On June 27, 2022, the Department of Comprehensive Affairs of the National Medical Products Administration (the “NMPA”) issued the Notice of the Department of Comprehensive Affairs of the National Medical Products Administration on Further Strengthening Services Provided to Foreign Invested Enterprises (the “Notice”). The Notice proposes to enhance services provided to foreign invested enterprises (the “FIEs”) in eight aspects, including improving assistance provided to enterprises, innovating regulatory methods and means, accelerating evaluation and approval process of innovative and urgently needed products, promoting implementation of drug patent linkage system, actively promoting international rules internalization, comprehensively strengthening drug regulatory capacity construction, smoothing regular and open channels for enterprises to voice their demands, and further strengthening drug safety regulations.
Regulatory authorities in China have issued a number of relevant regulation documents and policies with respect to the series of systems mentioned in the Notice. This article aims to summarize the major systems mentioned in the Notice, based on the existing laws and regulations governing pharmaceuticals, cosmetics and medical devices, as well as our years of experience in the pharmaceutical industry, and provide an outlook to the new trend of the supervision on the pharmaceutical and medical business carried out by FIEs in China.
1. Innovation on Supervision Methods and Means
The Notice mentions enhancing services for FIEs by innovating regulatory methods and means, including strengthening the development of drug traceability system, improving the intelligent regulation for pharmaceuticals, cosmetics and medical devices, and comprehensively implementing drug marketing authorization holder system, medical device registrant (filing applicant) system and cosmetics registrant (filing applicant) system etc.
a) Drug Traceability System
The drug traceability system is an important intelligent regulation system for pharmaceuticals, cosmetics and medical devices, which enables the relevant tracing parties with an interest in drug quality and safety, including but not limited to drug marketing authorization holders, manufacturers, business enterprises, users, drug supervision and administration departments and consumers to systemically track and trace the information regarding pharmaceutical manufacturing process, circulation and usage by information-based means[1]. A drug traceability system can realize drug risk control (e.g., by recalling problematic drugs and preventing counterfeit and substandard drugs from legal circulation), and ultimately achieve the traceability of the sources, origins and destinations of all kinds of drugs.
As early as 2015, the General Office of the State Council of the People’s Republic of China issued the Opinions of the General Office of the State Council on Accelerating the Development of Traceability Systems of Key Products (Guo Ban Fa [2015] No.95), which proposed to promote the establishment of drug traceability systems. In 2019, the newly revised Drug Administration Law of the People’s Republic of China (“Drug Administration Law”) established the whole process traceability system for drugs at the legislative level for the first time. Since the promulgation of the Drug Administration Law, a series of regulatory documents have been issued, providing the relevant drug regulatory authorities, manufacturers, business enterprises and users with unified standards and specifications regarding drug traceability systems. We have summarized the main relevant regulations as follows for your reference:
b) The Establishment of the Drug Marketing Authorization Holder System, Medical Device Registrant (Filing Applicant) System and Cosmetics Registrant (Filing Applicant) System
Prior to the implementation of the Drug Administration Law, a drug marketing authorization holder must also be a manufacturer, while the marketing authorization holder mechanism pilot program was launched in certain provinces and cities. After the Drug Administration Law came into effect, China fully implemented the drug marketing authorization holder system nationwide, under which the drug marketing authorization holder and the manufacturing permit holder can be the same or different entities. Drug marketing authorization holders (the entities that obtain drug registration certificates or drug research and development enterprises) shall be responsible for the safety, effectiveness, and quality controllability of drugs in the process of research and development, manufacture, trade or use. A drug marketing authorization holder is permitted to manufacture the drug, either on its own or through a contract manufacturer.
Further to the nationwide implementation of the drug marketing authorization holder system, the newly revised Regulations on the Supervision and Administration of Medical Devices came into effect on June 1, 2021, implementing the medical device registrant (filing applicant) system nationwide. According to the Regulations on the Supervision and Administration of Medical Devices, an enterprise or a research and development institution that has obtained a medical device registration certificate or completed the filing for a medical device is a medical device registrant or filing applicant. Medical devices registrants (filing applicants) shall strengthen the quality management of medical devices in their whole life cycle and assume responsibility for the safety and effectiveness of medical devices in the process of research and development, manufacture, trade or use.
