BIS Should Issue Entity List Guidance for Medical Device Exports to Hospitals, Industry Official Says
The Bureau of Industry and Security should clarify that certain hospitals affiliated with entries on the Entity Listed are not subject to Entity list restrictions, said Tory Tibor, global head of trade compliance for medical device company Olympus. Tibor said the clarification would help address confusion among third parties, including forwarders, about what types of entities are captured by Entity List controls.
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“It's kind of a sore topic for a lot of folks within the medical device space,” Tibor said during a recent interview. He first mentioned the issue, which he said has been “going on for years,” in a November presentation to the Commerce Department’s Materials and Equipment Technical Advisory Committee (METAC) meeting. He said he hopes BIS will soon issue more guidance, which could not only speed up exports but also help reduce patient safety issues caused by exporting delays. “BIS has been very supportive once they end up figuring out what our challenges are,” he said. “The more we raise it, the faster hopefully we'll get a fix.”
Although BIS has issued specific guidance saying that hospitals and medical centers owned by the India’s Department of Atomic Energy -- including the Bhabha Atomic Research Centre (BARC), which is on the Entity List -- aren’t subject to the list’s licensing requirements, Tibor said the agency should issue more general guidance for hospitals in other countries. Tibor said third parties, including freight forwarders and banks, are sometimes reluctant to move forward with exports without explicit approval from BIS for hospitals owned by entities on the Entity List, even though they aren’t subject to the same restrictions. Tibor specifically pointed to China’s University of Electronic Science and Technology and Sichuan University, which are on the list but also own hospitals.
Betty Lee, a BIS official and METAC’s designated federal officer, said during the November meeting that companies can always submit a license application for an export to a hospital if they are unsure if a license is required. She said BIS would normally issue an RWA, or “return without action,” for those applications, because those hospitals typically don’t need a license.
But Tibor said third parties don’t feel comfortable processing an export with only an RWA, which BIS sometimes issues for applications that are incomplete or don’t have accurate information. “They actually want to see a license approval, which we obviously can't get in some cases,” Tibor said. “We don't have anything to prove to all these other third parties like banks, like freight forwarders, like Chinese customs brokers or distributors, that we can legally do business.”
BIS should issue guidance to clarify that “all hospitals and doctors” associated with certain Entity List entries aren't subject to the same license requirements, Tibor said. This would give companies more comfort that they won’t be penalized for their export, he said. “I think that we’re just looking, at least in the medical device space, for a little bit more consistency,” he said. “Especially if we're treating BARC differently than how we’re treating many of these Chinese hospitals.”
Not only can more guidance reduce time spent by medical companies applying for licenses, but it may also encourage firms to proceed with the export, Tibor said. He also said clear guidance can reduce patient safety problems by helping companies more quickly send replacement parts for medical devices.
“There may be extensive delays of 30 to 60 days before we can otherwise get in in some cases to fulfill these part requests,” Tibor said. “What our practice is doing on the export compliance side is actually hindering patient safety overall." A Commerce spokesperson declined to comment.
Tibor also said the medical device industry struggles with “inconsistent” export classifications among Wassenaar Arrangement members. While the U.S., Australia and others exempt certain medical exports from license restrictions if they are used for medical end-uses, others don’t, including the European Union and Singapore. He said this has led to inconsistent licensing policies among countries for a variety of items, including Santovac pump oil used in MRIs, spectacle frames containing hafnium and pathology microscopes. “Those are a couple of discrepancies that are constantly a pain point,” Tibor said.
BIS can help urge other Wassenaar member countries to adopt similar exemptions and “hopefully get some carve-outs for our products,” he said. This would be especially helpful for companies with operations in the EU, which sometimes must meet additional license requirements than if they were exporting the same product from the U.S. “It's just kind of this strange place where the EU is actually quite a bit more conservative than the U.S. and Australia,” Tibor said.