China Releases Draft Implementation Guidelines for the Drug Administration Law

The latest draft implementation guidelines for China’s Drug Administration Law (“Guidelines”) are out and open for comment. Previously, the new implementation measures for early dispute resolution mechanisms for drug patents (“Patent Linkage Measures”) came into effect on July 4, 2021.

The Guidelines indicate that the final approval of generic chemical drug applications for marketing approval will be stayed pending Paragraph IV litigation results. Technical review for things like safety and efficacy will proceed regardless. Although previously published Patent Linkage Measures indicate that the maximum stay period is 9 months, these Guidelines only say “a certain period.” The regulatory approval process for generic biologics and traditional Chinese medicines will not be stayed pending Paragraph IV litigation results. 

Market Exclusivity 

First Generics: Similar to the US, China also gives “first generics” market exclusivity. Under the new proposed Guidelines, the first generic chemical drug applicant to (1) successfully challenge an innovator patent and (2) obtain marketing approval will obtain 12 months of market exclusivity. This exclusivity period of time is twice as long as the US’s version, which gives 180 days of exclusivity. Furthermore, the exclusivity period cannot exceed the original term of the challenged patent.

It’s no surprise that the China would like to promote access to lower cost medicines to its people, even including in the preamble “[t]he State encourages the development of generic drugs.” 

Aside from generics, this set of proposed Guidelines also includes market exclusivity provisions for pediatric formulations and new orphan drugs. 

Pediatrics: Any new variety, dosage form or specification designed specifically for pediatric use; or an existing drug approved for any new indication or use specifically for children, can enjoy up to a maximum of 12-month market exclusivity.  

Orphan Drugs: Any new drug approved for treating a rare (orphan) disease can enjoy up to a maximum of 7 years market exclusivity, provided that the manufacturer can guarantee supply. If supply is not guaranteed, then the market exclusivity will be terminated. 

Data Exclusivity 

The new proposed Guidelines also set out more details on exclusivity for confidential data, including providing 6 years data exclusivity for undisclosed experimental data and other data from “newly approved drugs.” The NMPA (Chinese drug regulatory agency) will not approve any new drug application that uses such confidential data that a marketing authorization holder (“MAH”) used to obtain drug marketing approval without the MAH’s prior approval, unless if the data was acquired independently. 

Data Confidentiality 

The Guidelines recognize that confidentiality of clinical data is important. It has set forth strong language emphasizing the confidentiality of data, stating that no one from the NMPA may disclose any clinical data unless if it is (1) in the interest of the public or (2) steps are taken to protect the data against unfair commercial use.

The Guidelines further set forth penalties for data disclosure (experimental or other), making the NMPA liable for losses/damages arising from the NMPA (or its staff’s) violation of the regulations. It emphasizes that personnel/staff who intentionally or negligently disclose data shall also personally provide compensation and even potentially suffer administrative sanctions. 

A Few Comments 

Since 2002, The Chinese Patent Law has provided a 6-year data exclusivity period for new chemical entities (NCE’s), added as a condition for China joining the WTO. In the past, it has been said that the 2002 data exclusivity provisions for NCEs had no teeth for a few reasons.  

One is that the term “new chemical entity” was narrowly interpreted as a new to the world (not new to China). As such, foreign drugs whose first clinical trials were not done in China were not considered new chemical entities when they entered China.

Second, China’s regulatory agencies sometimes considered data obtained from public sources as being obtained “independently.” Therefore, if a foreign company published the results of a clinical study, a generic company could arguably use that publicly available data for its own clinical filings without running afoul any data exclusivity protections, since the data was acquired by the generic company “independently” from public sources. 

“New Chemical Entity” to “Newly Approved Drug” 

In these new data exclusivity draft provisions, the change from “new chemical entity” to “newly approved drug” implies that the NMPA is possibly broadening its data exclusivity protection, clarifying that protection is given to any “newly approved drug,” not just new chemical drugs. Furthermore, “newly approved” seems to imply newly approved by the NMPA, which gives room for foreign drugs previously approved in other jurisdictions. 

However, narrowing the protection of data exclusivity to only cover "undisclosed experimental data" further signals that the NMPA does not consider published clinical trial data as being protectable under China's data exclusivity provision.

The exception “unless if the data was acquired independently” is a bit unclear. 

We should note that the exception for data “acquired independently” is still in the new version of the regulations, and uses pretty much the same language “自己获得”. We think it is worth asking the NMPA to clarify whether “acquired independently” means the drug applicant needs to run its own studies, or whether it includes using others' published data. If the latter is true, then innovator companies need to be aware of this when deciding when to publish the data from their clinical trial studies.

Confidentiality of Data 

Finally, we know there has been concern about the confidentiality of data that is submitted to the NMPA. At least these draft Guidelines acknowledge the importance of confidentiality, strongly support the protection of such data, and clearly lay out certain consequences to those who do not protect data confidentiality. At the same time, broad and vague exceptions, such as for “public interest”, no data protection if “acquired independently”, and trying to figure out what “unfair commercial use” means, still provides reasons for concern. It remains to be seen how things will really play out. 

About the Authors

Jennifer Che, J.D. is Vice President and Principal at Eagle IP, a Boutique Patent Firm with offices in Hong Kong, Shenzhen, and Macau.

Yolanda Wang is a Principal, Chinese Patent Attorney, and Chinese Patent Litigator at Eagle IP, a Boutique Patent Firm with offices in Hong Kong, Shenzhen, and Macau.

This article is for general informational purposes only and should not be considered legal advice or a legal opinion on a specific set of facts.