During 2017, China increased the reform of its drug and device regulations. The general offices of the State Council and, in a rather unique event, the Chinese Communist Party, issued a blueprint of various reforms aimed at encouraging innovation and making the system more efficient, referred to as the Opinion on Deepening the Reform of the Review and Approval System and Encouraging the Innovation of Drugs and Medical Devices (Innovation Opinion) (No. 42 2017). The encouragement of innovation in the drug and device spaces was also a goal of the 13th Five Year Plan and related policy plans that the government put in place in 2016.
These new reforms are not the first building block in this effort. They follow years of reforms that have accelerated during the past few years. For example, in 2013, the State Food and Drug Administration was reorganised into a more powerful ministry-level agency, referred to as the China Food and Drug Administration (CFDA). In 2014, the entire medical device regulatory regime was revised. Following an opinion on reform of the approval system for drugs and devices in 2015, a new system of registration pathways for small molecule drugs was established, under which generic drugs must demonstrate therapeutic and quality equivalence with what should typically be a fully evaluated reference product, and new drugs or innovations (e.g., dosage forms) must now meet a high standard of being ‘new to the world’.2 China has also implemented a pilot marketing authorisation holder programme (MAH Pilot) in 10 cities. That programme permits domestic research-based companies to hold the rights to the product, while contracting out manufacturing, subject to a set of obligations. Marketing authorisation holders (MAHs) are responsible for the overall quality of the product and a developing set of post-marketing obligations, including pharmacovigilance.
These and other reforms are changing the regulatory landscape in China. At the time of writing, the Innovation Opinion is final, but the laws, regulations and rules required to implement it are not. It is not clear whether some of these reforms will take shape in the next few months, during the coming year or further in the future. Therefore, this chapter describes the system for drug and device regulation as it exists at the time of writing, but also notes where and how some of the most innovative reforms may affect different parts of this system.
II THE REGULATORY REGIME
i Regulatory agencies and their jurisdiction
The CFDA is the primary pharmaceutical and medical devices regulatory agency in China. This includes biologics and combination products. It enjoys power over most aspects of pre-market approval and a substantial part of post-marketing activities. Under the current arrangement, the CFDA is organised into departments and affiliated centres. The departments have responsibility for administration and enforcement functions, while the affiliated centres are responsible for scientific review and for recommending decisions for the departments to adopt and implement.
For drugs, the primary departments and centres include the Department for Drug and Cosmetic Registration and the Department for Drug and Cosmetic Safety Supervision. The affiliated centres are the Centre for Drug Evaluation (CDE) and the Centre for Drug Re-Evaluation (CDR). The CDE evaluates clinical trial and marketing authorisation applications. The CDR includes the National Centre for Drug Adverse Event Monitoring, which is also responsible for device adverse event monitoring.
The CFDA similarly has registration and supervision departments for medical devices. The registration department is subdivided by whether the devices use electrical power or not, as well as including a department for supervising research and development. The supervision department is divided into divisions responsible for regulating manufacturing, distribution, and monitoring and evaluation. The Centre for Medical Device Evaluation (CMDE) is the affiliated centre responsible for organising the technical evaluation of medical devices.
With an official head count of 345 at the national level (not counting contract personnel), the CFDA relies on provincial food and drug administrations (PFDAs) and similar food and drug regulatory authorities in the municipalities3 to carry out various activities, including accepting applications, conducting on-site checks and inspections, collecting samples, and issuing manufacturing and distribution licences. These provincial agencies receive their budget and their personnel allocation from the provincial governments, and they can vary in terms of capacity. State accredited laboratories and clinical trial sites (i.e., in state-owned hospitals) also play a role in drug and device regulation in China. China has worked since 2015 to provide the review agencies (CDE and CMDE) with more reviewers. Real numbers are difficult to determine, but the CDE’s annual reports indicate that it continues to add reviewers, and that the number has grown into the hundreds, from 60 to 70 a few years ago.4 The CMDE has similarly been adding reviewers but has fewer than the CDE.5 The increases in staff have been and will continue to be an important step in resolving delays.
Although the CFDA is the primary agency for pre-approval, other government agencies also play important roles in the pharmaceutical regulatory framework. For example, the National Development and Reform Commission (NDRC) has a key role in articulating drug and device pricing policy. The State Administration for Industry and Commerce (SAIC) has a significant role in enforcing advertising and promotion and other consumer protection laws. The National Health and Family Planning Commission (NHFPC) (formerly the Ministry of Health) oversees all aspects of the medical profession and hospitals (which include CFDA-accredited clinical trial sites for drugs and devices), and plays a part in determining the essential drugs that may be reimbursed under China’s state insurance plans. The Ministry of Personnel and Human Resources also plays a part in setting the formularies for these insurance plans. For imported drugs, two additional government agencies – the Chinese Customs and the Administration of Quality Supervision, Inspection and Quarantine – are involved in product-quality inspections and customs clearance. This sharing of responsibility creates a complex system in many respects.
ii Primary statutes and regulations
The CFDA administers laws, State Council regulations, rules and guidance documents related to drugs and devices. The primary statute regulating drugs (including biologics) is the Drug Administration Law (DAL), which was enacted by the national legislative body, the National People’s Congress, in 1984 and then subsequently substantially amended in 2001.6 Small amendments were made to the DAL in 2013 and in 2015 to support what China considered to be more pressing regulatory reforms, such as drug pricing. The State Council has enacted one general set of implementing rules for the DAL, referred to as the DAL Implementing Regulations (DALIR), which were last amended in 2016. China plans further amendments to the DAL to implement the Innovation Opinion, potentially later in 2018.
The CFDA (and its predecessor agency, the SFDA) promulgated several agency rules under the DAL and the Regulations for Implementation of the DAL to govern various activities, such as development, registration, manufacturing and marketing of drugs. These include good practice on manufacturing, distribution, clinical development and laboratory work. The core regulation governing clinical trials and drug and biologic registration are the Drug Registration Regulations (DRR), for which the CFDA has not finalised a comprehensive amendment since 2007. An amendment in accordance with the Innovation Opinion is planned for later in 2018.
However, the CFDA has made changes to the policies reflected in the DRR via shorter regulatory documents. For example, it implemented the more recent reference product and MAH reforms through these documents. In October 2017, the CFDA issued a document entitled Adjustment of Several Matters Regarding the Registration of Imported Drugs (CFDA No. 35,2017) (hereinafter Document 35). Document 35 removes certain restrictions on the development and registration of imported drugs that are in the DRR. These reforms may be incorporated into the DAL or the DRR (or both) as the process of regulatory reform progresses. The CDE also issues its own rules and guidance documents related to drug development and registration, priority pathways and supplemental applications.
China’s legislature has not enacted a law covering medical devices, but the State Council has enacted a framework regulation, namely the Regulations for the Supervision and Administration of Medical Devices (RSAMD). As with drugs, the CFDA has enacted a number of implementing rules covering registration, production and distribution.7 In 2014, the State Council revised the RSAMD, and the CFDA subsequently issued an entirely new set of substantially revised implementing regulations, governing device registration, manufacturing and distribution. In 2017, the State Council finalised a shorter amendment to the RSAMD to implement reforms to the approval of sites for medical device clinical trials and other issues, for example, related to the approval of a category of ‘large-scale medical devices’. As the time of writing, the CFDA has drafted another amendment to the RSAMD to implement device-related forms in the Innovation Opinion, such as the expansion of the MAH system to medical devices. That amendment is due to progress through the legislative process during 2018.
Reform of the CFDA’s rules on medical devices continues on a regular basis, and the CFDA has not yet finalised certain rules, such as those on adverse event reporting and monitoring, and device advertising and promotion. Like the CDE, the CMDE issues its own rules and product-specific guidance documents.
The general structure and classification of drugs is governed by the DAL. The DAL defines ‘drugs’ broadly as:
articles which are used in the prevention, treatment and diagnosis of human diseases and intended for the regulation of the physiological functions of human beings, for which indications, usage and dosage are established, including Chinese crude drugs, prepared tranches of Chinese crude drugs, traditional Chinese medicine preparations, chemical drugs substances and their preparations, antibiotics, biochemical drugs, radioactive pharmaceuticals, serum, vaccines, blood products and diagnostic agents.8
This definition should be read to include small molecule drugs, biologics, traditional Chinese medicine and certain in vitro diagnostics. In practice, the CFDA has significant discretion to determine whether a substance constitutes a drug or fits into another regulatory regime. As will be discussed below, the CFDA does recognise some category overlap. When products may be considered drug and device combination products, the CFDA and a combination of experts from either the CDE, CMDE or both will make a decision as to whether to regulate the product as a drug or as a device.
Once determined to be a drug, the regulatory requirements applicable to a product will be determined by its pathway and its features. Even with the current reforms, the primary pathways remain those for domestically manufactured drugs or imported drugs, depending on whether the finished dosage form of the drug is manufactured inside or outside China. Among other differences, if the drug is to be manufactured in China, it must be made in a facility with the appropriate drug manufacturing licence and comply with China’s drug good manufacturing practice requirements.9
Before a company can market a drug in China, the DAL requires that the company submit and obtain government approval of a drug registration application, which may be divided into two parts: a clinical trial application and a subsequent application for approval to market the drug.10 If the drug is to be manufactured and finished abroad, the company must apply for an import drug licence.11 In either event, approval requires a robust demonstration of safety and efficacy, showing that the drug’s benefits outweigh its risks. After approval, a drug manufacturer is required to conduct pharmacovigilance and follow rules on advertising and promotion, as discussed in the sections below.
Regardless of the place of manufacture, domestic drugs are then classified into three types: traditional Chinese medicines and natural drugs, chemical drugs and biological drugs. Within each classification, drugs are again placed into categories and subcategories. These classifications and sub-classifications determine the clinical data and other requirements necessary for registration. In March 2016, pursuant to authorisations from the National People’s Congress and the State Council, the CFDA restructured the registration categories for chemically synthesised drugs. These new categories were intended to reduce confusion about the registration process, integrate the new reference product system for generics and encourage innovation. The five categories under this system are:
- Category 1: innovative drugs. These drugs have an active ingredient that has a clear structure and is clinically valuable. The ingredient must be new to the world, not just new to China.
- Category 2: improved innovative drugs. These drugs have an improvement that is clinically valuable and new to the world, such as certain structural changes, dosage forms, routes of administration, strengths and indications.
- Category 3: generics with foreign reference products. This category is for generic drugs that use fully evaluated drugs (typically originator drugs), which are marketed abroad but not in China, as their reference products.
- Category 4: generics with domestic reference products. The opposite of Category 3, this category is for generics that use fully evaluated drugs that are marketed in China as their reference roducts.
