By Julio G. Martinez-Clark, bioaccess
One of the challenges posed worldwide by the COVID-19 pandemic has been the increased distribution of various medical devices that supply the healthcare system.1 The COVID-19 pandemic has been the worst health crisis in Chile in the last 100 years, but approximately four out of 10 Chileans had received at least one dose of vaccine that protects against SARS-CoV-2 by April 2021, reflecting the logistical organization of the Chilean healthcare system.2,3 This article provides an overview of the regulatory framework and the opportunities Chile represents for medtech companies looking to quickly and cost-effectively enter Latin America without regulatory barriers and with access to a robust private payor insurance system modeled after the U.S. healthcare system.
The first member of the Organization for Economic Co-operation and Development (OECD) in South America,4 Chile is a country of 756,102 km² with a population of approximately 19 million in 15 regions and 53 provinces. In comparison to its neighbors, Chile is famous for its political stability, legal certainty, and business friendliness. It stands out as the top country in Latin America per its very high human development index (HDI) –0.851 for Chile, 0.845 for Argentina, and 0.815 for Panama – and after Panama, it has the second highest gross national income per capita in Latin America.5 Chile has the highest annual healthcare expenditure as a percent of GDP and the highest out-of-pocket expenditure per capita in Latin America.6
The Chilean healthcare system is hybrid. The public system, or National Health Services System (SNSS), consists of the Ministry of Health (MINSAL) and its sub-agencies: The 29 Health Services (S.S.); the National Health Fund (FONASA); the Institute of Public Health (ISP); the National Supply Center (CENABAST); private pension health institutions (ISAPRES), and the network of primary healthcare providers that each municipality manages.5 FONASA, the government-run healthcare insurance system, covers almost 80 percent of the Chilean population, and the private sector insurance system covers most of the remaining 20 percent.7
Chile imports most of its medical devices. The total market size of the medical device sector in Chile is about $1.7 billion and has grown a whopping 75 percent since 2017. American medical equipment and devices, accounting for 20 percent of imported devices, have established a prestigious reputation in Chile; most key opinion leaders prefer FDA and CE-mark products over products approved in other non-reference countries. The pandemic has also led to a rapid increase in the utilization of telemedicine in Chile, from less than 1 percent pre-pandemic to about 25 percent in 2020.3
Only four types of medical devices are subject to mandatory registration with Chile's National Drug Agency (ANAMED in Spanish), a dependency of the Institute of Public Health (ISP in Spanish): contraceptives, gloves, needles, and syringes. Other medical equipment and devices do not need regulatory registration. X-ray equipment and nuclear medicine equipment needs special authorization from other government agencies, but not from ISP-ANAMED.3,8,9
Chile's mostly unregulated medical product market makes this country the only one in Latin America where foreign manufacturers can quickly sell their products after finding a distributor partner that can act as their importer of record (IOR). Chilean distributor partners are usually knowledgeable, experienced, and have good sales networks with national coverage.8 Local distributor partners, which are concentrated in Santiago de Chile, the country's capital, generally have good contacts in the public and private sectors. The Chilean market highly values after-sale service and support.3 Foreign manufacturers should seek well-established distributors like CEGAMED, Socofar, and Reutter. Generally, these distributors prefer to represent well-known foreign brands. Due to the limited market size, most Chilean distributors demand exclusivity. Expo Hospital is the annual trade show that foreign manufacturers should attend to exhibit their medical innovations and meet potential distribution partners.
Chile's open medical product sector also makes it a unique market-regulated country where patients and physicians prefer American or European medical equipment and devices with voluntary registration at ISP-ANAMED over Chinese, Indian, Turkish, or Pakistani imports that typically bypass ISP-ANAMED and don't have an established brand name or reputation.
