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Insight on the new regulatory framework from the China Food and Drug Administration
The China Food and Drug Administration has introduced reforms to accelerate the development, approval, and manufacture of needed therapies. In an interview with Pharmaceutical Technology, Shanghai-based legal experts Katherine Wang and Xiaoyi Liu of the law firm Ropes & Gray, explain key elements of the new regulatory framework and implications for Western companies.
Pharmaceutical Technology: Please provide a brief overview of the Chinese Food and Drug Administration’s new programs to accelerate drug approvals and improve manufacturing practices.
Ropes & Gray: In recent years, China’s Food and Drug Administration (CFDA) has been under public pressure for its slow processing of drug and device applications, which has prevented new drugs and devices from reaching the Chinese patients in a timely manner. The State Council announced on Aug. 18, 2015 in its Opinions Concerning the Reform of the Review and Approval System for Drugs and Medical Devices that China will reform its current review and approval system for drugs and medical devices. Under this reform plan, several measures are being rolled out to improve the efficiency of drug and device review and approval, to improve the quality of pharmaceutical products, and to encourage innovative product development to meet critical medical demands.
One of the reform initiatives is the pilot of the marketing authorization holder (MAH) system in 10 selected provinces in China, where the market authorization/drug license holders are no longer required to be the actual drug manufacturers. The MAH system is primarily meant to benefit domestic R&D institutions and allow for more flexibilities in contract manufacturing arrangements, but it is not applicable to imported drugs. For multinational companies with R&D presence in China, they may consider positioning certain assets as local drugs with the marketing authorizations held by the local subsidiary, as opposed to applying for imported drug licenses based on foreign marketing approvals. Utilizing the MAH pilot program, they can outsource the manufacturing to local contract manufacturers in China, instead of having the drugs manufactured outside China.
A number of other policy changes promise to streamline and accelerate domestic and imported drug approvals in China. These changes include introducing an umbrella clinical trial authorization for all three phases of registration studies (instead of the original phase-by-phase approvals), implementing a filing/recordation system for bioequivalence studies on generics (instead of the original review and approval system), and admitting more types of drugs as innovative drugs eligible for the fast track/green channel approval pathway.
Pharmaceutical Technology: Under the new regulations, China-based pharmaceutical companies can outsource manufacturing operations. What opportunities does this present for Western contract manufacturers?
Ropes & Gray: Under the MAH system, contract manufacturers must be China-based. The MAH system, if successfully rolled out, should be able to bring more opportunities for contract manufacturers of complicated pharmaceutical products.
Pharmaceutical Technology: What legal and regulatory hurdles must Western contract manufacturers overcome to establish operations in China?
Ropes & Gray: Foreign contract manufacturers must also obtain the Drug Manufacturing License and Chinese GMP certification to operate in China and this can be a time-consuming process. There can be rigid requirements for facility, workforce, and management system, etc. Working with resourceful local partners to form joint ventures may be a feasible option.
Pharmaceutical Technology: What opportunities are available for Western bio/pharma companies under the fast-track approval pathway?
Ropes & Gray: To be qualified for the fast-track pathway, western companies may consider targeting therapeutic areas in high clinical demands by Chinese patients and in certain instances, have the drug assets manufactured in China.
To date, the fast-track approval pathway has been mainly available for drugs that have not been marketed anywhere in the world, or those addressing critical or unmet medical needs. The CFDA recently expanded the fast track approval pathway to cover more types of drugs, including pediatric/geriatric drugs, drugs treating China-prevalent diseases, drugs sponsored by national science and technology grants, foreign innovative drugs to be manufactured locally in China, innovative drugs using advanced technology, using innovative treatment methods, or having distinctive clinical benefits, drugs manufactured at a US/EU qualified facility and under review by the US Food and Drug Administration/European Medicines Agency for concurrent marketing authorizations.
The clinical trial applications and marketing authorizations for drugs addressing urgent clinical needs will also be accelerated. Under this condition, clinical trial applications submitted three years prior to the date of patent expiration or marketing authorization applications submitted one year prior to the date of patent expiration, will be permitted.
Pharmaceutical Technology: What does the new classification system for new drugs and generics mean for Western companies seeking to introduce drugs to the Chinese market?
Ropes & Gray: The CFDA now divides drugs into new drugs and generics. Previously, new drugs referred to "drugs never marketed in China." Under the new classification scheme, new drugs are those that are neither marketed in or outside China. This change creates more incentives for China’s domestic drug manufacturers than for multinational firms, because imported drugs first marketed outside China are no longer considered new drugs.
Multinational companies may consider localizing certain pipeline assets and position them as local drugs to be qualified as new drugs. Meanwhile, smaller R&D-based western companies may consider out-licensing certain assets under development to Chinese companies and investors who shop for “first-in-class” assets.
Pharmaceutical Technology: What steps or strategies do you recommend for Western pharma companies that wish to market innovative drugs in China?
Ropes & Gray: Amid China’s new regulatory environment that encourages domestic innovation, western companies may consider the following strategy:
About the expertsbr /> Xiaoyi Liu, an international associate at Ropes & Gray in Shanghai, ha eight years of experience in the international business advisory field, both from legal and commercial perspectives.
Katherine Wang, a partner in in the Ropes & Gray life sciences group, is widely regarded as a leading life sciences regulatory lawyer in China.