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The regulatory regime

i Regulatory agencies and their jurisdiction

As of the full government re-organisation in March 2018, the NMPA is now the primary pharmaceutical and medical devices regulatory agency in China. Many of the other agencies that had some hand in regulating drugs, including biologics, devices and combination products, have also changed names or merged with other agencies to become super-ministries. It enjoys power over most aspects of pre-market approval and a substantial part of post-marketing activities. Under the current arrangement, the NMPA is organised into departments and affiliated centres. The departments have responsibility for administration and enforcement functions, while the affiliated centres are responsible for scientific review and recommending decisions for the departments to adopt and implement.

For drugs, the primary departments and centres include the Department for Drug Registration, which is subdivided into departments for research and development, chemically synthesised drugs and biological products, and the Department for Drug Supervision, which is subdivided by the type of manufacturing that each subdivision supervises (chemically synthesised, biologic) and a department in charge of pharmacovigilance activities. The affiliated centres are the Centre for Drug Evaluation (CDE) and the Centre for Drug Re-Evaluation (CDR). The CDE evaluates clinical trial and marketing authorisation applications. The CDR includes the National Centre for Drug Adverse Event Monitoring, which is also responsible for device adverse event monitoring.

The NMPA similarly has registration and supervision departments for medical devices. The registration department is subdivided by whether the devices use electrical power or not, as well as including a department for supervising research and development. The supervision department is divided into divisions responsible for regulating manufacturing, distribution, and monitoring and evaluation. The Centre for Medical Device Evaluation (CMDE) is the affiliated centre responsible for organising the technical evaluation of medical devices.

With an official headcount of 216 at the national level (not counting contract personnel), the NMPA relies on provincial counterparts, which are merging with local administrations for industry and commerce to become 'market supervision bureaus', and similar device and drug regulatory authorities in the municipalities to carry out various activities, including accepting applications, conducting on-site checks and inspections, collecting samples, and issuing manufacturing and distribution licences. These provincial agencies receive their budget and their personnel allocation from the provincial governments, and they can vary in terms of capacity. State-accredited laboratories and clinical trial sites (e.g., in state-owned hospitals) also play a role in drug and device regulation in China. China has worked since 2015 to provide the review agencies (CDE and CMDE) with more reviewers. Real numbers are difficult to determine, but the NMPA's announcement on the CDE's hiring and the CDE's annual reports indicate that it continues to add reviewers, and that the number has grown into the hundreds, from 60 to 70 a few years ago. The CMDE has similarly been adding reviewers but has fewer than the CDE. The increases in staff have been and will continue to be an important step in resolving delays.

Although the NMPA is the primary agency for pre-approval, other government agencies also play important roles in the pharmaceutical regulatory framework. For example, a division previously under the National Development and Reform Commission (NDRC) that is now within SAMR has a key role in articulating drug and device pricing policy. The SAMR has a significant role in enforcing advertising and promotion and other consumer protection and fair competition and anti-monopoly laws that intersect with the drug and device industries. The National Health Commission (NHC, formerly the National Health and Family Planning Commission (NHFPC)) oversees all aspects of the medical profession and hospitals (which include NMPA-accredited clinical trial sites for drugs and devices), and plays a part in determining the essential drugs that may be reimbursed under China's state insurance plans. The Ministry of Human Resources and Social Security also plays a part in setting the formularies for these insurance plans. For imported drugs, the China Customs Administration, which now includes parts of the former Administration of Quality Supervision, Inspection and Quarantine, is involved in product-quality inspections and customs clearance. This sharing of responsibility creates a complex system in many respects.

ii Primary statutes and regulations

The NMPA administers laws, State Council regulations, rules and guidance documents related to drugs and devices. The primary statute regulating drugs (including biologics) is the DAL, which was enacted by the national legislative body, the National People's Congress, in 1984 and then substantially amended in 2001. Small amendments were made to the DAL in 2013 and 2015 to support what China considered to be more pressing regulatory reforms, such as drug pricing. The State Council has enacted one general set of implementing rules for the DAL, referred to as the DAL Implementing Regulations (DALIR), which were last amended in 2016. China released two proposed amendments to the DAL to implement the Innovation Opinion in October 2017 and November 2018, but they are not yet finalised.

The NMPA (and its predecessor agencies, the CFDA and SFDA) promulgated several agency rules under the DAL and the Regulations for Implementation of the DAL to govern various activities, such as development, registration, manufacturing and marketing of drugs. These include good practice on manufacturing, distribution, clinical development and laboratory work. The core regulation governing clinical trials and drug and biologic registration are the Drug Registration Regulations (DRR), for which the NMPA has not finalised a comprehensive amendment since 2007. An amendment in accordance with the Innovation Opinion has been planned for some time now but has not materialised.

However, the NMPA has made changes to the policies reflected in the DRR via shorter regulatory documents. For example, it implemented the more recent reference product and MAH reforms through these documents. In October 2017, the NMPA issued a document entitled Adjustment of Several Matters Regarding the Registration of Imported Drugs (CFDA No. 35,2017) (Document 35). Document 35 removes certain restrictions on the development and registration of imported drugs that are in the DRR. These reforms may be incorporated into the DAL or the DRR (or both) as the process of regulatory reform progresses.

The CDE also issues its own rules and guidance documents related to drug development and registration, priority pathways and supplemental applications. Similarly, in 2018 it issued a document providing for implicit approvals (similar to notifications) for new drug clinical trials.

China's legislature has not enacted a law covering medical devices, but the State Council has enacted a framework regulation, namely the RSAMD. As with drugs, the NMPA has enacted a number of implementing rules covering registration, production and distribution. In 2014, the State Council revised the RSAMD, and the NMPA subsequently issued an entirely new set of substantially revised implementing regulations, governing device registration, manufacturing and distribution. In 2017, the State Council finalised a shorter amendment to the RSAMD to implement reforms to the approval of sites for medical device clinical trials and other issues, for example, related to the approval of a category of 'large-scale medical devices'. At the time of writing, the NMPA has issued two other draft amendments to the RSAMD for public comment to implement device-related forms in the Innovation Opinion, such as the expansion of the MAH Pilot to medical devices, with the last being issued in June 2018. This amendment should make some progress in 2019.

Reform of the NMPA's rules and guidelines on various aspects of medical devices and drugs continues on a regular basis. In August 2018, for example, the NMPA finalised a new and substantial rule on adverse event reporting of medical devices. Like the CDE, the CMDE issues its own rules and product-specific guidance documents.

iii ClassificationDrugs

The general structure and classification of drugs is governed by the DAL. The DAL defines 'drugs' broadly as:

articles which are used in the prevention, treatment and diagnosis of human diseases and intended for the regulation of the physiological functions of human beings, for which indications, usage and dosage are established, including Chinese crude drugs, prepared tranches of Chinese crude drugs, traditional Chinese medicine preparations, chemical drugs substances and their preparations, antibiotics, biochemical drugs, radioactive pharmaceuticals, serum, vaccines, blood products and diagnostic agents.

This definition should be read to include small molecule drugs, biologics, certain traditional Chinese medicine and certain in vitro diagnostics. In practice, the NMPA has significant discretion to determine whether a substance constitutes a drug or fits into another regulatory regime. As will be discussed below, the NMPA does recognise some category overlap. When products may be considered drug and device combination products, the NMPA and a combination of experts from either the CDE, CMDE or both will make a decision as to whether to regulate the product as a drug or as a device.

Once determined to be a drug, the regulatory requirements applicable to a product will be determined by its pathway and its features. Even with the current reforms, the primary pathways remain those for domestically manufactured drugs or imported drugs, depending on whether the finished dosage form of the drug is manufactured inside or outside China. Among other differences, if the drug is to be manufactured in China, it must be made in a facility with the appropriate drug manufacturing licence and comply with China's drug good manufacturing practice requirements.