- Category 5: imported drugs already approved for marketing abroad. Following on from the separation between imported and domestic drugs described above, this category is either for original drugs that are already marketed abroad (5.1) or generic drugs marketed abroad (5.2). These drugs use the import licence pathway.12
Biologics have not yet undergone a similar reform, although the CFDA proposed a new highly simplified classification system for biologics in October 2017. Currently, biologics are classified as either therapeutic or preventive (i.e., vaccines), then further classified into 15 subcategories under each heading.13 Classification depends on the drug’s marketing approval status in China and abroad, source material, composition and other factors. The subcategories are not necessarily mutually exclusive, which can lead to confusion and duplicative requirements. China does not have a pathway for biosimilars in its regulations. Rather, in 2015, it issued a guidance document on the development of biosimilars that largely mirrored the guidance issued by the World Health Organization in terms of setting forth a method for a comparative evaluation typically against an innovative therapeutic biologic.
As explained below, certain types of drugs may also be subject to separate and heightened requirements and require additional special permissions. Examples of this would be those that the CFDA classifies as ‘narcotic drugs’ and ‘psychotropic drugs’, which are discussed below.
Medical devices are also defined via regulation and then further sub-classified. The RSAMD defines ‘medical devices’ broadly as:
Medical devices means the instruments, equipment, appliances, in vitro diagnostic reagents and calibrators, materials and other similar or related articles directly or indirectly used with human bodies, including the computing software required. Their effectiveness is primarily achieved by physical or other similar means and not by pharmacological, immunological or metabolic means, although it may be assisted in its function by such means, the purpose of which is to achieve the following objectives:
(1) diagnosis, prevention, monitoring, treatment or mitigation of diseases;
(2) diagnosis, monitoring, treatment or mitigation of injuries or the functional compensation thereof;
(3) inspection, replacement, adjustment or support of the physical structures or physiological processes;
(4) life support or sustaining;
(5) pregnancy control; and
(6) provision of information for medical or diagnostic purposes by inspecting the samples of human bodies.14
The RSAMD then defines three classes of medical devices:
Class I medical devices means medical devices with low risks, and those for which safety and effectiveness can be ensured through routine administration; Class II medical devices means medical devices with moderate risks, which must be strictly controlled and administered to ensure their safety and effectiveness; Class III medical devices means medical devices with relatively high risks, which must be strictly controlled and administered through special measures to ensure their safety and effectiveness.15
As with drugs, the CFDA and its relevant divisions have significant discretion to determine what constitutes a medical device and what class it fits into. Applicants for a device registration may make their own determination as to classification and then submit their application to the CFDA or they can treat their device as a Class III and ask the CFDA to make adjustments.16 The CFDA oversees an electronic portal that permits applications for a predetermination of device classification.
The CFDA maintains and periodically updates a classification catalogue showing its medical device classification decisions. By reference to this catalogue, with the general classification rules, the applicant can make its own determination as to classification. In 2017, the CFDA finalised a new and extensive classification catalogue, offering a new system of organising different types of devices and more detail and examples of the types of devices that fit under the various entries. The new classification catalogue will come into effect in August 2018.
As with drugs, the RSAMD and the Administrative Measures on Medical Device Registration classify a medical device as either a domestic device or an imported device, depending on whether the finished device is manufactured inside or outside China. If it is an imported device, the CFDA reviews and approves a registration application for Class II and Class III devices. Class I imported devices go through a notification system, which the CFDA also administers. For domestic devices, the review and the reviewing authority depend on the classification. Class I device manufacturers must notify municipal authorities before marketing their products; a provincial-level FDA approves Class II medical device registration applications; and the CFDA reviews and approves Class III medical device registration applications.17
Some medical devices are sub-classified as in vitro diagnostic reagents. The CFDA maintains a separate body of regulations for devices that meet this definition, including different rules on development, registration, and licence amendment and renewal. The primary CFDA rule for IVDs is the Measures on the Registration of In Vitro Diagnostic Reagents (IVD Measures), which set out a similar classification and registration scheme for IVDs. Under the IVD Measures, IVDs are defined as:
In vitro diagnostic reagents managed as medical devices refer to reagents, reagent kits, calibrators, quality control products and other products for in vitro testing of human samples used in the process of predicting, preventing, diagnosing, monitoring the treatment of, and observing the prognosis of disease and evaluating a state of health. They can be used alone or in combination with other devices, appliances, equipment or systems. In vitro diagnostic reagents for blood screening and radionuclide indicators are not considered IVDs and are regulated as drugs.
The IVD Measures also divide IVDs into three classes (I, II, III), III being the highest risk and I being the lowest. An amendment to the IVD Measures in accordance with the Innovation Opinion is planned for later in 2018.
The CFDA issued a notice in 2009 to govern its review of drug and device combination products.18 If the primary mode of action of a product is medicinal, the CDE will review it as a drug, or lead a joint and parallel review by both the CDE and the CMDE. If the primary mode of action of a product is not medicinal, the CMDE will review it as a device, or lead a joint and parallel review by the CMDE and CDE. One example of a product that the CFDA may treat as a combination product is a tissue-engineered product, which may be considered a medical device that may also have to meet certain requirements particular to the development of a biological product.19
Unless there are extenuating circumstances (e.g., substantial clinical need), the CFDA will not approve a combination product that is imported into China, if the product as a whole has not received any approval from the exporting country, or if the drug component of the product has not been approved in China or in the exporting country.
iv Non-clinical studies
Non-clinical studies for drugs must comply with the CFDA Drug Good Laboratory Practice Regulations,20 which for the most part follow similar good laboratory practice (GLP) requirements in other countries. Non-clinical studies for drugs must be conducted by institutions that have been certified by the CFDA to perform such studies to be accepted as part of a drug registration application. The CFDA also accredits laboratories that conduct pretrial testing for Class II and III devices. The Innovation Opinion may create more flexibility in this system by permitting both drug and device applicants to conduct testing outside this structure of state-accredited laboratories. Those implementing measures are still in progress.
v Clinical trials
Under the regulations, the default requirement for a permission to market a drug or Class II and III device in China is to conduct a clinical trial. As we explain below, the CFDA will permit some flexibility in this arrangement in certain cases. For example, some devices are exempt from clinical trials based on existing data and the safety record of predicate devices. For both drugs and devices, the CFDA is considering a more structured mechanism to accept foreign data to support marketing applications in the United States. The Innovation Opinion also includes a conditional approval programme, under which a foreign-approved drug for an orphan indication can receive approval in China presumably directly after receiving approval in another country. Implementing rules on all these points are still in draft form.
Before a clinical drug trial can be initiated in China, the sponsor must submit a clinical trial application (CTA) to the CFDA (specifically to CDE), and the CFDA (i.e., CDE) must approve it and issue a clinical trial permit. Although reform in this area is continuing, the CFDA’s review of a CTA can take about one year or more. Currently for new drug trials, the CFDA will permit an umbrella review of all three phases of a trial following a pre-CTA meeting. Also, an expedited review is potentially available for drugs that fit within the new drug pathway and those that are intended to treat certain illness or patient populations (e.g., children or elderly people) that the State Council or the CFDA consider to be clinically in demand. Priority review may also be possible for drugs that are in simultaneous development in the European Union and the United States. The CFDA is continually working to reduce this timeline for approval.21 As discussed below, the CFDA has recently adopted a filing system for bioequivalence studies for generic drugs that is less onerous than the CTA process. Under the Innovation Opinion, it is possible that CTAs for new drug trials may proceed within 60 business days of the submission of an application if no objection has been received from the CFDA.
The CFDA requires that investigational drugs (regardless of the imported or domestic pathway) be manufactured at good manufacturing practice (GMP) facilities and comply with GMP standards, that government-certified laboratories conduct quality testing to confirm conformity with the quality standards,22 and that the sponsor seeks review and approval of the clinical trial by a qualified ethics committee. Ethics committee approval must take place before CTAs are submitted to the CFDA. If the institution has one, another approval by a clinical trial management committee may be required.
Clinical trials can be conducted only at institutions that have been inspected and certified by the CFDA for that type of clinical investigation. Under the Innovation Opinion, this certification process has now changed from a pre-approval to a filing. Clinical trials in China are also governed by pharmaceutical good clinical practice (GCP) regulations,23 which follow similar GCP regulations in other countries in some respects. The GCP regulations and the DRR set out sponsor and investigator obligations, including for serious adverse events. The CFDA, or ethics committee, can hold or terminate a study for safety reasons.
Once a clinical trial protocol is approved by the CFDA, the information associated with it (including the protocol) can be difficult to amend, even for small changes. Although the agency is proposing to change current practice in this latest round of reforms, its regulations still do not include a clear procedure for protocol or other amendments to a CTA. This shortcoming has led to applicants having to file an entirely new CTA when making changes to their approved CTA, even if those changes are not safety-related.
For investigational arms of clinical trials, in some cases the DRR specify the following minimum numbers of study subjects, and the trial must have sufficient statistical power.24 The CFDA began to revise the application requirements for chemically synthesised drugs in 2016, with new data and application requirements.25 These minimum case requirements may largely be eliminated soon, but the following requirements for biologics remain on the books.
As of 2017, if the drug has been approved abroad, China’s drug regulations generally require submission of proof of that prior to submitting the CTA for an imported drug. In the event that the drug has not been approved elsewhere, an application for an imported drug can include submission of a CTA without proof of foreign approval.
Foreign manufacturers choose to apply for permission to conduct an international multi-centre trial (IMCT), and China has recently lifted the restriction that an applicant must show that it has begun Phase II or been approved abroad.26 Once the IMCT is complete, the applicant can apply directly for marketing approval. In 2017, the CFDA reversed its policy requiring a separate waiver application subsequent to the IMCT but before submission of a marketing application.
China has increasingly embraced the idea of multi-centre clinical trials by adopting special guidance on these types of trials in early 2015, and has pledged to encourage domestic drug manufacturers to participate in these trials.27
Clinical data are used to establish the safety and efficacy of medical devices that are registered for marketing in China.28 In general, manufacturers must submit clinical trial data to register Class II and Class III medical devices (including in vitro diagnostics).29 No clinical trial is required for Class I devices.30
The revised 2014 RSAMD broadened the exemptions from clinical trials for certain devices and for IVDs. The exemptions for devices include (1) devices for which there is an identical type of device on the market with a well-established safety record following many years of clinical use; (2) devices that can be evaluated effectively through non-clinical data; and (3) devices that can be evaluated through pre-existing data on the same types of devices.31 To further define these categories, the CFDA issued multiple catalogues of exempt devices,32 and guidance on how to determine whether a device falls under one of these broad exemptions. Exemptions similar to (1) and (2) also exist under the revised IVD regulations.33
Clinical trials of Class II and most Class III medical devices do not require CFDA approval. However, the CFDA has issued a catalogue of a subclass of high-risk Class III devices for which pre-approval of the clinical trial is required.
