Medicinal product regulation and product liability in China: overview

A Q&A guide to medicinal product regulation and product liability law in China.

The Q&A gives a high level overview of key issues including pricing and state funding, manufacturing, marketing, clinical trials, advertising, labelling, and product recall and liability.

For information on pharmaceutical patents, trade marks, competition law, patent licensing, generic entry, abuse of dominance and parallel imports, visit Pharmaceutical IP and Competition Law in China: overview.

To compare answers across multiple jurisdictions, visit the Medicinal product regulation and product liability Country Q&A tool.

The Q&A is part of the multi-jurisdictional guide to life sciences law. For a full list of jurisdictional Q&As visit www.practicallaw.com/lifesciences-mjg.

Contents

Regulatory overview

1. What is the regulatory framework for the authorisation, pricing and reimbursement of drugs, biologicals and devices (as they are termed in your jurisdiction)?

Legislation

Under Chinese law, drugs and biologics are both regulated as pharmaceuticals. The regulatory framework for the authorisation, pricing and reimbursement of pharmaceuticals mainly consists of the following laws, regulations and administrative notices:

  • The PRC Drug Administration Law and the Regulations for the Implementation of the PRC Drug Administration Law.

  • The Drug Registration Rules.

  • The Administrative Measures for Special Review of New Drugs.

  • The PRC Price Law.

  • The Governmental Pricing Measures for Drugs.

  • The National Development and Reform Commission Notice on the Drug Pricing Catalogue.

  • The Decision on Establishing the Urban Employees' Basic Medical Insurance System and the Notice on the Drug Catalogue for the National Basic Medical Insurance, the Employment Injury Insurance, and the Maternity Insurance.

The following laws, regulations and administrative notices regulate the authorisation, pricing and reimbursement of medical devices:

  • The Regulations for the Supervision and Administration of Medical Devices.

  • The Measures for the Administration of Medical Device Registration.

  • The Opinion on Reforming the Price Administration of Medical Services.

  • The Notice on Standardising the Price Administration of Medical Services and the Related Issues.

  • The Opinion on the Administration of the Clinic Projects under the Urban Employees' Basic Medical Insurance System and the Opinion on Defining the Scope and Payment Standards for Medical Services under the Urban Employees' Basic Medical Insurance System.

Regulatory authorities

The China Food and Drug Administration (www.sfda.gov.cn) and its local counterparts are the primary regulatory authorities applying and enforcing laws and regulations concerning pharmaceuticals and medical devices. Its main areas of responsibility are:

  • Granting market authorisations for medicinal products and their post-market surveillance and re-evaluation.

  • Granting market access for pharmaceutical manufacturers and distributors by issuing pharmaceutical manufacturing licences and distribution licences.

  • Defining and enforcing various good practices for pre-clinical studies, clinical studies, pharmaceutical manufacturing and distribution.

In addition, the following are also responsible for regulating different aspects of the life science sector:

  • The National Health and Family Planning Commission.

  • The State Administration of Industry and Commerce.

  • The State Administration of Quality Supervision, Inspection and Quarantine.

  • The National Development and Reform Commission.

  • The Ministry of Human Resources and Social Security.

The National Health and Family Planning Commission (www.moh.gov.cn):

  • Regulates the operation of public hospitals and the conduct of healthcare professionals.

  • Formulates and implements national pharmaceutical policies, including the national essential drug system.

  • Formulates laws and regulations related to healthcare services and food safety.

The National Development and Reform Commission (www.sdpc.gov.cn):

  • Issues catalogues of drugs subject to government pricing.

  • Sets government-guided prices for the drugs listed in the pricing catalogue.

The State Administration of Industry and Commerce (www.saic.gov.cn):

  • Regulates pharmaceutical advertising and promotion.

  • Regulates commercial bribery and unfair competition.

  • Implements rules on trade mark protection.

 
2. Briefly outline how biologicals and combination products are regulated in your jurisdiction.

Biological products are regulated as a sub-class of pharmaceuticals and are subject to more stringent regulatory requirements, for example, there are no abbreviated regulatory pathways for marketing authorisations, higher standards for Pharmaceutical Good Manufacturing Practices (GMP) Certification, and stricter testing requirements for product releases.