Regardless of the place of manufacture, domestic drugs are then classified into three types: traditional Chinese medicines and natural drugs, chemical drugs and biological drugs. Within each classification, drugs are again placed into categories and subcategories. These classifications and sub-classifications determine the clinical data and other requirements necessary for registration. In 2015 and 2016, pursuant to authorisations from the National People's Congress and the State Council, the CFDA restructured the registration categories for chemically synthesised drugs. These new categories were intended to reduce confusion about the registration process, integrate the new reference product system for generics and encourage innovation. The five categories under this system are:

  1. Category 1: innovative drugs. These drugs have an active ingredient that has a clear structure and is clinically valuable. The ingredient must be new to the world, not just new to China.
  2. Category 2: improved innovative drugs. These drugs have an improvement that is clinically valuable and new to the world, such as certain structural changes, dosage forms, routes of administration, strengths and indications.
  3. Category 3: generics with foreign reference products. This category is for generic drugs that use fully evaluated drugs (typically originator drugs) that are marketed abroad but not in China as their reference products.
  4. Category 4: generics with domestic reference products. The opposite of Category 3, this category is for generics that use fully evaluated drugs that are marketed in China as their reference products.
  5. Category 5: imported drugs already approved for marketing abroad. Following on from the separation between imported and domestic drugs described above, this category is either for original drugs that are already marketed abroad (5.1) or generic drugs marketed abroad (5.2). These drugs use the import licence pathway.

Biologics have not yet undergone a similar reform, although the CFDA proposed a new highly simplified classification system for biologics in October 2017. Currently, biologics are classified as either therapeutic or preventive (i.e., vaccines), then further classified into 15 subcategories under each heading. Classification depends on the drug's marketing approval status in China and abroad, source material, composition and other factors. The subcategories are not necessarily mutually exclusive, which can lead to confusion and duplicative requirements. China does not have a pathway for biosimilars in its regulations. Rather, in 2015, it issued a guidance document on the development of biosimilars that was similar in certain respects to the guidance issued by the World Health Organization in terms of setting forth a method for a comparative evaluation typically against an innovative therapeutic biologic. CDE has issued or proposed product-specific guidance documents for certain types of biosimilars since then.

As explained below, certain types of drugs may also be subject to separate and heightened requirements and require additional special permissions. Examples of this would be those that the NMPA classifies as 'narcotic drugs' and 'psychotropic drugs', which are discussed below.


Medical devices are also defined via regulation and then further sub-classified. The RSAMD defines 'medical devices' broadly as:

Medical devices means the instruments, equipment, appliances, in vitro diagnostic reagents and calibrators, materials and other similar or related articles directly or indirectly used with human bodies, including the computing software required. Their effectiveness is primarily achieved by physical or other similar means and not by pharmacological, immunological or metabolic means, although it may be assisted in its function by such means, the purpose of which is to achieve the following objectives:
(1) diagnosis, prevention, monitoring, treatment or mitigation of diseases;
(2) diagnosis, monitoring, treatment or mitigation of injuries or the functional compensation thereof;
(3) inspection, replacement, adjustment or support of the physical structures or physiological processes;
(4) life support or sustaining;
(5) pregnancy control; and
(6) provision of information for medical or diagnostic purposes by inspecting the samples of human bodies.

The RSAMD then defines three classes of medical devices:

Class I medical devices means medical devices with low risks, and those for which safety and effectiveness can be ensured through routine administration; Class II medical devices means medical devices with moderate risks, which must be strictly controlled and administered to ensure their safety and effectiveness; Class III medical devices means medical devices with relatively high risks, which must be strictly controlled and administered through special measures to ensure their safety and effectiveness.

As with drugs, the NMPA and its relevant divisions have significant discretion to determine what constitutes a medical device and what class it fits into. Applicants for a device registration may make their own determination as to classification and then submit their application to the NMPA or they can treat their device as a Class III and ask the NMPA to make adjustments. The NMPA oversees an electronic portal, run by the National Institutes for Food and Drug Control (NIFDC), that permits applications for a predetermination of device classification.

The NMPA maintains and periodically updates a classification catalogue showing its medical device classification decisions. By reference to this catalogue, with the general classification rules, the applicant can make its own determination as to classification. In 2017, the CFDA finalised a new and extensive classification catalogue, offering a new system of organising different types of devices and more detail and examples of the types of devices that fit under the various entries. The new classification catalogue came into effect in August 2018.

As with drugs, the RSAMD and the Administrative Measures on Medical Device Registration classify a medical device as either a domestic device or an imported device, depending on whether the finished device is manufactured inside or outside of China. If it is an imported device, the NMPA reviews and approves a registration application for Class II and Class III devices. Class I imported devices go through a notification system, which the NMPA also administers. For domestic devices, the review and the reviewing authority depend on the classification. Class I device manufacturers must notify municipal authorities before marketing their products; a provincial-level device regulatory authority approves Class II medical device registration applications; and the NMPA reviews and approves Class III medical device registration applications.

Some in vitro diagnostic reagents are considered medical devices. The NMPA maintains a separate body of regulations for devices that meet this definition, including different rules on development, registration, and licence amendment and renewal. The primary NMPA rule for IVDs is the Measures on the Registration of In Vitro Diagnostic Reagents (IVD Measures), which set out a similar classification and registration scheme for IVDs. Under the IVD Measures, IVDs are defined as:

In vitro diagnostic reagents managed as medical devices refer to reagents, reagent kits, calibrators, quality control products and other products for in vitro testing of human samples used in the process of predicting, preventing, diagnosing, monitoring the treatment of, and observing the prognosis of disease and evaluating a state of health. They can be used alone or in combination with other devices, appliances, equipment or systems.

In vitro diagnostic reagents for blood screening and radionuclide indicators are not considered device-type IVDs and are regulated as drugs. The IVD Measures also divide IVDs into three classes (I, II, III), III being the highest risk and I being the lowest.

Combination products

None of the aforementioned framework legislation has mentioned combination products. Instead, the NMPA issued a notice in 2009 to govern its review of drug and device combination products. If the primary mode of action of a product is medicinal, the CDE will review it as a drug, or lead a joint and parallel review by both the CDE and the CMDE. If the primary mode of action of a product is not medicinal, the CMDE will review it as a device, or lead a joint and parallel review by the CMDE and CDE. One example of a product that the NMPA may treat as a combination product is a tissue-engineered product, which may be considered a medical device that would also have to meet certain requirements particular to the development of a biological product.

iv Non-clinical studies

Non-clinical studies for drugs must comply with the NMPA Drug Good Laboratory Practice Regulations, which may be similar to good laboratory practice requirements in other countries to some extent. Non-clinical studies for drugs must be conducted by institutions that have been certified by the NMPA to perform such studies to be accepted as part of a drug registration application. The NMPA also accredits laboratories that conduct pretrial testing for Class II and III devices. The Innovation Opinion may create more flexibility in this system by permitting both drug and device applicants to conduct testing outside this structure of state-accredited laboratories. Those implementing measures are still in progress.

v Clinical studies and data

Under the regulations, the default requirement for a permission to market a drug or Class II or III device in China is to conduct a clinical trial. As we explain below, the NMPA will permit some flexibility in this arrangement in certain cases. For example, some devices are exempt from clinical trials based on existing data and the safety record of predicate devices. For both drugs and devices, the NMPA has adopted a more structured mechanism to accept foreign data to support marketing applications in China.