All trials for both medical devices and IVDs must take place at hospitals and other healthcare institutions that the CFDA has accredited to conduct device trials.34 In 2017, the State Council amended the RSAMD to permit hospitals to qualify as clinical trial sites after completing a filing process, as opposed to a pre-approval.
While no pre-approval from the CFDA is required (unless the device is designated as a high-risk Class III device), all medical device clinical trials must be approved by the institution’s ethics committee and notified to the provincial-level government where the clinical trial sponsor is located. The CFDA issued procedures to implement this provincial notification requirement in July 2015.35 In addition, under the revised RSAMD, device trials must comply with medical device GCPs. The CFDA issued new GCPs for medical device trials to support registration with the CFDA in 2016.36 These GCPs added to the provisions on informed consent (including those on consent from children and others who lack the capacity to consent), requirements for agreements between sponsors and the site, and the coordination of multi-site trials. The GCPs set forth a set of reporting requirements for adverse events that occur during the trial.
Human genetic resources
Foreign companies that sponsor clinical trials in China and collect human biospecimens must apply for approval to do so jointly with the Chinese clinical trial site (i.e., the hospital) from the Office of Human Genetic Resource Management within the Ministry of Science and Technology. This approval can also cover the exportation of the biospecimens and the data associated with them. This approval is required regardless of whether the foreign company is conducting genetic tests and covers any sample that contains human DNA.37 The regulations on human genetic resources also include controversial provisions on the sharing of intellectual property, including patent rights to any invention emerging out of the cooperation regarding collection of the samples. The Office of Human Genetic Resource Management reviews the agreements associated with a clinical trial to determine whether these requirements have been met and has significant discretion to delay or reject an application.
vi Named-patient and compassionate use procedures
Under the Innovation Opinion, China has committed to create an expanded access pathway under which a company sponsor can apply for permission for an expanded access treatment programme for patients with life-threatening illnesses that otherwise cannot qualify for the trial. The latest proposal would permit applicants to submit applications to the CDE. If the CDE determines that the application meets relevant requirements and the expanded access programme would not otherwise interfere with the trial, then it may approve an expanded access programme within 30 days.
Currently, the CFDA permits limited drug compounding or medical device manufacture by hospitals for use on their own patients, sometimes without having to receive CFDA clinical trial approval or marketing authorisation.38 In addition, Chinese drug regulations provide for the importation of unapproved drugs to satisfy urgent clinical needs or in the case of national emergencies. The urgent clinical need standard is a significant one, which is difficult for individual patients to meet, but may be used rather more commonly when the drug is necessary to treat a specific group of patients to prevent the spread of serious contagious disease.39
vii Pre-market clearance
As discussed, CFDA review and approval is required for the domestic production or importation of drugs. The DRR provide five types of drug registration applications: (1) new drug; (2) generic drug; (3) imported drug; (4) supplemental applications; and (5) re-registration.40 With the exception of (4) and (5), the type of application depends on where the finished dosage form of the drug is manufactured.
Imported drug application
If manufactured abroad and by a qualified foreign manufacturer, the application is for an imported drug. If approved abroad, the foreign manufacturer holding the relevant approval for the foreign regulatory health authority must be the applicant before the CFDA and will be required to present a certificate of pharmaceutical product to show marketing abroad. If the drug for import is not yet approved abroad, the CFDA can approve the imported drug as a Category 1 innovative drug (see above) and no foreign approval is required.
In addition, the foreign manufacturer must submit drug samples from three batches to be tested by the National Institute of Food and Drug Control (NIFDC) for conformity with product specifications and quality standards. Under the Innovation Opinion, this testing may be permitted at third-party laboratories, which, if implemented in this manner, could significantly reduce some of the delays that have prolonged development in China.
The manufacturer must also appoint a local entity in China to act as the agent for the imported drug registration.41 Registration agents may be drug distribution entities that hold distribution licences, which allow them to book sales and promote the drug.
New drug application
For chemically synthesised drugs, a new drug is now considered to be one that is new to the world in the ways specified in registration Categories 1 and 2 described in Section II.iii. The DRR provide that all biologics must proceed through the new drug pathway.
For this pathway, the CFDA requires that a manufacturer obtains a drug manufacturing licence after a facility inspection and a separate GMP certification. Depending on the existence of a manufacturing licence, the CFDA will issue a new drug certificate and, once there is a licensed facility in place, an official drug approval number, which permits marketing of the drug. Under the Innovation Opinion, the GMP certification will be merged with the manufacturing licence.
As discussed above, the CFDA implemented an MAH Pilot for drugs manufactured in China. The Pilot began in 2015 and will continue through 2018; it is being implemented in 10 provinces, including Beijing and Shanghai. Individuals of Chinese citizenship and research institutions (which can include drug companies) working or established, respectively, in one of the pilot provinces are permitted to hold a licence for a product, including the rights to sell, distribute and receive profits from the drug. However, those individuals or entities could contract out the manufacturing and distribution or hold their own manufacturing and distribution licences.42 MAHs are also permitted to use more than one manufacturing site. Although on a limited scale, the MAH Pilot permits smaller research and development entities to hold product licences without developing costly facilities that they cannot afford.
The Innovation Opinion has now stated that the MAH Pilot will be expanded to all applications, including those for imported drugs, after an amendment to the Drug Administration Law. The CFDA has already proposed the amendment, which is awaiting consideration by the National People’s Congress, possibly in 2018.
Generic drug application
With the exception of original drugs manufactured abroad, drugs that are not new to the world are generic drugs and go through an abbreviated process through which they establish therapeutic and quality equivalence to a reference product marketed in China or abroad. Equivalence is established either through a bioequivalence study or an in vitro study, if the drug qualifies for an exemption. In other cases, the applicant may have to conduct an efficacy study. In most cases, the reference product will be an original product, but the CFDA will also permit an ‘internationally recognised’ generic product to serve as a reference product.43
Generics on the market that are on the Essential Drug List (2012 version) for reimbursement in healthcare institutions and in solid oral forms must demonstrate equivalence by the end of 2018. All other fixed oral dosage form generics can freely determine when they will demonstrate equivalence, but the first generic manufacturer to seek such approval will get three years of exclusivity during which equivalence applications for other generics of the same type will not be accepted.44
The CFDA has developed and implemented a new set of guidelines for demonstrating bioequivalence. Under this new system, bioequivalence studies may begin after the applicant has notified the CFDA through an electronic platform.45 The CDE review of a generic drug application proceeds in parallel with manufacturing site inspection and collection of drug samples by the provincial FDA, as well as drug quality testing by the NIFDC. If results are satisfactory, the CFDA will approve the application and issue a drug approval number to the applicant, which should already have obtained a drug manufacturing facility permit.46
The pathway for biosimilars is somewhat different; that is to say, biologics for which there is an existing standard may be brought on the market. However, the DRR require that all biologics go through the application pathway for new drugs, and do not provide for a separate biosimilar category.47 The application requirements may still be different depending on the subcategory of biologics. For example, biologics for which there is a pre-existing national standard typically only need to conduct Phase III studies in China and for others, Phase I may be waived.48
In 2015, the CDE finalised a guidance document on biosimilars, intended to strengthen the methods for research and development of similar biologic products and their stepwise characterisation and comparison to reference originator products, including a quality comparison, and non-clinical and clinical evaluations. This guidance also includes some provisions on labelling and pharmacovigilance.49 The way that this guidance is intended to interact with existing law and regulation governing the approval process for all biologics is still not entirely clear.
In 2015, the CFDA began examining what had become a huge application backlog for both drugs and devices. The Agency has tens of thousands of applications pending, with thousands more being filed each year. The State Council and the CFDA have committed to significantly reducing this backlog by the end of 2018. The CDE’s last annual report, released on 3 March 2016, indicated that the drug backlog had been reduced from approximately 22,000 to 17,000 applications, which is a reduction of around 22 per cent,50 and by 2017, the CFDA touted reducing the backlog to only 6,000.51 The CFDA has also committed to increasing the speed of the reviews and the criteria for review and approval by adding review personnel and creating review guidelines.
With these reforms still progressing, the total time for review, site inspection, drug sample testing and final approval of an imported drug licence, a new drug application or a generic drug application is in flux, but it can still take one to two years. Most of this time continues to be occupied by the CDE review process. The DRR provide for 150 business days for CDE review of new or imported drug applications, and 160 business days for CDE review of generic drug applications. In practice, CDE review often takes longer. If the CDE needs additional information, it can issue a request to the applicant, and the review clock stops. The applicant will have four months to provide the additional information, and the CDE will have an additional 40 days to review the additional information. Requests for additional information are common in all applications, and sometimes repeated, although the CDE is required to avoid repeated requests. Reviewers may meet with the applicant upon request and the CFDA has implemented a new set of meeting guidelines that permit more structured and frequent interactions when issues arise in development or the registration process.
Priority review is available for certain drugs that treat serious or life-threatening conditions, including new drugs for the treatment of HIV, cancer or orphan diseases, and new drugs that treat unmet medical needs. The CFDA has recently introduced new priority categories, including drugs that treat diseases prevalent among children and elderly people, that are on national scientific research plans, foreign innovative drugs that transfer manufacturing to China, and drugs that are being developed simultaneously in the United States and Europe.52 Priority status facilitates applications by permitting the applicant better access to CDE reviewers for their marketing applications and in some cases for questions about their clinical trials. Publicly available information suggests that the fast-track mechanism has, in fact, shortened review times. The CFDA renewed these priority review categories in late 2017. Under the Innovation Opinion, the CFDA will permit conditional approval (permitting earlier approval of a drug that has showed promise in early trials and treats a life-threatening illness) provided that the drug meets post-marketing commitments. Similar conditional approval is likely to be permitted for drugs approved abroad that treat an orphan indication.
The registration for an imported or domestic drug is valid for five years. Six months prior to expiry of the registration, the applicant must submit a re-registration application to the CFDA if it is an imported drug or to the PFDA if it is a domestic drug. Re-registration applications generally do not require new clinical data, though data from the required Phase IV study may be a condition of renewal. The CFDA or PFDA must complete the review and either approve or deny the application within six months of accepting the filing. If the re-registration application is not approved, drugs manufactured after expiry of the existing marketing or manufacturing authorisation may not be marketed in China. The CFDA has now transferred the decision-making power relating to re-registration applications for imported drugs to the CDE.53
Supplemental drug application
Certain post-approval changes to a drug, whether imported or domestic, require CFDA approval of a supplemental drug application. The applicant must be the company that holds the existing marketing or manufacturing authorisation. While major post-approval changes require the CFDA review and approval, some minor changes can be notified to the agency and implemented without a full technical review.54 The proposal described above relating to re-registration of imported drugs would also transfer final approval over supplemental applications for both imported and domestic drugs to the CDE to reduce delays.
