Following the reform of the drug and device approval system introduced by the State Council in August 2015,(1) the China Food and Drug Administration (CFDA) has finally unveiled its implementation policies regarding improvements to the drug approval system with the November 11 2015 release of the Circular Concerning Several Policies on Drug Registration Review and Approval (CFDA Circular 2015/230) and several draft implementation measures. These documents set the stage for the transformation of China's drug approval system and include the following changes.

Pilot marketing authorisation holder system

The existing legal framework permits only drug manufacturers to obtain regulatory approvals and has been perceived as an obstacle to innovation. Research and development (R&D) companies must commit to a substantial investment in manufacturing facilities in order to commercialise their assets. To create a more supportive regulatory framework for innovation, the Standing Committee of the National People's Congress authorised the State Council to roll out a three-year pilot programme of the marketing authorisation holder system in 10 provinces,(2) effective as of December 1 2015. Under the CFDA's proposed pilot programme, domestic drug manufacturers, domestic R&D institutions and research personnel of Chinese nationality can obtain regulatory approvals to commercialise pharmaceuticals in principle(3) and completely outsource the actual manufacture to contract manufacturing organisations. Nevertheless, marketing authorisation holder applicants must arrange for insurance or financial guarantee to cover product liabilities.

Expanded fast-track approval pathway

To date, the fast-track approval pathway has been mainly available for drugs that have not been marketed anywhere in the world, or those addressing critical or unmet medical needs. The State Council has directed the CFDA to admit more types of drug to the fast-track approval pathway, including:

  • paediatric and geriatric drugs;
  • drugs treating China-prevalent diseases;
  • drugs sponsored by national science and technology grants;
  • foreign innovative drugs to be manufactured locally in China;
  • innovative drugs using advanced technology or innovative treatment methods, or having distinctive clinical benefits; and
  • drugs manufactured at a US or EU-qualified facility and under review by the US Food and Drug Administration or European Medicines Agency for concurrent marketing authorisations.

The clinical trial applications and marketing authorisations for drugs addressing urgent clinical needs will also be accelerated. Under this condition, clinical trial applications submitted three years before the date of patent expiration and marketing authorisation applications submitted one year before the date of patent expiration will be permitted.

Revised classification of new drugs and generics

According to the State Council's directive, 'new drugs' refer to pharmaceutical products that have never been marketed anywhere in the world or that represent improved forms of new drugs. 'Generics' refer to pharmaceutical products that are consistent with the quality and efficacy of reference drugs (or originator drugs). These definitions are very different from the existing definitions under the CFDA Drug Registration Rules. The CFDA plans to introduce a new classification system that adopts the State Council's definitions and will classify pharmaceutical products that have been marketed outside China, but not in China, as generics.

Simplified approval process for clinical trials

The CFDA will adopt a one-time umbrella approval procedure – rather than a phase-by-phase approval – for new drug clinical trial applications. Further, as of December 1 2015, the bioequivalent study of generic drugs will need to undergo only a recordation filing with the CFDA. Under the CFDA-proposed regulatory framework for the recordation filing, the applicant must obtain ethics committee approval and sign a clinical study agreement with the clinical site before filing the bioequivalent study. The CFDA will designate an information platform to record the bioequivalent study. This platform will generate a filing number once the applicant has submitted the required materials; the applicant can launch the bioequivalent study only after obtaining the filing number. If there is any change to the originally recorded bioequivalent study, the applicant must suspend the original study, enter the changes in the online recordation platform to obtain a new filing number and only re-launch the study thereafter.

Comment

These initiatives illustrate the government's clear determination to stimulate innovation and reduce time to market for new drugs. Pharmaceutical companies should adapt their business model to the new regulatory landscape – for example, by:

  • exploring early-phase concurrent drug development opportunities for innovative drugs in and outside China;
  • refining the product portfolio to reflect disease demographics and public health priorities in China;
  • revisiting the marketing authorisation holder designation for innovative drugs; and
  • leveraging regulatory flexibilities to acquire or spin off assets.

Further, foreign pharmaceutical manufacturers should assess the feasibility of localising the research, development and manufacture of their innovative assets in China, as the degree of localisation may also affect the time to market under the new drug approval system.

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 State Council Opinions Concerning the Reform of the Review and Approval System for Drugs and Medical Devices (Guo Fa Notice 2015/44, August 18 2015); for further details please see www.ropesgray.com/newsroom/alerts/2015/August/Chinas-State-Council-Announces-Reform-on-the-Drug-and-Device-Approval-System.aspx.

(2) Beijing City, Tianjin City, Hebei Province, Shanghai City, Jiangsu Province, Zhejiang Province, Fujian Province, Shandong Province, Guangdong Province and Sichuan Province.

(3) Narcotic, psychopathic, toxic, radioactive, biological prophylactic and blood products will be excluded from the pilot programme.

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