Combination products are regulated either as drugs or as medical devices, depending on which element contributes to the primary therapeutic effect. For new combination products, the CFDA will issue a classification decision at the time when the applications for marketing authorisations are made.

 
3. Briefly outline how medical devices and diagnostics are regulated in your jurisdiction. Is there any specific regulation of health IT issues and mobile medical applications?

Medical devices are primarily governed by the Regulations for the Supervision and Administration of Medical Devices, which was recently amended and will become effective on 1 June 2014. Medical devices are classified as Class 1, Class 2, or Class 3 devices in accordance with their risk profiles. Most in vitro diagnostic products are deemed medical devices in China, while those related to blood screening and those containing radioactive nuclide tracers may be classified as drugs.

A Class 2 or Class 3 medical device must be registered before marketing in China. There are two types of marketing authorisations: one for locally manufactured devices and the other for imported devices manufactured outside China. For obtaining marketing authorisations, clinical studies generally must be conducted if a device is launched for the first time in China. Clinical trial waivers are available for certain qualified Class 2 and Class 3 device products.

China has yet to issue any specific regulation addressing health IT issues and mobile medical applications. However, software may be subject to the above classification and registration requirements if it meets the definition of medical device:

  • It aims at the prevention, diagnosis, monitoring, and treatment of diseases.

  • It realises these functions mainly by physical mechanism instead of pharmacology.

  • It is used frequently to drive the operation of other medical devices or equipment.

 

Pricing, state funding and reimbursement

4. What is the structure of the national healthcare system, and how is it funded?

The Basic Medical Insurance system, China's national healthcare system, consists of the following programmes:

  • The Basic Medical Insurance System for Urban Employees, established in 1998 to cover the basic medical expenses related to outpatient and hospital treatments incurred by employees in urban areas. Participation is mandatory and the system is funded by contributions from both employees and employers.

  • The Basic Medical Insurance System for Urban Residents, established in 2007 for urban residents who are unemployed. Participation is voluntary and the system funded by contributions from each household with subsidies from the government.

  • The Novel Rural Co-operative Medicare System, established in 2003 to cover the basic medical expenses related to hospital treatments incurred by the rural population. It is primarily funded by the government and participation is voluntary.

  • The Urban and Rural Medical Aid System, established in 2006 to aid sections of the population with extreme financial difficulties. It is funded by the central and local governments, as well as public and charitable donations, as a supplement to the above three main systems.

 
5. How are the prices of medicinal products regulated?

The National Development and Reform Commission is responsible for setting maximum retail prices for:

  • Reimbursable prescription drugs on the National Reimbursable Drug List as well as all the National Essential Drugs.

  • Drugs with a People's Republic of China (PRC) drug substance patent.

  • Certain anaesthetics and psychotropic drugs.

  • Blood products.

The National Development and Reform Commission also sets the ex-factory prices or cost, insurance and freight (CIF) prices of birth control drugs and government-planned immunisation drugs.

The provincial counterparts of the National Development and Reform Commission are responsible for setting the maximum retail prices of reimbursable over the counter (OTC) drugs on the National Reimbursable Drug List and drugs listed on the Provincial Reimbursable Drug List.

Pharmaceutical manufacturers are permitted to set prices for drugs not subject to government pricing.

 
6. When is the cost of a medicinal product funded by the state or reimbursed? How is the pharmacist compensated for his dispensing services?

The costs of medicinal products can be reimbursed by the Basic Medical Insurance scheme in China if these products are listed in the National Reimbursable Drug List or the Provincial Reimbursable Drug List either fully or partly.

Pharmacists are employees of hospitals or retail pharmacies and their compensation is not related to the dispensing services. One initiative in China's healthcare reform plan is to allow hospitals to collect from patients additional fees for dispensing services, among other medical services.

 

Clinical trials

7. Outline the regulation of clinical trials.

Legislation and regulatory authorities

Clinical trials of pharmaceuticals are primarily governed by the Drug Registration Rules and the Pharmaceutical Good Clinical Practices (GCP). Also applicable are the Guidelines on Ethics Committee Review of Clinical Trials.

Authorisations

A clinical trial authorisation issued by the CFDA is required for the conduct of Phase I to III clinical trials for the purpose of product registrations.

