Introduction to China’s Drug Market
Everyone has been talking about opportunities in China’s drug market the last 5 years. While the size of the drug market in China varies, we estimate it at about $140 billion dollars now and growing about 10% per year. It is now the world’s second largest market and presents many opportunities and challenges to Western drug and biotech companies. To narrow the innovation gap between China and other leading Western countries, major reforms have been adopted in recent years. Over the last few years the Chinese regulatory agency went from the CFDA to the NMPA, added 10 times as many drug reviewers, has joined the ICH, and announced many other regulatory reforms which have been put in place – and others that are still evolving.
Background on China’s regulatory environment
Over the last few years, China’s Health Authorities (the NMPA, CDE, NHCC-National Health Commission of China) have issued new regulatory policies and guidelines that have encouraged overseas drug companies to get involved in China earlier for innovative products.
One of the biggest changes, is China’s decision to accept foreign clinical trial data for drug approval. In July 2018, the NMPA introduced guidance on the acceptance of foreign clinical trial data (“Technical Guiding Principles for the Acceptance of the Overseas Clinical Trial Data of Drugs (“Guiding Principles”) to benefit both Chinese citizens and foreign drug firms. Before this was introduced, only pharmaceutical products that had been extensively tested via clinical trials on Chinese people could be approved and marketed in China.
Now, with the acceptance of foreign clinical data, the key points of the Guiding Principles include the following – overseas clinical trial data must be – “truthful, complete, accurate, and traceable” – as the most fundamental requirements. And drug applicants must provide all overseas clinical trial data; selecting and submitting partial clinical trial data is not acceptable. The overseas clinical trial data must comply with the Good Clinical Practice (GCP) of the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (ICH).
Perhaps the biggest change in the clinical trial area, was the speed with which new clinical trial applications (CTA) could be approved and started in China. Before this new regulation was implemented, it could take about 18 months for the NMPA to review and approve a clinical trial application.
However, now under the newly revised regulations, applicants are permitted to proceed with the clinical trials according to the submitted protocol – if the NMPA does not object within 60 business days of the date of the CTA filing. In addition, after receiving the initial clinical trial approval, applicants can proceed with subsequent phases of their China trials without applying for additional clinical trial approvals from the NMPA. However, they still need to obtain approval from the ethics committee and file relevant supporting documents with the CDE.
Another major change involves the implementation of the MAH system. In the past, a drug registration in China was tied to the Chinese drug manufacturer and not the foreign drug company that wanted to make the drug in China. The new MAH system allows foreign drug company’s office in China (that does not make the drug) or their R&D centers in China, to own their own China registrations – even if they employ a local Chinese manufacturer to make the drug. Hence, foreign drug manufacturers utilizing a Chinese drug manufacturer, can now own their own registrations in China.
There are also more requirements now for drug MAHs in China today. In order to strengthen the safety requirements for drug and vaccine manufacturers, the revised regulations require MAHs to implement strict systems to trace the production of pharmaceuticals and vaccines from start to finish by assigning a unique traceability mark to each product’s packaging unit. The MAHs are held responsible for the safety and efficacy of the products, starting from the research phase until the products are marketed. In addition, in May 2019, the NMPA launched a pilot data-sharing platform that allows government officials nationwide to trace drug products more efficiently and provides the public with access to information on drugs via government websites.
There are 3 main options for regulatory clinical development in China
In this scenario, China simultaneously joins the global clinical development via a multi-regional clinical trial (MRCT). This is usually the best option because it enables international drug companies to strategically leverage the global clinical trials and uses a minimal sample size from the Chinese population – to satisfy the requirement for NDA approval in China.
If the sponsor pursues this option, the proposed clinical study protocol in China can be the same as the study protocol for the US/EU. This scenario will require about 15-20% of the patients to be Chinese in the overall trial population, as pivotal data for a Marketing Authorization Application (MAA) in China. When clinical trial costs, site feasibility, recruitment rate, clinical practice, and data quality are taken into account, Option 1 is the best pathway to optimize your global development strategy and reduce costs.
Option 2, which is especially appropriate for diseases that are prevalent in Asia, is to do an Asian regional MRCT to support the China NDA. If the Sponsor cannot join the global trial as outlined above in Option 1, this may be the second best regulatory strategy. In this scenario, at least 2-3 countries are selected from a group of Asian countries (China, Japan, Taiwan, Hong Kong, Korea, etc.). The subgroup of Chinese population data, could be used in the Asian MRCT to support the China NDA approval. In this Asian regional MRCT, it is recommended that about 60% – 70% of the patients are Chinese. The proportion of sample size allocation in the Asian countries can be referenced in the ICH E5 and E17 guidelines to support the marketing authorizations in these countries.
Option 2 is costlier and more time-consuming than Option 1 for China registration, because of the need for a larger sample size of the Chinese population. However, if a sponsor plans to do clinical trials in Asia, but cannot enter the global MCRT study on time, this may be the next best option for China approval and other approvals in the Asian region.
Multinational companies have used Option 3, a traditional pathway, over the last 30 years. Under Option 3, China is considered a 2nd tier country for global pipeline development.
