A New Regulations for the Implementation of

the Drug Administration Law will be in place in China

China’s National Medical Products Administration (NMPA) is publicly soliciting comments to a new draft amendment to the Regulations for the Implementation of the Drug Administration Law. Drug Administration Law is the fundamental statutory provisions governing pharmaceutical affairs in China. Its latest version took effect in December 2019. On May 9 of 2022, in order to further reinforce the supervision and management of pharmaceutical products, to safeguard people’s health using medicines, and to encourage the high-quality development in the pharmaceutical industry, NMPA formulated this draft amendment to the Regulations for the Implementation of the Drug Administration Law and published the same to invite general public inputs. 

This new draft amendment has 181 articles allotted in a total of 10 chapters, which is way populated than the currently effective version by 101 articles more. Particularly the Section 5 of Chapter 2 is headlined “Intellectual Property Protection for Pharmaceutical Products,” including Articles 38 to 40.

Article 38 for “patent linkage” reiterates primarily the same system in the Patent Law and the Implementation Measures for the Early Resolution Mechanism for Drug Patent Disputes. Where there is patent right dispute during the application for marketing approval of drugs, the relevant parties may file a lawsuit to the court or request for an administration adjudication to the CNIPA. Noteworthily, the examination for the application does not pause during a legal action. For a chemical drug that passed the examination, NMPA will eventually grant a marketing approval or not according to the court’s judgement, verdict, or settlement agreement, or the CNIPA’s administrative adjudication.  Having not receive the above documents from the court or CNIPA in lapse of a certain period of time, the NMPA may grant a marketing approval at its own power. Besides, the NMPA is the legal authority to run and supervise a pharmaceutical drug patent information registration platform to disclose patent status associated with a drug, where the marketing approval applicant holder are responsible for the authenticity, accuracy and completeness of the uploaded patent information.

Article 39 for “promoting the development of generic drugs” provides a market exclusivity to the first successful chemical generic drug which wins in a patent linkage dispute, meaning that the NMPA would not grant approval to anther generic copy within 12 months from the date of the first successful generic’s approval. But the market exclusivity term does not exceed beyond the expiry of the challenged patent term.

Article 40 for “data exclusivity” protects market approval holder’s submitted undisclosed experimental data or other data for some drugs from unfair commercial use by others. Within six (6) years from the grant of a market approval to either a chemical drug or a biologic, the NMPA does not grant approval to another application which cites the same data of the previous market approval.  Except the necessity of public interests or when measures safeguarding said data against unfair commercial exploitations were adopted, the NMPA shall not make public the undisclosed experimental data as described in the first sentence.

More prominently, for the first time ever, China is about to award market exclusivities to both pediatric drugs and orphan drugs.

As per Article 28, a market exclusivity of no longer than 12 months will be awarded to the first approved drug of new variety, dosage form, and strength specifically designed for children, to an existing drug with newly added indications or administration routes or doses for children. During said market exclusivity no other drugs of the same variety will be approved. To encourage the research and innovation of pediatric drugs, development of pediatric drugs of new variety, new dosage form, and new strength that match the physiological characteristics of children will be supported. The review process for the applications for market approvals of pediatric drugs will be prioritized.

Furthermore, as per Article 29, a market exclusivity of no longer than seven (7) years will be awarded to an approved orphan drug to treat a rare disease, should the marketing approval holder promise an uninterrupted supply of the drug. In failure to keep the promise of supply, the market exclusive will be terminated. Likewise, to encourage the research and innovation of orphan drugs, studies for drugs that treat rare diseases will be supported and developments for treating new indications of rare diseases by the already marketed drugs will be fostered. Besides, the review process for the applications for market approvals of orphan drugs in urgent needs for clinical uses will be prioritized.

Rare diseases suggest a small market for a medicine product whereas the cost in time and money to develop a new drug remains overwhelmingly high. Pharmaceutical companies engaging in orphan drugs development would start by applications for compound patents for them to better solicit more funding or financing opportunities in order to advance the projects to the next phases. But the lifecycles of an original drug are usually very long that the patent term would almost reach expiry by the time a new medicine is about to debut. And then a generic drug can follow to launch quickly. The result is that the original drug maker could not break even from the enormous cost ever spent. In lack of economic incentives, this vicious cycle devastatingly dissuades additional investment in innovative activities in orphan drugs. A market exclusivity for orphan drugs as now proposed in the draft amendment seems to be an extra segment of time compensable to the original patent term.

Article 178 prescribes the penalty for data leakage to provide that where the NMPA and its staff reveals any undisclosed experimental data or other data to cause losses of the applicant, the NMPA is liable for the applicant’s damages.

Last but not the least, as Article 121 provides, for the sake of public health or national emergent status, the relevant authority of the State Council may propose a compulsory license of a patent based on the necessity of disease diagnosis and treatments. Enterprises who is competent of required capacity may hence submit a request to the CNIPA who would eventually determine whether to grant such a compulsory license. The NMPA shall prioritize the review process for the drug for which a patent compulsory license is granted.

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