The statutory timeline for a clinical trial authorisation is between 125 working days (for imported pharmaceuticals) to 165 working days (for locally manufactured pharmaceuticals). The actual timeline can take from 12 to 15 months and consists of the following key stages:

  • Formality review of the application by the CFDA's Administrative Services Centre (for imported pharmaceuticals) or the PFDA where the manufacturer is located (for locally manufactured pharmaceuticals).

  • Testing of samples by the relevant drug control institute to verify conformity with the quality standards.

  • Technical review by the Centre for Drug Evaluation, including evaluation of the test report, clinical data and other supporting information.

  • Administrative review and the issue of the clinical trial authorisation by the CFDA.

Consent

Investigators must obtain an informed consent from each trial subject. The information communicated must include the:

  • Purpose, process and timeline of the trial.

  • Anticipated benefits and risks to the subject.

  • Treatment and compensation the subject may be entitled to in the event of trial-related injuries.

The informed consent form must be signed and dated by both the investigator and the individual trial subject or, if the subject is a child or incapacitated person, by his legal guardian.

Trial pre-conditions

Before the trial starts, a study protocol jointly agreed by the investigator and the sponsor needs to be submitted to the ethics committee for approval. The sponsor of the trial must:

  • Give the investigators an Investigator's Brochure and other materials, information and data related to the study drugs.

  • Provide adequate training to the investigators, establish a quality control system and monitor the study from time to time.

  • Arrange insurance for the trial subjects to cover potential study-related losses.

Procedural requirements

The conduct of clinical trials must adhere to the GCP and the protocols approved by the ethics committees of each study site. Investigators must take necessary measures to protect the safety of trial subjects and ensure the authenticity, accuracy, and completeness of study results. On completion of a clinical trial, a summary report needs to be produced, signed and dated by each investigator for submission to the sponsor.

Any serious adverse events must be promptly reported to the CFDA, the sponsor and the ethics committee. The sponsor and the investigator must promptly study the serious adverse event and adopt necessary measures to protect the safety of trial subjects. The sponsor must also relay this report to any other investigators involved in the same study. In case of any voluntary suspension of a clinical trial, the sponsor needs to notify the investigator, the ethics committee, and the CFDA with reasons.

 

Manufacturing

8. What is the authorisation process for manufacturing medicinal products?

Application

Companies must apply to different authorities for manufacturing medicinal products in China:

  • An application for a pharmaceutical manufacturing licence to the PFDA where the manufacturer is located.

  • An application for a Pharmaceutical GMP Certification to the CFDA or the PFDA where the manufacturer is located, depending on the type of pharmaceuticals to be manufactured.

  • An application for a business licence to the State Administration of Industry and Commerce or its local equivalent, depending on the investment size.

Conditions

To obtain a pharmaceutical manufacturing licence, the manufacturer must have:

  • Qualified pharmaceutical, engineering professionals, and technical workers.

  • The premises, facilities, and hygienic environment required for manufacturing.

  • The institutions and personnel capable of quality management and testing, and the necessary instruments and equipment.

  • The rules and internal procedures to ensure product quality.

To obtain the Pharmaceutical GMP Certification, the company must meet all the statutory requirements provided in the Pharmaceutical Good Manufacturing Practices.

Restrictions on foreign applicants

The latest Catalogue for the Guidance of Foreign Investment Industries as revised in 2012 restricts foreign investment in the manufacture of the following drugs:

  • Chloramphenicol, Penicillin G, Lincomycin, Gentamincin, Dihydrostreptomycin, Amikacin, Tetracycline Hydrochloride, Oxytetracycline, Midecamycin, Leucomycin, Ciprofloxacin, Norfloxacin and Ofloxacin.

  • Analgin, paracetamol, Vitamin B1, Vitamin B2, Vitamin C and Vitamin E, multivitamin and oral calcium.

  • All vaccines in the national immunisation programme.

  • Active pharmaceutical ingredients of narcotics and psychotropics (a Chinese partner must hold a majority of the shares).

  • Blood products.

Foreign investment in the restricted categories is subject to more stringent government scrutiny during the approval process and the percentage of foreign shareholding may also be limited.

Further, foreign investment in certain projects related to traditional Chinese medicines is prohibited under the Catalogue for the Guidance of Foreign Investment Industries.

Key stages and timing

The application process for a pharmaceutical manufacturing licence typically consists of the following key stages:

  • Submission of an application to the PFDA where the manufacturer is located.

