On May 9, 2022, National Medical Products Administration (NMPA) issued for public comments a draft revision (the "Draft Revision") to the Regulations for the Implementation of the Drug Administration Law of the People's Republic of China (the "Regulations"). The public comment period ends on June 6, 2022.
The Regulations were last revised and became effective in March 2019. However, the Drug Administration Law of the PRC (the "Drug Administration Law") was substantially revised about six months later in August 2019, officially adopting the marketing authorization holder ("MAH") system that had been piloted for many years in certain provinces and cities. The revised Drug Administration Law has come into effect for more than two years, and the public is eagerly looking forward to the revision of the corresponding implementing regulations. Since the implementation of the MAH system, the NMPA and other authorities have formulated and updated numerous supplementary rules in addition to the Drug Administration Law. These rules are scattered in various separate regulations, notices, announcements, and guiding principles. Per its content, the Draft Revision would add a considerable number of provisions that have not been explained or clarified in the Drug Administration Law and also integrate the scattered rules and principles found in various normative documents of different levels.
Here are our summary and commentary on the key contents of the Draft Revision.
DRUG DEVELOPMENT
- Requirements for Domestic and Foreign Research and
Development Activities
The Draft Revision stipulates that drug research and development activities for the purpose of marketing drugs in China, whether undertaken inside or outside China, must comply with the requirements of Chinese laws, regulations, rules, standards, and norms. This article would apply the Regulations to research and development activities undertaken overseas, which reflects an important method for the NMPA to ensure drug safety and strengthen supervision since drug development, manufacture, and distribution activities have become more and more globalized.
- Establishment of Technical Specification
System
China joined the International Council for Harmonization of Technology for Registration of Pharmaceuticals for Human Use (ICH) in 2017 and became a member of its management committee in 2018. China has since gradually transformed and implemented international advanced technical standards and guidelines and has actively participated in rulemaking. The Draft Revision once again specifies that China will further adapt to international rules. The NMPA will formulate relevant technical specifications and guiding principles for drug development in China and with reference to internationally accepted technical requirements.
- Non-clinical Research
In 2007, the predecessor to the NMPA promulgated the Measures for Administration of the Certification of Quality Management Standards for Drug Nonclinical Research, which has not since been updated. The Regulations do not currently mention this certification, but only require research institutions to comply with the corresponding quality management practices for non-clinical drug research (GLP). The Draft Revision expressly includes the GLP certification requirements for the first time and clarifies that certifications are valid for five years. The requirement on GLP certification would therefore be upgraded to be included in the Draft Revision, a State Council administrative regulation, which demonstrates that the authorities attach great importance to GLP certification and relevant supervision activities.
- Change of Sponsor
The Draft Revision clarifies that a sponsor can change during drug clinical trials and stipulates that the change should be approved by the NMPA (if necessary, the NMPA will re-issue the drug clinical trial approval notice). The sponsor is equivalent to the status of the MAH in the clinical trial stage, and accordingly, the changed sponsor assumes the corresponding obligations and responsibilities for the drug clinical trials. This also confirms the practice of changing sponsors in the current administrative guidelines and guidelines at the level of the NMPA Center for Drug Evaluation (CDE).
APPLICATION FOR DRUG MARKETING AUTHORIZATION
- Drug Marketing Authorization Application (New Drug
Application)
The Draft Revision clarifies for the first time in administrative regulations that a drug marketing authorization applicant (an "NDA applicant") and a drug clinical trial sponsor (an "IND sponsor") can be different entities. The NDA applicant assumes the obligations and responsibilities related to the marketing authorization application.
The transferability of research results and marketing rights is the core of the MAH system. In addition to determining who is responsible for the entire life cycle of drugs, another primary purpose of the MAH system is to provide liquidity for drug-related rights and interests, thereby providing flexibility for business arrangements for enterprises and enhancing the value of such rights as assets. To a certain extent, this also provides new approaches for business arrangements for companies who have established VIEs for business activities within negative list.
