China's State Council announced on May 26, 2016, a detailed
pilot plan for the Marketing Authorization Holder System
("MAH") for drugs in 10 provinces1 in China
(the "Plan"). The three-year pilot program2
was initiated in November 2015 by the Standing Committee of the
National People's Congress as an important reform measure to
encourage drug innovation.3 According to the Plan,
domestic drug research and development ("R&D")
institutions and individuals in the piloted regions are eligible to
apply for and hold drug product licenses. Eligible parties can now
commercialize their drug assets without having to become drug
manufacturers themselves. As marketing authorization holders, they
can completely outsource the actual manufacturing to contract
Specifically, the following drugs are eligible for the piloting
program: (1) new drugs approved after the implementation of the
Plan; (2) generic drugs approved as category 3 or 4 drugs under the
new classification system of chemical drugs;4 (3)
previously approved generics that have passed the equivalence
assessments against originator drugs; and (4) previously approved
drugs whose licenses were held by drug manufacturers originally
located within the piloted regions, but have been moved out of the
piloted regions due to corporate mergers or other reasons.
Narcotic, psychopathic, toxic, radioactive, biological
prophylactic, or blood products are excluded from the pilot
To be eligible as marketing authorization holders, R&D
companies must be incorporated in the piloted regions, and R&D
individuals must be Chinese citizens working in the piloted
regions. Both R&D companies and individuals must have the
capability to assume drug quality and safety-related liabilities
through providing guarantees or through purchase of insurances.
The marketing authorization holders may engage contract
manufacturers for manufacturing, provided that the contract
manufacturers are licensed and GMP-certified, and are also located
within the piloted regions. The marketing authorization holder and
the engaged contract manufacturer can be located in two different
provinces within the piloted regions, in which case the Plan
requires the local FDAs of their respective provinces to exercise
Marketing authorization holders may apply to transfer the
marketing authorization to another eligible holder, or to change
the designated contract manufacturer. Such change applications can
be submitted both when the drug license application in question is
pending and after the drug is approved. Applications first must be
submitted to relevant provincial FDAs, who will relay the
applications to the CFDA for final review and approval.
The Plan requires the MAH holders to establish their quality
assurance and pharmacovigilance systems to ensure post-market drug
safety and quality. Patients who suffer physical injuries caused by
the quality of approved drugs can choose to seek compensation
either from the marketing authorization holders, or the drug
manufacturers, or the drug distributors.
The MAH system demonstrates China's strong momentum to
unleash innovation in the pharmaceutical sector. Both local and
foreign players should consider leveraging the regulatory
flexibility of the pilot program to acquire or spin off assets and
to utilize contract manufacturing arrangements. Contract
manufacturers are also advised to revisit potential opportunities
in the Chinese market.
1. Cities include Beijing City, Tianjin City, Hebei
Province, Shanghai City, Jiangsu Province, Zhejiang Province,
Fujian Province, Shandong Province, Guangdong Province, and Sichuan
2. The pilot program ends on November 4, 2018, according
to the Plan. The Plan has yet to announce whether or not MAH will
be formally implemented nationwide after the three-year
3. See details on the overall drug approval reform policy
introduced by the Standing Committee of the National People's
Congress in our Alert dated
November 19, 2015.
4. See details on the new classification system of
chemical drugs in our Alert dated
March 14, 2016.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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