  • Formality review by the PFDA and acceptance of the application.

  • Substantive review which may be followed by an on-site inspection by the PFDA.

  • Grant of the pharmaceutical manufacturing licence within 30 business days of receiving the application, and issuance of the pharmaceutical manufacturing licence within another ten business days.

On receiving the pharmaceutical manufacturing licence, the manufacturer must apply to the CFDA (for biological products, injections /infusions, and radioactive products) or to the PFDA (for all other products) for the Pharmaceutical GMP Certification. The CFDA or the PFDA will conduct a technical review and an on-site inspection in order to certify GMP compliance. The whole process can take several months.

Fee

No fees are required for obtaining the pharmaceutical manufacturing licence. For the GMP Certification, the fees can consist of an application admission fee and an on-site inspection fee, which can be as much as several tens of thousands of Chinese Yuan, depending on the different drug categories and the number of production lines to be certified.

Period of authorisation and renewals

A pharmaceutical manufacturing licence is valid for five years from the date of issue, and renewable on an application filed by the licence holder six months before it expires. The PFDA will re-examine the conditions for pharmaceutical manufacturing, and determines if a licence renewal is justified.

Likewise, a Pharmaceutical GMP Certificate is renewable every five years on application filed by the pharmaceutical manufacturer six months before expiry and following satisfactory re-inspection by the CFDA or the competent PFDA.

Monitoring compliance and imposing penalties

The CFDA and PFDAs are authorised to monitor the compliance of licensed pharmaceutical manufacturers, for example, a follow-up inspection of implementation of the GMP requirements. Failure to continuously comply with the statutory requirements may lead to rectification orders imposed on the manufacturers.

Penalties for breach of a manufacturing authorisation can vary depending on the degree of seriousness. Administrative sanctions range from a rectification notice to monetary fines, suspension of production and business operation, and revocation of the pharmaceutical manufacturing licence and the Pharmaceutical GMP Certificate.

 

Marketing

Authorisation and abridged procedure

9. What is the authorisation process for marketing medicinal products?

Application

A marketing authorisation is granted by the CFDA to a pharmaceutical manufacturer for marketing a pharmaceutical in China. There are two types of marketing authorisation for pharmaceuticals:

  • The domestic drug permit for pharmaceuticals locally manufactured in China. Applications for these are submitted to the CFDA through the PFDA where the manufacturer is located.

  • The imported drug permit for pharmaceuticals manufactured outside China. Applications for these are filed by the manufacturer directly to the CFDA.

Authorisation conditions

To obtain marketing authorisation, manufacturers must provide sufficient and reliable research data to prove the safety and therapeutic efficacy of the drugs, manufactured under proper quality control.

Marketing authorisation for new drugs generally can only be obtained after the completion of clinical trials from Phase I to Phase III. For generic drugs, a bioequivalence study is generally required. Biological drugs are subject to full-phase clinical trials.

To import a pharmaceutical product into China, the product must in principle have already been marketed in another country, except if urgent clinical needs are present. The marketing authorisation issued by another country must be submitted to the CFDA for product registration in China. Local registration trials are normally required for an application for an imported drug permit.

Key stages and timing

The regulatory approval procedure for a domestic drug permit typically consists of the following key steps, with a statutory timeline of 215 to 225 days in total:

  • Formality review and an on-site inspection of the clinical trial sites by the PFDA where the applicant is located.

  • Sample testing to verify the conformity of product standards by the provincial drug control institute.

  • Technical review of the application dossier by the Centre for Drug Evaluation.

  • On-site inspection of the manufacturing facilities by the Centre for Certification of Drugs and re-testing of samples by the provincial drug control institute.

  • Administrative review and issue of the domestic drug permit by the CFDA.

The regulatory approval procedure for an imported drug permit typically consists of the following key steps with a statutory timeline of 185 to 195 days in total:

  • Formality review by the Administrative Services Centre of the CFDA.

  • Sample testing by the National Institute of Food and Drug Control.

  • Technical review by the Centre for Drug Evaluation.

  • Administrative review and issue of the imported drug permit by the CFDA.

Fee

Different fee schemes apply to the domestic drug permit and the imported drug permit applications, and may vary from one drug category to another. The fees range from several thousands of Chinese Yuan at the PFDA level, to several tens of thousands of Chinese Yuan at the CFDA level.