Some form of pre-market review and approval is required for domestic production or importation of all three classes of medical devices. Domestic and imported Class I devices must be notified to either the municipal food and drug regulatory authority where the manufacturer is located or the CFDA, if manufactured abroad, before being placed on the market. Once the applicant submits the notification, the authorities will make an ‘on-the-spot’ determination to issue a notification certificate, provided that the materials are complete.
As noted above, domestically manufactured Class II devices must be reviewed and approved by a PFDA. Class III medical devices, as well as Class II and III imported medical devices, must be approved at CFDA level. For imported devices, the applicant must appoint a regulatory agent in China. For all Class II and III devices, government-certified laboratories first verify conformity with the device’s ‘technical requirements’, which the applicant must formulate in advance, and applicable standards through testing. This testing is often referred to as registration testing or type testing. For Class I devices, the applicant may submit its own internal test results. Under the Innovation Opinion and subsequent proposals, this self-testing would be expanded to other classes of devices.
The statutory timeframe for agency decisions on the different types of devices depends on the class of the device and the type of technical review required. For Class I devices, either the municipal FDA or the CFDA (if an imported device) will make an immediate determination of the completeness of materials and, if complete, accept the notification.55 In the case of a Class II or III device, the relevant agency will make a determination as to whether the application is complete and appropriately filed (i.e., the agency has jurisdiction). Within three days of acceptance of the application, the materials are sent on to a technical review institution, which under normal circumstances has 60 days to complete its review. If outside expert help is required or the institution decides that it needs to conduct an inspection of the applicant’s quality management systems, then the time may be extended beyond the 60 days. Similarly, the technical review institution may make a one-time request for any supplementary materials required. It then has another 60 days from the time of receipt of those materials to make its decision. Once the technical review is complete, the CFDA has 20 days to make a decision.
The CFDA already gives priority to innovative devices (described below) and, in 2016, as part of its effort to reduce delays and focus its resources on key areas, it issued new procedures on priority review for devices associated with national scientific initiatives, those with orphan indications, those that treat children or elderly people, and other devices that serve urgent clinical needs.56 Those accepted to these pathways get priority access to CMDE reviewers regarding the design of their application. Similar conditional approval procedures may be available for devices under the Innovation Opinion.
After approval, a medical device registration certificate is issued by the appropriate level of FDA, and the certificate is valid for five years. Six months prior to expiry of the five-year period, the manufacturer must submit a medical device re-registration application. If the renewal application is not approved by the time the licence expires, the application will be deemed approved.
Changes to certain elements of the registration require amendments or updates. The type of amendment and the length of review depends on whether it is a ‘licensing matter’ or a ‘registration matter’. Licensing matters include the non-proprietary product name, its model, its specifications, its structure, its composition, its scope of use (indications), its technical requirements and the foreign site of a manufacturer. Registration matters include the name of the applicant, the name of the agent and their addresses. In the case of a domestic manufacturer, the address of the manufacturing site is also a registration item. For registration items, the original licensing agency will issue a revised licence in 10 working days. Licensing items require another technical review before a modified registration certificate will be issued.57
viii Regulatory incentives
Chinese regulation is designed, in some respects, to encourage innovation and development and manufacturing of products for which there is a particular clinical need and value through expedited pre-market approval pathways. By contrast, post-approval regulatory incentives are very weak and their implementation is incomplete. China has established a system of patent protection for drugs and devices. There is some limited regulatory data protection for a new chemical entity, although this data protection is difficult to enforce in practice, and China has a kind of de facto market exclusivity implemented through a new-drug monitoring period (described below) for a product that has not been manufactured in China or is locally manufactured in China.
Under the Innovation Opinion, China has promised to implement new incentive systems, including real regulatory data protection, patent linkage and patent term extension. Although the remainder of this section describes the existing system, it is also important to understand some very significant reforms that could be on the horizon. The CDA has introduced, or plans to introduce, laws or regulations to implement these reforms in 2018.
Under regulatory data protection, innovative drugs (undefined term), innovative therapeutic biologics, orphan drugs, paediatric drugs, and drugs that have achieved a successful patent challenge would receive a certain period of protection for their original undisclosed clinical test data. This would prohibit follow-ons from using that data to apply for marketing permission.
Patent linkage will describe a system for resolving patent disputes prior to the approval of a potentially infringing drug. An applicant would prepare a statement of relevant patents. The applicant would need to give the holder of a relevant patent notice of its application, permitting the holder to file a suit within a certain period of time. During that suit or for a certain period, the CFDA would continue its review, but would not issue its approval.
The patent term extension pilot programme will grant additional patent life for certain drugs that have experienced delays as a result of clinical trials or the registration process.
Until the CFDA implements the reforms described above, the following system applies. China gives 20 years of patent protection. An applicant is required to provide information on patent status in China as part of its drug registration application. If there are relevant third-party patents in force, the applicant must make a declaration of non-infringement, which the CFDA will publish.58 If the drug is covered by third-party patent rights and the applicant is not able to file a non-infringement declaration, the applicant can file the application two years prior to the patent’s expiry. The CFDA can review the application and, if approvable, grant the approval when the patent expires. In practice, however, the CFDA does not implement these provisions rigorously, which led to the patent linkage reforms set forth above.59
China does not have true regulatory marketing exclusivity. The DRR provide that the CFDA has discretion to set a ‘new-drug monitoring period’ of up to five years when it approves the manufacturing of a domestic drug that is first in its class. The monitoring period is not available for imported drugs and, within the revised chemical drug registration categories, the monitoring period only applies to innovative new drugs and improved new drugs, which means it only applies if the drug (or its innovation) is new to the world. The monitoring period does not apply to generic drugs. During the monitoring period, the drug is under enhanced adverse event monitoring requirements, and the CFDA is not allowed to approve the clinical trial, manufacturing or importation of another domestic or imported drug in the same class for the same indication. If, however, the approved domestic drug is not manufactured within two years of approval, the CFDA can approve another domestic or imported drug application. The monitoring period does not provide complete exclusivity, however, because if the CFDA has approved the CTAs of other applicants for the same drug, those applications may proceed to registration. The Innovation Opinion leaves the fate of the monitoring period unclear.
The regulations for the registration of medical devices do not require patent certification or contain provisions on data or market exclusivity, and they are not covered by the reforms. The revised RSAMD expressly state that any patent disputes will be handled under the relevant laws (i.e., the Patent Law).60 There are procedures for expedited review and approval of medical devices where there is a public health emergency and the same kind of device is not marketed in China, or is marketed but is in short supply. Medical devices undergoing expedited procedures also benefit from assistance from the CFDA during development and registration.61
As discussed above, the CFDA has also created an expedited pathway for review of applications for ‘innovative devices’. To qualify as an innovative device:
- the patent for the technology must be held in China;
- the primary work on the product’s design and use mechanisms must have been the first of its kind in China;
- its safety or functionality must be a fundamental improvement over comparable technology;
- it must be leading technology internationally;
- the device must have clear clinical value;
- preliminary research must be complete and there must be a basic product model; and
- the data must be complete and traceable.62
The innovative device pathway does not entitle applicants to marketing exclusivity, however. It provides the applicant with priority in terms of access to communication with the CFDA regarding its application and the ability to hold a licence without a manufacturing facility. As noted above, the CFDA has recently released procedures on additional priority pathways, which are based on more on clinical needs and not other IP-related criteria. Devices are included in the conditional approval pathway under the Innovation Opinion.
ix Post-approval controls
Drug and medical device manufacturers are obligated to establish systems to report and analyse adverse events and product complaints, and meet any conditions imposed as part of the product approval.63 In 2011, the CFDA issued detailed regulations on adverse reaction and event reporting for drugs and devices. The Measures on the Administration of Adverse Drug Reaction Reporting and Monitoring (2011) require FDAs at national, provincial and municipal levels to set up adverse event collection systems, and imposes reporting and monitoring obligations on not only the drug manufacturer, but also drug distributors and healthcare organisations. Specific reporting time frames and follow-up actions are set out for handling individual cases, clusters of cases, periodic accumulative reporting, enhanced monitoring and imported drug reporting.64
For medical devices, the CFDA promulgated the Measures on the Administration of Medical Device Adverse Event Monitoring and Re-evaluation (Interim), and issued Guidance on the Monitoring of Medical Device Adverse Event (Interim) to impose detailed adverse event reporting obligations on device manufacturers, distributors and user facilities. The system and requirements are similar but not identical to those for drugs.
In late 2015 and then again in late 2016, China released a revised version of the Measures on the Administration of Medical Device Adverse Event Monitoring and Re-evaluation for public comment. That draft introduced (1) a more concrete role for technical monitoring institutions; (2) modifications to the timelines for manufacturers, distributors and healthcare institutions to report on and evaluate adverse events both on an individual and periodic basis; (3) a clearer definition of a serious adverse event; and (4) more concrete requirements and guidelines for targeted monitoring of certain devices and device re-evaluation.65 At the time of writing, the revisions are not final.
The CFDA has the authority to order mandatory recalls of drugs and medical devices because of serious adverse reactions or other safety issues.66 Under new device recall regulations released in 2017, the CFDA can order a mandatory device recall if the device does not meet mandatory national standards or its own technical requirements (i.e., specifications). This and other similar triggers have expanded the scope of recallable products.
Manufacturers and distributors also have different obligations, in varying circumstances, to cooperate with, report on or implement recalls. For example, for medical devices, the manufacturer is required to conduct an investigation and evaluation of adverse event and other safety-related information to determine whether they reveal a ‘defect’ (i.e., an unreasonable risk of bodily harm under normal conditions of use) with the device, a violation of a mandatory national standard or the device’s technical requirements, a violation of good manufacturing practices, or other similar circumstances. The manufacturer must also classify the recall into one of three classes, the first class being the highest risk and the third being the lowest. If a manufacturer does not conduct a recall voluntarily, the CFDA may order one if it disagrees with the manufacturer. The manufacturer must report on the progress of the recall and its final results.
Transfer of licences
Transfer of licences is more difficult to achieve in China than in, for example, the United States. Part of the reason is that CFDA regulations give limited guidance on this issue and regulatory changes have created further uncertainty. Another reason is because of the connection between the product permission and the manufacturing facility permissions. It is possible that the MAH system will make it easier to transfer licences because the licences will be (as we explain below) less linked to a manufacturing site.
Otherwise, for domestically manufactured drugs, licences are currently issued to the specific manufacturer for the specific manufacturing site. As a result, any transfer requires a transfer of ownership of the site because the two are bundled together. This is usually done via an equity acquisition of the holder of the two licences, because CFDA regulations have specifically prohibited any ‘purchase and sale, rental, or other loan of the licences’.
For imported licences, the situation is somewhat different because there is no manufacturing licence. Thus, the licence can be transferred by procedure to change the name of the holder, and the manufacturing site can be changed via a supplemental application to the licence.
