China’s top 10 developments over the last 12 months and the coming year: The new Biosecurity Law to be expanded and online medical treatment to be regulated
We look back to the top ten developments over the last 12 months in the life sciences and healthcare sector, and towards the future with our top ten predictions for the coming year for businesses operating in China.
Last year saw expansion of legislation and systems, including the drug patent linkage system, the Biosecurity Law, the new medical devices regulation and the new cosmetics regulation. For the coming year, we expect further specifications to be made with the Biosecurity Law, adoption of the internet medical treatment regulation, and the adoption of measures for the production of medical devices and their business operations.
Our experts will be closely monitoring these ongoing developments and predictions during the course of the year, providing regular updates and analysis as they happen through our various free know-how platforms.
Top developments and predictions in the Life Sciences & Healthcare sector in China 2 | Top developments and predictions in the Life Sciences & Healthcare sector in China 3 We look back to the top ten developments over the last 12 months in the life sciences and healthcare sector, and towards the future with our top ten predictions for the coming year for businesses operating in China. Last year saw expansion of legislation and systems, including the drug patent linkage system, the Biosecurity Law, the new medical devices regulation and the new cosmetics regulation. For the coming year, we expect further specifications to be made with the Biosecurity Law, adoption of the internet medical treatment regulation, and the adoption of measures for the production of medical devices and their business operations. Our experts will be closely monitoring these ongoing developments and predictions during the course of the year, providing regular updates and analysis as they happen through our various free know-how platforms: our eAlert service, Law-Now, LinkedIn at ‘CMS Asia Pacific and CMS Life Sciences & Healthcare Sector’ and WeChat at ‘CMSAsia’. For now, we hope you find our reflections on 2021 and predictions of interest and help to your business as you plan for the year ahead. China’s top 10 developments of 2021 and the coming year: The new Biosecurity Law to be expanded and online medical treatment to be regulated Nick Beckett Managing Partner, Beijing and Hong Kong Offices, Global Co-Head of CMS Global Life Sciences & Healthcare T +86 10 8527 0287/+852 2533 7818 M +86 186 1842 8030/+852 9756 5043 E [email protected] Roxie Meng Associate, Beijing T +86 10 8590 0769 M +86 185 1825 3576 E [email protected] Top 10 developments of 2021 1. Biosecurity Law went into effect: The Biosecurity Law, promulgated in 2020, came into effect on 15 April 2021. This is the first national biosecurity law in China, adding another key component of China’s overall national security legislation. The Biosecurity Law establishes a comprehensive legislative framework for the fragmented pre-existing regulations in relevant areas, which means it applies to a large number of relevant sectors and activities including: epidemic control of infectious diseases for humans; quarantines for animals and plants research, development, and application of biological technology; establishment and security of pathological microorganism labs; administration of human genetic resources and biological resources and prevention of bioterrorism and defending threats of biological weapons. For the life-sciences and health-care sector, the most significant changes are related to the import of bio-products and the export of human genetic resources (HGR) regulated by strict controls. Moreover, Amendment (XI) to the PRC Criminal Law, which took effect on 1 March 2021, makes it a crime to illegally collect the HGR of China or illegally export the HGR of China and endanger public health or social and public interest. 2. China implemented the drug patent linkage system: On 4 July 2021, the National Medical Products Administration (NMPA) and the China National Intellectual Property Administration (CNIPA) jointly announced that the Implementing Measures for the Early Resolution Mechanism for Drug Patent Disputes (for Trial Implementation) (the ‘Measures’) had been enacted. According to the Measures, a patent registration system, which is similar to the US Orange Book, has been established for the Marketing Authorisation Holder (MAH) of chemical drugs, biological products, and traditional Chinese medicines to register certain patents applicable to 5 the approved drug and to keep them updated. The Measures also introduce a patent certification process for generic drug applicants, and a parallel track for innovators and generics to fight patent linkage actions. Apart from the Measures, the CNIPA has formulated the Administrative Ruling Measures for Early Resolution Mechanism for Drug Patent Disputes and the Supreme People’s Court passed the Provisions on Several Issues Concerning the Application of Law in Civil Cases of Patent Disputes Related to Applications for the Registration of Drugs. Both are considered parts of the system. 3. Amendments to China’s Medical Devices Regulation: On 18 March 2021, the State Council of China announced certain amendments to the Regulation on Supervision and Administration of Medical Devices (the new ‘Regulation’), which took effect on 1 June 2021. This is the third amendment to the Regulation and is widely acknowledged as progressive and reflective of the advancement and innovations in the industry. The new Regulation has introduced several systems encouraging innovation. Highlights include the full implementation of the medical device registrar system, optimisation of the product registration process and requirements, inclusion of an implied licence system for clinical trials, conditional approval and clinical compassionate use system, allowing applicants to submit product self-test reports, relaxation of the restrictions on laboratory developed tests, and clarification of online sales requirements. The new Regulation, however, has also comprehensively enhanced compliance requirements for enterprises, including the introduction of the product identification traceability system, strengthening the main responsibility of enterprises as registrants and filers, increasing the penalties for violations, and fully implementing the penalty-to-person system. 