The Cosmetic Supervision and Administration Regulation, which came into effect on January 1, 2021, establishes the cosmetics registrants (filing applicants) system for the first time, under which cosmetics registrants (filing applicants) shall be responsible for the quality, safety and efficacy of cosmetics.
c) Innovative Development of Drugs and Medical Devices Supervision in Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”)
Another institutional highlight mentioned in the Notice in respect of innovative regulation is that it clarified once again that it is necessary to steadily promote the innovative development of regulation of drugs and medical devices in the GBA, and support Hong Kong and Macao drug marketing authorization holders and medical device registrants to manufacture the drugs and medical devices they hold in qualified enterprises incorporated in the nine mainland cities of the GBA (Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing in Guangdong Province).
In order to promote the innovative regulation of drugs and medical devices in the GBA, eight ministries and commissions, including the State Administration for Market Regulation and the NMPA, issued the Work Plan for the Innovative Development of Regulation of Drugs and Medical Devices in the Guangdong-Hong Kong-Macao Greater Bay Area on September 29, 2020, specifying to carry out the reform of the systems of drug marketing authorization holders and medical device registrants in the GBA, and to support the Hong Kong and Macao drug marketing authorization holders and medical device registrants to manufacture the drugs and medical devices they hold in qualified enterprises incorporated in the nine mainland cities of the GBA.
Two days after the issuance of the Notice, on June 29, 2022, the Department of Comprehensive Affairs of the NMPA issued the Implementation Plan for Supporting Hong Kong and Macao Drug Marketing Authorization Holders to Produce Drugs in the Nine Mainland Cities of the Greater Bay Area and the Implementation Plan for Supporting Hong Kong and Macao Medical Device Registrants to Produce Medical Devices in the Nine Mainland Cities of the Greater Bay Area (collectively the “Implementation Plans”), which clarify the application scope, work procedures, application path and documentary requirements, process management and limitation period, fee standards, and division of responsibilities of regulatory authorities for Hong Kong and Macao drug marketing authorization holders and medical device registrants which are legally registered in the Hong Kong Special Administrative Region or the Macao Special Administrative Region that have obtained the imported drug registration certificates or medical device registration certificates issued by the NMPA for the drugs or medical devices they held or manufactured (collectively, the “Hong Kong and Macao MAHs”) to entrust the manufacture of drugs or medical devices in the nine mainland cities of the GBA. The specific plans for cross-border entrusted manufacturing of drugs and medical devices by Hong Kong and Macao MAHs have finally been implemented.
We would like to discuss the three highlights of the Implementation Plans in detail:
Firstly, from 0 to 1 - Hong Kong and Macao MAHs are allowed to entrust the manufacturing of certain drugs or medical devices across the border.
The newly revised Drug Administration Law and the Regulations on the Supervision and Administration of Medical Devices do not explicitly prohibit cross-border entrusted manufacturing. However, pursuant to the Administrative Measures for Changes after Drug Marketing (for Trial Implementation), if a drug manufactured overseas and sold in China transfers its manufacturing site to China, the domestic applicant shall file an application in accordance with the requirements and procedures of the application for drug marketing authorization. Meanwhile, pursuant to the Announcement of National Medical Products Administration on Matters Concerning the Manufacturing of Imported Medical Devices by Enterprises within the Territory of China, where a registrant of imported medical devices manufactures, through an FIE incorporated by such registrant within the territory of China, Class II and Class III medical devices for which the registration certificates have been obtained, the FIE incorporated in China by the registrant of imported medical devices, or the Chinese enterprise that invests in the overseas registrant shall act as the registration applicant and shall file an application for registration of domestic medical devices with the drug administration.
As we can see, in the past, if the drug marketing authorization holders and medical device registrants outside mainland China intend to manufacture drugs or medical devices that have been registered as imported drugs or imported medical devices in mainland China, such drug or medical device shall be first registered as domestic drugs or domestic medical devices in mainland China before those drugs or medical devices can be domestically produced. However, the Implementation Plans removed such restrictions to a certain extent, i.e., except for those drugs and medical devices explicitly prohibited from being manufactured by entrustment under the Implementation Plans[2], Hong Kong or Macao MAHs may entrust enterprises with the corresponding manufacturing qualifications with registered addresses and manufacturing sites located in the nine mainland cities of the GBA to manufacture the Chinese patent medicines and chemical medicines and medical devices held and manufactured by such Hong Kong or Macao MAHs which have obtained the imported drug registration certificate/medical device registration certificate and have been sold in mainland China.
