The key facts about regulatory reforms in Chinese pharma. Prepared in association with Fangda Partners, one of China’s most prestigious and well-regarded law firms. This is an extract from The Pharma Legal Handbook: China, which can be purchased here for USD 99.

1. Are there proposals for reform or significant change to the healthcare system?

There have been tremendous regulatory reforms in the pharmaceutical industry in the past three years, highlights of these reforms include:

• Marketing authorization system. The State Council issued the Pilot Plan for the Drug Marketing Authorization Holder System on May 26, 2016, which provides a detailed pilot plan for the marketing authorization holder system, or MAH System, for drugs in 10 provinces in China. Under the MAH System, domestic drug research and development institutions and individuals in the pilot regions are eligible to be holders of drug registrations without having to become drug manufacturers. The marketing authorization holders may engage contract manufacturers for manufacturing, provided that the contract manufacturers are licensed and GMP-certified, and are also located within the pilot regions. Drugs that qualify for the MAH System are: (1) new drugs (including Category 1 and 2 drugs under the Drug Reclassification Plan) approved after the implementation of the MAH System; (2) generic drugs approved as Category 3 or 4 drugs under the Drug Reclassification Plan; (3) previously approved generics that have passed equivalence assessments against original drugs; and (4) previously approved drugs whose licenses were held by drug manufacturers originally located within the pilot regions, but which have moved out of the pilot regions due to corporate mergers or other reasons.
• Two-invoice system for the distribution of drugs. On 12 December 2016, the Chinese government issued the Opinions on Implementation of Two-Invoice System in Drug Procurement by Public Medical Institutions (for Trial Implementation), the two-invoice system generally requires a drug manufacturer to only issue one invoice to its distributor followed by the distributor issuing a second invoice to the end customer hospital. Only one distributor is permitted to distribute drug products between the manufacturer and the hospital. Exceptions for the Two-invoice System are granted for (i) exclusive distributors of imported drugs, or intra-company transfers (such as between a distributor and its subsidiaries); (ii) emergency circumstances; (iii) distribution of specially administrated drugs (such as anesthetic); and (iv) hospitals located in remote and rural areas.
• Fast-track approval system for the marketing of new drugs. A fast track clinical trial approval or drug registration pathway initiated in 2015 will be available for the following drugs:
• drugs with distinctive clinical benefits: (1) registration of innovative drugs not sold within or outside China; (2) registration of innovative drug transferred to be manufactured locally in China; (3) registration of drugs using advanced technology, innovative treatment methods, or having distinctive treatment advantages; (4) CTAs for drugs with patent expiry within three years, and manufacturing authorization applications for drugs with patent expiry within one year; (5) concurrent applications for new drug clinical trials which are already approved in the United States or European Union, or concurrent drug registration applications for drugs which have applied to the competent drug approval authorities for marketing authorization and passed such authorities’ onsite inspections in the United States or European Union and are manufactured using the same production line in China; (6) traditional Chinese medicines (including ethnic medicines) with clear position in prevention and treatment of serious diseases; and (7) registration of new drugs listed in national major science and technology projects or national key research and development plans, or that are clinically trialed and designated by the National Clinical Medical Research Center; and
  • drugs with distinctive clinical benefits for the prevention and treatment of the following diseases: HIV, phthisis, viral hepatitis, orphan diseases, cancer, children’s diseases, and generic and prevalent diseases in elders.
• Innovation Opinion. In October 2017, China announced the landmark legislation – the Opinion on Strengthening the Reform of the Drug and Medical Device Review and Approval Process to Encourage Drug and Medical Device Innovation (“Innovation Opinion”), which includes 36 provisions and is deemed to be the blueprint for future reform of China’s drug and device regulatory system. Following the promulgation of the Innovation Opinion, NMPA has issued several implementing regulations (including draft regulations for public comment) to specify the rules in the Innovation Opinion. Major reforms proposed in the Innovation Opinion cover include: (i) reform of clinical trial administrative system; (ii) accelerating review and approval process; (iii) patent linkage and regulatory data protection system; and (iv) expansion of the marketing authorization holder (“MAH”) program.

2. When are they likely to come into force?

Some of the reforms proposed by the Innovation Opinion have already come into force, for example:

• The establishment of a filing system for the clinical trial site (previously, all sites must go through a stringent approval process to host clinical trials).
• The establishment of a filing system for clinical trial application replacing the previous approval system. NMPA has 60 business days to conduct its review for new drug clinical trial applications, and then the application will be deemed approved if no objection or question is raised.
• Clinical data generated in foreign trials can be used to support a marketing authorization application in China.

Some of the proposed reforms are still pending and will be enforced when related implementing rules are promulgated, including the patent linkage and regulatory data protection system and the expansion of the MAH system.