Since the implementation of the U.S.-Chile Free Trade Agreement in 2004, medical equipment and devices enter Chile duty-free, provided that the IOR presents a U.S. certificate of origin to Chilean customs. Imports to Chile from foreign countries, as well as domestic products, are subject to Chile's 19 percent VAT (value added tax).3
Chile's private healthcare market is currently relatively small, competitive, and provides the most potential for manufacturers of state-of-the-art medical technologies. However, it is growing as the purchasing power of the Chilean population keeps increasing. The primary purchasers in the private market are hospitals and clinics, which usually purchase medical equipment, devices, and supplies directly from local suppliers through private procurement processes. The public and private markets are predominantly price driven. The private market is easier to access and always looking to provide the best quality care for the best price. Many private healthcare providers are entirely dependent on foreign companies to offer innovative solutions.10
How To Navigate The Upcoming Bill That May Impact Medical Device Regulation
The Chilean Congress is currently considering a 2015 bill, known as Ley de Farmacos II, that may impose additional regulations on pharmaceuticals and medical devices in the country. The Chilean Medical Device Association (ADIMECH) considers that this new law could impact the health sector due to the work required to regulate the existing high volume of medical devices on the local market and the accelerated level of innovation in the pharmaceutical and medical device industries. The bill proposes regulatory registration for all new devices, a six-month registration process for all medical device suppliers, and a 12-month quality accreditation period for all existing medical devices in the Chilean market. If the bill passes, the local industry projects about a 7 percent increase in the cost of medical devices and the quality accreditation on existing devices to take about five years. 3,8,10,11,12
If you are a U.S. or European medical equipment and device manufacturer, voluntarily register your products in Chile. You will have to submit ISP-ANAMED form ANDID 001 (with its corresponding technical and legal documents) titled Revisión De Los Antecedentes Que Acompañan Al Dispositivo Médico (loosely translated as "Background Assessment Certificate"). This voluntary registration will increase your appeal to purchasers and your reputation in the local market and prepare you for when the Farmacos II legislation takes effect, which may require that registration for all new and existing devices. The timeline for ISP-ANAMED to process form ANDID-001 is about 75 working days from the date of submission, and the official filing fee is about $350.13
Chile classifies medical devices into four classes:14
- Class I (low risk): Examples are cholesterol and uric acid test systems, surgical instruments, bandages, surgical cameras, electric operating tables, patient scales.
- Class II (low-moderate risk): Examples are pregnancy self-tests, electric hospital beds, surgical lamps, surgical masks.
- Class III (high-moderate risk): Examples are blood glucose self-tests, ECG and X-ray units, syringes, condoms, and contact lenses.
- Class IV (high risk): Examples are HIV blood donor screening test systems, stents, intraocular lenses (IOLs), defibrillators, and pacemakers.
To voluntarily register foreign medical equipment or devices at Chile's ISP-ANAMED, you must first find an IOR and have this entity – or a regulatory affairs consultant acting on behalf of the manufacturer – complete a short ISP-ANAMED form and attach some standard documents, including:13
- A Free Sales Certificate or export certificate from the manufacturer's country of origin.
- Quality system certifications (medical device and manufacturing plant).
- A letter authorizing a local entity in Chile to be the manufacturer's distributor and IOR.
- A risk management report (Class III and IV).
- A biocompatibility report (Class III and IV).
- A declaration of sterility, method, and validation certificate (applicable for sterile medical devices).
- A certification of electrical safety according to IEC 60601 (if applicable).
- The implant card (if applicable).
- A letter stating the manufacturer's commitment to providing local post-sale technical support, including replacement parts.
- Labels (originals and their Spanish translations).
- The instructions for use (IFU).
- Any promotional material.
- The qualitative and quantitative composition (if applicable).
Chile elected a new president in 2018. His healthcare plan includes creating a network of high-quality family outpatient centers throughout the country and building 30 new modern hospitals, thus creating 7,000 new beds over the next six to eight years.3 The critical challenge for Chilean healthcare providers is not purchasing equipment but increasing the productivity of their hospitals and services. Specific medical devices aimed at improving productivity within hospitals are in great need.10
MINSAL generally conducts procurement in Chile's public sector through MercadoPúblico.cl – the government procurement website that lists the majority of tenders for procurement opportunities. The U.S. Commercial Service, International Trade Administration recommends that U.S. manufacturers appoint a local representative with experience selling to the public sector. SNSS also encourages public hospitals and municipal primary healthcare centers to make many of their purchases. Direct procurement in public hospitals and primary healthcare centers mainly occurs through CENABAST, Chile's public central purchasing agency. CENABAST is in charge of the procurement and distribution of medications, medical supplies, and goods. Should CENABAST not have a particular product available, Chilean hospitals may place tenders on MercadoPublico.cl. Public hospitals do not import products directly but work with locally established entities.10
