July 2022
Karl Zhang and Teresa Huang
The Drug Administration Law, which was adopted on August 26, 2019 and came into force on December 1, 2019, mainly defines the drug marketing authorization holder system, strengthens the supervision of drugs at the development stage and after they are marketed, and enhances the security of drug supplies. To implement and refine the above system, the Regulations for the Implementation of the Drug Administration Law need to be reformulated. On May 9, 2022, the National Medical Products Administration (hereinafter, the “NMPA”) released the Regulations for the Implementation of the Drug Administration Law of the People’s Republic of China (Draft Revision for Comments) (hereinafter, the “Draft for Comments”) to openly solicit public opinions. After the phase of soliciting public opinions, the formal version of the regulations will be released shortly. Although the subsequent official version may contain adjustments to the Draft for Comments, still the system to be established in the field of drug administration is basically reflected in the Draft for Comments. This article will interpret the key contents of the Draft for Comments to get a glimpse of the new trends for the imminent development in the field of drug administration for the reference of relevant practitioners.
I. Refining and implementing the drug marketing authorization holder system
The Drug Administration Law legally establishes the drug marketing authorization holder system (also known as the “marketing authorization holder” (MAH) system). The main significance of this system is the separation of drug marketing and production licenses, which allows a drug research and development institution that does not meet the conditions for drug production to act as a drug marketing authorization holder and retain qualified enterprises to engage in the production. The Draft for Comments further implements and refines the requirements of the MAH system, stipulating that a drug marketing authorization holder should establish an independent quality management department and a pharmacovigilance department and be equipped with and file for record with the provincial drug regulatory authorities a person in charge of quality, an authorized person, a qualified person for pharmacovigilance and persons performing quality management, marketing release, pharmacovigilance, and other duties.
Article 38 of the Drug Administration Law requires foreign MAHs to designate domestic enterprises to fulfill the obligations of MAHs and assume joint and several responsibilities with them. Article 44 of the Draft for Comments also stipulates two approaches for foreign MAHs to designate domestic agents: one is that a foreign applicant designates a domestic agent before the marketing authorization of the drug and specify the domestic agent in the drug registration certificate, and the other is that the marketing authorization of the drug is granted first, and the foreign MAH can market the drug only after designating a domestic agent and registering with the provincial drug regulatory authorities. The difference between the two approaches is that the latter only pertains to registering the agent with the provincial drug regulatory authorities, while the former approach requires such information to be specified in the drug registration certificate. The latter is more convenient, while the former can directly reflect the identity of the MAH agent. For an overseas MAH holding multiple drug marketing authorizations, the MAH “shall designate one” domestic company as its agent pursuant to Article 47 of the Measures for the Supervision and Administration of Drug Production.
II. Recognizing cross-border drug development and clinical trial data
In terms of cross-border drug development, Article 7 of the Draft for Comments includes in the regulatory scope of laws and regulations overseas development activities conducted for the purpose of marketing in China and provides that drugs marketed in China may be developed onshore or offshore. Meanwhile, Article 23 of the Draft for Comments provides that the clinical data obtained by drug marketing authorization applicants overseas may be used for drug marketing authorization application if they meet the requirements of the drug supervision and administration authority under the State Council. For the data obtained by an overseas enterprise that conducts international multicenter drug clinical trials in China may also be used for marketing authorization applications if they meet relevant requirements. This provision can reduce the process and cost of drug registration and thus accelerate the marketing of drugs.
However, under Article 22 of the Draft for Comments, the applicant and the drug trial site should be both in China or outside of China during the registration application stage. This means that the applicant that produces drugs outside of China should be an overseas enterprise, and the applicant that produces drugs in China should be a domestic enterprise. For the introduction of foreign drugs by domestic enterprises, only a foreign enterprise can act as the applicant, which to a certain extent will cause obstacles to the introduction of new drugs, and the licensor and the licensee need to coordinate the responsibilities of both parties and other issues through agreements.
