China’s new Amended Drug Administration Law is being enacted to strengthen and streamline its regulation of the pharmaceutical industry. The amended law seeks to address prominent problems in the pharmaceutical industry, such as counterfeit drugs, substandard drugs and high drug prices. Fangda Partners’ Josh Shin elaborates on China’s market authorization holder (MAH) system, which will make it easier to bring new drugs to market.
The Amended Drug Administration Law, scheduled to take effect on December 1, 2019, will modernize the pharmaceutical market by introducing a nationwide MAH-based drug approval system. The new system will make it easier for drug developers to bring new drugs to market. At the same time, it will increase their responsibility to ensure the safety of those drugs.
This MAH-based drug approval system will focus drug licensing on marketing approvals, as opposed to the current system’s production approvals. The aim is to encourage the development of innovative drugs by allowing drug researchers, research institutes and biotech companies with innovative technologies to market drugs by outsourcing production instead of requiring in-house manufacturing (which means substantial investment) as is currently required to bring a new drug to market.
While the new MAH system will make it easier to receive approvals to bring new drugs to market, the system will also place new requirements on MAHs. They will now be responsible for the safety, effectiveness, and quality of a drug across its entire life cycle. They will need to establish a quality assurance system over the whole drug development and production process, covering all aspects of preclinical research, clinical trials, production and distribution, post-marketing research, adverse reaction monitoring and reporting. Moreover, the MAH must be able to provide patient compensation for defective drugs. Meanwhile, for an overseas MAH, a domestic corporate legal person must be designated to fulfill the MAH’s obligations and assume joint and several liability with the MAH. However, it remains to be seen how the scope of such joint liability will be defined, especially when the domestic corporate legal person is not in the distribution chain of the relevant drugs.
Finally, the Amended Drug Administration Law sets out several measures supporting the introduction of an MAH-based approval system, in particular requiring medical institutions and drug license holders, manufacturers and distributors to establish drug tracking systems capable of reporting to the governmental authorities. China’s National Medical Products Administration (NMPA) will issue technical guidance with more details as well as establishing a dedicated collaboration platform to enable the government to develop a unified drug tracking system and standardized drug specifications.