With China marching into the Year of the Ram, multinational life sciences companies should anticipate and be prepared for regulatory changes and enforcement initiatives by Chinese agencies that may significantly affect their existing China operations and future business strategies.
- The China Food and Drug Administration (CFDA) is in the process of developing more rules and guidelines for its review and approval of pharmaceutical products. Regulations likely to be amended include the Drug Registration Regulation, and the Good Clinical Practices (GCP). In addition, the industry has been waiting a long time for CFDA’s clarification of its review procedures on multi-regional clinical studies (MRCT).
- China amended its overarching national medical device regulation in mid-2014, followed by CFDA’s on-going efforts to revise its implementing regulations on device registration, clinical studies, local manufacturing and distribution. These legislative efforts suggest more relaxed regulations over Class I and Class II products, but more enhanced requirements for innovative and high-risk products. In particular, CFDA has developed Good Manufacturing Practices (GMP) and Good Supply Practices (GSP) for local device manufacturers and distributors.
- For several years, there has been speculation that China might impose additional pricing controls on pharmaceutical and device products marketed in China, either through mandated price ceilings or through tender bidding in government-organized procurements. While the national pricing authority, the National Development & Reform Commission (NDRC), did not act in 2014, several provincial governments have recently imposed more aggressive pricing requirements. The constantly-evolving pricing regime, together with more procurement regulations favoring local products, will continue to pose challenges to multinational companies in product strategies and supply chain management.
- CFDA will heighten GCP, GMP and GSP enforcement significantly. Specifically, CFDA intends to conduct more inspections of local and overseas clinical study sites, manufacturing facilities and of local distributors. CFDA and its local agencies are also expected to impose more aggressive penalties.
- Pharmaceutical and medical device companies will face increasingly stronger antitrust pressure in China. In 2015, NDRC is expected to complete the industry-wide antitrust inquiries it launched last year against pharmaceutical companies, possibly with penalties. It may also initiate formal antitrust investigations in the pharmaceutical industry and gradually shift its focus of antitrust enforcement to the medical device industry, especially to device products with media-alleged “inflated” or “unreasonably high” prices. In addition, the State Administration for Industry and Commerce (SAIC), another antitrust enforcement agency, may follow suit and start its own antitrust investigations of these industries.
- The anti-corruption compliance environment in China is changing rapidly and many new challenges have arisen. The Chinese government has significantly increased its anti-corruption enforcement in the public healthcare sector since the new cabinet took office in 2014, which will translate into higher anti-corruption compliance pressure for pharmaceutical and medical device companies. Certain forms of promotional and academic activities adopted by companies in the past years may be questioned due to change of the regulatory environment — for example, the proposed reform of medical associations and more restrictions on the receipt and use of sponsorships by these associations. Companies may need to revisit their internal compliance control measures.
Changes are also expected in food and cosmetic regulations. China is planning to create an entirely new regulatory framework for dietary supplements and functional foods, and is working on consolidating and revising the existing regulations on cosmetics.
If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work, or
Chen Yang
Partner
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Lei Li
Partner
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