These issues are somewhat different regarding devices. The facilities still require manufacturing licences but, in contrast to drugs, the CFDA also issues product licences for domestic devices. Therefore, for both imported and domestic devices, the CFDA has permitted the Class II and Class III device product licences to transfer between entities using an application to amend the name of the applicant on the licence. For Class I devices, the new applicant is likely to submit a new filing, which could be accomplished relatively quickly. The applicant may have to make other changes to items on the licence, such as the registration agent and the manufacturing site, through product licence amendment procedures, depending on the details of the deal.67
There are more specific provisions on the transfer of device manufacturing licences. Under the revisions to the Device Manufacturing Regulations, the manufacturing licence travels with the entity. If the entity survives a merger or split, then the licence need only be modified. If the original entity is dissolved, then the licence will not be transferred and any new entity must apply for a new licence.68
Suspension or revocation of approvals
The CFDA has broad authority over licences, their approval, their renewal every five years and their cancellation on the basis of safety concerns or fraud. This discretion extends not only to product licences but also to facility licences, accreditations and clinical trial approvals. For example, the CFDA has a number of grounds for revoking or refusing to renew a product licence.
In any of the following circumstances, a drug shall not be re-registered [if]:
(1) the application for re-registration is not made prior to the expiry date;
(2) the relevant requirements set by the State Food and Drug Administration when approved for marketing are not met;
(3) the Phase IV clinical trial is not completed as required;
(4) the adverse drug reaction monitoring is not conducted in accordance with regulations;
(5) there are uncertain therapeutic efficacy, serious adverse reaction or other factors harmful to human health upon re-evaluation by the State Food and Drug Administration;
(6) the drug approval documents shall be withdrawn in accordance with the provisions of the Drug Administration Law;
(7) the production conditions prescribed in the Drug Administration Law are not met;
(8) the obligation of observation period is not fulfilled in accordance with regulations; or
(9) there are other circumstances not in conformity with relevant regulations.
For devices, a renewal will not be granted if (1) the filing of the application is not timely; (2) compulsory standards for the medical device have been revised and the device fails to meet the new standards; and (3) specific conditions related to medical devices needed for treating rare diseases or for public health emergencies are not met.69
Second, there are several types of non-compliance that can trigger licence suspension or revocation in China. For example, the DAL provides for the revocation of drug approval licences on various grounds, including:
- production or sale of counterfeit or substandard drugs;70
- non-compliance with customs rules for imported drugs;71 or
- non-compliant labels.72
The RSAMD provide for the re-evaluation and potential revocation of medical device licences when:
- new developments in science and technology raise questions about the safety and effectiveness of the device;
- adverse event reporting raises questions about the safety and effectiveness; and
- any other circumstances that the CFDA determines warrant a re-evaluation.73
The revised RSAMD provide that obtaining a licence via fraudulent or corrupt means is grounds for revocation of the licence.74 Other activities that constitute impermissible marketing of devices or marketing of devices known to be unsafe or not in compliance with standards may result in fines, seizures, disgorgement and, in certain circumstances, blacklisting from the industry. In September 2017, the Supreme People’s Court also interpreted certain provisions of the PRC Criminal Code to apply to circumstances in which a drug or medical device application is procured by making fraudulent misrepresentations or using fabricated data.
x Manufacturing controls
As discussed above, drugs and Class II and III device manufacturing facilities located in China must hold a manufacturing licence, and observe drug or device GMPs. Class I device facilities submit a notification to local food and drug regulatory authorities.
For drugs, any proposed establishment of a facility must be approved by government agencies responsible for economic planning, and by the PFDA for potential ability to meet GMP requirements. Upon completion of the facility construction, the facilities must pass GMP inspection and receive a GMP certificate before they can be issued a drug or medical device manufacturing licence.
Class II and Class III device facilities must be verified as device GMP-compliant before a local authority will issue a manufacturing licence. This requires a compliance inspection.75 If any manufacturer is found to be non-compliant with the rules, and does not correct the violation, it can be fined or shut down.76
Contract manufacturers must be similarly GMP-compliant and hold the requisite manufacturing licence. In some circumstances, in which the CFDA has determined that the products present heightened risk, such as in the case of psychotropic drugs or narcotic drugs, the agency will not permit contract manufacturing.77
Import manufacturers are also required to comply with GMPs for drugs or devices, as the case may be. The CFDA monitors compliance with all facilities that support the products that it licenses through inspections. Inspections may be for cause and announced or unannounced. In some cases, the regularity of inspections is risk-based. For example, for device manufacturers, the CFDA and its local counterparts set a risk level that determines the number of inspections during a specific period. The CFDA also conducts inspections of facilities abroad, although it is not entirely clear what determines the need for these inspections.
xi Advertising and promotion
The CFDA must pre-approve all drug advertising and prohibits any direct-to-consumer advertising of prescription drugs. The term ‘advertising’ is broadly defined under the general Advertisement Law and can include any published media that directly or indirectly introduces the product (or service). As a result of amendments to the Advertisement Law in 2015, the legislature has made it more prominent that the definition of advertisement will include websites, mass emails and postings on microblogs and other social media sites.78 Article 3 of the Detailed Rules on Implementation of Administration of Advertisements – which was issued in 2004 but remains effective – also contains a generally phrased list of the various media and promotional activities as examples, including product samples. Therefore, there is ample authority on which agencies can enforce against sponsors. Promotion or advertising of a drug prior to CFDA approval is prohibited, although some strictly limited scientific exchange may be permissible.
The drug-specific advertisement requirements and prohibitions are provided in a number of laws and regulations, including the Measures for Review of Drug Advertisement (Advertisement Measures) and the Standards for Drug Advertisement Review and Release (Advertisement Standards), both of which were promulgated jointly by the CFDA and the State Administration for Industry and Commerce (SAIC) in 2007. The SAIC began revising the Drug Advertisement Standards in 2015, but the draft it issued did not propose to make substantial changes to the basic features of the system.79 The CFDA issued a proposal to revise its procedures for approving drug, device and health food advertisements in late 2016, but it has not yet finalised that rule. As the Advertising Law sets many of the limits on substantive content, the CFDA’s rule was primarily procedural.
The provincial FDA where the advertiser is located must review and approve all drug advertisement materials. Article 4 of the Advertisement Measures provides that advertisements of prescription drugs can only run in CFDA-approved medical journals (currently, the CFDA has approved about 557 journals). The prohibition on consumer advertising of prescription-only drugs also prevents many indirect advertising activities, such as sending journals or reprints to the public, or any other means of advertising to the public.
Upon approval, drug advertisements are given an approval number, which appears on the advertisements. Advertisement approval is valid for one year only and no change is allowed to an approved advertisement. Upon the approval’s expiry, or if any change is needed to an approved and unexpired advertisement piece, a new advertisement application must be filed and new advertisement approval obtained. The CFDA has posted on its website all advertisements that have been approved and those against which there has been enforcement.
China prohibits advertising outside the content of the approved label or package insert (off-label promotion). The prohibition against off-label advertising is set out in Article 6 of the Advertisement Standards:
The advertisement content relating to the indications or the primary therapeutic functions must be consistent with the drug instructions approved by the CFDA, must not expand or maliciously conceal, and must not contain any theories, viewpoints, or similar contents that are outside the drug instructions.
The Regulations on Administration of Drug Product Instructions and Labels require that: ‘drug instructions and labels shall be approved by the CFDA, the labels must be based on the drug instructions, and the contents of the labels shall not exceed the scope of product instructions, and shall not contain wording or symbols that imply therapeutic effectiveness, misleading use, or inappropriate promotion’. The Drug Administration Law of China also prohibits off-label promotion through other means, such as labelling materials, including the spoken word and written or video materials used by sale representatives in promotional discussions with physicians.
The penalties for unapproved changes to an approved advertisement include immediate revocation of the advertisement approval, and rejection of any advertisement application for the subject drug for one year. Heavier penalties would apply in the event that an illegal advertisement expands the scope of the indications or primary therapeutic function, exaggerates efficacy or seriously deceives and misleads consumers. Heavier penalties include the provincial FDA suspending the sale of the subject drug within the province that has jurisdiction, and ordering the drug company to run corrections regarding the advertising concerned.
The term ‘promotion’ is not defined under Chinese law. Any activity related to a drug is promotional, if, objectively, the intent is promotional, as that term is commonly understood (i.e., where it is intended to further the acceptance and sale of the drug). This includes a broad array of product launch activities and associated materials. China has other laws that govern promotion and require that it be generally truthful and non-misleading. These include the Anti-Unfair Competition Law (AUCL) and the Law for the Protection of the Rights and Interests of Consumers (Consumer Protection Law). The AUCL is often a basis for enforcement by the Administrations for Industry and Commerce, which have been combined (with the FDAs) into Market Supervision Bureaux in provincial-level localities such as Shanghai, which investigate promotional violations, including violations of off-label promotion. There is no clear distinction between what constitutes promotion under these laws and what constitutes advertising under the Advertisement Law, even though the AUCL does make that distinction.
As noted above, scientific information exchange, including exchange of off-label information, may be viewed as non-promotional with somewhat less risk when conducted appropriately, because the intent is to advance science and medicine through the exchange of scientific information between medical professionals, rather than to further the acceptance or sale of a drug.