Period of authorisation and renewals

A marketing authorisation lasts for five years and can be renewed by application to the competent PFDA for domestic products or the CFDA for imported products, within six months before the expiry date.

The application for marketing authorisation renewal can be rejected, if uncertainty in its therapeutic efficacy, serious adverse reactions, or other factors harmful to human health are found on re-evaluation by the CFDA.

Monitoring compliance and imposing penalties

The CFDA and PFDAs are authorised to monitor compliance with issued marketing authorisations through administrative sanctions. Failure to comply with the statutory obligations can disrupt the manufacturer's business operation and lead to revocation of the relevant domestic drug permit or imported drug permit in serious cases.

Penalties for breach of a marketing authorisation can vary depending on the degree of seriousness. Administrative sanctions range from a rectification notice to monetary fines, revocation of the marketing authorisation and debarment from re-application.

 
10. What commitments and pharmacovigilance obligations apply after a company has obtained marketing authorisation? Are there further conditions concerning how the drug is distributed and accessible to patients?

Post-marketing commitments and pharmacovigilance obligations

The post-marketing obligations for a marketing authorisation holder primarily include the following:

  • Pharmacovigilance, especially monitoring and reporting of adverse drug reactions (ADRs).

  • Monitoring and evaluation of the manufacturing process, quality, stability, efficacy and adverse drug reactions of a new drug during the new drug monitoring period.

  • Product quality control and GMP compliance.

  • Product recall.

  • Renewal of the marketing authorisation on expiry.

  • Amendment of the marketing authorisation to reflect changes in the product permit.

  • Conduct of Phase IV clinical studies as required by the CFDA.

Other conditions

A company must meet the following conditions to maintain the authorisation:

  • Meet the relevant requirements set out by the CFDA for marketing.

  • Complete the Phase IV clinical trial as required by the CFDA.

  • Monitor adverse drug reactions.

  • Maintain the GMP compliance.

  • Monitor and evaluate the manufacturing process, quality, stability, efficacy and adverse drug reactions during the new drug monitoring period.

 
11. Which medicinal products can benefit from the abridged procedure for marketing authorisation and what conditions and procedure apply? What information can the applicant rely on?

Medicinal products can benefit from the abridged procedure in the following scenarios:

  • Newly discovered pharmaceutical substances that have not been previously marketed in China.

  • Chemical or biological pharmaceuticals that have not been marketed either in China or in any overseas jurisdiction.

  • New pharmaceuticals for AIDS, cancers, or certain rare diseases with a superior clinical advantage.

  • New pharmaceuticals for diseases which currently lack any effective medical treatment.

The procedure of the special review is similar to the normal regulatory review procedure, but the statutory timeline can be reduced by 30 to 60 days. A successful applicant will benefit from accelerated timelines for technical evaluation, priority in the waiting list of applications under review, and greater possibilities for direct communications with the Centre for Drug Evaluation.

 
12. Are foreign marketing authorisations recognised in your jurisdiction?

A foreign marketing authorisation is generally not recognised as a substitute for a marketing authorisation issued by the CFDA in China (see Question 9).

 

Parallel imports

13. Are parallel imports of medicinal products into your jurisdiction allowed?

The Patent Law allows parallel imports, and the Trademark Law does not specifically prohibit parallel imports. However, an import drug licence must be obtained (see Question 9) and customs cleared before importing medical products into China.

For information on pharmaceutical patents, trade marks, competition law, patent licensing, generic entry, abuse of dominance and parallel imports, visit Pharmaceutical IP and Competition Law in China: overview ( www.practicallaw.com/0-568-3025) .

 

Restrictions

14. What are the restrictions on marketing practices such as gifts, sponsoring, consultancy agreements or incentive schemes for healthcare establishments or individual medical practitioners?

Restrictions on marketing practices are set out in the Anti-Unfair Competition Law and related regulations such as the Provisional Regulations on the Prohibition of Commercial Bribery. Serious offences can lead to criminal liabilities under criminal law.

However, the statutory provisions do not provide specific guidance on common marketing practices. Multinational pharmaceutical companies typically refer to the Code of Practice on the Promotion of Pharmaceutical Products, issued by the R&D based Pharmaceutical Association in China, which specifically provides:

  • Payments in cash and gifts for personal benefit must generally not be offered to healthcare professionals.

