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  November 29th, 2017 | Written by

China Announces Improvements to Drug Approval Process

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  • China requires trials of new drugs to reach an advanced stage in other countries before allowing Chinese trials.
  • China's process can delay the introduction of new drugs to the Chinese market by seven years compared to the US.
  • Delays in China reduces return on R&D for pharmaceutical companies.

The Central Committee of China’s Communist Party (CCP) revealed a new pharmaceutical approval process in October that is expected to speed up the ability of foreign firms to introduce new drugs in China, according to a report from the US-China Economic Security Commission.

China has long used an asynchronous review process for foreign pharmaceuticals and biotechnology products, requiring trials of new products to reach an advanced stage in other countries before allowing Chinese trials and safety reviews to begin. With respect to pharmaceuticals, this process can delay the introduction of new drugs to the Chinese market by as much as seven years compared to approval processes in the United States or Europe.

As China is the world’s second-largest pharmaceutical market after the United States, accounting for $117 billion in drug sales in 2016, this delay significantly pushes back the return pharmaceutical companies receive on research and development, decreasing incentives for innovation.

Under the new system, some foreign drugs will not require Chinese trials if data from outside of China can be provided demonstrating the drug is safe. However, these data must meet Chinese standards and must demonstrate the drug is an effective treatment for “Eastern” people, requiring foreign companies to run trials with an Asian population. This new process will significantly decrease the approval time for drugs that have already run clinical trials internationally—possibly allowing imminent approval in China if the pharmaceutical firms can provide appropriate ethnicity data.

The new approval system also increases the number of organizations in China that can conduct clinical trials—providing speedier approval for drugs developed domestically in China—and establishes a fast-track approval process for new drugs, drugs and devices for rare diseases, and urgently needed medical devices.

Chinese regulators and foreign pharmaceutical firms have faced an ever-growing backlog of drug applications in China. The number of drugs awaiting approval for China’s market has steadily grown from almost 14,000 in 2013 to 21,000 in 2015, an increase of 51 percent.

The United States has long pressed China to end its asynchronous review of pharmaceuticals in bilateral dialogues. In 2014, at the 25th US-China Joint Commission on Commerce and Trade, China committed to allowing foreign drugs to begin trials in China at the same time as abroad, although this promise does not appear to have been fulfilled. This new system, if fully implemented, may function as a work-around to China’s asynchronous review.

The United States has also sought to address China’s asynchronous review of biotech products, but to date has enjoyed limited success. In May, as part of the US-China 100-Day Action Plan, China pledged to consider approval of eight US biotech crop strains that had been awaiting review, but it has only approved four strains so far. China’s delayed approval of US biotech crops stalls their introduction worldwide as US firms often wait to begin production until they receive approval from China, a large market for US agriculture.

Foreign drug companies have experienced a drop in prices for many of their drugs in China recently, as the Chinese government has negotiated lower prices in exchange for including certain drugs in a government health insurance program. According to the Financial Times, in 2016 average cuts of 44 percent were applied to 36 drugs, most of which were developed by foreign companies.