The Innovation Opinion also includes a conditional approval programme, under which a foreign-approved drug for an orphan indication or a drug for preventing or treating life-threatening diseases can be approved based on early-stage data. Various prior and subsequent documents have mentioned the conditional approval programme in different forms and levels of detail. Perhaps most significantly, in October 2018, the NMPA and NHC jointly issued procedures under which a drug designated by CDE and approved in the United States, EU or Japan, can receive approval in China on a special expedited basis.


Before a clinical drug trial can be initiated in China, the sponsor must submit a clinical trial application (CTA) to the NMPA (specifically to CDE), which CDE must approve. As of July 2018, for a 'new drug' or a drug that has not yet been approved in China or outside, the applicant submits a dossier or materials and then may begin the trial according to its protocol if CDE has not objected within 60 days of the date of filing. This notification system – also referred to as 'implicit approval' – was also included in the proposed amendment of the DAL that the National People's Congress issued for comment in late 2018. If it does not go through this system, the NMPA's review of a CTA can take about one year or more.

Currently, for new drug trials, the NMPA will permit an umbrella review of all three phases of a trial following a pre-CTA meeting. Also, an expedited review is potentially available for drugs that fit within the new drug pathway and those that are intended to treat certain illnesses or patient populations (e.g., children or elderly people) that the State Council or the NMPA considers to be clinically in demand. Priority review may also be possible for drugs that are in simultaneous development in the European Union and the United States. The NMPA is continually working to reduce this timeline for approval. As discussed below, the NMPA has also recently adopted a filing system for bioequivalence studies for generic drugs that is less onerous than the CTA process.

The NMPA requires that investigational drugs (regardless of the imported or domestic pathway) be manufactured at good manufacturing practice (GMP) facilities and comply with GMP standards, that government-certified laboratories conduct quality testing to confirm conformity with the quality standards, and that the sponsor seeks review and approval of the clinical trial by a qualified ethics committee. Ethics committee approval must take place before CTAs are submitted to the NMPA. If the institution has one, another approval by a clinical trial management committee may be required.

Clinical trials can be conducted only at institutions that have been inspected and accredited by the NMPA with departments that have been certified for that type of clinical investigation. Under the Innovation Opinion and recent legislative changes to the DALIR, this certification process has now changed from a pre-approval to a filing. Clinical trials in China are also governed by pharmaceutical good clinical practice (GCP) regulations, which follow similar GCP regulations in other countries in some respects. The GCP regulations and the DRR set out sponsor and investigator obligations, including for serious adverse events. The NMPA, or ethics committee, can hold or terminate a study for safety reasons.

Once a clinical trial protocol is approved by the NMPA, the information associated with it (including the protocol) can be difficult to amend, even for small changes. Although the agency is proposing to change current practice in this latest round of reforms, its regulations still do not include a clear procedure for protocol or other amendments to a CTA. In the past, this shortcoming has led to applicants having to file an entirely new CTA when making changes to their approved CTA, even if those changes are not safety-related.

In some cases the DRR still specifies the following minimum numbers of study subjects for different phases, and the trial must have sufficient statistical power. The NMPA has been revising the application requirements for chemically synthesised drugs, but the following requirements for biologics remain on the books.

Phase IPhase IIPhase IIIPhase IV
Therapeutic biologic20100300Not specified
Preventive vaccine20300500Not specified

As of 2017, if the drug has been approved abroad, China's drug regulations generally require submission of proof of that prior to before submitting the CTA for an imported drug. In the event that the drug has not been approved elsewhere, an application for an imported drug can include submission of a CTA without proof of foreign approval.

Foreign manufacturers can choose to apply for permission to conduct part of an international multi-centre trial (IMCT), and China has lifted the restriction that an applicant must show that it has begun Phase II or the drug has been approved abroad. Once the IMCT is complete, the applicant can apply directly for marketing approval.

China further embraced the idea of multi-centre clinical trials by adopting special guidance on these types of trials in early 2015, and has pledged to encourage domestic drug manufacturers to participate in these trials.

In June 2018, the NMPA released guidance on the acceptance of foreign data, including early stage data, to support marketing applications in China. The data must be generated according to China's requirements including related to design and human subject protection, and proper attention must be given to whether there are concerns about ethnic differences in the subject population abroad that could be meaningful for China.


Clinical data are used to establish the safety and efficacy of medical devices that are registered for marketing in China. In general, manufacturers must submit clinical trial data to register Class II and Class III medical devices (including in vitro diagnostics). No clinical trial is required for Class I devices.

The revised 2014 RSAMD broadened the exemptions from clinical trials for certain devices and for IVDs. The exemptions for devices include: (1) devices for which there is an identical type of device on the market with a well-established safety record following many years of clinical use; (2) devices that can be evaluated effectively through non-clinical data; and (3) devices that can be evaluated through pre-existing data on the same types of devices. To further define these categories, the NMPA issued multiple catalogues of exempt devices, ultimately issuing one unified catalogue in 2018, and guidance on how to determine whether a device falls under one of these broad exemptions. Exemptions similar to (1) and (2) also exist under the revised IVD regulations. In 2018, a proposed amendment to the RSAMD would remove the requirement for a clinical trial for Class II devices and potentially broaden the exemption for Class III devices to cover those that present a greater degree of risk.

Clinical trials of Class II and most Class III medical devices do not require NMPA approval. However, the NMPA has issued a catalogue of a subclass of high-risk Class III devices for which pre-approval of the clinical trial is required.

All trials for both medical devices and IVDs must take place at hospitals and other healthcare institutions that the NMPA has accredited to conduct device trials. In 2017, the State Council amended the RSAMD to permit hospitals to qualify as clinical trial sites after completing a filing process.

While no pre-approval from the NMPA is required (unless the device is designated as a high-risk Class III device), all medical device clinical trials must be approved by the institution's ethics committee and notified to the provincial-level government where the clinical trial sponsor is located. The NMPA issued procedures to implement this provincial notification requirement in July 2015. In addition, under the revised RSAMD, device trials must comply with medical device GCPs. The NMPA issued new GCPs for medical device trials to support registration with the NMPA in 2016. These GCPs added to the provisions on informed consent (including those on consent from children and others who lack the capacity to consent), requirements for agreements between sponsors and the site, and the coordination of multi-site trials. The GCPs set forth a set of reporting requirements for adverse events that occur during the trial.

Like with drugs, the NMPA has always permitted stakeholders to rely on foreign-generated data to support applications in China. However, in 2018, the NMPA issued guidance on the acceptance of foreign data to support device registration applications. The guidance focuses on design, human subject protections and attention to ethnic differences.

Human genetic resources

Foreign companies that sponsor clinical trials in China and collect human biospecimens must apply for approval to do so jointly with the Chinese clinical trial site (i.e., the hospital) from the Office of Human Genetic Resource Management within the Ministry of Science and Technology. This approval can also cover the exportation of the biospecimens and the data associated with them. This approval is required regardless of whether the foreign company is conducting genetic tests and covers any sample that contains human DNA. The regulations on human genetic resources also include controversial provisions on the sharing of intellectual property, including patent rights to any invention emerging out of the cooperation regarding collection of the samples. The Office of Human Genetic Resource Management reviews the agreements associated with a clinical trial to determine whether these requirements have been met and has significant discretion to delay or reject an application.

vi Named-patient and compassionate use procedures

Under the Innovation Opinion, China has committed to create an expanded access pathway under which a company sponsor can apply for permission for an expanded access treatment programme for patients with life-threatening illnesses that otherwise cannot qualify for the trial. The latest proposal would permit applicants to submit applications to the CDE. If the CDE determines that the application meets relevant requirements and the expanded access programme would not otherwise interfere with the trial, then it may approve an expanded access programme within 30 days.