  • Sponsorship is only allowed for events with the purpose to provide scientific or educational information, which must be held in an appropriate venue that is conducive to such purpose. Sponsorship is limited to the payment of appropriate fees, and must not be conditional on an obligation to prescribe, recommend, or promote medicinal products.

  • To engage healthcare professionals as consultants or to perform other services, a written agreement must be agreed in advance to specify the nature of the services and the basis for payment. Legitimate needs for the services need to be identified and the compensation must be reasonable and in accordance with fair market value.

 

Sales and marketing

15. What are the restrictions on selling medicinal products? Are there specific regulations for the sale of medicinal products on the internet, by e-mail and by mail order?

Distributors, hospitals, and pharmacies must obtain a pharmaceutical distribution license in order to legally distribute and sell pharmaceutical products in China. An individual must have a prescription to purchase prescription drugs. OTC drugs can be purchased by individuals without a prescription at hospitals and pharmacies.

A company must obtain a special approval from the competent PFDA to market pharmaceuticals online. If the company wants to operate an internet pharmacy, the company must be a duly licensed operator of retail pharmacies offline.

The drug-related information to be displayed on the internet must be scientific, accurate and comply with the relevant laws and regulations. Statutory requirements for drug advertising also apply to marketing medicinal products on the internet.

Drugs must be distributed through licensed channels both online and offline. It is therefore not permitted for any unlicensed entities or individuals to send e-mails or posts to solicit drug buyers and engage in drug selling. It is permitted for consumers to order OTC drugs on the internet, or by e-mail or mail order from those licensed pharmacies, online or offline.

 

Advertising

16. What are the restrictions on advertising medicinal products?

Legislation and regulatory authority

The CFDA, the State Administration of Industry and Commerce and their local counterparts (FDAs and AICs respectively) apply and enforce the regulations on pharmaceutical promotion and marketing in accordance with the Drug Administration Law, the Advertisement Law, and the Examination Standards for Pharmaceutical Advertisements. The FDAs are in charge of the review and approval of the promotional content, while the AICs are in charge of the administration of the actual distribution of pharmaceutical advertisements.

Restrictions

Drug advertisements must be science-based, guide reasonable use, pre-approved, accurate, and precise. Direct-to-consumer advertising of pharmaceuticals is possible only with OTC drugs, while prescription drugs can only be advertised in designated medical and pharmaceutical journals intended for healthcare professionals.

The content of pharmaceutical advertisements must not contain, for example:

  • Information inconsistent with the approved drug label.

  • Unscientific affirmations, statements or promises on efficacy or safety.

  • The cure rate, or comparison with other products.

  • Use of the name or image of medical research units, academic organisations, experts, doctors, or patients as proofs of good efficacy, and so on.

Internet advertising

Internet advertising must also conform to all the above drug advertising requirements. Since the internet is a public media, online drug advertising qualifies as direct-to-consumer advertising and therefore is only permitted in relation to OTC drugs. For prescription drugs, careful distinction needs to be made between sharing drug information online from illegal direct-to-consumer advertising.

Operators of internet websites hosting drug advertisements must file for content review to and obtain prior approvals from the relevant PFDA.

 

Data protection

17. Do data protection laws impact on pharmaceutical regulation in your jurisdiction?

China does not yet have a dedicated Data Protection Law, but patient privacy-related provisions can be found in various rules governing the pharmaceutical sector. For example, the GCP requires anonymity of subjects in the case report forms for clinical trials. Patient data obtained in adverse events reporting and monitoring must remain confidential. Medical records, both in physical and electronic format, are to be exclusively maintained and used by HCPs at medical institutions and can be revealed to relevant third parties only under exceptional circumstances. However, data protection provisions are generally not detailed enough and enforcement is still lacking in China.

 

Packaging and labelling

18. Outline the regulation of the packaging and labelling of medicinal products.

Legislation and regulatory authority

The CFDA regulates the packaging and labelling of drugs primarily in accordance with the Provisions for Drug Insert Sheets and Labels.

Information requirements

The insert sheets must contain:

  • All active ingredients and traditional Chinese medical herbs in the prescription combinations (also all pharmaceutical adjuvants when injections and OTCs are concerned).

