Published by:
Andrea Sorgato - Zunarelli – Studio Legale Associato
on 15 Jul 2020
On Dec 1st, 2019, the new Chinese “Drug Administration Law” (中华人民共和国药品管理法) came into force. After several revisions of the previous Drug Administration Law, from 2015 on, the Chinese Government launched a comprehensive project of reforming the whole legal system for drugs and medical devices. First, on August 2015, an Opinion on reforming the Review and approval system for Drugs and medical devices was issued (Opinion of State Council no. 44/2015); then, an Opinion on Deepening the Reform of Review and approval system to encourage Innovation on drugs and medical devices was issued by the General office of the State Council (together with the General office of the Standing Committee of CPC: no. 42/2017). Based on these guidelines and regulations, several pilot programs have been launched, especially on innovation, improving of quality of drugs, R&D, new clinical trials procedures, drugs for pediatric disease, innovative drugs.
The destination of this huge program of reforms has been the implementation of the new “Drug Administration Law”, thanks to which several new regulations and measures have been now extended countrywide.
General context of the Chinese Pharma Law
It is important consider that the Drug Administration Law of China (both the previous and the current Law) is not the comprehensive source of Chinese pharmaceutical law. Besides the Law, there are several Opinions and Notices who regulate the Chinese Pharma jurisdiction: most of them are particularly important to understand the legal framework of Pharma Law in the Chinese jurisdiction. For example, concepts such as “new drug” (新药), “innovative drug” (创新药), or “generic drug” (仿制药) are not contained in the Law. The mentioned Opinions of the State Council no. 44/2015 represent a fundamental source to understand the difference between these categories of drugs. Similarly, a huge number of notices issued by NMPA – National Medical Product Administration (former CFDA – China Food and Drug Administration) contain important rules on how to manage, for example, the registration for imported drugs: on that, the notice of NMPA no. 51/2016 (化学药品注册分类改革工作方案的公告2016年51号) regulates five different categories of drugs for purpose of registration, and clarifies what are the differences between drugs already marketed abroad as “original product” (原研药品) and drugs which cannot claim this feature.
However, the approval of the new Drug Administration Law provides the Chinese pharma jurisdiction with a new major legislative text, with significant differences and improvements on the quality of Pharma legislation in China. The New Law is structured in twelve Chapters and 155 articles, all expressly inspired to the principles of innovation, quality, efficiency, system, and capability.
About the New Law, at least three milestones must be considered. First, the implementation of a certain number of streamlined authorization procedures (for innovative drugs; for clinical trials approvals; for bioequivalence tests, for compassionate use; for conditional approval). Second, the key-role of the MAH - Marketing Authorization Holder. Third, the enforcement of liability provisions, especially for foreign MAHs and for Public Authorities.
Reforming of procedures for examination and approval. Encouraging innovative drugs and compassionate use. Discipline on Clinical trials protocols
Regarding this point, the whole examination and approval system has been deeply revised. Article no. 16 of the New Law states clearly that “the State supports drug innovations that are clinically value-oriented and with definite or special effectiveness on human diseases, and encourages the research and development of new drugs with new therapeutic mechanisms, treatment of life-threatening diseases or rare diseases”.
With specific regards to children’s health, the New Law “give priority to the examination an approval of children’s medicines”. As said before, the New Law does not define what shall be deemed as “innovative drug” or “improved new drug”: these concepts have been disciplined by Opinion of State Council no. 44/2015, mentioned above. The New Law takes in consideration these definitions to set up the priorities for the new system of examination and approval of drugs.
The New Law also introduces the “implied” license for clinical trial approval. According to article no. 19, upon submitting a clinical trial permit application before NMPA – National Medical Product Administration, the latter shall decide whether approve or not within 60 days: if it fails to notify the sponsor its decision within the said limit, “it shall be deemed that the application is approved”. This mechanism, well-known in many Western Countries, is now implemented in China for an important, key, sector as the drug market. However, the implementation of an “implied” authorization does not affect the importance of safety and ethical principles which a clinical study – through its clinical protocol – must comply with. On this aspect, article no. 20 states that “the ethics committee shall establish an ethical review work system to ensure that the ethical review process is independent, objective and impartial, supervise and standardize clinical trials of drugs, protect the legitimate rights and interests of the subjects, and safeguard the public interests”. Moreover, pursuant to article no. 21, “when carrying out a drug clinical trial, it is imperative to truthfully state and explain the purpose, risks and other details of the clinical trial to the subject or his or her guardian, obtain the clinical trial informed consent form voluntarily signed by the subject or his or her guardian, and take effective measures to protect legitimate rights and interests of the subject”. The effort of the New Law is to conjugate streamlining of approval procedures (by introducing the implied approval) together with the protection of the subjects involved in the trial: the enrollment process must abide by the safety and awareness of each person (patient or healthy) involved in the trial about the risks and the consequences of the trial.
Another important streamlining has been introduced: for BE - bioequivalence trials, applicants are allowed now to file records before NMPA instead of applying for – and waiting for – approval. BE trials are the regulatory basis for registration application of generic drugs. On that issue, several regulations had been introduced in China before this New Law, to encourage the development of the market for generic drugs (whose cost is much cheaper), and, at the same time, to strengthen the quality, safety and efficacy of these drugs within the Chinese market. On 2015, through the mentioned opinions no. 44, the State Council pointed out that “quality conformity assessment of generic drugs shall be promoted”, by “ensuring the conformity of their quality and efficacy with the quality and efficacy of drugs of original research”. The Opinions also stated that “The CFDA shall determine reference preparations after consultation with experts, and may select drugs of original research or internationally-recognized drugs of the same category”. This regulations must be coordinated with the New Law: to apply for a BE study, is still necessary to furnish the data to compare the “generic drug” with its “reference product” (参比制剂), which can be a “drug of original research” (i.e. “original product”, 原研药品), or an “internationally-recognized drug” (国际公认的同种药品).
