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Thursday
May182017

China FDA proposals could affect life science industry sales and promotional activities

Late last week, the China Food & Drug Administration released for public comment four draft policy circulars designed to speed approvals for innovative drugs and medical devices, permit conditional approvals for certain products where efficacy has been proven in clinical trials, further protect data exclusivity during clinical trials, allow more flexibility during clinical trials, and clarify IP rights.

The four draft policy circulars (“Circulars”) are drafted at a high level and lack the force of law but suggest significant changes in the overall regulatory environment in the life science industry as part of broader medical reform efforts in China.  (See a related post about the recent Two-Invoice policy here.)

Some of the provisions in the Circulars parallel those found in a January 2017 State Council policy document, although in some cases the Circulars are narrower or omit certain requirements or prohibitions found in the earlier policy document.

A section of the Circulars would, if promulgated as drafted, impose several new prohibitions and requirements on activities by the life science industry, particularly reps:

1. Reps would be prohibited from having “sales responsibilities” and would be permitted to engage only in “academic promotion” of “new drugs” and listening to feedback from doctors. The terms, including “sales responsibilities” and “new drugs,” are not defined.  CFDA has expressed an openness to hearing from industry what form selling activities take.

2. Reps would be prohibited from “having contact with doctors in private.” These terms are not further defined, and CFDA seems unlikely to provide a further gloss.

3. Companies and reps would be required to hold academic promotion activities “in public” and file a record of the event with the medical institution (e.g., hospital, clinic). The terms are not defined, and the terminology does not suggest that pre-approval would be needed. (The Circulars would seem to expressly permit such academic promotion activities; the propriety of such activities was called into question by the Nine Prohibitions, jointly issued by two different government agencies in late 2013.)

4. Manufacturers would be required to register their reps on website designated by CFDA that will be publicly accessible.

5. Individuals at hospitals would be prohibited from providing prescription data to employees of pharmaceutical companies or distributors. (Collating or providing prescription data “for a commercial purpose” was prohibited in 2013; the Circulars would remove the “commercial purpose” qualifier and prohibit all provision of prescription data from individuals at hospitals to industry.)

The Circulars do not have the force of law and lack penalty clauses, and it is unclear how CFDA would enforce in practice some of the requirements and prohibitions. Much would depend on how these high-level provisions were interpreted in practice, or enforced in coordination with other government agencies with more direct oversight over pharma and device companies. Many in the industry are watching for further developments before making changes.

The deadline for public comments is June 10; comments on changes are encouraged by May 25.

Covington has prepared an analysis, available from the author upon request, of the broader regulatory impact of the Circulars, including full translations.

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Eric Carlson, a contributing editor of the FCPA Blog, is a Shanghai-based partner at Covington & Burling LLP specializing in anti-corruption compliance and internal investigations, with a particular focus on China and other regions in Asia. He speaks fluent Mandarin and Cantonese and can be contacted here

James Yuan and Audrey Zhi, both associates in Covington’s Shanghai office, contributed research for this post.