Device advertisements also require pre-approval. Regulation of advertising and promotion of medical devices is similar to that for drugs, as described above. The rules for advertising and promotion of medical devices are set out in several regulations, such as the RSAMD, the Measures on the Examination of Medical Device Advertisements (2009) and the Standards on the Examination and Release of Medical Device Advertisements (2009), which, like the drug standards, are now also under revision as a result of the 2015 amendments to the Advertisement Law.80 Device promotion is also subject to the AUCL and the Consumer Protection Law.
xii Distributors and wholesalers
China requires a company to have a licence to engage in the retail or wholesale distribution of drugs that are manufactured by other companies. No distribution licence is required for a drug or device manufacturer to distribute the products that it manufactures for itself. Both drug and device distributors must meet respective sets of good supply practices.81
The system of device distribution licences also exists for Class III medical devices. Distributors of Class II devices no longer need a licence, but those distributors must submit a notification to their local municipal governments. In either case, the entity must certify that it has appropriate premises, storage conditions and quality management systems, and personnel for its scope of operation.82
In 2017, China released a policy for drugs called the Two Invoice System. The aim is to curb corruption in the drug supply chains, and the system limits those supply chains to two invoices. In other words, once the product leaves the manufacturer or the manufacturer’s agent, there may be only two invoices, one from the manufacturer to the distributor and one from the distributor to the end-user hospital. Those in the supply chain are required to check the invoices, and failure to observe the policy can result in blacklisting from important procurement processes or loss of distribution credentials. There are some limited exceptions to this system, such as for transfers between entities in the same corporate group or to exclusive distributors.
xiii Prescription status
The CFDA classifies drugs as prescription drugs or over-the-counter (OTC) drugs, and requires the CFDA’s review and pre-approval for both. For the purposes of distribution and sale, the CFDA further classifies OTC drugs into Type A or B, where Type A drugs can be sold only by pharmacies or distributors that have received drug wholesale or retail distribution licences, and Type B drugs can be sold at most retail outlets, such as convenience or grocery stores, if approved by provincial governments. The National Health and Family Planning Commission regulates prescribing behaviour for physicians, including a requirement that physicians use the non-proprietary names of drugs. The CFDA has not set up prescription or non-prescription classifications for medical devices.
xiv Imports and exports
In addition to the product licences for imported drugs and devices, there can be a variety of additional requirements and formalities at the ports. For example, special import or export permits are required for narcotic or psychotropic substances.83 Drugs that are imported for processing and re-export do not require CFDA pre-approval; only provincial FDA notification is required for such products provided they will not be sold or used in China.84 Additional testing at the border may be required.85
The CFDA generally does not impose the same requirements for exporting drugs or devices and relies instead on the regulatory oversight of the country of destination. Manufacturers of exported drugs and certain devices must still obtain a manufacturing licence and comply with good manufacturing practices and standards. There are exceptions for nine types of drug86 and two types of device,87 which the CFDA has placed into the catalogue of drugs and devices subject to full CFDA supervision.88 In addition, special export permits are required for exporting some narcotics or psychotropic substances. In most cases, drug and device manufacturers must also submit a filing to their local government prior to export.89 Certificates of free sale for foreign import authorities may be available from provincial governments, provided that the China manufacturer meets the relevant requirements.
xv Controlled substances
China exercises heightened control over narcotic and psychotropic drugs. The State Council promulgated the Rules on the Administration of Narcotics and Psychotropics, which provide separate rules on these products. The CFDA, the Ministry of Public Security, and the Ministry of Health recently jointly issued the revised Catalogue of Narcotics and the revised Catalogue of Psychotropics. Special heightened control is exercised by several government agencies regarding the growing of plants from which narcotics or psychotropics are extracted, and the clinical trialling, manufacturing, transportation and distribution of narcotics and psychotropics. For example, government agencies set the total amount of narcotics and psychotropics needed annually, and the CFDA then sets the annual production plan based on the current supply and stockpile. The CFDA and the department of agriculture jointly set the annual growing plan. Special permits are given only to limited entities to study, produce and distribute narcotics and psychotropics.
Enforcement against violations of drug or medical device requirements is undertaken by the FDAs at national, provincial and lower local levels, with cooperation from other government agencies such as the SAIC, NHFPC and the public security bureau (China’s police force) at all levels of government. Routine and for-cause inspections are the primary means of detecting actual or suspected violations, and complaints from competitors are often the triggers for for-cause inspections. The CFDA has also adopted comprehensive regulations on unannounced inspections for drug and device manufacturers.
The focus of inspections can include many compliance requirements and activities, such as those targeting good practice (laboratory, clinical, manufacturing, storage), data integrity, conflicts of interest, bribery, violative advertisement and off-label promotion. The penalties include revocation of licences and certificates, which can be imposed (see Section II.vii) on post-approval controls in many more situations than in the United States. Other penalties include administrative fines, seizure of products, disgorgement of profits and blacklisting of companies and individuals. Monetary penalties are increasingly high. Criminal liability can be imposed for many violations, and disbarment from engaging in drug or device work is possible. Production or distribution of counterfeit medicines as defined by the DAL may be subject to life in prison or the death penalty if the violation causes death or especially serious harm.90
Increasingly, the CFDA has been requiring manufacturers, distributors and clinical trial sponsors to conduct self-evaluations into good practice compliance and report on the results to the CFDA. For example, in mid 2016, all holders of device distribution licences were required to take stock of compliance with device distribution regulations and good storage practice (GSP) over a two-year period and report back to the CFDA on any non-compliances and plans for remediation. Failure to comply risked the holder’s distribution licence.91 The CFDA has required similar self-evaluation for drug clinical trials in 2015. Holders of CTAs were required to review for compliance with GCP, which resulted in the withdrawal of nearly 80 per cent of the trial approvals for non-compliance.92
III PRICING AND REIMBURSEMENT
China has recently begun to reform its system for drug pricing. Specifically, it has abolished the ‘maximum retail price’ for drugs, and is now implementing a plan to permit those prices to be set more by the market and by reimbursement standards negotiated more openly by stakeholders. Specifically, for drugs that are reimbursed on China’s state insurance plans (discussed below), the price will be determined by reimbursement rates. For patented drugs produced exclusively by one manufacturer, the price will be set through transparent negotiations between the manufacturer, government and healthcare industry representatives. Prices will still be set or guided by the government for certain types of drugs, such as narcotic drugs and psychotropic drugs. For all other drugs, however, the prices may be freely set by the manufacturers, provided that they accurately reflect costs.93
Most insurance is through state plans. The government operates three basic insurance programmes: one for urban employees, one for urban non-state-employed residents and one for rural residents, covering nearly 90 per cent of the nation’s population. Covered drugs for the urban plans are included in the National Reimbursement Drug List (NRDL), which has a total of 2,151 drugs in its most recent version, which the government revised in February 2017. This latest version includes a number of innovative drugs and increases the range of therapies available for paediatrics, cancer, hepatitis and cardiovascular diseases. The covered drugs for the rural plan may vary by province.
The NRDL is categorised into two lists. Drugs on List A are the National Essential Drug List and are fully reimbursable in any province. Drugs on List B are only partially reimbursable under various insurance schemes at provincial level. Pricing for the drugs on the NRDL are determined by government agencies based on various factors, including cost of production, clinical need, and supply and demand. The pricing and coverage decisions are taken primarily by the NDRC and its local counterparts (the pricing bureaux), as well as the Ministry of Human Resources and Social Security. Drug manufacturers and distributors are required to report various production costs and sales information to the government agencies, and based on this information, the government agencies decide on the prices by applying complex formulas.
By contrast, the commercial insurance sector is smaller, but steadily developing.94 For example, the government has been trying to promote critical disease insurance for individuals who have exceeded their coverage level under the state plans. Individuals with qualifying diseases that obtained critical disease coverage would be eligible for 50 per cent reimbursement under those plans. The government has encouraged the commercial insurance sector to play a strong role in providing this type of coverage.95
A pricing system also exists for medical devices, but its features may differ depending on the locality. In some localities, the government will set a maximum retail price for devices. The manufacturer reports information about its costs to the government and is then permitted a certain mark-up that is set by the government.
As with drugs, coverage by the national plans and reimbursement rates for medical devices are set by a combination of central and local government agencies. Medical institutions (i.e., hospitals and clinics) acquire devices through restricted procurement processes.
IV ADMINISTRATIVE AND JUDICIAL REMEDIES
Administrative and judicial remedies are available in China to appeal agency decisions and redress illegal government practices. Administrative regulations are rarely challenged in the courts for alleged defects in the underlying authority or rule-making procedures because China’s Administrative Litigation Law prohibits ‘abstract’ challenges of this sort to the validity of administrative rules. Most efforts to formally challenge the CFDA focus on challenging concrete CFDA administrative decisions instead. Processes are available for both administrative reconsideration and judicial review of administrative decisions, but it may be difficult to win controversial cases in court in the absence of a clear violation by the agency of laws, regulations or its own rules.
i Administrative reconsideration
When an applicant is not satisfied with a government agency’s decision, the applicant may file an administrative reconsideration request for review by either the government agency itself or its supervising ministry or department within 60 days.96 To file an administrative reconsideration request challenging a CFDA decision, the applicant must have legal standing to do so. The complaint must name the respondent and the specific decision the applicant is challenging.97 Permissible grounds for reconsideration are:
- the agency’s fact-finding on major issues is incorrect and evidence is inadequate to support the decision made;
- the law was erroneously applied;
- the agency violated relevant statutory procedures;
- the agency exceeded its authority or abused its power; or
- the decision was obviously inappropriate.
A special division within the CFDA is responsible for handling administrative reconsideration requests (the Administrative Reconsideration Office (ARO)) to challenge decisions made by the CFDA itself or its local offices. For complex cases and cases involving a challenge to underlying laws or regulations, the Administrative Reconsideration Committee (ARC), which consists of the commissioner and deputy commissioners of the CFDA and ranks higher than the ARO, will hear the case.
The ARO or ARC will examine the request and decide within five days whether it meets the requirements for reconsideration.98 If so, it will be accepted for review and the ARO or ARC is obliged to render a decision within 60 days. If the situation is complicated, the time for review may be extended by a maximum of 30 days. The ARO or ARC may affirm the administrative decision, or overturn it and remand the matter to the government agency with instructions to take either a specific or an alternative administrative act. The decisions made by the ARO and ARC are legally effective upon the signature of the head of the CFDA.99 The applicant can appeal an ARO or ARC decision to the State Council, whose decision is final, without the availability of judicial review.
ii Judicial lawsuit
If an applicant decides not to appeal the ARO or ARC’s decision to the State Council, it may bring a judicial lawsuit in the People’s Court against the ARO within 15 days after the time limit for reconsideration expires.100 If the People’s Court finds that any of the following conditions are met, then the administrative act must be annulled or partially annulled, or the defendant must be ordered to take another alternative administrative act:
- the major evidence was inadequate;
- the administrative agency erroneously applied the law or regulations;
- the administrative act violated legal procedures;
- the administrative act exceeded authority; or
- administrative power was abused.101
V FINANCIAL RELATIONSHIPS WITH PRESCRIBERS AND PAYERS
China has enacted laws and regulations to prohibit bribery, kickbacks or other inappropriate financial relationships or sponsorship. The DAL contains these provisions, and penalties for violations could include revocation of the drug or medical device approvals, civil fines and criminal penalties. In addition, the SAIC administers regulations against commercial bribery. Bribery cases may also be handled through the criminal justice system. Scrutiny of these activities has grown substantially in the past two years since the government launched anti-bribery investigations of foreign drug manufacturers.
The fallout from those investigations has resulted in much more significant scrutiny of the relationships between drug companies and healthcare providers by regulators in China. The NHFPC issued a policy of ‘Nine Prohibitions’ (or bad acts in the healthcare system) that would be the focus of government scrutiny and enforcement resources, as well as blacklisting rules meant to curb ethical abuses in the healthcare sector. The Nine Prohibitions are:
- no linkage between healthcare provider incomes and profits from drug sales or medical services;
- no rebates for prescribing medicine or referrals for services or drugs;
- no overcharging of patients;
- no acceptance of illegal donations;
- no illegal advertisements or promotion of drugs, devices, food or other products by medical institutions or healthcare providers;
- no collation of statistics for commercial purposes or personal gain by healthcare providers;
- no private buying or selling of drugs, devices or other equipment by healthcare providers;
- no acceptance of kickbacks or commissions from healthcare companies or engagement in entertainment activities provided by those companies; and
- no solicitation or acceptance of financial benefits from patients.102
In late 2013, nine agencies, including the NHFPC and CFDA, issued a joint opinion (a blueprint of sorts) intended to create higher standards for ethical conduct by physicians and other hospital personnel in their dealings with the drug industry. The opinion also mentioned higher standards for safety for medical devices but singled out corruption associated with drugs as the primary target.
