New Draft Implementing Regulations propose key changes for pharmaceuticals in China

On 9 May 2022, the National Medical Products Administration (the “NMPA”) published the Implementing Regulations of the Drug Administration Law (Draft Amendments) (the “Draft Regulations”) for public consultation which will last until 9 June 2022. The Draft Regulations propose significant changes to the current Implementing Regulations of the Drug Administration Law (2019) (the “Current Regulations”).

The Draft Regulations provide a comprehensive regulatory framework governing the entire lifecycle management for a pharmaceutical covering drug research and registration, the system for approving and monitoring market authorisation holders (the “MAH”), drug manufacture, drug business operation, medical institution management, drug supply, and overall supervision and sanctions. The proposals are extensive (the Draft Regulations contain 181 articles compared to 80 articles in the Current Regulations).

Set out below are the key proposed changes for originator drugs in China:

1. Removal of definition of new drug

Currently “new drug” is defined in Article 77 of the Current Regulations as a drug that has not been marketed in China, i.e. “the drug must be new in China”. This definition is inconsistent with the State Council Opinions on the Reform of the Review and Approval System for Drug and Medical Device (2015) (the “2015 Opinions”) which states that a new drug is a drug that has not been marketed in China or overseas, i.e. “the drug must be new worldwide”.

The Draft Regulations propose the deletion of “new drug” in Article 77 and once removed, the definition will be consistent with the 2015 Opinions and the NMPA’s Interpretation on Classification of Chemical Drug Registration (2016). It will also be consistent with the new patent term extension for new drug patents set out in Article 42.3 of the Patent Law (2021) and the proposals in the Draft Patent Examination Guidelines (2021).

2. Data exclusivity

Article 34 of the Current Regulations provide 6 years data exclusivity for the undisclosed trial data and other data of a drug containing a new chemical entity (“NCE”). The 6 year term commences from the date of marketing authorisation (“MA”) approval in China. The Current Regulations only protect drugs containing NCE and do not include biologics. In addition, there is no definition of NCE, creating uncertainty on the scope of data exclusivity protection in China.

Article 40 of the Draft Regulations proposes that data exclusivity protection be given to “undisclosed trial data and other data of a part of drugs approved for marketing authorisation”. However, it is unclear what is meant by “a part of drugs” and further clarification from the NMPA will be required to better understand the proposed scope of data exclusivity protection in China.

3. Pediatric drug exclusivity and orphan drug exclusivity

Currently there is no market exclusivity for pediatric or orphan drugs in China. Articles 28 and 29 of the Draft Regulations introduce a period of market exclusivity and during this protection period, the NMPA will not approve the MA of other drugs of the same variety.

The market exclusivity for a pediatric drug is up to 12 months for a drug which is the first approved for a new variety, dose form or specification for the use for children, or the addition of a pediatric indication or dosage and administration. In addition, the MA application of a pediatric drug will be subject to priority review.

The MA application of an orphan drug that is clinically urgent will be subject to priority review. Market exclusivity of up to 7 years may be granted for an approved new drug for orphan disease, conditional upon the MAH’s undertaking to guarantee the supply of the drug. The market exclusivity may be terminated if the MAH fails to comply with this undertaking.

4. Removal of new drug monitoring period

Under Article 33 of the Current Regulations, a monitoring period of not more than 5 years can be granted to a new drug produced by a drug manufacturer. During the monitoring period, the NMPA will not approve the manufacture and importation of the same drug of the same variety.

The proposal under the Draft Regulations is to remove the monitoring period entirely. The drug monitoring period provision has already been removed from the Drug Registration Rules (2020), which came into effect on 1 July 2020. On 18 February 2022, the Center for Drug Evaluation of NMPA (the “CDE”) issued the draft amendments on the Chemical Drug Registration Acceptance Review Guidelines, which also proposes to remove all provisions on the monitoring period. The NMPA’s proposal is to repeal the monitoring period system in China in its entirety.

5. Patent protection

Articles 38 and 39 of the Draft Regulations mention the associated patent linkage mechanism on patent disputes during the MA application period and the 12-month market exclusivity for generic chemical drug manufacturers. These articles are identical to the provisions set out in the Patent Law (2021) and Patent Linkage Implementing Measures (2021) of NMPA and CNIPA (i.e., the China National Intellectual Property Administration). For more information about patent linkage and patent challenge, please refer to Bird & Bird’s article - News flash - Patent Linkage Implementing Measures came into force in China on 4 July 2021.

Article 121 of the Draft Regulations specifies the mechanism for compulsory licenses for drug patents pursuant to Article 54 of Patent Law (2021). The proposal is that in the event of a public health event or a national emergency, the National Health Commission can propose the commencement of compulsory licences and suitable companies can make applications with CNIPA for a grant of compulsory license of a drug patent. Further, the MA application of the drug subject to compulsory patent license can benefit from priority review.

The Draft Regulations are going to bring significant changes on the regulations of drugs in China. We will continue to monitor the status and provide updates.