4. New administrative measures of medical devices took effect: In order to implement the newly revised Regulation on Supervision and Administration of Medical Devices, on 26 August 2021, the State Administration for Market Regulation issued the Administrative Measures for the Registration and Record-filing of Medical Devices and the Administrative Measures for the Registration and Record-filing of In Vitro Diagnostic Reagents (both took effect on 1 October 2021). Both measures aim to fully implement the requirements for the medical device registrar system, and have clarified that medical device registrants and filers should strengthen the management of medical devices throughout their life cycle and should take responsibility for the safety, efficacy and quality controllability of medical devices in the whole process of development, production, operation and use in accordance with the law. 5. Acceptance of supplementary data for chemical or pharmaceutical patents: On 15 January 2021, the amended Chinese Patent Examination Guideline (the ‘Guideline’) took effect with clearer standards for accepting supplementary data for chemical and pharmaceutical patents. The Guideline specifies that (1) the examiner shall examine the experimental data submitted by the applicant after the application date regarding Article 22.3 (inventive step), Article 26.3 (insufficient disclosure) of the PRC Patent Law; (2) the technical effect proved by the supplementary experimental data can be obtained from the contents disclosed in the patent application by a person skilled in the relevant technical field. It is good to see that, for technical effects merely asserted in the specification without specific embodiment, supplementary data can be used to manifest the inventive step over the prior art under the current standards. The effects, however, must be recorded in the patent document in order for the data supplementation to prove these effects. 6. New cosmetics regulation took effect: On 1 January 2021, the Regulation on the Supervision and Regulation of Cosmetics (the ‘Regulation’) came into force. The Regulation establishes a cosmetic production and operation management system in which the registrant and the person on record are responsible for the quality and safety. Moreover, introduced in August 2021, the Measures for the Supervision and Administration of Production and Operation of Cosmetics (the ‘Measures’) further clarifies the responsibilities of cosmetic registrants and filers. The Measures require cosmetic registrants and filers to establish a cosmetic production quality management system in accordance with the law, fulfil their obligations in terms of monitoring adverse reactions, risk control and product recall, and be responsible for the quality and safety of cosmetics and claims of efficacy. In addition, the Measures also provide that cosmetic registrants, filers, enterprises entrusted with production should establish a cosmetic quality and safety responsibility system. 6 | Top developments and predictions in the Life Sciences & Healthcare sector in China 7. New regulation of pharmacovigilance quality management introduced: In May 2021, the Pharmacovigilance Quality Management Specifications (the ‘Specifications’) were released and entered into force on 1 December 2021. The Specifications are the first complementary document on pharmacovigilance issued after the implementation of the newly amended PRC Drug Administration Law, marking the expansion of China’s practice from adverse drug reaction monitoring and post-marketing safety evaluation to whole-life pharmacovigilance. According to the Specifications, drug marketing authorisation holders and drug registration applicants shall establish and continuously improve the pharmacovigilance system, conduct regular internal audits, provide relevant training to employees, and actively, comprehensively and effectively collect and report information on suspected adverse drug reactions. 8. Update on drug post-marketing changes: On 12 January 2021, the NMPA issued the first Administrative Measures for Drug Post-marketing Changes (for Trial Implementation) (the ‘Measures’) for matters relating to post-marketing changes to medicines. With the continuous development of new technologies, changes in the management status of enterprises and market demand, it is inevitable that changes related to the registration and production of drugs will occur after the drugs have been marketed. Against this background, the introduction of the Measures is of great significance in promoting the development of the pharmaceutical industry since they require that enterprises should manage post-marketing changes to ensure that the safety, efficacy and quality control of medicines will not be adversely affected even if there are changes related to medicines. Formulated in accordance with the PRC Drug Administration Law, the PRC Vaccine Management Law, the Administrative Measures for Drug Registration and the Measures for the Supervision and Administration of Drug Production, the Measures provide a more specific basis for the management and conduct of post-marketing changes. 