III. Encouraging the research and development of drugs for children and rare diseases
Children’s drugs are currently facing the issue of fewer types, fewer special dosage forms, and insufficient supply.[1] Article 28 of the Draft for Comments stipulates that since the state encourages and supports the research and development and innovation of children’s drugs, it is necessary to give priority to their approval to expedite the marketing process. Meanwhile, for the first approved new varieties, dosage forms, and specifications for children or increased indications or dosages for children, a period of market exclusivity not longer than 12 months will be granted, and the same varieties will not be approved for marketing during such a period.
China has a large population with 20 million rare disease patients,[2] who are facing a lack of medical care and drugs. As for the lack of drugs, introducing foreign drugs and encouraging the research and development of domestic drugs can alleviate the above social issue to a certain extent. In this regard, Article 29 of the Draft for Comments provides for a period of market exclusivity of up to seven years for new drugs for rare diseases, subject to the commitment of the drug market authorization holder to ensure the supply of the drug.
IV. Protecting drug trial data
For a drug for which authorization is granted based on the trial data obtained by the applicant, the NMPA protects the trial data of the drug for a certain data protection period. Article 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights stipulates that it is necessary to protect the “undisclosed test data or other data, the origination of which involves a considerable effort,” and which should be submitted “as a condition of approving the marketing of pharmaceutical or of agricultural chemical products which utilize new chemical entities.”[3] This requirement was not implemented by the old Regulations for the Implementation of the Drug Administration Law or other laws and regulations. Article 40 of the Draft for Comments clarifies the protection of drug trial data and grants market authorization holders a six-year protection period, in which the NMPA will not approve the application of other applicants who use such data for drug marketing authorization without permission.
However, the Draft for Comments does not clarify the scope of drugs included in the drug trial data protection and merely provides for “some drugs.” In this regard, provisions are made in the draft for comments of the (Provisional) Regulations for the Implementation of Drug Trial Data Protection on innovative new drugs, innovative therapeutic biologics, drugs for rare diseases, drugs for children, and drugs with successful patent challenges, but such a draft for comments is also not implemented. The establishment of the drug trial data protection system requires refined accommodating provisions. The (Provisional) Regulations for the Implementation of Drug Trial Data Protection are also expected to be formally implemented.
V. Patent linkage system and encouraging the development of generic drugs
The drug patent linkage system, which originated in the United States, refers to the system that the patent examination authority needs to consider the patent status of the original drug, when approving a generic drug, in order to avoid possible patent infringement. Article 76 of the Patent Law of the People’s Republic of China (amended in 2020) and the Measures for the Administrative Adjudication of the Mechanism for Early Settlement of Drug Patent Disputes provide for the drug patent linkage system for the first time, while Article 38 of the Draft for Comments provides for the drug patent linkage system at the level of administrative regulations for the first time, including the patent dispute resolution mechanism during drug registration applications and the requirement to register relevant patent information in the drug patent information registration platform at the time of patent application.
Meanwhile, in encouraging the research and development of generic drugs, Article 39 of the Draft for Comments provides for generic drugs and grants a 12-month market exclusivity period to the first chemical generic drug that successfully challenges a patent and is the first to be approved for marketing. The above-mentioned system design balances the protection of the rights and interests of original drug patentees and the development needs of generic drugs.
In addition to the above highlights, the Draft for Comments also provides for ethical review (Articles 2 and 19), change of clinical trial sponsor (Article 20), conversion of prescription drugs and non-prescription drugs (Article 26), and online sales of drugs (Articles 82 through 84), etc. The relevant provisions reflect the trend of a sound and international drug administration system. More detailed accommodation documents will be issued subsequently. This Firm will pay continued attention to the legislative developments of the Draft for Comments and the accommodating documents and share our views and suggestions.
(The authors’ opinions do not represent the position of this law firm.)
[1] Medical insurance data shows these issues surprisingly exist in the field of drugs for children, https://www.cn-healthcare.com/articlewm/20200112/content-1082239.html
[2] With around 20 million rare disease patients in China, it is necessary to secure the rare desease prevention, control, and protection network, https://news.cctv.com/2021/05/17/ARTIlJSKifyfsqqYcWLABQ6m210517.shtml
[3] The Agreement on Trade-Related Aspects of Intellectual Property Rights, http://ipr.mofcom.gov.cn/zhuanti/law/conventions/wto/trips.html