Introduction

On March 4 2016 the China Food and Drug Administration (CFDA) formally launched a new classification system for chemical drugs, with the release of the Reform Scheme of the Classification System for Registration of Chemical Drugs.(1) The reform scheme is an important part of the general reform of the drug and device approval system that the State Council initiated in late 2015.(2) The reform scheme's new classification of small molecule drugs differs considerably from the old classification under the Drug Registration Rules.

New classification system

The reform scheme redefines new drugs and generics. Under the old Drug Registration Rules, 'new drugs' referred to drugs never marketed in China, even if they had been marketed outside of China. Under the new classification, 'new drugs' now refers only to:

  • new chemical entities that have never been marketed anywhere in the world; or
  • improved new forms of known chemical entities that have never been marketed anywhere in the world.

Domestic drugs that have been marketed outside of China, even if they have not been marketed in China, are now considered generic.

Imported drugs now fall into the separate Class 5 and continue to follow the existing registration pathway under the Drug Registration Rules. Below is an overview of the new classification system.

Click here to view the table.

Domestic drug manufacturers

The CFDA considers this reclassification to be in line with other major countries' drug regulatory philosophies.

While no significant changes are expected for the registration pathway of imported drugs, the new classification system is likely to affect China's domestic drug manufacturers in the following ways:

  • They will have more incentives to develop Class 1 new drugs, which may receive expedited review and more favourable standing in post-approval tendering and reimbursement.
  • They will more actively pursue Class 2 new drugs, focusing on new and improved drug forms with clear clinical value. The new drug status will also allow Class 2 drugs some regulatory exclusivity-period protection.
  • They will have more incentives to be the first to introduce high-quality Class 3 generics onto the Chinese market. Under the reform scheme, Class 3 drugs are not entitled to regulatory exclusivity-period protection. Nevertheless, applicants need only conduct bioequivalence studies against the originator drugs, instead of having to obtain a clinical trial authorisation and conduct full-scale clinical trials as new drugs. This will allow Class 3 drugs to go to market much quicker in order to compensate for the loss of regulatory exclusivity available for new drugs.

Comment

The ongoing drug approval reform may transform the competitive landscape for pharmaceutical companies in China. The government is demonstrating a clear resolution to foster indigenous innovation and improve the quality of domestic players. It is important for firms to stay informed of the changing policies and adapt their market-entry strategies accordingly.

For further information on this topic please contact Katherine Wang at Ropes & Gray LLP by telephone (+86 21 6157 5200) or email (katherine.wang@ropesgray.com). The Ropes & Gray LLP website can be accessed at  www.ropesgray.com.

Endnotes

(1) The initial draft of the reform scheme was announced for public comments on November 6 2015.

(2) For further details please see "CFDA announces implementation scheme to improve drug approval system".

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