafter referred to “Ministerial ordinance GQP, etc.” set forth duties that MAH must have the Marketing Director and other Responsible Persons conduct. In order that these duties are conducted properly, MAH must grant the Marketing Director and other Responsible Persons necessary authority to fulfill such duties, and clarify the scope of the authority within the company (See Ministerial ordinance GQP Article 4, paragraph (4), Ministerial ordinance Article 5, paragraph (2), Ministerial ordinance QMS Article 15, Ministerial ordinance GMP Article 6, paragraph (4), Ministerial ordinance GCTP Article 4, paragraph (4)). It is important to consider what kind of authority to grant to each of Responsible Persons in order not to disrupt manufacturing control, quality control and post-marketing safety control and make law violation occur due to the insufficient authority granted to the Marketing Director and other Responsible Persons. (2) Supervision of Operations of the Marketing Director MAH must supervise the Marketing Director and other Responsible Persons to see whether they execute the authority granted to them appropriately and conduct business operations regarding manufacturing control, quality control and post-marketing safety control properly and take improvement measures where appropriate.

5. Other Measures Necessary for Proper Execution of Business Operations of MAH (Act Article 18-2, paragraph (1), item (iv), paragraph (3), item (iv) of the same Article, Article 23-2-15-2, paragraph (1), item (iv), paragraph (3), item (iii) of the same Article, Article 23-35-2, paragraph

MAH must, as set forth in Article 2-1, in addition to showing guidance for compliance to employees and clarify the authority and job description of Responsible Officers, take necessary measures to have the compliance systems developed pursuant to the Article 2 function effectively. Also, based on the occurrence of law violations cases described in Article 1-2 (Attachment 1), in order to prevent the similar cases from occurring again, MAH must take measures from (1) to (3) shown below and manufacturers must take measures from (1) shown below. (1) Measures to Prevent Manufacturing and Sales of Pharmaceuticals, etc. that are Inconsistent with the Contents of Approval, etc. MAH shall collect the information regarding items that are likely to affect the method of manufacture of Pharmaceuticals, etc., the method of tests and inspections and quality of other Pharmaceuticals, etc. and if the reality of the contents of approval or certification are inconsistent with the manufacture, etc., the manufacture must be changed to follow the contents of approval or certification. Also, MAH shall obtain the approval or certification, etc. as set forth in Act Article, 14, paragraph (13) (including mutatis mutandis application of Act Article 19-2, paragraph (5)), Article 23-2-5, paragraph (15), (including mutatis mutandis application of Article 23-2-17, paragraph (5)), Article 23-2-23, paragraph (7) or Article 23-25, paragraph (9) (including mutatis mutandis application of Article 23-37, paragraph (5)). Manufacturers shall take necessary measures including furnishing necessary information to MAH (in case of medical devices or In-vitro diagnostics manufacturers, to the person certified for foreign-manufactured medical devices or foreign manufacturers of designated specially-controlled medical devices). (2) Measures for Proper Adverse Effects Reporting In order for reporting of adverse effects, etc. to be implemented timely and properly based on the provisions of Act Article 68-10, paragraph (1), necessary measures shall be taken including securing personnel, development of the system and supervision of business operations to conduct collection, consideration and reporting of safety control information properly pursuant to Ministerial ordinance GVP. (3) Measures for Proper Information Provision regarding Pharmaceuticals, etc. Necessary supervision of business operations and other measures shall be taken in order to ensure that information provision regarding Pharmaceuticals, etc. is conducted according to objective and evidence-based information and that advertising, etc. violating Act Article 66-68 are not conducted. III.  Officers who are responsible for business operations regarding pharmaceutical affairs. (Act Article 12, paragraph (2), item (ii), Article 13, paragraph (3), item (iii), Article 23-2, paragraph (2), item (ii), Article 23-2-3, paragraph (2), item (iii), Article 23-20, paragraph (2), item (ii), Related to Article 23-22, paragraph (3), item (iii).)

1. Significance of Responsible Officers.

Representatives of MAH and officers, who are in charge of business operations regarding laws and regulations on pharmaceutical affairs, have the responsibility to act proactively in order to comply with laws and regulations on pharmaceutical affairs by MAH, and this includes establishment and operation of a compliance system described Second, above. If these officers fail to fulfill their responsibilities and if MAH violate laws and regulations on pharmaceutical affairs, the officers shall take responsibilities for the law violation. If MAH are corporations, these officers are positioned as Responsible Officers under the PMD Act and their names must be stated in the application form for permission, etc. of marketing, etc. On the other hand, officers of MAH who are not in charge of business operations regarding laws and regulations on pharmaceutical affairs (officials whose divided scope does not include business operations regarding laws and regulations on pharmaceutical affairs) do not correspond to the Responsible Officers under the PMD Act nor so-called executive officers do not correspond to the Responsible officers under the PMD Act. Business operations regarding laws and regulations on pharmaceutical affairs refer to business operations related to items subject to control of the PMD Act including applications, notifications, marketing, manufacturing control, quality control, post-marketing safety control and advertisements, etc. regarding to Pharmaceuticals, etc. and  other items subject to control of laws and regulations on pharmaceutical affairs and include business operations related to compliance regarding pharmaceutical affairs.