In addition, we have also compared the relevant requirements for the manufacturing of drugs or medical devices in mainland China by Hong Kong and Macao MAHs and other non-Hong Kong and non-Macao drug marketing authorization holders and medical device registrants outside mainland China (collectively “Other MAHs”) as follows:
Secondly, from the national level to the provincial level - optimizing the approval process.
According to the Implementation Plan for Supporting Hong Kong and Macao Drug Marketing Authorization Holders to Produce Drugs in the Nine Mainland Cities of the Greater Bay Area, the supplementary application filed by the Hong Kong and Macao MAH for cross-border entrusted manufacturing of drugs will be reviewed separately by the Center for Drug Evaluation of NMPA after such application has been accepted, and the registration examination and on-site inspection shall be organized by the Guangdong Provincial Medical Products Administration (“GDMPA”) rather than the NMPA[5]. These measures reflect the reform of government functions, and optimize the approval process for cross-border entrusted manufacturing of drugs.
Thirdly, four-step working procedures for Hong Kong and Macao MAHs to realize cross-border entrusted manufacturing.
According to the Implementation Plans, there are four steps for the cross-border entrusted manufacturing by Hong Kong and Macao MAHs, which are generally not complicated.
With regard to the cross-border entrusted manufacturing of imported drugs by the Hong Kong or Macao drug marketing authorization holder, firstly, a domestic agent shall be designated; secondly, an entrusted manufacturing agreement shall be executed; thirdly, the contract manufacturer shall add the corresponding entrusted manufacturing scope to its manufacturing permit of drugs; fourthly, the Hong Kong and Macao drug marketing authorization holder shall add the domestic drug manufacturing site to its drug registration certificate by applying for supplementary application or record filing. The specific requirements are summarized in the chart below for reference.
With regard to the cross-border entrusted manufacturing of imported medical devices by a Hong Kong or Macao medical device registrant, firstly, a domestic agent shall be designated; secondly, an entrusted manufacturing agreement shall be executed; thirdly, the manufacturing site specified in the medical device registration certificate shall be changed accordingly; fourthly, the contract manufacturer shall perform its reporting obligation. The specific requirements are summarized in the chart below for reference.
2. Accelerating the Evaluation and Approval Process for Innovative and Urgently Needed Products
In addition to the innovation of regulatory methods, the Notice emphasized the need to improve services for FIEs by accelerating the evaluation and approval process for innovative and urgently needed products, including making full use of the four expressways for drug evaluation; accelerating the marketing speed of overseas new drugs urgently needed in clinical practice, drugs for rare diseases, pediatric drugs, drugs for serious infectious diseases and so on; accelerating the marketing evaluation and approval for innovative medical devices, and fully implementing the innovative and prioritized evaluation and approval procedures; continuously improving the construction of the standard system of cosmetics regulations, and establishing and improving the evaluation mechanism for cosmetics technology.
As of today, a series of supporting regulations have been issued. We have summarized the main regulations concerning acceleration of the evaluation and approval process for innovative and urgently needed drugs and medical devices as follows:
a) Summary of Relevant Regulations Relating to Acceleration of Drugs Evaluation and Approval Process
b) Summary of Relevant Regulations Relating to Acceleration of Medical Devices Evaluation and Approval Process
3. Further Strengthening the Supervision of Drug Safety
China always emphasizes the supervision of the drug industry. The Notice also emphasizes the need to comprehensively strengthen the construction of drug supervision capacity and further strengthen drug safety supervision, including implementing the Implementing Opinions on Comprehensively Strengthening the Construction of Drug Supervision Capacity, intensifying the supervision of high-risk key products, and comprehensively strengthening the supervision of the quality of drugs and medical devices for epidemic prevention and control. In addition to the drug traceability system mentioned above, the following material measures are also implemented to strengthen drug supervision capacity.
a) Pharmacovigilance
Pharmacovigilance system refers to the monitoring, identification, evaluation and control of adverse effects of drugs or any other medicine-related problems. The Drug Administration Law, issued on August 26, 2019, elevated the pharmacovigilance system to the legislative level for the first time. On May 7, 2021, the NMPA issued the Good Pharmacovigilance Practice, which imposes higher requirements on quality management, institution personnel management, testing and reporting, risk identification, evaluation and control, documentation and data management of pharmacovigilance. On April 11, 2022, in order to guide the drug regulatory authorities to carry out pharmacovigilance inspections, the NMPA issued the Guidelines for Pharmacovigilance Inspections (including its annex Key Points of Pharmacovigilance Inspections) to procure drug marketing authorization holders to fully implement the main responsibility of pharmacovigilance.