Scrutiny in this area continues to be very significant and regulatory reform is continuing. In late 2014, the NHFPC issued measures on clinical research projects at medical and other health institutions, which, among other things, called for stronger clinical research and ethics committee management of these projects, and guidelines for financial management intended to prohibit payments directly to investigators.103
To further control improper incentives given by the drug industry to Chinese hospitals, in 2015, the NHFPC released regulations further circumscribing donations to healthcare institutions, emphasising that all such donations must have an acceptable charitable purpose and that charities (all donations must flow through approved charities) must conduct a thorough review of the donor and the plan for the donation itself.104 Anti-corruption investigations and physician kickbacks continue to be significant issues in China.
As discussed above, the CFDA and other agencies have been taking measures to curb corruption in other ways. These include the Two Invoice System, discussed above, aimed at reducing corruption by slimming down distribution chains. There are also new measures on medical representatives, which require a separation between medical affairs representatives and salespeople, and a registration system that makes that separation more visible.
In 2017, China revised the AUCL, which contains a new and arguably expanded concept of what constitutes commercial bribery and increased penalties. This adds another tool to combat corruption in this space.
VI SPECIAL LIABILITY OR COMPENSATION SYSTEMS
Compensation can rely on provisions specifically on drugs and devices in the Tort Law, and perhaps on provisions in other laws, such as the Consumer Protection Law, the Product Quality Law and the Regulations on Medical Disputes. The Regulations are currently under revision. Compensation is available when the product is defective or not made according to compulsory national standards. Drugs or medical devices can still cause injuries in the absence of product defects or medical malpractice, but no special strict liability has been set up for compensation under such circumstances.
VII TRANSACTIONAL AND COMPETITION ISSUES
i Competition law
China’s Anti-Monopoly Law (AML) took effect on 1 August 2008 and enforcement has become increasingly prominent in the healthcare industry in the past four years. Three enforcement agencies are responsible for enforcing the law: the Anti-Monopoly Bureau of the Ministry of Commerce (Mofcom), the Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau of the SAIC and the Price Supervision and Anti-Monopoly Bureau of the NDRC.
Mofcom reviews ‘concentration’ – defined as a merger, an acquisition of assets or equity that confers control over another company, or an acquisition of a decisive influence over another company through contract or other means. The NDRC and SAIC handle price-related and non-price-related violations, respectively, in connection with monopoly agreements and abuse of dominance.
Since 2013, the NDRC has stepped up its enforcement of the AML, particularly in the area of pricing of pharmaceutical drugs and medical devices. The agency conducted surveys on the pricing and marketing practices of over 100 pharmaceutical and medical device firms in 2016, and has formally initiated investigations against a number of multinational and domestic firms in the sector. In some respects, these pricing investigations were overshadowed by commercial bribery cases in the healthcare sector.105
In 2013, a Shanghai High Court ruled in favour of a plaintiff in the first successful private suit under the AML for vertical price fixing. The case, which involved Johnson & Johnson’s device business for surgical sutures in China, related to a distribution contract setting minimum resale prices, also known as resale price maintenance (RPM). The court found that the plaintiff had carried its burden of showing that the defendant’s conduct created a vertical restraint that had an anticompetitive effect. The court analysed (1) whether there was sufficient competition between manufacturers in the market; (2) whether the defendant exercised market dominance; (3) the defendant’s motives in entering into the distribution agreement; and (4) whether the anticompetitive effects of the conduct outweighed any negative effects on fair competition. The court awarded approximately 530,000 yuan in lost profits as a result of its finding of these violations.106
In 2016, the NDRC pursued pharmaceutical and medical device firms for vertical anticompetitive agreements (e.g., RPM). In December 2016, the NDRC fined Medtronic (Shanghai) Management Ltd, the China subsidiary of Medtronic, 1.1852 billion yuan for engaging in RPM and other vertical restraints.107 The NDRC stated in its decision that Medtronic deployed a multilayer distribution system in China and, through distribution agreements, email notifications and oral discussions, Medtronic restricted the resale prices of its distributors at all levels, despite the fact that these distributors are independent market players rather than Medtronic’s affiliated entities. It also restricted the bidding prices of its distributors and prohibited them from selling to customers outside the allocated geographic markets or from selling competitors’ products. According to the NDRC, vertical restraints such as RPM harmed both intra-brand and inter-brand competition in the relevant markets. The NDRC thus considered that the conduct violated Articles 14(1) and (2) of the AML and does not qualify for exemptions set forth under Article 15. The monetary penalty accounts for 4 per cent of Medtronic’s sales of the relevant products in 2015.
In addition to RPM investigations, the agency investigated horizontal anticompetitive agreements (i.e., cartels under Article 13 of the AML) in 2016. In January and July that year, the NDRC fined eight Chinese companies for two cartels involving active pharmaceutical ingredients (APIs) and tablets of allopurinol, a medication used to decrease high blood uric acid levels,108 and estazolam, a basic drug treating insomnia,109 respectively. According to the NDRC, the companies engaged in price fixing and allocating geographical markets for the sale of their products, and were considered to be violating Article 13 of the AML.
The pharmaceutical and medical devices sector in China is becoming increasingly sophisticated, not only because it is a highly regulated industry, but also because the government is working hard to curb rising medical costs, reduce the burden on the health insurance system and eliminate corruption. Against that background, the sector has become one of the top enforcement priorities of the government agencies. As sales to hospitals involve a public procurement and bidding process, legal compliance is further complicated by the intersection with bid rigging and anti-bribery rules, and the role of the SAIC and other agencies. It appears to be a growing trend that companies seek antitrust, anti-corruption and unfair competition advice to better adapt to China’s evolving regulatory environment as all three antitrust law enforcement agencies continued to step up their efforts in the sector during 2017.
ii Transactional issues
Government approval is a key issue for any mergers and acquisitions or joint venture deals in China. Depending on the nature of the target company and the deal structure, different types of approvals may be required. For example, the acquisition of an onshore Chinese target company will require approvals from a number of government agencies, including the Ministry of Commerce (or its local counterpart) and the NDRC. In addition, if structured as an asset acquisition of a Chinese pharmaceutical business, additional approval from the CFDA is required for the relevant operating permits to be reissued (such as the drug manufacturing licence or the drug distribution licence, as the case may be).
Joint ventures are commonly used for Western life sciences companies seeking to enter the Chinese market. Approval by the Ministry of Commerce or one of its local counterparts is required for setting up joint ventures. In addition, if the joint venture wishes to engage in business activities requiring special licences, those licences must be obtained before the relevant activities can be included in the joint venture’s business scope. By way of background, a corporate entity in China is only permitted to conduct business activities listed in its business scope on its business licence issued by the government authority. This is particularly relevant for companies in the life sciences sector because many activities require specific licences, such as a drug manufacturing licence or drug distribution licence. In recent years, the Chinese government has limited the issuance of new drug distribution licences by significantly raising the threshold requirements, making them very difficult to obtain.
Apart from mergers and acquisitions and joint ventures, complex life sciences transactions commonly seen in the United States and Europe, such as licensing and collaboration arrangements, have been increasing in China. The reason for the slow start was the fact that China’s life sciences industry has traditionally been dominated by generic players and there are few innovative assets in China. This is now beginning to change; fostered by government policies encouraging innovations in biotech, increasing numbers of innovative biotech companies have sprung up. In licensing deals, Chinese companies such as BeiGene and Zai Labs were given rights to commercialise products of foreign manufacturers, such as Celgene. Deals with US-listed companies have become increasingly popular in an environment that favours domestic innovation and biotech companies under the MAH pilot and other similar programmes.
VIII CURRENT DEVELOPMENTS
The primary focus of 2017 was the issuance of the Innovation Opinion, which has created a full blueprint for drug regulatory reform in China. In early 2018, the CFDA released a legislative plan that aims to draft, and possibly finalise, a number of the relevant laws and implementing regulations during this year.
The Innovation Opinion has created more efficient systems for development, in which new trials can be approved in 60 days, and for accrediting clinical trial sites. It lays the groundwork for expansion of the MAH system and creates new expedited programmes, including for conditional or accelerated approval. In addition to the reforms discussed above, it permits APIs, drug packaging and drug products to be approved via one application, instead of several. It has also created new regulatory incentives to encourage innovation by potentially protecting data through regulatory data protection and strengthening patent protection via patent linkage and patent term extension.
In addition to the reforms discussed, the Innovation Opinion also builds on the efforts of the past few years to increase the capacity of the CFDA and the CDE to review or approve applications efficiently through the use of good review practices and better communication with applicants through meetings throughout the development and approval processes. It also lays the groundwork for stronger pharmacovigilance through the MAH expansion and a ‘life-cycle’ approach to drug and device monitoring that takes into account a broader range of safe signals collected through more systematic and risk-based measures.
In the coming year, stakeholders should expect implementation of these reforms. This will include a shorter amendment to the DAL to make necessary reforms in the short term and possibly a draft of a more comprehensive amendment. A similar shorter implementation amendment is pending for the RSAMD. The CFDA will also be making regular revisions to its own rules, including the DRR and other individual rules on conditional approval, compassionate use and expanded access, foreign inspections and clinical trial data. Stakeholders should expect similar rules to occur simultaneously in the device sector.
1 Andrew Shaoyu Chen and John Balzano are partners at Covington & Burling LLP.
2 See Drug and Medical Device Registration Fee Regulations, Articles 3-4 (NDRC 2015); Drug Registration Fees Implementing Regulations, Article 3 (CFDA 2015).
3 While varying from year to year, the local food and drug agencies and affiliated organisations at PFDAs and municipalities have a total approximate headcount of 80,000 (direct and affiliated).
4 Annual Report of the Center for Drug Evaluation (3 March 2016).
5 Statistics compiled by reviewing many hiring announcements on CMDE’s website, www.cmde.org.cn.
6 Drug Administration Law (amended February 2001), http://eng.sfda.gov.cn/WS03/CL0766/61638.html.
7 RSAMD, www.cfda.gov.cn/WS01/CL0784/97814.html. These regulations cover in vitro diagnostic reagents (IVDs), but IVDs are regulated separately under a specialised set of implementing regulations. Throughout this chapter, references to medical devices refer to non-IVD devices, unless otherwise indicated.