  • Information on adverse reactions of the drug, with specification of any ingredient or pharmaceutical adjuvant that might cause a serious adverse reaction.

Both primary and secondary packaging must contain, among other things:

  • The generic name of the drug.

  • Indications, specifications, usage and dosage.

  • Date of production and expiry date, information about the manufacturer and the batch number.

The secondary packaging must also include:

  • The drug ingredients, character, adverse reactions, contraindication, precautions, and storage.

  • The marketing authorisation number of the drug.

Other conditions

The insert sheets and labels must be written in Chinese. Other languages are for reference only. They must also carry the special signs for narcotic drugs, psychotropics, toxic medicines, radioactive medicines, medicine for external use, or OTC drugs, when applicable.

The packaging materials and containers with direct contact to drugs must be products registered with PFDAs, suitable for use with the drug in question and good for human health and safety. Such packaging materials and containers are reviewed by the CFDA or PFDA when the manufacturer applies for the drug's marketing authorisation.

 

Product liability

19. Outline the key regulators and their powers in relation to medicinal product liability.

Product liability is a type of civil liability under Chinese law and can be established by courts for any personal injury or property damages caused by a defective medicinal product. The courts can demand manufacturers and sellers to issue product warnings to caution consumers against the defects, and in severe cases, recall their drug products from the market. In the event of physical injury, the manufacturers can be held liable for the claimants' medical costs, loss of income, the basic living costs of their dependents, statutory compensation for disability or death, funeral expenses, and so on.

 
20. Are there any mandatory requirements relating to medicinal product safety?

It is mandatory to report ADRs to a network of ADR Monitoring Centres set up under the CFDA. Manufacturers, distributors, and medical institutions that learn of reportable ADRs must report them within stipulated time limits, corresponding to the event's seriousness. Reports of ADRs will be further evaluated and may lead to such measures as:

  • Having manufacturers undertake post-market studies.

  • Modification of package inserts.

  • Suspension of sales and order of product recalls from the market.

  • Revocation of marketing authorisations, in certain cases.

Manufacturers are also encouraged to voluntarily recall those products identified with potential safety hazards. The local FDAs can impose penalties for non-compliance with ADR reporting and product recall duties.

 
21. Outline the key areas of law applicable to medicinal product liability, including key legislation and recent case law.

Legal provisions

The medicinal product liability law includes civil liability, administrative liability and criminal liability under the:

  • Product Quality Law.

  • Law on Protecting Consumers' Rights and Interests.

  • Tort Law.

  • Contract Law.

  • General Principles of the Civil Law.

  • Criminal Law.

The answers below are intended to address civil liabilities due to quality defects.

Substantive test

A drug manufacturer is strictly liable for the damages caused by a defective product without requiring finding of fault. The claimant only needs to prove that his damage or loss is caused by the defective drug.

Sellers of drugs are liable for damages due to their faults. They are not liable unless it is the seller's fault which contributed to the defect of the drug, or the seller fails to identify the manufacturer or the distributor it sources the drug from.

 
22. Who is potentially liable for defective medicinal products?

Both the manufacturer and the seller of defective products, as well as the medical institution that used defective products in the clinical process, can be liable to patients for product defects. Liability can also extend to other merchants whose fault has contributed to the product defect.

The manufacturer, the seller, and the using medical institution have to assume joint and several liabilities for a defective drug product. The party who compensates the claimant has recourse to the actual responsible party.

 
23. What defences are available to product liability claims? Is it possible to limit liability for defective medicinal products?

A drug manufacturer is not liable for the defect if any of the following is proven:

  • The manufacturer has not released the drug product for distribution yet.

  • The defect did not exist at the time the product was put on market.

  • The defect was not perceptible by the level of science and technology when it was put on the market.

A drug seller needs to prove the absence of fault that contributed to the defect of the drug, and to identify the manufacturer or the distributor it has sourced the defective drug from in order not to be liable.

 
24. How can a product liability claim be brought?

Limitation periods

The limitation period for claims for defective products under the product quality law is two years from the date the claimant knew or should have known his rights were infringed. Claims become time-barred after ten years from the day the defective product was delivered to the first consumers, unless the indicated term for safe use of the products has not yet expired.

Class actions

Class actions are permitted for product liability claims under the civil procedures but claimants need to register with the court to be eligible claimants and benefit from a favourable decision.