b) Drug Safety Credit System
The drug safety credit system, as an important module in smart regulation, has always been taken seriously in drug regulation at the national level and local levels. For example, the Implementing Opinions on Comprehensively Strengthening the Construction of Drug Regulation Capacity issued by the General Office of the State Council on April 27, 2021 specifies the requirement to implement the drug safety credit system, including establishing the criteria, publicity system and information sharing mechanism for compiling the list of seriously illegal and dishonest acts in accordance with laws and regulations, and implement joint credit punishment. Various local regulatory authorities are also actively exploring the construction of the drug safety credit supervision system, adopting joint incentive and joint punishment mechanisms to reward or punish enterprises acting in good faith and enterprises acting in bad faith respectively when participating in government procurement and obtaining government funds and land support and for the tax administration. Some provinces and municipalities have also established cross-regional information connection mechanisms, realizing the mutual recognition of results and sharing of credit award and punishment system. For example, in September 2021, the credit management departments and drug administrations of Jiangsu, Shanghai, Zhejiang and Anhui provinces (municipality) jointly issued the Memorandum of Cooperation on Credit Regulation in the Drug Safety Field in the Yangtze River Delta Region, cooperating in studying and establishing a mechanism for mutual recognition of credit rating in drug safety field and sharing the list of enterprises with seriously illegal and dishonest acts, and opening up reward and punishment in enforcing the credit mechanism in drug safety field in the Yangtze River Delta Region.
c) Strengthening Regulations on High-Risk Products
For high-risk products, the relevant departments are also continuously implementing and improving the relevant management mechanisms. According to the relevant news released by the NMPA, in 2021, the supervision of high-risk products of pharmaceuticals, cosmetics and medical devices continued to be strengthened, measures including full-coverage inspection of blood product manufacturers, orderly supervision and inspection of high-risk products such as specialty drugs, sterile and implantable medical devices, and strengthened supervision and inspection of vaccines in each process have been taken[6]. Policies and regulations regarding the supervision on high-risk products are being issued. For example, the NMPA issued the Administrative Provisions on the Production and Circulation of Vaccines on July 8, 2022, which provides a regulatory basis for managing the manufacture and circulation of vaccines and identifying responsibilities (for example, an overseas vaccine holder shall, in principle, designate a pharmaceutical wholesale enterprise to sell vaccines in China and assume the obligations and responsibilities in the sales process).
4. Promoting International Rules Internalization
In aligning with international regulations, the Notice proposes to actively promote the internalization of international rules, deeply participate in the formulation of international regulatory rules, and actively internalize and implement international technical standards and guidelines.
With respect to the progress of internalizing international rules, by December 31, 2021, a total of 735 international medical device standards (International Organization for Standardization and International Electrotechnical Commission) shall be internalized, and a total of 664 international medical device standards have been or are being internalized, achieving an internalization rate of 90.3%. According to the statistics of the IMDRF Standards Working Group, the internalization rate of international medical device standards in China ranks among the highest in the world[7].
With respect to the participation in international rulemaking, the first international standard relating to medical devices for epidemic prevention and control formulated under the leadership of China, ISO 80601 -2-90: 2021 Medical Electrical Equipment — Part 2-90: Particular Requirements for Basic Safety and Essential Performance of Respiratory High-Flow Therapy Equipment, and the world’s first international standard document on coronavirus detection, ISO/TS 5798: 2022 In Vitro Diagnostic Test Systems — Requirements and Recommendations for Detection of Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-Cov-2) by Nucleic Acid Amplification Methods, have been issued[8]. Recently, the international standard IEEE P2801 “Recommended Practice for the Quality Management of Datasets for Medical Artificial Intelligence (AI) Datasets” led by the China National Institutes for Food and Drug Control has been officially issued and implemented, becoming the first global standard in the field of AI medical devices[9].
With respect to the export of domestic standards, in November 2021, the first international standard ISO 22679 - 2021 Cardiovascular Implants — Transcatheter Cardiac Occluders transformed from the domestic medical device industry standard (standard number: YY/T 1553-2017), has been officially issued[10]. These developments indicate that China is not only actively promoting the internalization of international rules, but also has begun to gradually explore the export of domestic standards to the international level. The good integration of domestic regulation with international regulation also provides a friendly environment and more possibilities for FIE to carry out business in China.