The year 2021 provides specific opportunities for foreign providers of medical equipment and devices. Chile will have a new government in 2022, and the current government will have to start building the remaining 20-plus new hospitals (within a $10 billion investment plan). This massive investment plan will be completed before 2025.10
Smoking rates are high in Chile, alcohol consumption is rising, and cancer mortality is high compared to cancer incidence. However, Chile's most significant health challenge is obesity, with approximately 34.4 percent of adults categorized as obese and 44.5 percent of children classified as overweight or obese. Another urgent challenge is its aging population, with the percentage of people over 65 expected to reach 24.9 percent by 2050.10
Chile is a country with a mixed healthcare system, with state-regulated private and public healthcare service providers. Chile's healthcare system is famous in the region for being reasonably well-functioning, well-organized, and effectively governed. The medical equipment and device market yields excellent business opportunities, given that Chile imports almost all the medical products it needs. U.S. state-of-the-art medical technology has good market potential in Chile, especially in the private sector. Therefore, unique products (those that have no easy or cheap copy from China) have the best opportunity to enter the Chilean market. Reputable private hospitals and key opinion leaders in Chile prefer to deal with established American or European manufacturers that have gone through voluntary registration at ISP-ANAMED. Although registration of most medical devices is not a requirement in Chile, most purchasers require certification under international standards (i.e., EU CE marking and U.S. FDA). Buyers in Chile usually ask for quality certifications, such as ISO 13485/2003 and good manufacturing practices (GMP) certifications. The local medical device industry expects the Chilean Congress to pass a new medical equipment and device regulation that will likely align Chile's regulatory requirements with those of the other Pacific Alliance and OECD countries in Latin America (e.g., Mexico, Colombia, Peru). Due to the clarity of its business environment, the Chilean healthcare sector is attractive for companies investing for the first time in Latin America to gain experience in the region and as a base from which to expand to other markets in the area.
- Hospitals Reported That the COVID-19 Pandemic Has Significantly Strained Health Care Delivery. Retrieved from https://oig.hhs.gov/oei/reports/OEI-09-21-00140.pdf.
- The University of Oxford. Statistics and Research Coronavirus (COVID-19) Vaccinations. Retrieved from https://ourworldindata.org/covid-vaccinations.
- Chile - Country Commercial Guide International Trade Administration. Retrieved from https://www.trade.gov/knowledge-product/chile-healthcare.
- Chile signs up as first OECD member in South America. Retrieved from https://www.oecd.org/chile/chilesignsupasfirstoecdmemberinsouthamerica.htm.
- United Nations Development Programme. Human Development Report 2020. New York; 2020. Retrieved from http://hdr.undp.org/sites/default/files/hdr2020.pdf.
- Per capita spending on health in selected countries of Latin America in 2019, by type (in U.S. dollars). Retrieved from https://www.statista.com/statistics/787473/per-capita-health-expenditure-latin-america-country-type/.
- World Health Organization. Profile of the Health Service System: Chile. Retrieved from https://www.who.int/ageing/projects/intra/phase_one/alc_intra1_cp_chile.pdf?ua=1.
- Export.gov. Export.gov helping Us companies export [Internet]. 2019. Retrieved from https://2016.export.gov/industry/health/healthcareresourceguide/eg_main_108572.asp.
- Instituto de Salud Pública de Chile. Importación de Dispositivos Médicos bajo control sanitario. Retrieved from https://www.ispch.cl/wp-content/uploads/2021/01/3007-2020-OP-1.pdf.
- Market Studies Opportunities for the Dutch Health Sector in Chile. Retrieved from https://www.rvo.nl/sites/default/files/2019/11/Report-Chile-Healthsector-November-2019.pdf.
- Senado de Chile. Ley de Fármacos 2: en su recta final. Retrieved from https://www.senado.cl/ley-de-farmacos-2-en-su-recta-final/senado/2021-01-22/101018.html.
- Velasquez P. Proyecto de Ley “Fármacos II” buscaría regulación general para el acceso a los medicamentos. Retrieved from https://consultorsalud.com/proyecto-de-ley-regulacion-medicamentos/.
- Instituto de Salud Pública. Retrieved from https://www.ispch.cl/prestacion/9100002/.
- Instituto de Salud Pública. Retrieved from https://www.ispch.cl/sites/default/files/1_Guia_para_la_Adquisicion_de_Dispositivos_Medicos_en_las_Instituciones_de_Salud.pdf.
About The Author:
Julio G. Martinez-Clark is co-founder and CEO of bioaccess, a market access consultancy that works with medical device companies to help them do early-feasibility clinical trials and commercialize their innovations in Latin America. Julio is also the host of the LATAM Medtech Leaders podcast: A weekly conversation with Medtech leaders who have succeeded in Latin America. He serves as an advisory board member for Stetson University's Leading Disruptive Innovation program. He has a bachelor's degree in electronics engineering and a master's degree in business administration.