8 Article 102 of the DAL.
9 Article 8 of the DAL.
10 Article 29 of the DAL.
11 Article 39 of the DAL.
12 Notice on the Plan for New Registration Categories for Chemically Synthesized Drugs (CFDA No. 51 2016).
13 Appendix 3 of the DRR.
14 Article 76 of the RSAMD. This is an edited version of the translation available on www.chinalawinfo.com.
15 Article 76 of the RSAMD.
16 Article 16 of the RSAMD.
17 Article 5 of the Measures on Medical Device Registration.
18 Notice Concerning Registration of Drug and Device Combination Products (2009).
19 CFDA Notice on Tissue Engineered Medical Products and Related Application Requirements (CFDA 2007).
20 Good Laboratory Practice Regulations (2003), www.sfda.gov.cn/WS01/CL0053/24472.html.
21 See, e.g., Proposed Opinion Regarding Implementation of Priority Evaluation and Approval for Reduction of the Drug Registration Application Backlog (CFDA 2015).
22 Articles 35 and 36 of the DRR. Also see the CFDA clinical trial flow chart: http://eng.sfda.gov.cn/WS03/CL0769/61658.html.
23 Pharmaceutical Good Clinical Practice Regulations (2003), www.sfda.gov.cn/WS01/CL0053/ 24473.html.
24 Appendixes 2 and 3 of the DRR.
25 New Chemical Drug Registration Category Application Material Requirements (Trial Implementation) (CFDA No. 80 May 4, 2016).
26 Article 44 of the DRR.
27 See Guidance on Drug International Multicenter Clinical Trials (For Trial Implementation) (CFDA 2015); Notice to Seek Comments on the Policies to Expedite the Reduction of Drug Registration Application Backlog (CFDA 2015).
28 Article 17 of the RSAMD.
29 Article 17 of the RSAMD.
30 Article 17 of the RSAMD.
32 Notice on Issuing the Catalogue of Class II Medical Devices that are Exempted from Conducting Clinical Trials (2014), available at www.cfda.gov.cn/WS01/CL0087/105224.html; Notice on Issuing the Catalogue of Class III Medical Devices that are Exempted from Conducting Clinical Trials (2014), available at www.cfda.gov.cn/WS01/CL0087/105225.html.
33 Articles 18 to 20 of the Measures on the Registration of In Vitro Diagnostic Reagents (2014).
34 Article 18 of the RSAMD.
35 Article 18 of the RSAMD.
36 Good Clinical Practices for Medical Device Clinical Trials (CFDA No. 25 2016).
37 Tentative Measures on the Management of Human Genetic Resources (1998).
38 Article 25 of the DAL; Article 10 of the Regulations for the Supervision and Administration of Medical Devices.
39 Article 37 of the DALIR.
40 Article 11 of the Provisions for Drug Registration (2007).
41 Articles 84 to 95 of the DRR.
42 Id. Notice for Issuing the Plan for the MAH Pilot (State Council General Office No. 41 2016).
43 Opinion on Developing Therapeutic and Quality Equivalence Evaluation for Generic Drugs (State Council General Office No. 8 2016).
44 Notice on Several Matters Related to the State Council General Office’s Option on Demonstrating Therapeutic and Quality Equivalence of Generic Drugs (CFDA No. 106 26 May 2016).
45 Provisions on Chemical Drug Bioequivalence Study Notifications (CFDA 2016).
46 Chapter 5 of the DRR.
47 Article 12 of the DRR.
48 Appendix 3 of the DRR.
49 Draft Guidance on the Research and Development and Technical Evaluation of Similar Biotherapeutic Products, available at www.cde.org.cn/zdyz.do?method=largePage&id=212.
50 Annual Report of the CDE (3 March 2016).
51 CFDA, The Drug Application Backlog is Basically Extinguished, the Drug Approval System Reform has Succeeded (22 June 2017), available at www.sfda.gov.cn/WS01/CL0050/174094.html.
52 Notice on Several Questions of Policy Related to Drug Registration Evaluation and Approval (CFDA 2015).
53 Decision on Adjusting the Procedures Related to Part of the Examination and Approval of Certain Administrative Matters.
54 Chapter 8 of the DRR.
55 Notice on Several Matters Related to Class I Medical Device Notification (2014), available at www.cfda.gov.cn/WS01/CL0087/100816.html.
56 Procedures on Priority Review and Approval for Medical Devices (CFDA No. 168 2016).
57 Articles 49 to 53 of the Measures on the Registration of Medical Devices.
58 Article 17 of the Provisions on Drug Registration.
59 Articles 18 to 19 of the DRR.
60 Article 48 of the RSAMD.
61 Articles 4 to 5 of the Procedures for Emergency Review and Approval of Medical Devices (2009).
62 Article 2 of Procedures on the Examination of Innovative Medical Devices (Trial Implementation) (2014), available at www.sda.gov.cn/WS01/CL1237/96654.html.
63 See, e.g., Articles 41 to 44, 67 to 68, and 121 of the DRR, and Article 169 for drugs, and Article 48 of the RSAMD (requires manufacturer to establish device AE reporting system, and tracking system on Class III devices).
64 The Measures on the Administration of Adverse Drug Reaction Reporting and Monitoring (2011), Chapters 2 to 6.
65 Notice Soliciting Comments on the Revised Draft of Administrative Measures on Monitoring Medical Device Adverse Events and Re-Evaluation (CFDA/NHFPC 2015); Notice Soliciting Comments on the Revised Draft of Administrative Measures on Monitoring Medical Device Adverse Events and Re-Evaluation (State Council OLA 2016).
66 The Measures on the Administration of Drug Recalls were promulgated in 2007, and the Measures on the Administration of Medical Device Recalls (Interim) were promulgated in 2011.
67 Articles 49 to 50 of the Measures on Medical Device Registration; Article 15 of the Measures for the Supervision and Administration of Medical Device Manufacturing. For imported devices, a change of a manufacturing address abroad is a more complex process that requires the submission of more information and a longer timeline.
68 Article 18 of the Medical Device Manufacturing Regulations (CFDA 2014).
69 Article 55 of the RSAMD.
70 Articles 74 and 75 of the DAL.
71 Article 81 of the DAL.
72 Article 86 of the DAL.
73 Article 51 of the RSAMD.
74 Article 64 of the RSAMD.
75 Article 10 of the Measures for the Supervision and Administration of Medical Device Manufacturing.
76 Article 67 of the RSAMD; Article 67 of the Measures on the Supervision and Administration of Medical Devices.
77 Article 12 of the Regulations on Drug Contract Manufacturing (2014).
78 Draft for Comment of the Interim Measures on Supervision of Internet Advertising (2015). To date, these measures do not appear to have been finalised. Under the Advertisement Law of China (2015), which applies to all advertising, including drug or device advertising, the term advertisement is defined in Article 2 as ‘any commercial advertisement, which a commodity or service provider bears the costs for, through certain media or forms, directly or indirectly introducing their commodities being sold or services being provided’.
79 Drug Advertisement Examination Standards Draft for Comment (SAIC 2015).
80 Draft Standards on the Examination of Medical Device Advertisements (SAIC 2015).
81 Article 66 of Medical Device Good Supply Practices, available at www.cfda.gov.cn/WS01/CL0087/
82 Articles 29 to 31 of the RSAMD.
83 Article 45 of the DAL.
84 Regulations on the Administration of Drug Processing for Export (2003).
85 Administrative Measures for the Inspection and Supervision of Imported Medical Devices (2007).
86 Gentamicin, atorvastatin, sildenafil, oseltamivir, cefoperazone, glycerine, heparin, artemisinin and traditional Chinese medicine in finished dosage form and indicated for erectile enhancement.
87 Glucose-testing strips and condoms.
88 Notice on Implementing Catalogue Administration on certain drugs and devices for export (2008), available at www.sfda.gov.cn/WS01/CL0245/33456.html.
89 Article 3 of the Administrative Regulations on Filings for Contract Manufactured Drugs for Foreign Enterprises (2005); Article 70 Administrative Measures on the Manufacturing of Medical Devices (2014).
90 Article 141 of the Criminal Code of the People’s Republic of China.
91 Notice on Regulating Distribution Activities in Medical Device Circulation (CFDA 112 7 June 2016).
92 Eighty Percent of New Drug Data is Fraudulent, Where are the Flaws in the Research Environment? (September 20, 2016), available at www.chinanews.com/m/jk/2016/09-20/8008219.shtml.
93 Circular Concerning Opinions on Advancing the Drug Pricing Reform (National Development and Reform Commission 2015).
94 Several Opinions on Accelerating the Development of the Modern Insurance Service Industry (State Council 2014).
95 Opinions on the Full Implementation of the Critical Disease Insurance Program for Urban and Rural Residents (State Council 2015).
96 Administrative Reconsideration Law (1999).
97 Administrative Reconsideration Measures of the CFDA (2013).
98 Article 17 of the Administrative Reconsideration Law; see also Article 48 of the Regulations on the Implementation of the Administrative Reconsideration Law (2007).
99 Article 20 of the Administrative Reconsideration Measures of the CFDA.
100 Article 38 of the Administrative Litigation Law (2014).
101 Article 54 of the Administrative Litigation Law; see also Article 6 of the Provisions of the Supreme People’s Court on Several Issues Concerning the Hearing of Administrative Cases of International Trade (2002). Similar interpretations can be found in Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Laws in the Hearing of Anti-Dumping Administrative Cases (2002) and Provisions of the Supreme People’s Court on Several Issues Concerning the Application of Laws in the Hearing of Countervailing Administrative Cases (2002).
102 Notice on Improving the Medical Health-Care Workstyle and Establishing the Nine Prohibitions.
103 Administrative Measures on the Development of Clinical Research Projects at Medical Health Institutions (NHFPC 2014).
104 Administrative Measures on Accepting Donations for Public Welfare by Healthcare Entities (for Trial Implementation) (NHFPC 2015).
105 Benjamin Shobert and Damjam P DeNoble, ‘Understanding China’s Antimonopoly Investigations’, China Business Review, 30 March 2014, available at www.chinabusinessreview.com/understanding-chinas- antimonopoly-investigations/.
106 Chunfai Lui & Stephenson Harwood, ‘A Landmark Court Ruling in China: Resale Price Maintenance As Examined in the Johnson & Johnson Case’, CPI Antitrust Chronicle, available at
107 See The NDRC’s Administrative Penalty Decision  No. 8, available at www.ndrc.gov.cn/fzgggz/jgjdyfld/fjgld/201612/t20161209_829717.html.
108 See The NDRC’s Administrative Penalty Decision  No. 1-4, available at http://jjs.ndrc.gov.cn/fjgld/201602/t20160202_774107.html.
109 See The NDRC’s Administrative Penalty Decision  No. 5-7, available at http://jjs.ndrc.gov.cn/fjgld/201607/t20160727_812579.html.