5. Conclusion
In light of the Notice and the construction of the existing relevant systems, China has always highly valued and encouraged FIEs to carry out pharmaceutical and medical business in China. The provision of the Notice on supporting Hong Kong and Macao MAHs to carry out cross-border entrusted manufacturing in nine cities in the GBA under a pilot program is an important breakthrough and new exploration of the existing system. It can be expected that China will make more constructive explorations in innovating regulatory methods, accelerating evaluation and approval, promoting the internalization of international rules and other aspects, and will provide more convenience and possibilities for FIEs to carry out pharmaceutical and medical business in China.
*Any reference to "Hong Kong" or "Hong Kong SAR" shall be construed as a reference to "Hong Kong Special Administrative Region of the People's Republic of China". Any reference to "Macao" or "Macao SAR" shall be construed as a reference to "Macao Special Administrative Region of the People's Republic of China".
Thanks to Luo Tianen and Guo Zian for their contributions to this Article.
Article 5 of Guiding Opinions of National Medical Products Administration on the Development of Information Technology-based Traceability Systems for Drugs (Guo Yao Jian Yao Guan [2018] No. 35).
According to Article 3 Item 1 of the Implementation Plan for Supporting Hong Kong and Macao Drug Marketing Authorization Holders to Produce Drugs in 9 Mainland Cities of the Greater Bay Area, drugs that are prohibited from entrusted manufacture under the Drug Administration Law and Measures for the Administration of Pharmaceutical Precursor Chemicals (Original Ministry of Health Order No. 72) are prohibited from entrusted manufacture. According to Article 3 Item 1 of the Implementation Plan for Supporting Hong Kong and Macao Medical Device Registrants to Produce Medical Devices in 9 Mainland Cities of the Greater Bay Area, medical devices that are prohibited from entrusted manufacture under the Catalogue of Medical Devices Prohibited from Entrusted Manufacture (National Medical Products Administration Notice No. 17 of 2022) are prohibited from entrusted manufacture.
According to Article 4 of the Announcement of National Medical Products Administration on Matters Concerning the Manufacturing of Products with the Registration Certificate for Imported Medical Devices by Enterprises within the Territory of China, a domestic registrant shall, in accordance with the Measures for the Supervision and Administration of Medical Device Manufacturing, apply for a manufacturing permit for medical devices, strictly implement its primary responsibilities for quality and safety, and strengthen the quality management of medical devices in the whole life cycle; and shall, in accordance with the Good Manufacturing Practice for Medical Devices, establish and improve its quality management system and ensure the effective operation of such system.
Article 3 Item 2 of the Explanation to Announcement of National Medical Products Administration on Matters Concerning the Manufacturing of Products with the Registration Certificate for Imported Medical Devices by Enterprises within the Territory of China published by NMPA on September 25, 2020, https://www.nmpa.gov.cn/directory/web/nmpa/xxgk/zhcjd/zhcjdylqx/20200925152939121.html.
Pursuant to Article 6 of the Measures for the Administration of Drug Registration, the drug administrative authorities of provinces, autonomous regions and centrally-administered municipalities shall be responsible for the following administration of drug registration within their respective administrative region… (d) participate in examination, inspection etc. for drug registration organized by the National Medical Products Administration.
China Will Intensify Efforts to Investigate and Handle Drug-related Cases in 2021, NMPA, https://www.nmpa.gov.cn/yaowen/ypjgyw/20220323113947112.html.
Exploring the Construction of Medical Device Standards in China from the Beginning, China Pharmaceutical News, http://news.pharmnet.com.cn/news/2022/06/22/567852.html.
Exploring the Construction of Medical Device Standards in China from the Beginning, China Pharmaceutical News, http://news.pharmnet.com.cn/news/2022/06/22/567852.html.
Official Release of IEEE P2801 “Recommended Practice for the Quality Management of Datasets for Medical Artificial Intelligence (AI) Datasets”, https://www.nifdc.org.cn/nifdc/gzdt/ywdt/20220704160241171815.html.
Annual Report on the Management of Medical Device Standards in China (2021), https://www.nmpa.gov.cn/directory/web/nmpa/ylqx/ylqxjgdt/20220218145010154.html.
