Recently, the 13th National People’s Congress (“NPC”) of the People’s Republic of China passed the Programme of Reforming the Institutions of the State Council (“Programme”) on the 17 March 2018. According to the Programme, some of the institutions under the State Council will be reorganised. This includes the China Food and Drug Administration (“CFDA”) and the National Health and Family Planning Commission (“NHFPC”), which are key regulatory authorities for the life sciences and healthcare industries. Both authorities will be combined with other authorities to create giant, new regulatory authorities.

We have summarised the key reorganisation plans in the life sciences and healthcare areas below.

  • The National Health Commission (“NHC”) will be established

The NHC will merge the functions of: the NHFPC; the Office of the Leading Group for Deepening the Reform of Medical and Health Regime of the State Council; the China National Working Commission on Ageing; and certain functions of the Ministry of Industry and Information Technology and the State Administration of Work Safety. The State Administration of Traditional Chinese Medicine will be administrated by the NHC. The NHFPC will not exist after the merger.

According to the Clarification of the Programme (“Clarification”), which has been submitted to the NPC for discussion, the NHC will be in charge of: designing national health policies; co-ordinating the promotion of deeper reform in the medical and healthcare regime; organising the design of the national essential medicine regime; supervising and administrating public health, medical services and responses to health emergencies; enforcing family planning policy; designing measures for the aging population and policies for combining medical and pension services.

  • The State Administration for Market Supervision (“SAMS”) will be established

The SAMS will merge the functions of: the State Administration for Industry & Commerce; the General Administration of Quality Supervision, Inspection and Quarantine; the CFDA; the anti-monopoly and price supervision functions of the National Development and Reform Commission (“NDRC”); the Ministry of Commerce; and the Anti-Monopoly Committee under the State Council. 

According to the Clarification, the SAMS will be in charge of: supervising and regulating the market; commercial registering; enforcing anti-monopoly law; administrating product liabilities of industry products, food safety, and the safety of special equipment; inspection and quarantine etc. A China Drug Administration (“CDA”) will be established under the SAMS to regulate medicines. The CDA will set up branches in provincial level areas.  The SAMS’ branches under the provincial level will take the responsibility of drug regulation.

  • The State Medical Insurance Bureau (“SMIB”) will be established

The SMIB will merge the basic medical insurance and maternity insurance functions of: the Ministry of the Human Resources and Social Security; the Rural Cooperative Medical Service function of the NHFPC; the drug and medical service pricing function of the NDRC; and the medical assistance function of the Ministry of Civil Affairs.

According to the Clarification, the SMIB will be in charge of: designing and implementing the policies, plans and standards of medical insurance, maternity insurance and medical assistance etc.; supervising and administrating the medical insurance foundation; designing and regulating the prices of medicines and medical services; designing and implementing the bidding and purchasing policies for medicines and medical supplies etc.

The detailed measures of such reorganisation are expected to be issued soon. Currently, it is difficult to predict what influence such reorganisation will have on the current regulatory regime of the life sciences and healthcare sectors. It is expected that the new authorities may restructure the regulatory regime in a more organised and efficient way.

During the reorganisation process, it may be a difficult for business entities to identify the competent regulatory authority. This will continue until the functions of every department in each authority are clarified. CMS will keep a close eye on the process and provide timely updates.