Since the reform in the pharmaceutical industry started in 2015, the CFDA has been aiming to simplify and accelerate the approval process of clinical trials. In November 2015, the CFDA released the Circular Concerning Several Policies on Drug Registration Review and Approval, and in February 2016, it released the Opinions on Priority Review and Approval for Resolving Drug Registration Applications Backlog, both of which provide detailed stipulations on the drug categories eligible for priority review. According to the 2016 annual drug review report of the Centre for Drug Evaluation (“CDE"), 169 registration applications for chemical drugs were granted priority review in 2016, and the backlog of registration applications has almost been eliminated.

Among the above CFDA circulars, Circular 52 continues to expand the categories and procedures for priority review. Under the Circular 52, critical drugs in urgent clinical need to receive conditional marketing approval if early and mid-stage clinical trials indicate their efficacy and predict their clinical value. In addition to upholding conditional approvals for urgently needed drugs, reduced trials for applicants of new pharmaceutical products treating rare diseases raised and some other proposals presented in Circular 52, the Opinion also calls for the establishment of a catalogue of rare diseases as well as a registration system of patients with rare diseases.

In the past, imported drugs were usually required to conduct clinical trials, in addition to those conducted overseas, and thus their registration process could last substantially longer than that of domestic drugs. While CFDA sometimes accepts foreign data, it had not expressly announced its position until the Decision on Adjusting Items concerning the Administration of Imported Drug Registration (Draft for Comment) was published in March 2017. This draft policy proposed to remove the requirement of Phase II or Phase III clinical trials for drugs that have gone through international multi-centres in China.

The Opinion goes one step further to stipulate that qualified clinical data generated in overseas multi-centres can be used to support registration applications in China. For drugs applied for marketing in China for the first time, applicants should provide clinical data regarding the existence of racial difference. This change is expected to minimise the gap between the review and approval process for domestic and overseas innovative drugs.

The patent linkage system works to link the marketing approval for a generic drug to the expiry or invalidation of the originator's drug patent. In China, the Administrative Measures for Drug Registration of the PRC (“Administrative Measures") has established a moderate patent linkage system, under which an applicant should declare non-infringement regarding relevant third-party patents when applying for drug approval. The applicant may submit its application up to two years before the expiry of the relevant patent(s), but the CFDA will not issue marketing approval until that patent has expired. However, this system has yet to produce actual effects, due to some procedural issues such as no actual examination of infringement issues by the CFDA and lack of effective communications between the CFDA and the State Intellectual Property Office.

As previously proposed in the Circular 55, 

Circular 55 also proposes to create a catalogue of approved drugs which will be a Chinese version of the Orange Book.

The Opinion confirms the idea of patent linkage but removes the specific time limits for the time being. 

According to the Opinion, 

The removal of timing requirements is understandable, given the actual judicial practice in China. Specifically, a 20-day case-filing period is quite challenging for patentees to collect evidence and prepare infringement pleadings and the stay period needs to be longer than 24 months in order to fit the complicated and lengthy judicial proceedings in China.

As regulatory approvals are typically issued long after a relevant patent term has begun, a majority of innovative drugs enjoy only a significantly shortened protection term at the time of commercial launch. In order to compensate the patent term lost during the regulatory process, some countries provide drug patentees with the opportunity to extend their patent term for some time.

The current Chinese patent laws provide invention patents with a patent term of 20 years, but do not set forth stipulations providing patent-term restoration or patent-term extension. By calling for a pilot patent-term restoration system for some new drugs to extend their patent term as a compensation for the time delayed due to the review and approval process, this Opinion proposes to establish a patent-term restoration system in China for the first time. As China is concurrently revising the PRC Patent Law, it would be interesting to see how this newly proposed patent-term restoration system would land onto the Chinese market.

In parallel with the patent linkage system, data exclusivity prevents generic manufacturers from relying on the innovator's expensive clinical data for a prescribed period of time. This system has already been preliminarily established in China according to relevant provisions in the Implementing Rules to the Drug Administration Law and the Administrative Measures. According to relevant laws and regulations, a developer of a new drug which contains a new chemical entity is entitled to six years of data protection starting from the date of approval, during which no marketing approval may be given by the CFDA to the applicant for generic drugs that use the originator’s undisclosed data, unless the applicant has obtained permission from the originator, or the data submitted is acquired independently.

The Opinion upholds CFDA’s proposal in Circular 55 to refine the framework of data exclusivity by expanding coverage of data exclusivity and creating a multi-level data protection system. First, Circular 55 proposes to extend the subject protected under data exclusivity from new chemical entities to apply to generics and biopharmaceutical products as well. Further, the Circular 55 proposes to specify different lengths of data exclusivity for different drugs as follows: six years for innovative new drugs, ten years for innovative new drugs that treat rare diseases or specifically treat children, three years for improved new drugs that treat rare diseases or specifically treat children, and ten years for innovative therapeutic biopharmaceutical products. The Opinion acknowledges data protection for innovative drugs, drugs for rare diseases, pediatric drugs and innovative therapeutic biologics, but it does not specify the length of protection at this stage. 

The Marketing Authorisation-Holder (“MAH") system is a common practice in the area of drug regulation in Europe, the United States, Japan and other regions. Under this mode, drug-marketing authorisation will be independent from drug-manufacturing authorisation, and drug marketing-authorisation holders (“Holder") can either manufacture themselves or engage drug manufacturers to manufacture their drugs.

Since 2015, China has introduced a pilot MAH scheme in ten provinces and municipalities to incentivise pharmaceutical companies to focus on drug research and development while utilising contract manufacturers to manufacture their drugs. The Opinion now calls for a full implementation of MAH system throughout the country on the basis of meaningful experiences collected from the pilot scheme. Meanwhile, the Opinion requires the Holders to be responsible for the legal liabilities relating to the relevant drug throughout its entire lifecycle, including remaining responsible for their contract research organisations, manufacturers and distributors’ activities. One thing to be noted is that the Opinion allows both research institutions and research personnel to apply for marketing approval, while the revised draft of Administrative Measures issued on October 23rd following this Opinion limits the marketing authorisation applicant to institutions. It is necessary for research-focused organisations and individuals to monitor closely follow-on updates.