The Changing Face of Regulations and Market Access in China

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China is rapidly emerging as world’s fastest growing pharmaceutical industry. The market  is poised to reach $175B by 20221. Faster regulatory approvals and widening market access are some of the major drivers to this growth. China’s rapidly-moving health care industry and unique market characteristics has often required a pharmaceutical company to adopt a China specific development and launch strategy in isolation from other major markets.

What are the key changes in market access and drug approval regulations?

Better Market access in China2 – Rethinking market access and reimbursement

Historically, global pharmaceutical manufacturers have faced several challenges when launching innovative products in China. Getting an entry for innovative products in China’s National Drug Reimbursement List (NDRL) has been challenging, largely due to the infrequent updates to the list and China’s preference for generic drugs. From 2001 to 2016, the NDRL was updated only three times with limited inclusion of innovative medicines3.

However, since 2017, there has been rapid progress in market access. Several constructive steps have been taken to address pricing and reimbursement related issues:

  • Creation of State Medical Insurance Administration (SMIA) – The goal of this organization is to make the pricing and reimbursement process more efficient and frequently update the NRDL. NRDL was updated both in 2017 and 2018. An important development was a new pricing negotiation mechanism. The new price negotiation mechanism requires companies to thoroughly explore the possibilities of a potential trade-off between price and volumes that can be sold
  • In 2017, 45 medicines were invited into price negotiations; of which 36 reached agreements to join the NRDL at an average price cut of 44%. Subsequently, 17 cancer drugs were added to the NRDL with an average 57 % price cut in 2018
  • Out of the 17 drugs that were added to NRDL in 2018, ten were novel products – an indicator of the increased speed in the reimbursement process. Moreover, some payers and private insurers have also been proactive in experimenting and piloting different programs (such as outcome-based schemes) to enhance patient access
  • In addition to the national pricing and reimbursement process, several provinces in China have introduced Severe Disease Insurance (SDI) policies to cover life-saving, high-cost drugs, that are not listed on the NDRL. Under the SDI mechanism, provinces invite manufacturers to directly negotiate a price. Once a price is agreed upon, the province will pay for up to 70% of the cost, significantly improving patient access to high-cost therapies4
  • Negotiating with leading provinces is an effective way for pharmaceutical companies to provide high-cost, high-value drugs to Chinese patients in the absence of a national mechanism

These changes are in line with the government’s stated goal of broadening access to high quality care to its citizens.

Changing Regulatory Landscape

Historically the regulatory environment in China has been quite challenging. Some of the major concerns were:

  1. Drug Lag: Slow review process and additional local requirements, such as the requirement of a phase 2 study to be completed outside China before starting a local study. This resulted in delay in the approvals by an average of five to seven years in China
  2. Quality issues between international and local products and manufacturers
  3. Application backlog: A lack of capacity in the regulatory bodies that has resulted in a backlog of applications

In August 2015, the China State Council issued “Opinions on Reforming the Review and Approval System for Drugs and Medical Devices.” (known as Document No. 44), identifying several problems with drug and device registration. The document contains 36 specific provisions and is an important blueprint for reform of China’s drug and device regulatory system endorsed at a very high level of the government and political system5.

The Innovation Opinion’s 36 provisions focus on following important areas:

  1. Reforming clinical trial management
  2. Improve the drug review process and shorten IND and NDA review timelines
  3. Accelerate market authorization of medical innovations
  4. Create a framework in China that encourages research and development of new drugs in line with global development – encourage new drug innovation
  5. Balancing the development of innovative drugs and generic drugs
  6. improve the drug review process and shorten Investigational New Drug (IND) and New Drug Application (NDA) review timelines

Shortly after the issuance of the Innovation Opinion, CFDA issued multiple implementation proposals / reforms


These reforms introduced a fast-track approval process and a potential local-study waiver for products targeting rare diseases or diseases with substantial unmet needs. The review and approval process is much faster and the number of new approvals in China has significantly increased, since 2016.

The Priority Reviews

Over the past years, China has made several efforts to improve the new drug approval process

  1. Clearing the registration-application backlog – the effort to clear the registration-application backlog has resulted in significant acceleration of the review timelines. In addition to efforts to clear the backlog, a series of reforms on drug-registration policy has been published. These are designed to further improve the registration process and to encourage pharma companies to bring innovation to China6
  2. The implementation of a ‘Priority Review Pathway’ to speed up the development of drugs with ‘significant clinical value’ such as innovative drugs and those with advanced formulations
  3. Products that fit into the priority review categories benefit from shortened regulatory timeframes throughout development and approval. Each of the timeframes is measured in days, with the single longest step taking 90 days. CFDA intends to evaluate the prioritization request within 5 working days after accepting the submission7

A steep increase in the new IND and NDA product launches has been seen in China following these reforms.

  • In 2016 only three multinational pharmaceutical company drugs and two local drugs were approved, however, the situation changed in 2017
  • In 2017, 39 MNC drugs were approved and by the end of 2017, around 180 candidates had been granted priority review status
  • In 2018, 182 drugs were accepted for priority review

As an example of fast approval with priority-review status, AstraZeneca submitted its NDA for Tagrisso in early 2017, received approval in March 2017, and had the drug on the market by mid-April of the same year. Tagrisso was approved in China just 15 months after it received US approval—a record for recent years6.

Not only the overseas drugs but also domestic drugs have benefited from the Priority Review Pathway. In 2017, IND for a locally developed Ebola vaccine was approved in record 10 days, although the approval was conditional on a commitment to complete a Phase 3 trial later8. As a direct consequence of these reforms, it’s expected that a significant number of new molecules will reach the market in the next few years, from both multinational corporations and local companies, creating a competitive environment for both development and commercialization

Along with fast approvals, the drug lag in China has reduced significantly. On an average, in 2017 China’s approvals lagged behind the US and EU by 85 and 84 months, respectively; in 2018 the lag shrank to 28 and 31 months respectively9,10


In conclusion:

China’s historical delay in drug approvals is diminishing at a fast pace. The country looks toward future with solid objectives for a more accessible and inclusive health care environment. No longer does a local study have to wait until a Phase 2 study outside China concludes. The CFDA’s regulatory reforms, including fast-track approval and a local-study waiver for qualifying products, should be examined and exploited for launch success. Their benefits extend beyond the biopharma manufacturer to China’s enormous population, which awaits the arrival of innovative new drugs.

Although it is challenging to capture the essence of a broad range of market developments in China, this article offers an overview of what we see as several material changes underway in the Chinese pharmaceutical landscape. In line with the Chinese government’s desire to modernize and improve a wide range of regulations, as well as to more closely align with established regulatory systems, these major reforms are expected to have a positive impact on China’s healthcare system, the pharmaceutical industry and patients. The impact of these changes is already starting to become visible and is likely to be heavily tracked and reported over the coming months and years

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Zahid Nabi
Zahid Nabi
Zahid joined RAS in 2015 and since then he has been involved in several projects including competitive intelligence, strategy analysis, market analysis Zahid brings in 12 years of professional experience spanning across consulting, medicinal and synthetic chemistry.

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