Notably, the Draft Revision stipulates that at the drug registration application stage, the applicant and trial drug manufacture site should both be in China or overseas. However, it does not expressly prohibit the transfer of the applicant's location and that of the drug trial manufacture from overseas to China or vice versa.
- Encourage Innovation
The Draft Revision supports clinical value-oriented drug innovation. In November 2021, CDE released the Guidelines for Value-oriented Clinical Research and Development of Anticancer Drugs, which indicate that the development of new drugs should take providing patients with better treatment options as its ultimate goal (more effective, safer or more convenient). Encouraging first-in-class or best-in-class research, meanwhile, this document is seen as a powerful squeeze on the cluttered R&D "bubble". As a result, the developing prospects for numbers related companies were no longer clear and the financing and marketing plans of some were affected. Although the influences of this policy was controversial among the industry, it indicated the CDE's purpose to alleviate the homogenized competition in drug research and development and also showed CDE's determination and means. Judging from the inclusion of phrase "clinical value-oriented" in the Draft Revision, authorities may continue to, by adopting guiding principles or through other means in the future, encourage and promote higher standard innovation in the field of innovative drugs (not limited to anti-tumor drugs), emphasize avoiding the development of drugs with limited clinical value ("me worse"), and to guide companies to prudently choose R&D targets.
In addition, the Draft Revision also clearly provides that drug innovation should be supported in terms of scientific and technological project establishment, financing, credit, bidding procurement, price payment, and medical insurance. In view of the significant regulatory reforms and market fluctuations experienced by the pharmaceutical industry in recent years, there is a certain gap between the industry's expectations and the reality of the overall investment and financing environment, capital market performance, centralized procurement bidding, and national negotiations. By reaffirming this supportive position, the Draft Revision also provides a brighter perspective for the effective implementation of follow-up supporting rules to provide practical and powerful legislative and policy support for drug innovation.
- Accelerating Marketing Channels
The Draft Revision references systems stipulated in the Drug Administration Law for encouraging drug R&D innovation and shortening the process of drug R&D and review, including those for breakthrough therapeutic drugs, conditional approval for marketing, priority review and approval, and special approvals. The Draft Revision does not provide for extensive details on these matters because the Measures for Administration of Drug Registration, promulgated in 2020, already provides sufficient rules and are accompanied by relevant implementation guidelines to support related policies concerning accelerated marketing channels.
- Dispute Resolution Mechanism
The Draft Revision proposes that the NMPA would establish a drug registration objection resolution mechanism to properly handle applicants' objections to the technical review conclusions in the registration. This is not the first reference to such a system. In August 2020, the NMPA issued the Procedures for Resolving Objections to Drug Registration Review Conclusions (for Trial Implementation). Pursuant to these procedures, objection resolution refers to "where, upon completion of the comprehensive review and the conclusion is not to approve, following the CDE informing the applicant, the applicant raises an objection and the CDE organizes a comprehensive assessment or expert advisory committee demonstration to form the final technical review conclusion."
- R&D of Chemical Generic Drugs
The Draft Revision specifies that the NMPA is to select and publish the catalogue of generic drug reference preparations; that the R&D of chemical generic drugs refers to relevant technical guidelines to select reference preparations or reference drugs; and the NMPA is to establish a drug patent information registration platform. The drug registration applicant and the MAH would register the relevant drug patent information according to the regulations and explain the relevant drug patents involved and their ownership status.
This catalogue of generic drug reference preparation and drug patent information registration platform are combined together as a counterpart to the Orange Book in the United States. The Orange Book is not only the basis for chemical generic drug applicants to provide a patent ownership status statement, but also the patent drug MAH's reliance for its intellectual property and regulatory rights protection.
China's Orange Book is not new. The Catalogue of Marketed Drugs in China was formulated as early as the end of 2017. The Draft Revision merely reconfirms this system and links it with other drug regulatory laws and regulations. It is believed that if this part of the Draft Revision is adopted, the Orange Book system will continue to develop and mature in the future.
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