 
25. What remedies are available to the claimant? Are punitive damages allowed for product liability claims?

The Tort Law provides consumers with the right to demand that manufacturers and sellers eliminate the danger caused by unsafe drug products. Drug manufacturers and sellers must issue product warnings to caution consumers against the defects, and in severe cases, recall their drug products from the market.

In the event of physical injury caused by a defective drug product, the claimant is entitled to:

  • Compensation for medical costs, loss of income, and the basic living costs of dependants.

  • Statutory compensation for disability or death, funeral expenses, and so on.

In the event of severe psychological trauma caused by a major physical injury or the death of a spouse, child or parent, compensation for moral losses is also possible.

Punitive damages are allowed for the claimant, in cases when manufacturers or sellers are clearly aware of the defects and the defects have caused serious physical injuries or death.

 

Reform

26. Are there proposals for reform and when are they likely to come into force?

The CFDA will continue to reform the regulatory framework to reward drug R&D by accelerated technical reviews and regulatory approvals. Amendment of key legislation is ongoing, most notably the Drug Administration Law. The revised Drug Registration Rules are also likely to come into force this year and will introduce new changes to the drug marketing authorisation mechanism.

Apart from drug innovation, quality and safety are also top on the government's agenda. The government requires strict compliance with the pharmaceutical GMP and the recently amended Pharmaceutical Good Supply Practices (GSP). Quality consistency testing for generic drugs is also ongoing to eliminate substandard generic drugs from the market.

For information on pharmaceutical patents, trade marks, competition law, patent licensing, generic entry, abuse of dominance and parallel imports, visit Pharmaceutical IP and Competition Law in China: overview ( www.practicallaw.com/0-568-3025) .

 

Online resources

China Food and Drug Administration (CFDA)

W http://eng.sfda.gov.cn

Description. The English website of the CFDA, which contains the major pharmaceutical laws and regulations, and a basic regulatory guide for marketing authorisation applications.

R&D based Pharmaceutical Association in China (RDPAC)

W www.rdpac.org/en

Description. The English website of the RDPAC, which contains a brief profile of its member companies, industry facts and news, and the Code of Practice on the Promotion of Pharmaceutical Products.



Contributor profiles

Katherine Wang, Chief China Life Sciences Adviser

Ropes & Gray LLP, Shanghai

T +86 21 6157 5256
F +86 21 6157 5299
E katherine.wang@ropesgray.com
W www.ropesgray.com

Professional qualifications. New York, 2002

Areas of practice. China life sciences regulatory.

Recent transactions

  • Routinely advises multinational pharmaceutical and medical device companies on issues arising from their clinical studies in China.
  • Advised several multinational pharmaceutical companies on market access issues in China, particularly related to product pricing, reimbursement and tendering.
  • Advised a leading pharmaceutical distributor in relation to online marketing of drugs.
  • Advised several institutional and corporate investors in the conduct of regulatory due diligence on issues ranging from licence transfer/acquisition, GMP and pharmacovigilance of their potential investment targets in China.

Geoffrey Lin, Partner

Ropes & Gray LLP, Shanghai

T +86 21 6157 5289
F +86 21 6157 5209
E geoffrey.lin@ropesgray.com
W www.ropesgray.com

Professional qualifications. New York, 2003; California, 2000; US Patent and Trademark Office, 2000

Areas of practice. Intellectual property transactions.

Non-professional qualifications. BS (Neural Science), New York University, 1997

Recent transactions

  • Represented a US biopharmaceutical company in structuring and developing a joint venture with a Chinese party to develop and commercialise a biologic asset in China, and in drafting and negotiating the definitive agreements, including the out-licence and collaboration agreement.
  • Represented a US pharmaceutical company in out-licensing a late-stage asset to a collaboration partner for development and commercialisation in China.
  • Represented Schneider Electric in settling the largest intellectual property case in China through appeals, negotiations and drafting of the settlement agreement.
  • Represented global pharmaceutical companies in addressing generic and biosimilar competitors in China through use of regulatory protections; assessing the strength of the clients' patent portfolios; developing and executing strategies to prove patent infringement, including developing and using analytical testing methodologies; defending several patents from invalidation actions; monitoring and applying to invalidate competitors' patents; and strengthening their Chinese patent portfolios.

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