SHANGHAI – Over the last few weeks, multinational pharmaceutical companies have received notification from the CFDA of an additional administrative hurdle that will likely delay drug approvals for innovative imported drugs by a year, or possibly longer.

The change puts increased emphasis on companies to apply for local clinical trials, and it penalizes companies that request approval for multicenter trials, either in the Asian region or internationally.

"Basically, it was a two-step process and now it is a three-step one," said Clement Ngai, law partner at Baker and McKenzie's Shanghai office. "There is a separate process that will cause delays. This is purely an administrative requirement . . . It is an issue of great concern to our foreign pharmaceutical clients."

A McKinsey survey last year found approvals of foreign drugs in China lag six years behind developed markets. With this new delay, it could mean that Chinese patients won't have access to life-saving therapies for seven years, long after they are available in other markets. (See BioWorld Asia, Dec. 13, 2013.)

EMPHASIS ON LOCAL TRIALS, IN NAME ONLY

The CFDA requires that foreign companies conduct local trials in China on Chinese patients in order for an imported drug to obtain approval and gain market access.

When leaving home markets and branching out, it is a common strategy for pharma companies to conduct multicenter trials. If looking for approval in China, that will necessitate including a study of Chinese patients, typically following the same or greater standards as a "local trial."

Multicenter regional trials (MCRTs) often include countries such as Taiwan, Hong Kong, Korea or Japan, while international multicenter trials typically include the U.S. or Europe.

The CFDA has viewed permission to conduct a multicenter trial in China as a separate process, not classifying it the same as approval for a "local trial" – even though the quality of trial data is generally regarded as equivalent or better.

To get around that technical formality, companies asking to conduct a multicenter trial have had to submit a "waiver" to opt out of the official "local trial" requirement. The waiver request would be filed at the same time as the new drug application (NDA).

The procedural change means that companies with multicenter trials operating in China are now required to submit a waiver after the multicenter trial is completed but before they apply for the NDA. That additional submission, given the well-known backlog at the CFDA, is expected to take a year or more.

According to Ngai, and other sources for this story, that new requirement has not been officially announced by the CFDA but news has spread quickly within the industry. It may take several years before the length of the delays and the impact on market approval is fully known, Ngai cautioned.

Drug companies are not the only ones affected. The increased emphasis on a local trial requirement for foreign companies in China appears to be a trend.

New medical device regulations came into effect June 1, stipulating for the first time that imported class III medical devices would have to undergo local trials in China.

Class III medical devices are considered the highest risk medical devices, used in the body such as artificial joints. Prior to the new rules, manufacturers could submit foreign trial data to be accepted at the CFDA's discretion. Now, that is no longer possible, and lengthy delays are expected.

DROP MULTICENTER TRIALS IN FAVOR OF LOCAL ONLY

Drug companies may have a variety of reasons to favor a multicenter trial over a local one, but in terms of China approvals, it has not always been to move things along more quickly.

"[An] MRCT does not necessarily speed things up in China, even with the previous two-step process," Ngai said. "For MRCT results, you would have to submit the clinical data for test patients in the other countries as well. The CFDA would take longer to complete reviews because they would have to evaluate more patient data."

According to Ngai, in light of the three-step process causing delays, foreign pharmaceutical companies, when applying for drug registrations, may decide to conduct local trials instead of MRCTs.

However, for those companies with multicenter clinical trials already under way, that may not be a simple option.

LOCAL ADVANTAGE

Given the current climate, another option for multinational corporations (MNCs) may be to turn to domestic biotech partners and drop out of pursuing the imported drug pathway altogether.

If taking the imported drug approval pathway is viewed as too cumbersome, foreign companies may explore the option of licensing-out technologies to the new crop of local biotechs, those that promise to deliver the quality standards MNCs require while leveraging certain advantages of the domestic drug approval pathway reserved for drugs manufactured here.

It is no secret that China is looking to develop a homegrown life sciences sector, and the overall policy direction is set to find ways to support local innovators.

In fact, it is possible the trial delays arose out of that motive in the first place.

According to a local CEO, who spoke with BioWorld Asia but declined to be named, local players had been increasingly concerned that foreign pharma companies were taking advantage of multicenter trials – coming to China during phase II – to speed up the approval process for imported drugs. That was closing the gap that had been eating away at the patent life of imported drugs. In light of that, the CFDA was lobbied to enforce the rules around local clinical trials more strictly.