What’s in the Pharmaceutical Administration Law amendment?

By Wu Li and Wang Rui, AnJie Law Firm

On 26 August 2019, the Standing Committee of the National People’s Congress voted for the Amendment to the Pharmaceutical Administration Law, which will come into force on 1 December 2019. The amendment included strict requirements of the state on drug safety, and completed the systems for pharmaceutical administration. There are many noteworthy highlights in the amendment from the perspective of pharmaceutical enterprises.

Q: Could you give a view of the marketing authorization holder system newly introduced in the amendment?

Wu Li
Senior Partner
AnJie Law Firm

A: The marketing authorization holder system is the focus of the amendment. Article 6 of the amendment specifies that the state shall adopt the marketing authorization holder system for pharmaceutical administration, and sets up a separate chapter to interpret the system in detail. According to this new system, pharmaceutical R&D organizations and manufacturers with pharmaceutical technologies shall obtain drug registration certificates through a drug marketing authorization application, launch their products in the market in their own names, and assume responsibilities over the life cycle of a drug.

The administration mode separating drug marketing authorization from production licensing represents a significant adjustment under the amendment. Relevant benefits from the system are worth looking forward to.

According to the amendment, a marketing authorization holder is required to monitor safety, efficacy and quality control of the whole process of pharmaceutical development, production, operation and use of drugs, and assume relevant responsibilities. A marketing authorization holder with a registration certificate may be an enterprise, a pharmaceutical R&D organization or any other entity. A marketing authorization holder has an independent operating entity status, so it may independently produce and deal in drugs or engage other persons to do so. In addition, a foreign enterprise may become a marketing authorization holder, but it shall expressly designate a Chinese enterprise legal person to perform its obligations on its behalf, and shall assume joint and several liabilities.

It is especially noteworthy that the amendment specifies the legal transfer of drug marketing authorization, clearly defines the ownership of a marketing authorization, and promises more vigorous pharmaceutical innovation and development.

Q: What other new systems have been introduced that pharmaceutical enterprises need to pay close attention to?

Wang Rui
Senior Associate
AnJie Law Firm

A: Article 12 of the amendment also specifies the establishment of two new basic systems. The first is the drug traceability system, established and completed by the state. It specifies that all marketing authorization holders, enterprises producing and dealing in drugs, and medical institutions shall establish and implement their drug traceability systems to ensure the quality and safety of drugs in production, dealing in and use, through intercommunication and sharing of information, and to realize drug risk control.

The second is the “pharmacovigilance” system established by the state. Pharmacovigilance covers the science and activities relating to detection, assessment, understanding and prevention of adverse effects of drugs or any other drug-related problems. It is a comprehensive safety monitoring system covering the entire life cycle of a drug. Although it has certain similarities to the current adverse drug reaction monitoring system of China, pharmacovigilance has a wider monitoring scope, covering safety problems like misuse, abuse, overuse, interactions, and lack of efficacy of drugs.

It should be pointed out that the amendment only indicates the necessity to establish the drug traceability system and the pharmacovigilance system. The specific establishment of the two systems, the detailed procedures and the implementation mechanisms remain to be explored. These will pose great challenges to pharmaceutical enterprises in the foreseeable future.

Q: What other highlights of the amendment are noteworthy?

A: A series of measures encouraging innovation and accelerating approval are to be introduced. The amendment specifies that clinical trial approval will change from the approval-based system to the implied licence-based system. Chemical raw drugs, adjuvants, and packaging materials and containers in direct contact with drugs will be evaluated and approved together with preparations. Drugs for treating serious life-threatening diseases for which no current effective treatment methods can be used, and drugs which are urgently needed for public health, are subject to conditional approval. Pediatric drugs, drugs which are urgently needed for clinical use and drugs in short supply, new drugs for preventing serious infectious diseases, rare diseases and other diseases will be given priority for review and approval.

In addition to introduction of the above-mentioned drug marketing authorization holder system, the amendment replaces good manufacture practice (GMP) certification for medical products and good supply practice (GSP) certification for medical products, with the requirements that an enterprise shall establish and perfect pharmaceutical production and operation quality management systems, and ensure that the entire manufacturing process always meet requirements. The amendment shifts the regulatory focus from “issue of certificates” to “supervision & regulation”.

The amendment also particularizes and perfects a series of regulatory measures including warning, summon for a meeting, correction within a prescribed time limit, suspension of production and sales, and further increases the number of punishment types and the strength of punishment deterrence.

Q: What’s your outlook and expectation after the amendment?

A: The Opinions on Deepening the Reform of the Evaluation and Approval Systems and Encouraging Innovation in Drugs and Medical Devices, printed and issued in October 2017, proposes: the establishment of a drug patent linkage system; pilot implementation of the system of compensatory extension of the drug patent term; a system of drug trial data protection; and improvement in the approval process for generic drug marketing.

This is a significant reform initiative for the pharmaceutical intellectual property system, and there are high expectations in this regard within the pharmaceutical industry. It is a bit of a pity that the amendment does not cover the above-mentioned reform initiative, as there is room for speculation in the industry.

Wu Li is a senior partner, and Wu Rui is a senior associate at AnJie Law Firm

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