After that, specific regulations on reform of registration system for generic drugs has been implemented by the “Announcement no. 230/2015 on Several Policies Pertaining to the review of drug registration), issued by CFDA, and by Circular no. 20/2018 on “Opinions Concerning Reforms of policies to improve the supply and utilization of generic drugs”. Both these regulations urged on the importance to register generic drugs only upon a severe and meticulous evaluation on safety, efficacy, and quality of generics, which shall be consistent with its “reference product” on all these aspects.
Besides generic drugs, the New Law also improved the regulation on compassionate use and on approval under conditions. Both these “emergency” channels have been widely used during the acute phase of COVID-19 outbreak. According to article no. 23 of the New Law, “with regard to drugs that are undergoing clinical trials to treat diseases that are life-threatening and for which there is no effective treatments, if medical observations show that the aforesaid drugs offer potential cure and conform to ethical principles, upon review and informed consent, the drugs may be used for patients with the same condition in the institutions where the clinical trials are conducted”. Indeed, during the COVID-19 outbreak, several Class III hospitals in China launched clinical studies for treatment of the Coronavirus infection: some of these studies have been involved in pre-MA use for the related drugs.
The same consideration shall be made for approval under conditions. As per article no. 26 of the New Law, “with regard to drugs to be used for the treatment of diseases that are life-threatening and for which there is no effective treatments, and drugs that are urgently needed in public health matters, if data from clinical trials of the drugs show the effectiveness thereof, and their clinical value is predictable, the registration of those drugs can be conditionally approved, with relevant matters stated in the drug registration certificate”. On that, however, specific duties have been charged on the holder of the drug certificate (MAH): according to article no. 78 of the New Law, the MAH must take “specific risk management measures and complete relevant research within the prescribed time limit”. Failing that, the NMPA shall consider whether impose corrections, up to revoke the registration certificate of the concerned drug.
Implementation of MAH system
Regarding the second point, the role of the MAH – Marketing Authorization Holder needs to be examined in depth. During the validity of previous Drug Administration Law, the role of the holder of the Drug Certificate was regulated amongst various other stakeholders involved in the drug chain, but it had not a preeminent role.
Moreover, the previous Law had a different purpose, that was provide China with a comprehensive regulation (the first of his history) by introducing several provisions on control made by Authorities over pharmaceutical chain. Instead, the current Law has a different scope, which is to improve the whole regulatory chain, as well as the quality and efficacy of controls and approval proceedings. The Law is now inspired to the principles of risk management, full process control, and social co-governance. Now these principles inspire the regulation on MAH, who is in charge – on its own – for the whole chain, from R&D to use.
Originally, the MAH was introduced in China as a project-pilot: the purpose was encourage the holders of Drug certificate to choose whether produce the drug by themselves or – especially for small-scale industries – entrust third parties (throughout specific agreements) to produce on its behalf. The holder of the Drug certificate kept the ownership of the certificate, and another manufacturer was in charge to produce the drug. This scheme is now possible, countrywide, according to the New Law: pursuant to article no. 32, MAHs “are allowed to carry out the drug production on their own or entrust pharmaceutical manufacturers with the drug production”. A specific guideline issued by NMPA – National Medical Product Administration is expected on this issue. Similar provisions are set forth for distribution and sell: MAH can choose if perform these activities by itself of by entrusting third parties. Of course, in both cases, a specific license must be obtained by NMPA.
Liabilities both for companies and for public authorities
The New Law also reinforces the liability provisions, especially on traceability, post-marketing surveillance, batch release and recall for adverse events. Article no. 37 states that MAH “shall establish an annual reporting system, and report annually to the drug supervision and administration departments of the people’s government of provinces, autonomous regions, and municipalities directly under the Central government, on the production and sales of drugs, post-marketing research, risk management and other related information”. For overseas MAHs, article no. 38 states that “the enterprise legal person designated thereby in China shall fulfill the obligation of the MAH and bear joint and several liability with the MAH”. Accordingly, article no. 136 states that “where a MAH is an overseas enterprise, if its designated enterprise legal person within the territory of China fails to perform the relevant obligations in accordance with the provisions of this Law, provisions of this Law concerning the legal responsibility of MAH shall apply”.
These provisions are linked to a “self-quality inspection” system which represents the base of the new liability system, implemented by Chapter 11 of the New Law. With specific regard to post-marketing surveillance and adverse events, several provisions have been introduced. For instance, as punishment for failure to establish and implement the traceability system, or to submit annual reports (as required by article 37 hereinabove), or to formulate post-marketing risk management plans, article no. 127 imposes first warnings to enterprises and, if warning time limit is ignored, a fine between 100,000 and 500,000 CNY is imposed.
The same liability is stated if an enterprise fails to submit bioequivalence trials to the record-filing process.
Besides, as per article no. 134, where MAH fails to conduct drug adverse reaction monitoring or report suspected drug adverse reactions, first a warning is imposed to make correction within a time limit and, if it is ignored, “it shall be ordered to suspend production or business for rectification, and concurrently imposed a fine no less than 100,000 CNY but no more than 1 million CNY.”
Many other liabilities are set forth in other provisions of this Law, to cover the whole pharma chain and related proceedings. Finally, a specific section, from article no. 145 to article no. 150, has been dedicated to the liability on Public Authority’s side, to punish abuses, illegal involvement in business and participation in activities of pharmaceutical companies, or complicity with other liable person or enterprise.
Reference:
https://iclg.com/briefing/13934-new-drug-administration-law-new-rules-and-liabilities-china
