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China Releases Reform Policies to Encourage Innovation of Pharma and Medical Devices

2017.10.13 YANG, Fan、MA, Feng (Jason)、LIU, Yiyi

The China government continues its efforts to further reform of the review and approval system for pharmaceuticals and medical devices, as well as to encourage innovation in these industries. On October 8, 2017, the State Council released Opinions Concerning Furthering the Reform of the Review and Approval System and Encouraging Innovation in Pharmaceuticals and Medical Devices (the “Policies”) based on drafts published earlier this year.  The Policies aim to upgrade and optimize industrial infrastructures, to promote innovation in pharmaceuticals and medical devices, to enhance competitiveness of the industries of pharmaceuticals and medical technology and to meet the needs of the public for clinical uses of pharmaceuticals and medical devices. The Policies focus on (i) reforming administration of clinical studies; (ii) expediting the review and approval process for pharmaceuticals and medical devices; (iii) promoting innovation as well as production of generic products; (iv) strengthening regulatory oversight of the pharmaceutical and medical devices industries throughout the product lifecycle and (v) improving technical support for the review and approval process of pharmaceuticals and medical devices. The key measures include deregulating clinical studies, protecting intellectual property and data, and defining the responsibilities of the Marketing Authorization Holders (the “MAH”). 

I. Reforming administration of clinical studies 

  • The Drafts proposed that clinical study sites should no longer be required to be certified and approved, but rather implemented by a simple filing process. The Policies uphold this policy and also encourage hospitals and medical academic institutions to conduct clinical studies. Foreign companies and institutions are permitted to conduct clinical studies in China as part of multi-regional clinical trials (MRCT). 

  • Ethics committee approvals are a condition of applying for the Clinical Trial Approval. Reviewers are required to communicate with applicants and give comments before they accept applications. Once accepted, if the reviewers fail to deny approval within the given deadline, applicants will be permitted to conduct clinical trials. However, it is not clear yet how deadlines will be set.  

II. Expediting the review and approval process for pharmaceuticals and medical devices

  • The Policies authorize accelerated approvals, with certain conditions, of drug and device products that are urgently needed. Orphan pharmaceuticals and devices may be exempted from clinical trials or be permitted to conduct simplified trials. Those products that have already been marketed in other countries may be approved by the CFDA with certain conditions and follow-up trials.

  • Registration of active ingredients, excipients (inactive ingredients), and packaging materials for pharmaceutical products will be approved along with the relevant pharmaceuticals, but no longer separately issued.  

III. Promoting innovation as well as encouraging production of generic products

  • China will set up a catalogue of marketed pharmaceuticals, including newly approved pharmaceuticals and generic drugs that have passed the consistent evaluations of quality and efficacy.   

  • The patent linkage system will be adopted. When filing drug registration applications, the applicant must disclose all patents that may be involved and their status, and inform patent holders. However, it remains highly uncertain whether such requirements will be strictly enforced. Further, the CFDA continues its review process in case of a pending law suit brought by a patent holder against the applicant. The CFDA may even approve the generic product if the lawsuit against the applicant is not concluded by the deadline. From the perspective of innovative drug manufacturers, such policies may raise concerns about patent enforcement in China.

  • Certain innovative pharmaceuticals may be selected for compensation with additional protections for the period of time required for clinical trials and regulatory reviews.

  • Undisclosed clinical data for certain products such as innovative pharmaceuticals, orphan pharmaceuticals and pediatric pharmaceuticals may be granted a protection period. During such period, no applications for the same product will be approved. The Policies are silent on how long the protection period may be.

  • China will continue to encourage production of generic products in order to increase public access to pharmaceuticals.

IV. Strengthening regulatory oversight of pharmaceuticals and medical devices throughout the product lifecycle 

  • The MAH system for pharmaceuticals and medical devices will be implemented in all provinces. Under the MAH system, it is no longer required that a drug or device approval holder possess GMP-certified manufacturing facilities. 

  • The Policies made clear that the MAH will be ultimately liable for a pharmaceutical or medical device for the product’s entire lifecycle -- including pre-clinical studies, clinical studies, manufacturing, distribution and adverse event reporting, and it will be responsible for the activities of third party contractors, such as CROs and CMOs.

V. Improving technical support for the review and approval process of pharmaceuticals and medical devices. 

  • The Policies emphasize the confidentiality obligations of reviewers. All officials involved in the review process must keep the technical information and clinical trial data strictly confidential. 

  • The enforcement against non-compliance with GCP, GMP and GSP will continue to be rigorous. It is clarified that the GCP compliance is supervised and enforced by the national CFDA. Provincial FDAs are responsible for enforcing GMP compliance and FDAs at the municipal level or county level responsible for enforcing GSP compliance. 

In addition, the Policies address the role of medical representatives in drug promotion, which has been heavily debated in the industry. According to the Policies, medical representatives can only provide academic information about pharmaceuticals and collect feedback from clinical use. They must not have any responsibility for the sales performance of pharmaceuticals. All academic promotional activities must be conducted openly and filed with relevant departments within medical institutions.

It should be expected that more detailed regulations and rules will be released for implementation purposes. For example, on October 10, 2017 the CFDA published, a few initiatives to reform the approval process for imported pharmaceuticals (the “Circular”). The highlights are:

(i) Previously, an MRCT in China could be approved by the CFDA only after the drug was in a Phase II or Phase III trial or had been approved in a foreign country. No such requirement will apply after the Circular, except for biological products for prevention purposes. It means that a Phase I trial may be conducted in China as part of the MRCT. 

(ii) The Circular permits applicants to apply for pharmaceutical approvals once the China portions of the MRCT are completed.

(iii) For clinical trial approval and drug approval purposes, it is no longer required that the product has been approved in a foreign country if the products are innovative chemical pharmaceuticals or innovative biologicals for treatment purposes. 

The Policies and follow-up regulations reflect the China government’s determination and efforts to reform the regulatory system for pharmaceuticals and medical devices. With these new policies, the Chinese government expects to see more pharmaceutical and medical device companies invest and engage in R&D activities, and to further improve the safety and quality of pharmaceuticals and medical devices in the China market. 

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