2019 continues to be a milestone year for China’s drug regulatory and health care reform. Starting from December 1, 2019, the new Drug Administration Law (“DAL”) took effect. The DAL codified many of the reforms that had already been implemented, with the main objective of developing a modern and more welcoming regulatory environment for new drugs. For global pharmaceutical companies, the most encouraging change under the new DAL is the more streamlined drug registration process with NMPA. For example, the clinical trial in China no longer requires explicit approval, and sponsors can proceed after 60 working days of notification to NMPA unless they receive objections from NMPA (Article 19 of the DAL). NMPA will grant priority review for pediatric drugs, shortage drugs for urgent clinical needs, new drugs for severe infectious diseases and rare diseases. These changes would greatly shorten the drug review time. Other notable encouraging developments include the potential for expanded access to certain unapproved drugs during clinical investigation stage (Article 23 of the DAL) and leniency for importing a small amount of drugs approved outside of China but unapproved in China (Article 124 of the DAL).

Consistent with the initiative, the Center for Food and Drug Inspection or CFDI, the inspection arm of NMPA, has been strengthening its oversea inspection program. Under the program, NMPA will not only target facilities outside of China for drugs that are already marketed in China, but also drugs that are pending NMPA’s approval. In the event of inspection violations identified by NMPA during these inspections, NMPA can request the manufacturer to attend a regulatory meeting, impose timelines for corrective actions, issue warning letters, suspend drug importation, or suspend sale and use. For the most serious cGMP violations, NMPA can even ask the manufacturer to conduct product recalls or event revoke the product’s approvals. The inspection findings published by NMPA so far show that many overseas manufacturers are unfamiliar with the Chinese laws and regulations. For example, it is required that all drugs sold in China must comply with the specifications of the 2015 Chinese Pharmacopeia (ChP), which can be different from prevailing international standards such as USP or EP.

With the opportunity for global pharmaceutical companies to gain new access to the Chinese innovative drug market presenting itself like never before, generic drug manufacturers is facing fierce pricing pressure in China. The pilot centralized drug procurement program (the “4+7 city centralized procurement program”) has already been rolled out nationwide. For the third round of centralized drug procurement, which likely will take place in early 2020, 35 generic drugs are involved. Based on the bidding results from the previous rounds, we expect their prices to be reduced by at least 50%，which hopefully will be in exchange for the 70% of the market share in China. Stay Tuned!