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China’s FDA Ups Its Game
One of the pharmaceutical industry’s main complaints about China is the extremely slow drug approval process. The approval process in China typically is 6-8 years, roughly double that of the US and most developed markets. The underlying problems are understaffing, inadequate expertise, and a towering backlog of applications (18,500 NDAs and change applications pending as of 31 December 2014.) Copycat generic drugs comprise a significant portion of the backlog, delaying the approval process for innovative drugs.
We recently met with several pharmaceutical companies and executives who conduct business in China. For the first time, they noted some tangible evidence of improvement in the approval process in response to direction from the State Council (China’s chief administrative body.) The data are anecdotal at this stage, and may simply reflect the circumstances around particular products. Yet the backdrop behind these developments supports the idea that change is afoot. This post covers just a few of the highlights of a much broader reform process at CFDA.
New Leadership with Powerful Connections in Place
In January 2015 the State Council appointed Mr. Bi Jingquan as director of the CFDA. He previously served as a Deputy Secretary General of the State Council, and Vice-President of the China Consumer Association. Mr. Bi has shown a willingness to accept input from CFDA’s overseas counterparts. For instance, in May the Gates Foundation brought in a group of former FDA officials to discuss a variety of issues, including staff development. In addition, the US Embassy staff includes a former FDA staff member who meets regularly with various CFDA counterparts.
Further, the agency took a page from the USFDA’s playbook in May by raising application fees substantially. The fee for a new branded drug increased to RMB624,000 from RMB35,000 (set in 1995.) CFDA intends to use the additional money for hiring and staff development. Also, the higher fees likely will reduce the number of applications for drugs of little value.
CFDA Has Started Cleaning Out the Registration Pipeline
In July CFDA directed drug manufacturers to conduct self-inspections of the clinical trial data for 1,622 registration applications, and withdraw the registrations if they found data integrity issues (essentially an amnesty program) or face public rejections of applications if CFDA found irregularities. Manufacturers withdrew 317 (20%) of the applications quickly. The number of withdrawals escalated to 727 (45%) in early September then to 1,184 (73%) in the past few days. Also, CFDA announced the rejection of 11 applications in November. The magnitude of the withdrawals illustrates the amount of “junk” that was clogging the approval pipeline.
State Council Publicly Directs CFDA to Fix the Registration Process
The State Council upped the ante last August by releasing a document that called on CFDA to increase the efficiency of registration reviews for drugs and devices, including upgrading the process to international standards. Further, the document called on CFDA to clear the registration backlog by 2016 (note the self-review program), and to comply with new timelines for the registration process by 2018. The new registration framework (highlights below) will prioritize approvals for innovative drugs over generics and “me too” branded products. One interesting provision of the document requires bioequivalency studies by 2018 for all generic drugs that were added to the National Essential Drug List prior to October 1, 2007 (possibly as many as 2,400 drugs.) This exercise could force some rationalization of the industry.
Revised CFDA Registration Approval Framework:
“No light” – Globally innovative drugs (no barriers to approval)
“Green light” – Drugs that meet urgent clinical needs or are “beneficial to industrial transformation”
“Yellow light” – Repetitively filed generic drugs “not encouraged”
“Red light” – Excessively repetitive filings of generics drugs. CFDA will list, publicize, and restrict these.
CFDA Reform Fits with the Government’s Broader Policy Agenda
China’s government appears determined to stick with these reforms, but the process could take longer than expected or the political winds could shift. We should note that CFDA has resisted the USFDA’s requests to increase its staff for plant inspections (and there are some real issues out there.) At the same time, the government has enacted a variety of other policies (tax benefits, development of life science parks) to encourage development of an R&D-driven life sciences industry that can help boost per-capita incomes.
MNCs Likely the Main Beneficiaries Initially
The multi-national drugs companies (MNCs) should be the main beneficiaries initially because many innovative products on the market elsewhere have been stuck in the queue at CFDA. There are Chinese companies that will benefit too, but many more that will have to adjust their business models or shut down. The government appears more than happy to see the “irregular” players disappear.