HONG KONG – In an effort to encourage innovation and upgrade China’s pharmaceutical sector, China’s drug watchdog continues to target companies with weak clinical trial data. The latest example is the rejection of 30 new drug applications.

An unnamed official from the Department of Drug and Cosmetics Registration at the CFDA announced the current progress on the authority’s campaign to crack down on subpar data, according to a note recently published on the CFDA’s website. The authority requested verification in October last year. By the end of September, the official said, 30 registration applications out of a total of 117 were rejected due to shortcomings in authenticity.

Twenty-seven applications, as well as 11 clinical trial institutions and contract research organizations suspected of providing fraudulent data, have been investigated.

“The R&D process is a very costly and time-consuming process which needs arduous input by medical professionals,” the official said. “However, the drug R&D must be conducted scientifically and rigorously, with no dishonesty allowed, let alone deliberate fraud. The initiation of the self-examination and verification of clinical data and cracking down on data fraud is intended to encourage innovation and cultivate a healthier environment in order to ensure the safety and effectiveness of the drugs approved for the market.”

The CFDA started cracking down on weak clinical trials and focusing on the quality of the trials in the past year. On July 22, 2015, the CFDA issued a document, the Announcement on Performing Self-Examination & Verification of Drug Clinical Trials, requesting applicants of 1,622 drug registration applications to conduct self-inspections and verifications of their clinical trial data to ensure authenticity and reliability. Applicants could voluntarily withdraw their registration applications with problematic clinical trials and reapply later.

The policy has caught newspaper headlines and has drawn a lot of attention in the industry. Experts believe that while it means the government has made up its mind to establish a higher standard much closer to those in the U.S. and other developed markets, some small companies, especially weaker ones, will undergo a painful process or even be screened out during the reform.

By the end of June, the deadline set by the authority for self-investigation, 1,193 applications had been withdrawn by their companies, according to the latest note by the official. That large proportion – 83 percent of all applications under verification except for 193 cases exempted from clinical trial – has caused alarm. However, the official explained that voluntary withdrawals are due to a lot of reasons and it is wrong to simply attribute their decisions to data fraud.

“Some were for nonconformance to the good clinical practices, which could affect the [science] and accuracy of the clinical trial results; some were for data incompleteness, which could not be traced back and were insufficient to demonstrate the safety and effectiveness of the drug in application; some were for untruthful data, part of which cannot be excluded from the possibility of deliberate data fraud,” the official said.

“While improving the safety and quality of made-in-China drugs, it is also a good initiative that can reduce bad applications in the backlog. This, together with new regulations on quality and efficacy requirements for generics, aims to accelerate the approval procedure and encourage innovation,” said Shi Lichen, director of the Dingchen Pharmaceutical Management Consulting Center.

On May 25, the CFDA issued two announcements about quality and efficacy requirements for generics, including a review procedure framework and a catalogue of all generics that need to be reviewed by 2018.

“The quality and efficacy review is late but is necessary at this moment. Those inferiors will be gradually screened and the rest with good quality can be competitive in the international market,” said Deng Zhouyu, analyst at Guosen Securities Co. Ltd., in a recent note to investors. “The policy is an important reform of our country’s drug manufacturing industry.”

Shi expects that this review process will eliminate 50 to 75 percent of current generics.

In July, the CFDA further issued a revised version of the Measures for the Administration of Drug Registration. The revision of the framework, which had not been updated since 2007, was announced for public consultation.

According to the draft, a new drug that only changes the dosage, acid radical, alkali base or administrative route of an existing brand name drug without proving innovation or higher clinical value cannot be registered.

In addition, companies will not be able to register drugs that cannot be proven to have significantly better clinical value than biopharmaceutical products already being marketed in China.

All new rules suggest that it will be much harder for companies that don’t have innovation capabilities.

“The general direction of the government is to cut down on low-quality generics, and the same time, simplify the process for innovative drugs,” said Shi.