2. Scope of Responsible Officers

Based on the significance of Responsible Officers described above, the scope of Responsible Officers are as follows. In case of a stock company, it refers to representative directors and directors who are in charge of business operations regarding laws and regulations on pharmaceutical affairs. However, in case of a company with a nominating committee, etc., it refers to representative executive officers and executive officers who are in charge of business operations regarding laws and regulations on pharmaceutical affairs. In case of a holding company, it refers to representative employees and employees who are in charge of business operations regarding laws and regulations on pharmaceutical affairs. In case of other corporations, it refers to equivalents thereof. IV.  Marketing Director (Act Article 17, Article 18, Article 23-2-14, Article 23-2-15, Article 23-34, Related to Article 23-35) 1. Appointment of the Marketing Director Marketing director is a responsible person who supervises manufacturing control, quality control and post-marketing safety control of Pharmaceuticals, etc. that are the essential parts of business operations regarding marketing and manufacture of Pharmaceuticals, etc. and have the important role of ensuring that the business operations are conducted complying with the PMD Act and Ministerial ordinance GQP. In order that such roles are played sufficiently, MAH must appoint persons with necessary capability and experience to be able to properly conduct necessary duties for manufacturing control, quality control, post-marketing safety control of Pharmaceuticals, etc. To do this, MAH must consider, based on Article 2-3 and 4 (1) described above, what kind of authority should be granted to Marketing Director on the premise of the items that the Marketing Director must comply with based on the PMD Act and Ministerial ordinance GQP and items that the Marketing Director is obliged to conduct and with the scope of the authority clarified, they must objectively judge whether the persons have the knowledge, experience, ability to understand and ability to make decisions to conduct business operations related to the authority. Additionally, with closely cooperating with each department related to manufacturing control, quality control and post-marketing safety control, they also must objectively judge  whether the persons have ability for leadership to give instructions and conduct supervising to Responsible Persons and persons in charge of the department and also fully consider whether the persons have the positioning of duties to be able to state opinions candidly even to Responsible Officers as descried in the following 2.

2. Duty of Marketing Director to State Opinions

Marketing Director must state their opinions in writing to MAH when necessary, in order to conduct manufacturing control, quality control and post-marketing safety control fairly and properly. Marketing Director are familiar with laws and regulations and practical business affairs related to manufacturing control, quality control and post-market safety control and also as persons who have responsibility for management, they mutually have close cooperation with quality assurance supervisors, domestic quality assurance administrators and safety control managers and also they are in the position of learning problems from them regarding compliance on manufacturing control, quality control and post-marketing safety control most effectively. Therefore, in order for MAH to understand the problems regarding compliance on manufacturing control, quality control and post-marketing safety control,  Marketing director are required to timely report the problems they have realized on their own and by reports submitted by quality assurance supervisors, domestic quality assurance administrators or safety control managers, etc., to Market authorization holders, etc as well as state their opinions candidly that include measures for necessary improvement. Marketing director, etc. must try to understand the problems regarding compliance on their own proactively and also in order to widely understand the problems regarding compliance on manufacturing control, quality control and post-marketing safety control, they must closely cooperate with relevant departments and their Responsible Persons and persons in charge. Opinion statements must be conducted in writing in order that the contents of the opinion may be clearly shown to MAH and in order that the fact that opinion statement has been conducted. As a matter of course, it does not deny that the primary reports of emergency items are conducted orally, etc.

3. Respecting Opinions of Marketing Director and MAH’s Obligation to Take Measures

MAH must value opinions of the Marketing Director and consider whether measures should be taken for compliance, and if so, they must take the measures. Also, the contents of the measures taken must be recorded and preserved properly and if MAH fail to take measures though the Marketing Director stated opinions, they must record the intent and reason for it and preserve it properly. MAH should clarify the way Marketing Director state opinions and the system in which Marketing authorization holders take necessary measures including accepting opinions and clarifying Responsible Officers and meeting bodies that consider whether measures should be taken based on the opinions as well as Responsible Officers who take the measures, as a premise of valuing the opinions of the Marketing Director.