9. New guidelines for developing orphan drugs: On 11 October 2021, China’s CDE released its first technical guidelines for the clinical development of orphan drugs, demonstrating a concrete step by Beijing towards tackling issues related to the accessibility of orphan drugs. The technical guidelines came after the 2018 publication of the first national list of rare diseases featuring 121 indications. The government has since supported R&D for orphan drugs with a series of policies that aim to boost their development and supply. The technical guidelines are the first to explicitly target the clinical development of orphan drugs, and the third one related to rare diseases. Previously, the CDE rolled out technical guidelines for extrapolation of adult medication data to paediatric populations in May 2017, and for accepting overseas clinical trial data in July 2018. 10. ‘Hong Kong-Macao Drug and Medical Device Access’ policy implemented: On 27 August 2021, the Guangdong Provincial Medical Products Administration revealed that it had approved nine imported drugs and two medical devices for urgent clinical use since the start of the pilot ‘Hong Kong-Macao Drug and Medical Device Access’ policy in January 2021. According to the 2020 ‘Work Plan for the Innovative Development of the Regulation of Drugs and Medical Devices in the Guangdong-Hong Kong-Macao Greater Bay Area’, subject to necessary approval, medical institutions in nine cities in Guangdong are designated to use drugs that are in urgent clinical need and have been marketed in Hong Kong and Macao, and to use medical devices that are in urgent clinical need, having advanced clinical applications and having been procured and used by public hospitals in Hong Kong and Macao. The policy is a systematic, holistic and synergistic reform and innovation, which not only straddles Guangdong, Hong Kong and Macau geographically, but also involves import approval, overseas procurement, import customs clearance, storage and distribution, clinical use and many other aspects. 7 8 | Top developments and predictions in the Life Sciences & Healthcare sector in China Top 10 predictions for 2022 1. Further implementation of biosecurity law: From the perspective of implementing legislation, the entry into force of the Biosecurity Law in 2021 is only the first step. In 2022, it is expected that meticulous work will be done in areas such as the construction of a supporting legal and regulatory system for biosecurity, the effectiveness of the enforcement of biosecurity-related laws, biosecurity capacity building and scientific and technological support, and biosecurity publicity, education and public participation in the rule of law. 2. Further development of medical devices regulations: In 2022, it is expected that the newly revised Measures for the Supervision and Administration of Medical Device Production and the Measures on the Supervision and Administration of the Business Operations of Medical Devices will be adopted and take effect. Now that the NMPA has issued the draft revisions for public comments, these two documents are currently being revised. It is believed that the revision of the relevant regulations and documents for medical devices will promote the formation of a closed loop for the supervision of the entire life cycle of medical devices and will enable enterprises to achieve high-quality developments in a more favourable and orderly industrial environment. 3. Internet medical treatment in China enters the era of regulatory supervision: It is expected in 2022 that the Rules for Regulation of Internet-based Diagnosis and Medical Treatment (the ‘Rules’) will take effect. On 26 October 2021, the National Health Commission issued a notice to seek public comments on the Rules, which covers various aspects of Internet medical treatment, such as the supervision over medical institutions, personnel, business, quality, safety, and responsibilities during such supervision. In the future, the Rules will promote Internet medical treatment as it moves into the era of standardised supervision. Regarding the supervision of Internet medical records, the Rules propose that Internet medical records be managed in accordance with the relevant provisions of outpatient electronic medical records, and that graphic dialogue, audio and video information during treatments should be recorded and traceable throughout. In addition, the data interface should be opened to the provincial supervisory platform, and the preservation time should not be less than 15 years. Internet medical treatment has gained some demand and development in the context of the pandemic, but it will also face a stricter system of monitoring in the future. 4. New regulation on cosmetics for children: Promulgated by the NMPA on 30 September 2021, the Regulation on the Supervision and Administration of Cosmetics for Children (the ‘Regulation’) will take effect in 2022. Until the Regulation comes into force, only the Guidelines on the Declaration and Review of Cosmetics for Children (with effect from 1 February 2013) governs the administration of cosmetics for children. Compared with the Guidelines, which only concern the declaration and review of cosmetics for children, the Regulation lays down a more systematic regulatory regime, incorporating requirements for major aspects during the production of cosmetics for children, covering development, formulation, labelling, safety evaluations, adverse reactions, and quality issues for cosmetics for children, etc. The Regulation also specifies the responsibilities of responsible persons, including registrants, record-filing applicants, domestically responsible persons, manufacturers (or entrusted manufacturers) and operators. Compared to the Regulation on the Supervision and Regulation of Cosmetics, the Regulation sets forth stricter requirements, considering the physiological characteristics of children. 9 5. Aim to establish a standard system to cover full lifecycle management of medical devices: The ‘Opinions on Further Promoting High-quality Development of Medical Device Standardisation’ published by the NMPA and the National Standardisation Management Committee has proposed that, by 2025, a medical device standard system will be basically built up, in order to meet the needs of the whole life cycle management of medical device development, production, operation, use, supervision and management. Thus, more comprehensive improvements and implementations of medical devices regulations are expected to take place in 2022 and in the following years. 