In principle, there are 2 pathways for scenario 3. The first pathway is to initiate the NDA application directly in China with the full package of global clinical data after the first global approval of the new indication in the US/EU with CPP availability. The applicant needs to provide all the global CTD package from the reference country, including the full CSR of the pivotal phase 3 study, and other clinical trial information, if available. The “Technical Guidelines for Acceptance of Overseas Drug Clinical Trial Data” released by the NMPA in 2018 includes further detail on these guidelines.
Alternatively, the applicant could try to run an additional local China trial that may bridge the global phase 3 study by applying for a local CTA. Important aspects of the study design such as the treatment duration, sample size, ethnic differences, etc. can be discussed with the CDE in a pre-IND meeting. After the local China bridging study is completed, the NDA application will be submitted with the global full CTD package and the China bridging study. Generally, Option 3 is the most expensive and time-consuming for China drug approval.
Fast Track Priority Approval
One of the most significant changes with the new China drug regulations is fast track or priority review. There are 3 different strategies for Priority Review.
- Breakthrough Therapeutic Drug Process (BTD)
In order for a new drug to be eligible for the BTD award, evidence of clinical values demonstrated in clinical trials must be shown. The drug must be used for the prevention and treatment of severely life-threatening conditions or situations that impact the quality of life, or meet unmet medical needs for diseases without effective therapeutic measures or have obvious advantages compared to current therapeutic drugs.
The benefits of the BTD process include priority communication and consultations with the CDE regarding clinical trials, etc. However, the NMPA has the right to withdraw the BTD status when the application no longer meets the BTD criteria.
- Conditional NDA/BLA Approval Process
A conditional NDA/BLA approval can be achieved for –
a) drugs that have sufficient clinical efficacy data to predict the clinical value in the treatment of severely life-threatening and greatly unmet medical needs or great improvements on quality and efficacy, compared to current therapeutic drugs;
b) drugs with sufficient clinical efficacy data to predict the clinical values in the response to a public health emergency; and
c) vaccines with urgent needs to cope with public health emergencies or with accreditation by National Public Health Committee of China
After receiving the conditional approval, the applicant still needs to complete the required post-marketing commitment within a defined timeframe and take other risk management measures for the marketed drug. If the applicant cannot complete the required investigations or cannot prove that the benefits outweigh the risks within the defined timeframe, the NMPA has the right to withdraw the conditional approval of drugs and vaccines.
- Priority Review Process of NDA/BLA:
This process is specified for innovative or modified new drugs where a clinical shortage exists or there are greatly unmet medical needs – drugs that prevent or treat important contagious diseases or rare diseases, new pediatric drugs, new formulations and specifications, urgently-needed vaccines, drugs that are recognized as breakthrough therapy, etc.
The priority review application could be submitted together with the NDA/BLA submission provided that the CDE agrees to this in the pre-NDA/BLA meeting.
While the normal review time is 200 working days, the estimated timeframe for drug priority review is 130 working days. The timeframe is even shorter at 70 working days for drugs treating rare diseases in clinically urgent needs and drugs already approved overseas, but not in China.
Regulations on Orphan Drugs
In order to boost support for patients with rare diseases, in May 2018, China published the first national list of rare diseases, which sent a positive signal to foreign pharmaceutical companies interested in marketing their orphan products in China. Before the rare disease list was published, there were no rare disease list or approved orphan drugs. Therefore, the publication of the list was seen as a major overhaul of the Chinese healthcare system.
In March 2019, China also started cutting taxes on some orphan drugs to spur the availability of medicines for rare diseases to Chinese consumers. China’s State Council cut the value-added tax (VAT) rate for some rare disease therapies by more than 80%. Since most orphan drugs in China are manufactured by foreign drug companies, this move by China’s government was seen as an incentive for foreign drug companies to speed the development of much-needed drugs that could benefit 20 million Chinese citizens with rare diseases.
In November 2019, the National Healthcare Commission (NHC) announced that they would start requiring hospitals to register cases they encounter of patients with any of the 121 rare diseases included on China’s list of rare diseases. In addition, Chinese authorities are considering using government health insurance to help fund the cost of rare disease drugs.
Negative Trends in China’s New Drug market
While it is now significantly easier for foreign drug companies to get their products into China in a more efficient and timely way, the main problem is that China has dramatically cut drug prices and utilized more group purchasing mechanisms – called value-based procurement. Trying to raise the accessibility of its healthcare system, China is pressuring foreign pharmaceutical companies to significantly lower their prices in exchange for being added to the reimbursement list. The number of drugs on China’s reimbursement list increased from 2,588 in 2017 to 2,709 in 2019. However, after new products were added to the list in late 2019, foreign drug companies saw an average price drop of about 70%. In September 2019, China’s National Healthcare Security Administration drafted a plan to decrease the control of provincial governments over adjustments made to drug prices. The plan could also reduce reimbursement for some drugs distributed at the local level.
In addition, China has made little progress with patent protection. There is no product protection in China without a patent. Patent disputes in China have been described by patent linkage. In other words, the original drug manufacturer will state the relevant patents it has in China. A new drug applicant would need to give the patent holder notice about their drug and give the patent holder time to file a suit within a certain period of time, if they believe their patent is being infringed. During that time the NMPA would not approve the new Applicant’s drug. However, this linkage system is not well enforced. Also, there has been talk about patent extensions, but to date, there is no new info on this.