On 17 October 2020, the Standing Committee of the PRC National People’s Congress (“NPC”) passed the PRC Biosecurity law which will become effective on April 15, 2021 (the “Biosecurity law”). Notably, the Biosecurity law was passed by the NPC’s Standing Committee in less than a year from its first review - this signifies the strengthening of regulations for the biotechnology and life sciences industry in the midst of the COVID-19 pandemic.
The Biosecurity law establishes a comprehensive legislative framework for the somewhat piecemealed pre-existing regulations in the following areas:
- epidemic control of infectious diseases for humans, animals and plants;
- research, development, and application of biology technology;
- biosecurity management of pathogenic microbials laboratories;
- security management of human genetic resources and biological resources;
- countermeasures for microbial resistance; and
- prevention of bioterrorism and defending threats of biological weapons.
Some of the highlights of the Biosecurity law include:
1. Strengthening regulations on the conduct of biotechnology research and development activities in China
Like elsewhere in the world, China is witnessing a rise in biopharma and the increasing demand of innovative biomedical technologies. The Biosecurity law introduces an approval and recordal system for biotechnology research and development activities. Specifically, it classifies biotechnology research and development activities into high-risk, medium-risk and low-risk categories. The various risk categories are determined based on the risk of harm to public health, industrials, agriculture and ecology. Technologies that fall in the high-risk and medium-risk categories will need to be conducted by a legal entity in China and obtain the relevant approval or recordal. In other words, individuals such as principle investigators might not organize the conduct of high-risk or medium-risk activities without approval from their associated institutions. Details of the approval or recordal requirements as well as the catalogues of technologies will be co-promulgated by the responsible government authorities in due course.
2. Aggravating the penalties for illegal conducts
Penalties have been introduced under the Biosecurity law for conducting prohibited biotechnology research, development, and application activities, including the confiscation of illegal gains, technical materials and other tools, equipment, and raw materials used for the illegal conduct, and imposition of fines of between RMB 1 million to RMB 10 million. Where the illegal gains exceed RMB 1 million, the fines shall be between 10 to 20 times of any illegal gains. Further, personal liabilities on the legal representative, principal or direct responsible person in charge and other responsible personnel have also been introduced, including fines and 10 year-to-permanent bars from engaging in biotechnology research, development and application activities.
The administrative penalty for some existing liabilities have also been increased under Biosecurity Law. For example, the amount of fines is raised from between 5 to 10 times of any illegal gains, to between 10 to 20 times of any illegal gains in cases where a foreign entity or individual, or domestic entity established by or under the actual control of a foreign entity or individual collects or stores Chinese human genetic resources within China, or supplies Chinese human genetic resources outside of China, and the illegal gains resulting from the aforementioned activities exceed RMB 1 million.
3. Launching a management system for controlled essential equipment and special biological agents
The Biosecurity law also establishes a retroactive management system for controlled essential equipment and special biological agents. Specifically, each entity is required to record with the relevant authority any purchase or import of controlled essential equipment and special biological agents. The first import of any high risk biological agents by an entity will be subject to approval by the relevant government authority. On the other hand, individuals are now prohibited from purchasing or possessing controlled essential equipment or special biological agents. Biological agents are broadly defined as animals, plants, microbials, biotoxins and other biologically active substance. Detailed rules regarding controlled essential equipment and special biological agents are expected to be promulgated pursuant to the Biosecurity law.
The release of the Biosecurity law reflects China’s strategic positioning of biosecurity as part of its national security system. Notably, the regulations for genetically modified organisms, are not explicitly included in the Biosecurity law. Although the fundamental principles for prevention from invasion by foreign species and the protection of biological resources (such as wild animals and plant genetic resources) are established by Biosecurity law, the detailed regulations for these subject matters are yet to be promulgated. We are keeping a close eye on further developments as the relevant governmental authorities provide more clarity.