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Oct 19, 2015
 |  BioCentury  |  Regulation

Unleashing China's innovators

How China FDA reforms may unleash development of innovative drugs

An ambitious slate of reforms proposed by China's State Council could at last relieve the regulatory bottlenecks that have long hobbled development of innovative drugs in and for China by domestic and multinational pharmas alike.

If coupled with pricing and reimbursement reforms proposed earlier this year, the effect on access to innovative medicines would be profound, according to BioCentury's reporting with lawyers and principals at international management consultancies who practice in China, and domestic R&D executives.

However, the regulatory proposals put forth in skeleton form in August must be fleshed out quickly if revisions to the Drug Administration Law, which provides the framework for drug regulation, are to be ratified by the National Congress at its annual session in March.

Innovators will be watching to see whether CFDA embarks on pilots to test the reforms, which the consultants and executives told BioCentury is the most likely next step.

The proposed reforms would build on years of government investment to create an innovative drug industry. VCs report that early results from these investments can be seen in increases in the amount of novel biology being prosecuted in China, and its uptake into domestic start-ups that intend to translate discoveries into innovative drugs.

In particular, the reforms could unleash the growing cohort of forward-thinking domestic pharmas with profitable businesses in generics and traditional Chinese medicines that are now committing significant investment to developing NCEs, including in-licensing China rights to molecules discovered in the West.

These innovators, and multinational pharmas, have been stymied by a well-documented litany of regulatory blockades: far too few and far too inexperienced review staff at CFDA, lengthy review timelines for clinical trials and marketing applications, and an opaque drug review process.

Even with a new and experienced director installed in 2014 and the creation of a new pathway that speeds reviews for domestic companies, the agency has amassed a daunting backlog of applications.

The management consultants and industry executives who spoke to BioCentury place the estimate at 15,000-23,000 NDAs and clinical trial applications (CTAs). They said CTA approvals can take anywhere from six to 20 months. NDA approvals take at least 10 months but are typically much longer.

The State Council's reform proposals have been published only in Chinese, but consultants and lawyers who read the original document and described its contents to BioCentury report that most of the reforms fall into two categories: increasing the quality and speed of the review process, and strengthening CFDA's technical expertise.

The former category includes setting a deadline for clearing the backlog of applications, establishing review deadlines for new applications and creating new pathways akin to FDA's accelerated approval pathway for innovative medicines intended to treat serious diseases with large public health consequences (see "China's Regulatory Ambitions").

"For companies and investors from Western markets, it will look much more familiar to them and make China a more comfortable place to operate," L.E.K.'s Helen Chen told BioCentury.

While those proposals could be expected to increase the burden on CFDA, the State Council also proposed to increase user fees and to recruit additional staff for the agency.

This spring, CFDA had already announced it would increase registration fees for domestic drugs from RMB35,000 ($5,642) to RMB624,000 ($100,589). However, CFDA may struggle to recruit reviewers with the expertise and experience to handle the expected influx of applications for innovative drugs within the time frame the State Council proposed.

The consultants added that clearing the path for innovative drugs in China must include transitioning away from a lengthy reimbursement process that relies on blunt price-cutting tactics to a more predictable system that is willing to pay for innovation. The government has proposed an external reference pricing system that could allow a premium for patented drugs.

The state of play

A thriving innovative drug sector is crucial to the Chinese government's plan to transition from a high-growth, low-skill economy to one in which sustainable growth is driven by innovative industries.

China's two most recent five-year plans, ratified in 2006 and 2011, named biotech as one of seven "pillars" of the country's economic growth. To support this economic...

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