Currently, the NMPA permits limited drug compounding for use on their own patients, sometimes without having to receive NMPA clinical trial approval or marketing authorisation. In addition, Chinese drug regulations provide for the importation of unapproved drugs to satisfy urgent clinical needs or in the case of national emergencies. The urgent clinical need standard is a significant one, which is difficult for individual patients to meet, but may be used rather more commonly when the drug is necessary to treat a specific group of patients to prevent the spread of serious contagious disease.

In the absence of a finalised compassionate use pathway, the Bo'ao medical tourism zone in Hainan Province has emerged as a place that provides earlier access to unapproved drugs. Medical institutions can assess patients for a treatment plan in the zone and apply for importation of unapproved medicines. Recently Bo'ao obtained approval to make those decisions for itself instead of obtaining NMPA approval. The drugs are then imported specially into Hainan for this purpose and used there. This has become a fairly efficient process for obtaining access to unapproved medicines on an expedited basis. Bo'ao also permits fast-tracking of unapproved medical devices under similar circumstances.

vii Pre-market clearanceDrugs

As discussed, the NMPA review and approval is required for the domestic production or importation of drugs. The DRR provide five types of drug registration applications: (1) new drug; (2) generic drug; (3) imported drug; (4) supplemental applications; and (5) re-registration. With the exception of (4) and (5), the type of application depends on where the finished dosage form of the drug is manufactured.

Imported drug application

If manufactured abroad and by a qualified foreign manufacturer, the application is for an imported drug. If approved abroad, typically the foreign manufacturer holding the relevant approval for the foreign regulatory health authority is the applicant before the NMPA and will be required to present a certificate of pharmaceutical product to show marketing abroad. More recent practice has shown that there may be some flexibility for other applicants to utilise another entity's certificate of pharmaceutical product. If the drug for import is not yet approved abroad, the NMPA can approve the imported drug as a Category 1 innovative drug (see above) and no foreign approval is required.

In addition, the foreign manufacturer must submit drug samples from three batches to be tested by the NIFDC for conformity with product specifications and quality standards. Under the Innovation Opinion, certain testing may be permitted at other third-party laboratories, which, if implemented in this manner, could significantly reduce some of the delays that have prolonged development in China.

The manufacturer must also appoint a local entity in China to act as the agent for the imported drug registration. Registration agents may be drug distribution entities that hold distribution licences, which allow them to book sales and promote the drug. The registration agents bear joint responsibility and liability for quality, safety and other regulatory obligations and related violations.

New drug application

For chemically synthesised drugs, a new drug is now considered to be one that is new to the world in the ways specified in registration Categories 1 and 2 described in Section II.iii. The DRR provide that all biologics must proceed through the new drug pathway.

For this pathway, the NMPA requires that a manufacturer obtains a drug manufacturing licence after a facility inspection and a separate GMP certification. Under a new plan, the manufacturing licence and the GMP certification will be merged. Depending on the existence of a manufacturing licence, the NMPA will issue a new drug certificate and, subsequently, an official drug approval number, which permits marketing of the drug.

As discussed above, the NMPA implemented an MAH Pilot for drugs manufactured in China. The MAH Pilot began in 2015 and was renewed in 2018. It was originally implemented in 10 provinces, including Beijing and Shanghai. Individuals of Chinese citizenship and research institutions (which can include drug companies) working or established, respectively, in one of the pilot provinces are permitted to hold a licence for a domestically made product, including the rights to sell, distribute and receive profits from the drug. However, those individuals or entities could contract out the manufacturing and distribution or hold their own manufacturing and distribution licences. MAHs are also permitted to use more than one manufacturing site. Although on a limited scale, the MAH Pilot permits smaller research and development entities to hold product licences without developing costly facilities that they cannot afford. MAHs also have the ability to distribute their drugs directly without having to apply for a drug distribution licence.

Both the proposed DAL and RSAMD contain the structure for the MAH Pilot to become a regular feature of the regulatory landscape.

Generic drug application

With the exception of original drugs manufactured abroad, drugs that are not new to the world are generic drugs and go through an abbreviated process through which they establish therapeutic and quality equivalence to a reference product marketed in China or abroad. Equivalence is established either through a bioequivalence study, an in vitro study, if the drug qualifies for an exemption, or a clinical trial to show efficacy in some cases. In most cases, the reference product will be an original product, but the NMPA will also permit an 'internationally recognised' generic product to serve as a reference product.

Generics on the market that are on the Essential Drug List (2012 version) for reimbursement in healthcare institutions and in solid oral forms were required to demonstrate equivalence to reference products by the end of 2018. All other fixed oral dosage form generics can freely determine when they will demonstrate equivalence, but the first generic manufacturer to seek such approval will get three years of exclusivity during which equivalence applications for other generics of the same type will not be accepted.

The NMPA has developed and implemented a new set of guidelines for demonstrating bioequivalence. Under this new system, bioequivalence studies may begin after the applicant has notified the NMPA through an electronic platform. The CDE review of a generic drug application proceeds in parallel with manufacturing site inspection and collection of drug samples by the provincial drug regulatory authority, as well as drug quality testing by the NIFDC. If results are satisfactory, the NMPA will approve the application and issue a drug approval number to the applicant, which should already have obtained a drug manufacturing facility permit.

The pathway for biosimilars is somewhat different; that is to say, biologics for which there is an existing standard may be brought on the market. However, the DRR require that all biologics go through the application pathway for new drugs, and do not provide for a separate biosimilar category. The application requirements may still be different depending on the subcategory of biologics. For example, biologics for which there is a pre-existing national standard typically only need to conduct Phase III studies in China and for others, Phase I may be waived.

In 2015, the CDE finalised a guidance document on biosimilars, intended to strengthen the methods for research and development of similar biologic products and their stepwise characterisation and comparison to reference originator products, including a quality comparison, and non-clinical and clinical evaluations. This guidance also includes some provisions on labelling and pharmacovigilance. Some biosimilars have been approved under this guidance.

Approval timelines

In 2015, the NMPA began examining what had become a huge application backlog for both drugs and devices. The agency had tens of thousands of applications pending, with thousands more being filed each year. The State Council and the NMPA committed to significantly reducing this backlog by the end of 2018. The CDE's annual report, released on 3 March 2016, indicated that the drug backlog had been reduced from approximately 22,000 to 17,000 applications, which is a reduction of around 22 per cent, and by 2017, the NMPA touted reducing the backlog to only 4,000. The NMPA also committed to increasing the speed of the reviews and the criteria for review and approval by adding review personnel and creating review guidelines.

With these reforms still progressing, the total time for review, site inspection, drug sample testing and final approval of an imported drug licence, a new drug application or a generic drug application is in flux, but it can still take one to two years. Most of this time continues to be occupied by the CDE review process. The DRR provide for 150 business days for CDE review of new or imported drug applications, and 160 business days for CDE review of generic drug applications. In practice, CDE review often takes longer. If the CDE needs additional information, it can issue a request to the applicant, and the review clock stops. The applicant will have four months to provide the additional information, and the CDE will have an additional 40 days to review the additional information. Requests for additional information are common in all applications, and sometimes repeated, although the CDE is required to avoid repeated requests. Reviewers may meet with the applicant upon request and the NMPA has implemented a new set of meeting guidelines that permit more structured and frequent interactions when issues arise in development or the registration process.

Priority review is available for certain drugs that treat serious or life-threatening conditions, including new drugs for the treatment of HIV, cancer or orphan diseases, and new drugs that treat unmet medical needs. The NMPA's new priority categories over the past two years include drugs that treat diseases prevalent among children and elderly people, drugs that are on national scientific research plans, foreign innovative drugs that transfer manufacturing to China, and drugs that are being developed simultaneously in the United States and Europe. Priority status facilitates applications by allowing the applicant better access to CDE reviewers for their marketing applications and in some cases for questions about their clinical trials. Publicly available information suggests that the fast-track mechanism has, in fact, shortened review times. The NMPA renewed these priority review categories in late 2017 for the duration of 2018 and beyond.

As discussed, under the Innovation Opinion, the NMPA will permit conditional approval (permitting earlier approval of a drug that has showed promise in early trials and treats a life-threatening illness) provided that the drug meets post-marketing commitments. The NMPA permitted something like conditional approval before the Innovation Opinion (i.e., allowing foreign data to support orphan drugs with only a requirement that the applicant conduct a short study post-marketing), but this new system more officially permits early phase data to support expedited approval.

As discussed above, this measure permits drugs approved abroad that treat orphan indications and drugs marketed in the United States, the EU and Japan that the CDE has designated as fulfilling urgent clinical needs in China. The NHC and NMPA released a list of diseases qualifying as orphan diseases in 2018.

Re-registration application

The registration for an imported or domestic drug is valid for five years. Six months before expiry of the registration, the applicant must submit a re-registration application to the NMPA if it is an imported drug or to the local provincial drug regulatory authority if it is a domestic drug. Re-registration applications generally do not require new clinical data, though new testing or data from the required Phase IV study may be a condition of renewal. The relevant regulatory authority must complete the review and either approve or deny the application within six months of accepting the filing. If the re-registration application is not approved, drugs manufactured after expiry of the existing marketing or manufacturing authorisation may not be marketed in China. The NMPA has now transferred the decision-making power relating to re-registration applications for imported drugs to the CDE.

Supplemental drug application

Certain post-approval changes to a drug, whether imported or domestic, require NMPA approval of a supplemental drug application. Certain changes may require a new drug application, such as a new indication or route of administration. The applicant must be the company that holds the existing marketing or manufacturing authorisation. While major post-approval changes require the NMPA review and approval, some minor changes can be notified to the agency and implemented without a full technical review. The proposal described above relating to re-registration of imported drugs would also transfer final approval over supplemental applications for both imported and domestic drugs to the CDE to reduce delays.


Some form of pre-market review and approval is required for domestic production or importation of all three classes of medical devices. Domestic and imported Class I devices must be notified to either the municipal food and drug regulatory authority where the manufacturer is located or the NMPA, if manufactured abroad, before being placed on the market. Once the applicant submits the notification, the authorities will make an 'on-the-spot' determination to issue a notification certificate, provided that the materials are complete.

As noted above, domestically manufactured Class II devices must be reviewed and approved by a provincial-level device regulatory authority. Class III medical devices, as well as Class II and III imported medical devices, must be approved at NMPA level. For imported devices, the applicant must appoint a regulatory agent in China.

For all Class II and III devices, government-certified laboratories first verify conformity with the device's 'technical requirements', which the applicant must formulate in advance, and applicable standards through testing. This testing is often referred to as registration testing or type testing. For Class I devices, the applicant may submit its own internal test results. While self-biocompatibility testing has been available for some time, the innovation opinion could expand self-testing, and proposed drafts of the RSAMD have included provisions to this effect.

The statutory time frame for agency decisions on the different types of devices depends on the class of the device and the type of technical review required. For Class I devices, either the municipal device regulatory authority or the NMPA (if an imported device) will make an immediate determination of the completeness of materials and, if complete, accept the notification. In the case of a Class II or III device, the relevant agency will make a determination as to whether the application is complete and appropriately filed (i.e., the agency has jurisdiction). Within three days of acceptance of the application, the materials are sent on to a technical review institution, which under normal circumstances has 60 days to complete its review. If outside expert help is required or the institution decides that it needs to conduct an inspection of the applicant's quality management systems, then the time may be extended beyond the 60 days. Similarly, the technical review institution may make a one-time request for any supplementary materials required. It then has another 60 days from the time of receipt of those materials to make its decision. Once the technical review is complete, the NMPA has 20 days to make a decision.

The NMPA already gives priority to innovative devices (described below) and, in 2016, as part of its effort to reduce delays and focus its resources on key areas, it issued new procedures on priority review for devices associated with national scientific initiatives, those with orphan indications, those that treat children or elderly people, and other devices that serve urgent clinical needs. Those accepted to these pathways get priority access to CMDE reviewers regarding the design of their application. Similar conditional approval procedures are available for devices that treat orphan indications or meet urgent clinical needs.

After approval, a medical device registration certificate is issued that is valid for five years. Like with drugs, six months before the expiry of the five-year period, the manufacturer must submit a medical device re-registration application. If the renewal application is not approved by the time the licence expires, the application will be deemed approved.

Changes to certain elements of the registration require amendments or updates. The type of amendment and the length of review depends on whether it is a 'licensing matter' or a 'registration matter'. Licensing matters include the non-proprietary product name, its model, its specifications, its structure, its composition, its scope of use (indications), its technical requirements and the foreign site of a manufacturer. Registration matters include the name of the applicant, the name of the agent and their addresses. In the case of a domestic manufacturer, the address of the manufacturing site is also a registration item. For registration items, the original licensing agency will issue a revised licence in 10 working days. Licensing items require another technical review before a modified registration certificate will be issued.

viii Regulatory incentives

Chinese regulation is designed, in some respects, to encourage innovation and development and manufacturing of products for which there is a particular clinical need and value through expedited pre-market approval pathways. By contrast, post-approval regulatory incentives are weaker and their implementation is incomplete. China has established a system of patent protection for drugs and devices. China has not yet implemented regulatory data protection, and China has a kind of de facto market exclusivity implemented through a new-drug monitoring period (described below) for a product that has not been manufactured in China or is locally manufactured in China.

Under the Innovation Opinion, China committed to implement new incentive systems, including real regulatory data protection, patent linkage and patent term extension. The remainder of this section describes the existing system, and the progress that the NMPA and other agencies have made on the other reforms.

Under regulatory data protection, innovative drugs (undefined term), innovative therapeutic biologics, orphan drugs, paediatric drugs, and drugs that have achieved a successful patent challenge would receive a certain period of protection for their original undisclosed clinical test data. This would prohibit follow-ons from using that data to apply for marketing permission. As described below, in 2018, the NMPA released a draft regulatory data protection regulation in April, but the progress on the draft has stalled. Pursuant to this draft, patent linkage will describe a system for resolving patent disputes before the approval of a potentially infringing drug. An applicant would prepare a statement of relevant patents. The applicant would need to give the holder of a relevant patent notice of its application, permitting the holder to file a suit within a certain period of time. During that suit or for a certain period, the NMPA would continue its review, but would not issue its approval. To date, no real progress been made in developing a linkage system.

In early 2019, the National People's Congress issued a proposal for patent term extension as part of a proposed amendment to the Patent Law. Under this proposal, the State Council may decide to grant an additional five years of patent protection to compensate for delays in the review process for innovative drugs that are applying for marketing both in China and abroad. The extension can be up to five years on an invention patent, but in no event amount more than 14 years of protection post-marketing. It is not clear when this will be finalised.

DrugsPatent protection

China gives 20 years of patent protection. An applicant is required to provide information on patent status in China as part of its drug registration application. Although the regulations require that if there are relevant third-party patents in force, the applicant must make a declaration of non-infringement, this does not result in patent enforcement because the innovator is given no notice of the declaration and the NMPA does not allow potential patent infringement to halt regulatory approval. Technically there are provisions on the books that a follow-on applicant cannot file its registration application two years before the patent's expiry, but this is viewed as in conflict with the Bolar Exemption in the Patent Law, which permits development during the term of patent protection. Therefore, the NMPA does not implement these provisions rigorously, which is part of the reason why the patent linkage reforms set forth above are important.

Marketing exclusivity

China does not have true regulatory marketing exclusivity. The DRR provide that the NMPA can set a 'new-drug monitoring period' of up to five years when it approves the manufacturing of a domestic drug that is first in its class. The monitoring period is not available for imported drugs and, within the revised chemical drug registration categories, the monitoring period only applies to innovative new drugs and improved new drugs, which means it only applies if the drug (or its innovation) is new to the world. The monitoring period does not apply to generic drugs. During the monitoring period, the drug is under enhanced adverse event monitoring requirements, and the NMPA is not allowed to approve the clinical trial, manufacturing or importation of another domestic or imported drug in the same class for the same indication. If, however, the approved domestic drug is not manufactured within two years of approval, the NMPA can approve another domestic or imported drug application. The monitoring period does not provide complete exclusivity, however, because if the NMPA has approved the CTAs of other applicants for the same drug, those applications may proceed to registration. The Innovation Opinion leaves the fate of the monitoring period unclear.

Proposed Regulatory Data Protection

Under a recently issued draft regulation, the Regulatory Data Protection (RDP) would run from the time of approval and prevent the NMPA from approving marketing applications from other applicants for the same type of drug that rely on the data of the protected drug, unless there is consent.

The RDP draft proposed to grant six years of RDP for innovative small molecule drugs and 12 years for therapeutic biologics for which there were trials in China. However, full terms would be further limited to drugs for which the marketing applications are submitted in China before or simultaneously with those in other countries. Applications submitted later in China than in the rest of the world would only receive between one to five years of data protection, and applications relying on foreign data would receive only one-quarter or half of the degree of protection depending on whether they submitted supplementary 'China clinical trial data'.


The regulations for the registration of medical devices do not require patent certification or contain provisions on data or market exclusivity, and they are not covered by the aforementioned reforms. The revised Measures on Medical Device Registration in 2014 expressly state that any patent disputes will be handled under the relevant laws (i.e., the Patent Law). There are procedures for expedited review and approval of medical devices when there is a public health emergency and the same kind of device is not marketed in China, or is marketed but is in short supply. Medical devices undergoing expedited procedures also benefit from assistance from the NMPA during development and registration.

As discussed above, the NMPA has also created an expedited pathway for review of applications for 'innovative devices' in 2014 and amended it in November 2018. To qualify as an innovative device:

  1. the patent for the technology must be held in China;
  2. the application for innovative device is within five years after the date of patent authorisation, or if the patent is not granted yet, the National Intellectual Property Administration should issue a research report showing that the core technology has innovation and creativity;
  3. the primary work on the product's design and use mechanisms must have been the first of its kind in China;
  4. its safety or functionality must be a fundamental improvement over comparable technology;
  5. it must be leading technology internationally;
  6. the device must have clear clinical value;
  7. preliminary research must be complete, traceable and there must be a basic product model; and
  8. the data must be complete and traceable.

The innovative device pathway does not entitle applicants to marketing exclusivity, however. It provides the applicant with priority in terms of access to communication with the NMPA regarding its application and the ability to hold a licence without a manufacturing facility. As noted above, the NMPA has recently released procedures on additional priority pathways, which are based on more on clinical needs and not other IP-related criteria. Conditional approval is also available for certain devices.

ix Post-approval controlsAdverse events

Drug and medical device manufacturers are obligated to establish systems to report and analyse adverse events and product complaints, and meet any conditions imposed as part of the product approval. In 2011, the NMPA issued detailed regulations on adverse reaction and event reporting for drugs and devices. The Measures on the Administration of Adverse Drug Reaction Reporting and Monitoring (2011) require drug regulatory authorities at national, provincial and municipal levels to set up adverse event collection systems, and impose reporting and monitoring obligations on not only the drug manufacturer, but also drug distributors and healthcare organisations. Specific reporting time frames and follow-up actions are set out for handling individual cases, clusters of cases, periodic accumulative reporting, enhanced monitoring and imported drug reporting.

For medical devices, the NMPA issued revised Measures on the Administration of Medical Device Adverse Event Monitoring and Re-evaluation in August 2018, and the ADR Centre subsequently issued multiple guidance documents for comment shortly thereafter.

The reporting obligations under the new regulations remain similar (albeit with different timelines for reporting), serious adverse events and group adverse events. However, the new regulations also introduced a category of innovative medical device events. For 'innovative devices' (a term that is not yet clearly defined, but may mean those devices that have not yet been approved anywhere in the world), licence holders are required to report all adverse events for the first five years of the their device licence. The new regulation also requires biannual reports of events for innovative devices.

The new regulations also include various other new individual and periodic reporting obligations. For example, they require yearly risk assessments for devices. If there is a group event, it must be reported within 12 hours and each individual event must be reported within 24 hours of awareness. If a licence holder takes action to control a device event abroad (e.g., recall, market withdrawal, re-labelling), they are expected to notify the NMPA of an action plan for devices in China within 24 hours. These and other new, more intense requirements colour this new regulation, which went into effect on 1 January 2019.

The licence holders are obligated and the NMPA has the authority to order recalls of drugs and medical devices because of serious adverse reactions or events or other safety issues. Under new device recall regulations released in 2017, the NMPA can order a mandatory device recall for both safety and non-safety related issues, including if the device presents a risk of unreasonable harm, does not meet mandatory national standards or its own technical requirements (i.e., specifications), or violates good manufacturing or distribution practices in a way that causes unreasonable harm. This and other similar triggers have expanded the scope of recallable products.

Manufacturers and distributors also have different obligations, in varying circumstances, to cooperate with, report on or implement recalls. For example, for medical devices, the manufacturer is required to conduct an investigation and evaluation of adverse event and other safety-related information to determine whether they reveal a 'defect'. The manufacturer must also classify the recall into one of three classes – the first class being the highest risk and the third being the lowest. The class will determine reporting obligations and timelines. If a manufacturer does not conduct a recall voluntarily, the NMPA may order one if it disagrees with the manufacturer. The manufacturer must report on the progress of the recall and its final results.

Transfer of licences

Transfer of licences may be more difficult to achieve in China than it may be in other countries. Part of the reason is that NMPA regulations give limited guidance on this issue and regulatory changes have created further uncertainty. Another reason at least for domestic products is because of the connection between the product permission and the manufacturing facility permissions. The MAH system makes it easier to transfer licences because the licences will be less linked to one manufacturing site.

Otherwise, for domestically manufactured drugs, licences are currently issued to the specific manufacturer for the specific manufacturing site. As a result, any transfer requires a transfer of ownership of the site because the two are bundled together. This is usually done via an equity acquisition of the holder of the two licences, because NMPA regulations have specifically prohibited any 'purchase and sale, rental, or other loan of the licences'.

For imported licences, the situation is somewhat different because there is no manufacturing licence. Thus, the licence has been permitted to be transferred by a procedure to change the name of the holder, and the manufacturing site can be changed via a supplemental application to the licence.

These issues are somewhat different regarding devices. The facilities still require manufacturing licences but, in contrast to drugs, the NMPA also issues product licences for domestic devices. Therefore, for both imported and domestic devices, the NMPA has permitted the Class II and Class III device product licences to transfer between entities using an application to amend the name of the applicant on the licence. For Class I devices, the new applicant is likely to submit a new filing, which could be accomplished relatively quickly. The applicant may have to make other changes to items on the licence, such as the registration agent and the manufacturing site, through product licence amendment procedures, depending on the details of the deal.

There are more specific provisions on the transfer of device manufacturing licences. Under the revisions to the Device Manufacturing Regulations, the manufacturing licence travels with the entity. If the entity survives a merger or split, then the licence need only be modified. If the original entity is dissolved, then the licence will not be transferred and any new entity must apply for a new licence.

Suspension or revocation of approvals

The NMPA has broad authority over licences, their approval, their renewal every five years and their cancellation on the basis of safety concerns or fraud. This discretion extends not only to product licences but also to facility licences, accreditations and clinical trial approvals. For example, the NMPA has a number of grounds for revoking or refusing to renew a product licence.

In any of the following circumstances, a drug shall not be re-registered [if]:
(1) the application for re-registration is not made prior to the expiry date;
(2) the relevant requirements set by the State Food and Drug Administration when approved for marketing are not met;
(3) the Phase IV clinical trial is not completed as required;
(4) the adverse drug reaction monitoring is not conducted in accordance with regulations;
(5) there are uncertain therapeutic efficacy, serious adverse reaction or other factors harmful to human health upon re-evaluation by the State Food and Drug Administration;
(6) the drug approval documents shall be withdrawn in accordance with the provisions of the Drug Administration Law;
(7) the production conditions prescribed in the Drug Administration Law are not met;
(8) the obligation of observation period is not fulfilled in accordance with regulations; or
(9) there are other circumstances not in conformity with relevant regulations.

For devices, a renewal will not be granted if: (1) the filing of the application is not timely; (2) compulsory standards for the medical device have been revised and the device fails to meet the new standards; and (3) specific conditions related to medical devices needed for treating rare diseases or for public health emergencies are not met.

Second, there are several types of non-compliance that can trigger licence suspension or revocation in China. For example, the DAL provides for the revocation of drug approval licences on various grounds, including:

  1. production or sale of counterfeit or substandard drugs;
  2. non-compliance with customs rules for imported drugs; or
  3. non-compliant labels.

The RSAMD provide for the re-evaluation and potential revocation of medical device licences when:

  1. new developments in science and technology raise questions about the safety and effectiveness of the device;
  2. adverse event reporting raises questions about the safety and effectiveness and indicates that there is a defect; and
  3. any other circumstances that the NMPA determines warrant a re-evaluation.

These grounds are echoed in the new adverse event reporting regulation for the devices discussed above. The revised RSAMD provide that obtaining a licence via fraudulent or corrupt means is grounds for revocation of the licence. Other activities that constitute impermissible marketing of devices or marketing of devices known to be unsafe or not in compliance with standards may result in fines, seizures, disgorgement and, in certain circumstances, blacklisting from the industry.

In September 2017, the Supreme People's Court also interpreted certain provisions of the PRC criminal law to apply to circumstances in which a drug or medical device application is procured by making fraudulent misrepresentations or using fabricated data. This allows for the criminalisation of data integrity violations that are the result of intentional misconduct.

x Manufacturing controls

As discussed above, drugs and Class II and III device manufacturing facilities located in China must hold a manufacturing licence, and observe drug or device GMPs. Class I device facilities submit a notification to local food and drug regulatory authorities before proceeding with production.

For drugs, any proposed establishment of a facility must be approved by government agencies responsible for economic planning, and by the provincial regulatory authority for potential ability to meet GMP requirements. Upon completion of the facility construction, the facilities must pass GMP inspection and receive a GMP certificate before they can be issued a drug or medical device manufacturing licence.

Class II and Class III device facilities must be verified as device GMP-compliant before a local authority will issue a manufacturing licence. This requires a compliance inspection. If any manufacturer is found to be non-compliant with the rules, and does not correct the violation, it can be fined or shut down.

Contract manufacturers must be similarly GMP-compliant and hold the requisite manufacturing licence. In some circumstances, in which the NMPA has determined that the products present heightened risk, such as in the case of psychotropic drugs or narcotic drugs, the agency will not permit contract manufacturing.

Import manufacturers are also required to comply with GMPs for drugs or devices, as the case may be. The NMPA monitors compliance with all facilities that support the products that it licenses through inspections. Inspections may be for cause and announced or unannounced. In some cases, the regularity of inspections is risk-based. For example, for device manufacturers, the NMPA and its local counterparts set a risk level that determines the number of inspections during a specific period. The NMPA also conducts inspections of facilities abroad for compliance with China drug and device GMPs, although it is not entirely clear what determines the need for these inspections. The NMPA finalised new regulations on overseas inspections for drug and device manufacturers in late 2018.

xi Advertising and promotionDrugsAdvertising

The NMPA must pre-approve all drug advertising and prohibits any direct-to-consumer advertising of prescription drugs. The term 'advertising' is broadly defined under the general Advertisement Law and can include any published media that directly or indirectly introduces the product (or service). As a result of amendments to the Advertisement Law in 2015 and the interim regulation on internet advertising in 2016, the legislature has made it clear that the definition of advertisement includes websites, mass emails and postings on microblogs and other social media sites. Other rules have indicated that various media and promotional activities as examples, including product samples. Therefore, there is ample authority on which agencies can enforce against sponsors. Promotion or advertising of a drug before NMPA approval is prohibited, although some limited scientific exchange may be permissible.

The drug-specific advertisement requirements and prohibitions are provided in a number of laws and regulations, including the Measures for Review of Drug Advertisement (the Advertisement Measures) and the Standards for Drug Advertisement Review and Release (the Advertisement Standards), both of which were promulgated jointly by the NMPA and the State Administration for Industry and Commerce (SAIC) in 2007. There have been various proposals to revise the agency-level drug advertising rules, but none have been finalised.

The provincial drug regulatory authority where the advertiser is located must review and approve all drug advertisement materials. Article 4 of the Advertisement Measures provides that advertisements of prescription drugs can only run in NMPA and NHC-approved medical journals (of which there are over 500). The prohibition on consumer advertising of prescription-only drugs also prevents many indirect advertising activities, such as sending journals or reprints to the public, or any other means of advertising to the public.

Upon approval, drug advertisements are given an approval number, which appears on the advertisements. Advertisement approval is valid for one year only and no change is allowed to an approved advertisement. Upon the approval's expiry, or if any change is needed to an approved and unexpired advertisement piece, a new advertisement application must be filed and new advertisement approval obtained. The NMPA has posted on its website all advertisements that have been approved and those against which there has been enforcement.

China prohibits advertising outside the content of the approved label or package insert (off-label promotion). The prohibition against off-label advertising is set out in Article 6 of the Advertisement Standards:

The advertisement content relating to the indications or the primary therapeutic functions must be consistent with the drug instructions approved by the NMPA, must not expand or maliciously conceal, and must not contain any theories, viewpoints, or similar contents that are outside the drug instructions.

The Drug Administration Law of China also technically prohibits off-label promotion through its anti-counterfeiting provisions. The Anti-Unfair Competition Law (AUCL) contains prohibitions on false or misleading promotion that have been used to limit or penalise off-label conduct.

Some penalties for an unapproved advertisement include hefty fines in the hundreds of thousands of dollars, immediate revocation of the advertisement approval, and rejection of any advertisement application for the subject drug for one year. Heavier penalties would apply in the event that an illegal advertisement expands the scope of the indications or primary therapeutic function, exaggerates efficacy or seriously deceives and misleads consumers. Heavier penalties include the provincial authority suspending the sale of the subject drug within the province that has jurisdiction, and ordering the drug company to run corrections regarding the advertising concerned. Criminal penalties may be available in extreme cases.


The term 'promotion' is not defined under Chinese law. Any activity related to a drug is promotional, if, objectively, the intent is promotional as the term is commonly understood (i.e., where it is intended to further the acceptance and sale of the drug). This includes a broad array of product launch activities and associated materials. China has other laws that govern promotion and require that it be generally truthful and non-misleading. As discussed, these include the AUCL and the Law for the Protection of the Rights and Interests of Consumers (Consumer Protection Law). The AUCL is often a basis for enforcement by the new Market Supervision Bureaus, which have been combined with the drug regulatory authorities and investigate promotional violations, including violations of off-label promotion. There is no clear distinction between what constitutes promotion under these laws and what constitutes advertising under the Advertisement Law, even though the AUCL does appear to indicate that there is a distinction.

As noted above, scientific information exchange, including exchange of off-label information, may be viewed as non-promotional with somewhat less risk when conducted appropriately, because the intent is to advance science and medicine through the exchange of scientific information between medical professionals, rather than to further the acceptance or sale of a drug.


Device advertisements also require pre-approval. Regulation of advertising and promotion of medical devices is similar to that for drugs, as described above. The rules for advertising and promotion of medical devices are set out in several regulations, such as the RSAMD, the Measures on the Examination of Medical Device Advertisements (2009) and the Standards on the Examination and Release of Medical Device Advertisements (2009), which, like the drug standards, are now also under revision as a result of the 2015 amendments to the Advertisement Law. Device promotion is also subject to the AUCL and the Consumer Protection Law. A recent proposal to amend the RSAMD would eliminate the device advertisement approval requirement.

xii Distributors and wholesalers

China requires a company to have a licence to engage in the retail or wholesale distribution of drugs that are manufactured by other companies. No distribution licence or other permission is required for a drug or device manufacturer to distribute the products that it manufactures for itself. Both drug and device distributors must meet respective sets of good supply practices.

The system of device distribution licences also exists for Class III medical devices. Distributors of Class II devices no longer need a licence, but those distributors must submit a notification to their local municipal governments – a recent proposed amendment to the RSAMD would eliminate even this notification requirement. In either case, the entity must certify that it has appropriate premises, storage conditions and quality management systems, and personnel for its scope of operation.

In 2017, China released a policy for drugs called the Two Invoice System. The aim is to curb corruption in the drug supply chains, and the system limits those supply chains to two invoices. In other words, once the product leaves the manufacturer or the manufacturer's agent, there may be only two invoices, one from the manufacturer to the distributor and one from the distributor to the end user hospital. Those in the supply chain are required to check the invoices, and failure to observe the policy can result in blacklisting from important procurement processes or loss of distribution credentials. There are some limited exceptions to this system, such as for transfers between entities in the same corporate group or to exclusive distributors, or under some provincial rules, registration agents. Certain provinces have expanded the system to devices.

xiii Prescription status

The NMPA classifies drugs as prescription drugs or over-the-counter (OTC) drugs, and requires the NMPA's review and pre-approval for both. For the purposes of distribution and sale, the NMPA further classifies OTC drugs into Type A or B, where Type A drugs can be sold only by pharmacies or distributors that have received drug wholesale or retail distribution licences, and Type B drugs can be sold at most retail outlets, such as convenience or grocery stores, if approved by provincial governments. The NHC regulates prescribing behaviour for physicians, including a requirement that physicians use the non-proprietary names of drugs. The NMPA has not set up prescription or non-prescription classifications for medical devices.

xiv Imports and exports

In addition to the product licences for imported drugs and devices, there can be a variety of additional requirements and formalities at the ports. For example, special import or export permits are required for certain narcotic or psychotropic substances. Drugs that are imported for processing and re-export may not require NMPA pre-approval; only provincial drug regulatory authority notification is required for such products provided they will not be sold or used in China. Additional testing at the border may be required.

The NMPA generally does not impose the same requirements for exporting drugs or devices and relies instead on the regulatory oversight of the country of destination. Manufacturers of exported drugs and certain devices must still obtain a manufacturing licence and comply with good manufacturing practices and standards. There are exceptions for nine types of drug and two types of device, which the NMPA has placed into the catalogue of drugs and devices subject to full NMPA supervision. In addition, special export permits are required for exporting some narcotics or psychotropic substances. In most cases, drug and device manufacturers must also submit a filing to their local government before export. Certificates of free sale for foreign import authorities may be available from provincial governments, provided that the China manufacturer meets the relevant requirements.

xv Controlled substances

China exercises heightened control over narcotic and psychotropic drugs. The State Council promulgated the Rules on the Administration of Narcotics and Psychotropics, which provide separate rules on these products. The NMPA, the Ministry of Public Security, and the Ministry of Health recently jointly issued the revised Catalogue of Narcotics and the revised Catalogue of Psychotropics. Special heightened control is exercised by several government agencies regarding the growing of plants from which narcotics or psychotropics are extracted, and the clinical trialling, manufacturing, transportation and distribution of narcotics and psychotropics. For example, government agencies set the total amount of narcotics and psychotropics needed annually, and the NMPA then sets the annual production plan based on the current supply and stockpile. The NMPA and the department of agriculture jointly set the annual growing plan. Special permits are given only to limited entities to study, produce and distribute narcotic and psychotropic drugs.

xvi Enforcement

Enforcement against violations of drug or medical device requirements is undertaken by the drug regulatory authorities at national, provincial and lower local levels, with cooperation from other government agencies such as the SAMR, NHC and the public security bureau (China's police force) at all levels of government. Routine and for-cause inspections are the primary means of detecting actual or suspected violations, and complaints from competitors are often the triggers for for-cause inspections. The NMPA has also adopted comprehensive regulations on unannounced inspections for drug and device manufacturers.

The focus of inspections can include many compliance requirements and activities, such as those targeting good practice (laboratory, clinical, manufacturing, storage), data integrity, conflicts of interest, bribery, violative advertisement and off-label promotion. The penalties include revocation of licences and certificates, which can be imposed (see Section II.vii) on post-approval controls in many more situations than in the United States. Other penalties include administrative fines, seizure of products, disgorgement of profits and blacklisting of companies and individuals. Monetary penalties are increasingly high. Criminal liability can be imposed for many violations, and disbarment from engaging in drug or device work is possible. Production or distribution of counterfeit medicines as defined by the DAL may be subject to life in prison or the death penalty if the violation causes death or especially serious harm.

Increasingly, the NMPA has been requiring manufacturers, distributors and clinical trial sponsors to conduct self-evaluations into good practice compliance and report on the results to the NMPA. For example, in mid-2016, all holders of device distribution licences were required to take stock of compliance with device distribution regulations and good storage practice (GSP) over a two-year period and report back to the NMPA on any non-compliances and plans for remediation. Failure to comply risked the holder's distribution licence. The NMPA required similar self-evaluation for drug clinical trials in 2015 and has continued rigorous self-evaluation and trial inspection requirements to the present. Holders of CTAs are required to review for compliance with GCP. The original self-evaluation resulted in the withdrawal of nearly 80 per cent of the trial approvals for non-compliance. In 2018, the NMPA also issued a notice reinforcing its ability under various drug, device and cosmetic regulations to enforce fines and debarment sanctions against individuals. In a growing trend, legislation, including recent drafts of the RSAMD and DAL, has included provisions against responsible individuals in addition to increased fines for entities.

The year 2018 was also a year in which a scandal with a vaccine manufacturer's violation of drug GMP regulations shook up the policy environment. The discovery of the GMP violations led to the resignation and firing of certain key officials, and a renewed commitment to strict penalties in this area. Presumably as a result, the latest draft of the DAL had significant prohibitions and penalties generally and particularly related to vaccines and other biologics.