6. New drug list by national healthcare security: The National Healthcare Security Administration (NHSA) published the ‘National Drug List for Basic Medical Insurance, Work Injury Insurance and Maternity Insurance (2021 Version)’, which was implemented on 1 January 2022. Based on the changes made to the drug list, the new round of drug price negotiation in 2022 is expected to focus on expanding the categories of drugs for different diseases, reducing the prices of ‘overpriced’ drugs and including more drugs of high clinical value, low substitutability and potential large procurement volume. 7. Three-Year Action Plan for DRG/DIP Payment Reform: The NHSA has formulated the ‘Three-Year Action Plan for DRG/DIP Payment Reform’ (the ‘Plan’) to summarise and promote the effective practices of the national pilot DRG (payment by disease)/DIP (payment by disease points) from 2019 to 2021, promote the high-quality development of health security, facilitate supply-side structural reform and safeguard the rights and interests of participants. The Plan calls for the full completion of the DRG/DIP payment reform requirements from 2022 to 2024 to promote the high-quality development of health security. By the end of 2024, DRG/DIP payment reform will be in place in all coordinated regions nationwide, with pilot regions starting up in advance to continuously consolidate the reform results. By the end of 2025, the DRG/DIP payment method will cover all eligible medical institutions carrying out inpatient services, basically achieving full coverage of disease types and medical security funds. 10 | Top developments and predictions in the Life Sciences & Healthcare sector in China 10. Pilot cross-border e-commerce retail import of pharmaceutical products: On 8 May 2021, the State Council approved the launch of a pilot scheme for cross-border e-commerce retail import of pharmaceutical products in Henan Province, with 13 OTC medicines that have obtained a marketing licence in China listed as pilot drugs. Compared to the original import of these 13 OTC drugs in general trade, the import of these drugs in Henan as cross-border e-commerce retail imports enjoy faster customs clearance (exemption from import filing) and lower tax rates (zero tariff, 70% VAT). However, the significance of the pilot cross-border e-commerce retail import of medicines in Henan goes far beyond this. It is reported that the 13 OTC drugs that have been listed in China are only the initial stage of the pilot, and the pilot work of the retail import of drugs in Henan will follow the principle of ‘first easy and then difficult’ in four stages: firstly, the pilot stage of OTC drugs that are outside the positive list of cross-border e-commerce and have been listed in China; secondly, the pilot stage of OTC drugs that have been listed outside China, but have not been listed in China; thirdly, the pilot stage for prescription drugs that have been listed in China; and fourthly, the pilot stage for prescription drugs that have not been registered in China, but are in urgent clinical need in medical institutions. In the future certain life-saving and anti-cancer drugs that are not registered in China may potentially be exempted from going through the approval process and could significantly shorten the ‘drug lag’ time so that the Chinese people can quickly and easily procure new foreign drugs they urgently need. 8. Nationwide enforcement campaign targeting illegal personal care and cosmetic products: The NMPA, the administrative body responsible for regulating pharmaceuticals, medical devices and cosmetics in China, has launched a campaign to enforce the Regulation on the Supervision and Administration of Cosmetics (the ‘Cosmetics Regulation’), which is the first of its kind and scale since the Cosmetics Regulation came into force on 1 January 2021. During the one-year period ending in October 2022, the NMPA’s local offices across the nation will be asked to crack down on the sales of personal care and cosmetic products if they are found to violate the Cosmetics Regulation. The campaign will focus on e-commerce platforms. 9. Building a high-quality and highly efficient medical health service system: The National Development and Reform Commission and three other departments have issued the ‘Implementation Plan for Building a High-quality and Highly Efficient Medical Health Service System during the 14th Five-year Plan Period’ (the ‘Plan’). The Plan envisions that, by 2025, the basics for a high-quality and highly efficient integrated medical health service system with well-established structure, reasonable layout, clear division of work, inter-complementary functions, close coordination, efficient operation and great flexibility will be formed. Also, the capability to prevent and control a major pandemic and respond to public health emergency will be significantly raised. Remarkable progress will be made in the construction of major bases, such as the National Medical Centre, and the capability to provide all-round health service and guarantee in full life circle will be greatly strengthened. The service system for traditional Chinese medicine will be more comprehensive, so that broad masses of people can enjoy fair, accessible, systematic, and continuous medical health service nearby. To this end, the Plan sets forth four projects, such as the project of raising the prevention, control and treatment capabilities in public health and the project of promoting high-quality development of public hospitals. For each project, the Plan lays out various requirements and sets respective targets and supporting measures. 11 © CMS Legal Services EEIG (March 2022) –2203-0156601-5 Your free online legal information service. 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