Katherine Wang July 6 2016 China announces detailed pilot plan for drug marketing authorisation holder system Ropes & Gray LLP | Healthcare & Life Sciences - China Katherine Wang Healthcare & Life Sciences IntroductionEligibilityTransfersQuality assuranceCommentIntroductionOn May 26 2016 China's State Council announced a detailed pilot plan for the drugs marketing authorisation holder system, which will be rolled out in 10 regions.(1) The three-year pilot programme(2) was initiated in November 2015 by the National People's Congress Standing Committee as an important reform measure to encourage drug innovation (for further details please see "CFDA announces implementation scheme to improve drug approval system"). According to the plan, domestic drug research and development (R&D) institutions and individuals in the pilot regions can apply for and hold drug product licences. Eligible parties can now commercialise their drug assets without having to become drug manufacturers themselves. As marketing authorisation holders, they can outsource the actual manufacturing to contractors.EligibilityDrugsDrugs eligible for the pilot programme are:new drugs approved after the plan's implementation;generic drugs approved as Category 3 or 4 drugs under the new chemical drug classification system (for further details please see "CFDA launches new classification system for registration of chemical drugs");previously approved generics that have passed equivalence assessments against originator drugs; andpreviously approved drugs whose licences were held by drug manufacturers originally located within the pilot regions that moved due to corporate mergers or other reasons.Narcotic, psychopathic, toxic, radioactive, biological prophylactic and blood products are excluded from the pilot programme.Marketing authorisation holdersTo be eligible as marketing authorisation holders:R&D companies must be incorporated in a pilot region; andR&D individuals must be Chinese citizens working in a pilot region.Both R&D companies and individuals must have the capability to assume drug quality and safety-related liabilities through the provision of guarantees or the purchase of insurance.Contract manufacturersMarketing authorisation holders may engage contract manufacturers, provided that the contractors are licensed and good manufacturing practice-certified and located in a pilot region. The marketing authorisation holder and the contractors can be located in different pilot regions, in which case the plan requires the local food and drug administrations (FDAs) of their respective regions to exercise joint supervision.TransfersMarketing authorisation holders may apply to transfer the marketing authorisation to another eligible holder or to change the designated contract manufacturer. Such applications can be submitted either when the drug licence application in question is pending or after the drug has been approved. Applications must first be submitted to relevant provincial FDAs, which will relay the applications to the China FDA for final review and approval.Quality assuranceThe plan requires marketing authorisation holders to establish quality assurance and pharmacovigilance systems to ensure post-market drug safety and quality. Patients who suffer physical injuries caused by the quality of approved drugs can seek compensation from the relevant marketing authorisation holders, drug manufacturers or drug distributors.CommentThe marketing authorisation holder system demonstrates the strong momentum of China's innovation in the pharmaceuticals sector. Both local and foreign players should consider leveraging the regulatory flexibility of the pilot programme to acquire or spin-off assets and utilise contract manufacturing arrangements. Contract manufacturers are also advised to revisit potential opportunities in the Chinese market.For further information on this topic please contact Katherine Wang at Ropes & Gray LLP by telephone (+86 21 6157 5200) or email (k[email protected]). The Ropes & Gray LLP website can be accessed at www.ropesgray.com.Endnotes(1) Beijing City, Tianjin City, Hebei Province, Shanghai City, Jiangsu Province, Zhejiang Province, Fujian Province, Shandong Province, Guangdong Province and Sichuan Province.(2) According to the plan, the pilot programme ends on November 4 2018. It is yet to be announced whether the marketing authorisation holder system will be formally implemented nationwide after the three-year pilot.