China announces major changes to its drug regulatory regime

Following years of discussion and debate, the 12th Session of the Standing Committee of China's National People's Congress passed the Amendment of the Drug Administration Law of the People’s Republic of China on 26 August 2019 (the "Amendment").

Experts are calling this long-awaited Amendment, which comes into force on 1 December 2019, the second major systematic and structural amendment to China's drug-administration framework since the implementation of the last significant amendment in 2001.

The recent amendment has been in the works since 2015 when the Chinese government proposed several reforms of the nation's drug-regulatory regimes. In particular, on 8 October 2017, China’s State Council issued the Opinions on Deepening Regulatory Reforms to Encourage Drug and Medical Device Innovation, which proposed fundamental changes to the drug regulatory systems, including the simplification of clinical trials, implementing the Drug Marketing Administration Holder (MAH) system, establishing a patent-linkage regime and perfecting the drug-registration process.

During the discussions leading up to the adoption of the Amendment, many potential reforms were debated. The Amendment was therefore repeatedly amended, discussed and debated for years before being announced. As a result, the industry had high hopes that the final legislation would include all of the previously proposed reforms. Most analysts view the Amendment an acceptable compromise, implementing the majority of the most important reforms while keeping other proposals out.

The Amendment boasts a total of 155 articles, including 51 new articles, four new chapters (Chapter II Drug Research and Registration, Chapter III MAH, Chapter VII Drug Post-Marketing Management and Chapter IX Drug Storage and Supplement), and significant changes to the law's previous articles.

The key changes in the Amendment include:

• Implementing a nation-wide MAH regime. Based on the experience gained in the past four-year pilot regime in specific areas, the Amendment launches the national MAH regime, which includes all qualified applicants in and out of the territory of mainland China. For foreign Marketing Administration Holders, the changes make it necessary to designate a domestic legal person to perform the relevant obligations of the MAH and share joint responsibility with it.

• Establishing a drug traceability system. All information generated in drug research, manufacturing, distribution and usage is required to be true, accurate and traceable. The Chinese National Medical Products Administration (NMPA) will develop applicable uniform drug-information traceability standards and specifications.

• Setting up a pharmacovigilance system. The pharmacovigilance system monitors, identifies, evaluates and controls adverse drug reactions (ADR) and other harmful reactions related to drugs. MAH, medical institutions and any parties involved are required to contribute to the establishment of such a system.

• Simplifying the clinical trial approval regime. Clinical trial applications will be deemed approved if the authority does not provide comments within 60 working days after accepting the application. Bioequivalence-experiment applications and medical institutions interested in conducting clinical trials are subject to a record-filing system.

• Perfecting the drug registration system. Active ingredients, excipients, packaging materials and containers making direct contact with a drug can be approved during the drug-registration application. In addition, the authority can approve (with conditions) drugs for life-threatening diseases previously lacking effective treatments and drugs urgently needed for public-health reasons on the grounds that existing clinical-trial data should be able to indicate or predict their clinical values.

• Cancelling the certifying processes of the Good Manufacturing Practice (GMP) and the Good Supply Practice (GSP) certification. Although the certification processes will be cancelled, GMP and GSP requirements still broadly apply.

• Clarifying the applicable scope of online drug sales. Vaccine, blood products, narcotics, psychotropic substances, medicinal toxic drugs, radioactive pharmaceuticals and pharmaceutical precursor chemicals will be prohibited from online distribution.

• Strengthening the drug post-marketing management obligation. Every MAH must conduct post-market research and evaluation on its products, monitor ADRs, control all risks, recall unqualified products and make timely reports to the authority.

• Ensuring the drug supply. A drug-supply monitoring system will be established for the storage and supplements of drugs that face shortages. Drugs that are in short supply could enjoy a green (expedited) channel in the registration process. The Amendment would allow authorities to intervene in the manufacturing, pricing and export of these limited-supply products.

• Increasing punishment for non-compliance. The Amendment further defines and aggravates punishment for illegal acts. For example, the fine for manufacturing and distributing unapproved drugs has been changed from two-to-five times the value of the affected product to 15-to-30 times. In addition to regular punishment, a MAH guilty of non-compliance can be prohibited from registering new drugs for ten years. Individuals in charge or found to be directly liable could be subject to life-long industry bans and detentions of five-to-fifteen days.

In light of the significance and complexity of these changes, CMS is now preparing a series of articles for Law-Now, which will clarify the details and impact of the amended regulations.

In the meantime, investors in China's pharmaceutical industry can obtain more information on this eAlert and the nation's Drug Administration Law by contacting your usual CMS source or one of the following local CMS experts: