This article by partners Katherine Wang and associate Silvia Mo was published by Law360 on November 15, 2017.

The China Food and Drug Administration Office (CFDA) continues to reform the current review and approval system for drugs and devices, according to a circular entitled the Opinions Regarding Strengthening the Review and Approval System Reform to Encourage Innovation of Drugs and Medical Devices (opinions). The opinions outline a series of robust reform initiatives, and reflect the Chinese government’s unprecedented determination to accelerate drug and device approvals and encourage innovation.

The opinions were finalized based on four draft reform proposals issued by the CFDA this May. Compared with the CFDA's draft proposals, the opinions introduce a few new initiatives: a pilot program to grant compensatory patent term extensions to certain new drugs, and calling the CFDA to accelerate the early launch of generic drugs, biosimilars and follow-on drug-device combination products. On the other hand, the opinions remove details of the patent linkage system, the protection period for regulatory data and the pre-IND submission consultation meetings.

The opinions will create a level playground for R&D-focused drug and device companies, at home and abroad. Launches of imported innovative drugs and devices in China have historically been much later than the first launches in the country of origin, because the conduct of clinical studies requires the CFDA’s advance approval on a phase-by-phase basis, and in-country clinical study data derived from Chinese patients is typically required to prove safety and efficacy. The shortage of CFDA-qualified clinical study sites limits the infrastructure for clinical development, and increases study costs. Moreover, the CFDA typically requires NDA applicants to complete all three phases of clinical studies before filing for the NDA. The opinions propose the following key measures to address these challenges.

Deregulating the Conduct of Clinical Studies on Drugs and Devices

  • Admission of foreign study data: Foreign clinical data can be used to support the marketing applications for drugs and devices in China, as long as the data comply with Chinese regulations. For any drug and device applied for marketing approvals in China for the first time, the applicants must provide clinical data to prove if there are no ethnicity differences.
  • Clinical trial approval process: The clinical trial approval process will be streamlined greatly. Companies can conduct a study immediately after a 60-day waiting period expires, if the Center of Drug Review (CDE) or Center of Medical Device Review (CMDE) does not object to the filing or issue a deficiency notice.
  • Clinical sites management: the opinions revoke the current clinical site qualification system. Any institutions that have the necessary infrastructure may become qualified clinical sites after filing for record with the CFDA.
  • Ethics committee review process: the opinions encourage mutual recognition of ethics committee (EC) approvals through a unified EC review platform. In the event of multi-center studies, the participating sites must directly endorse the EC approval of the lead site, without repetitive reviews.
  • Expanded access to investigational products: Patients not enrolled in a clinical study may have access to investigational products, if they give informed consent and the investigational product is intended for treating life-threatening diseases with no effective treatments. The safety data generated from the expanded use can be used to support marketing authorization applications.

Accelerating the Drug and Device Approval Process

  • Expedited reviews for urgently needed therapies: If drugs and devices offer new solutions for treating life-threatening diseases or address critical unmet medical needs, they can be eligible for conditional approvals, as long as early and mid-stage study data indicate their efficacy and predict their clinical value.
  • Supportive regime for rare disease cures: The national health authorities will publish a catalogue of rare diseases and establish a rare disease patient registry. Drugs and devices approved outside China that offer new solutions for treating rare diseases will be eligible for conditional approvals.

The opinions also attempt to strike a balance between innovative drug and device manufacturers and manufacturers of follow-on products. Exclusivity entitlements for innovative products will enhance, but first-to-market follow-on products will also enjoy certain exclusivity and market access benefits. A combination of initiatives will be rolled out to promote pharmaceutical innovation and the growth of generics.

  • “China Orange Book”: The CFDA will publish a “China Orange Book” listing all approved drugs in China. The listing will contain the registration category of the approved drugs and their active ingredients, dosage forms, specifications, marketing authorization holder (MAH), and other regulatory exclusivity entitlements (i.e., patents, and regulatory data protection periods).
  • Patent linkage system: Generic drug applicants must describe the status and ownership for patents that relate to the drug and must inform the originator/patentee about the generic filing within the time limit. The CDE will continue the technical review, even if there is an on-going drug patent dispute. However, the CFDA will base its marketing approval on court decisions on patent disputes. If the court fails to reach a timely decision, the CFDA can issue marketing approvals directly.
  • Compensatory patent term extensions pilot program: The authority will grant compensatory patent term extensions to certain new drugs whose launches were delayed due to the review and approval process.
  • Improved regulatory data protection system: NDA applicants can apply for regulatory data protection along with their submissions. First-to-market generics will also enjoy a certain period of regulatory data protection. The CDE will not approve marketing authorizations for the same drugs during the protection period, except if the applicants can prove that they generate their data independently or obtain an approval from the original data owner.
  • Market access benefits: Hospitals will be encouraged to use new drugs that are effective and reasonably priced. The government will support inclusion of innovative drugs in the basic medical insurance scheme, and the reimbursable drug list will be updated more frequently.

Notably, the CFDA will shift its regulatory philosophy from the focus of pre-approval administration to post-approval enforcement. MAHs are expected to ensure compliance throughout product life cycles, and they need to supervise the activities of their contracted research organizations, manufacturers and distributors. The CFDA and local FDAs will continue to ensure good clinical practice (GCP), good manufacturing practice (GMP) and good storage practice (GSP) (collectively, GxP) compliance through rigorous inspections. Medical representatives are allowed to conduct only academic promotion and technical consultation when interacting with physicians and are prohibited from engaging in drug sales. MAHs must register their medical representatives with local FDAs, and their registration will be timely published.

The CFDA will strengthen its infrastructure to effectively respond to the new regulatory paradigm. The agency plans to contract qualified third parties to conduct drug and device reviews, and it will establish an electronic common technical document (eCTD) system to standardize the format of electronic submissions of drug and device applications. Technical reviews for new drugs and devices will be led by a team of cross-disciplinary reviewers. The CFDA and local FDAs will strengthen risk-based, on-site inspections and for-cause inspections for GxP compliance through the product’s life cycle, and build a professional team of inspectors through recruiting and training initiatives. Finally, the agency will step up its efforts to harmonize international technical standards and achieve mutual recognition of review and approval decisions.

The opinions will likely transform the competitive dynamics in China's life sciences industry and considerably impact multinational pharmaceutical and device companies’ strategy on the Chinese market. While the opinions set forth only general principles, the CFDA will announce more detailed implementation measures and other administrative authorities. R&D-based pharmaceutical and medical device manufacturers should carefully study the opinions, monitor the follow-on implementation measures and analyze their impacts on business operations in China.