China’s new foreign drug proposal: Pharmas excited, analysts cautious

China's new foreign drug registration regulation could speed up approvals, but analysts say the full impact remains to be seen.

China’s FDA proposed changes to its foreign drug registration regulation in mid-March, aiming at speeding up approvals. The changes have provoked anticipation for growth among Western drugmakers, particularly around two provisions having to do with drug trials.   

The CFDA would no longer require that a drug be tested through phase 1 elsewhere before being tested in humans in China, and foreign drugmakers can use data from international multicenter trials that have been conducted in China to directly file for marketing approval.

Jean-Christophe Pointeau, Sanofi's China head, said in a statement that “the change would attract greater investment from drugmakers and dramatically reduce the time to introduce blockbuster treatments."

The market produced about €2.04 billion ($2.18 billion) in revenue for the French pharma in 2016, making it the No. 3 foreign pharma company there.

AstraZeneca expressed similar sentiment. “The proposed changes should enable us to include China much earlier in the global development cycle and significantly speed up the registration process in China,” said the company in a statement to FiercePharma. 

AstraZeneca, which ranks second among MNC drugmakers in China with about $2.6 billion in 2016 sales, has already benefited from the country’s recent rounds of drug policy changes. Its EGFR inhibitor Iressa for lung cancer was among a few foreign drugs recently added to the country’s updated drug list covered by the national health insurance program.

Its Tagrisso was approved by the CFDA just days ago for non-small cell lung cancer (NSCLC) patients whose disease has progressed on or after EGFR-TKI therapy. The drug was put on the CFDA’s Priority Review pathway last September, and the agency’s record seven-month review speed was widely praised by the industry and is considered as a manifestation of the agency’s determination to speed up foreign drug approvals.

In many cases, pharma companies would rather wait until a drug is first approved in developed markets and later conduct China-specific trials to get approval in the country. The more likely scenario is to include China for an expansion of indication trial, or when a disease has a large population base in the country and few competing treatments. 

Tagrisso, for example, is the first treatment for EGFR T790 mutation-positive NSCLC patients. AZ also recently expanded in China the ongoing global phase 3 Neptune trial that tests durvalumab and tremelimumab combo therapy as first-line NSCLC treatment. It also initiated the new phase 3 Pearl trial, which pits durvalumab monotherapy against chemotherapy in first-line NSCLC patients whose tumors express PD-L1. “The Pearl trial focuses on Asian countries, primarily China, due to the high prevalence of NSCLC in the region,” said the company.

The late consideration of the Chinese market has the previous safety-test-elsewhere-first requirement partly to blame. Besides, even when a multicenter trial is complete, the company cannot use the data directly for an NDA in China, but instead needs to go the extra mile to apply for a foreign drug registration clinical trial. Each of those regulatory procedures can take months to complete.

In comparison, the new regulation “allows the imported innovative drug to move forward more naturally in China and not be required to be tied to international[-only] processes,” Helen Chen, managing director and head of life sciences with L.E.K. Consulting’s China unit, told FiercePharma in an emailed interview.

Chen expects a “renewed interest” in China. Big Pharmas are likely to be the initial beneficiaries as they are already planning and can more quickly adapt their current processes. But the market opportunity is also “for those who perhaps have explored it in the past but gave up in frustration, and for the smaller companies who previously may not have considered China as part of their strategy,” she said.

Chen believes the changes “are certainly in the right direction,” but says she would wait to see “if the implementation details do work out.” Even the seemingly excited AZ said that “[w]e look forward to examining the proposed changes in more detail.”

“As is with anything with Chinese regulations, there’s a lot of interpretation required,” said Chen.

Indeed, interpretation is exactly what caught foreign pharmas off guard in 2014. At that time the CFDA suddenly deviated from its previous practice of allowing multicenter trial data for direct NDAs, simply by using a different interpretation of the regulation. Now that the CFDA has just closed solicitation of public comments to the new proposal, the official rollout could be just around the corner.

But Scott Bass, head of the global life sciences team at the Sidley Austin law firm, said that while the language is clear, there are also working rules that remain to be developed. Bass, in an interview with FiercePharma, also expressed “cautious optimism,” saying that even though he does expect more multiregional trials in China, the full impact of the new rule at hand is still too early to tell.

“I think [the Chinese government] has removed some significant obstacles and at the same time wishes to retain flexibility,” said Bass. “It’s all in execution, … how and when it’s implemented,” especially when some rules are actually enforced in ways that the words didn’t seem to anticipate.

However, to Bass, who has decades of experience advising international pharmas and the government on drug legislation in China, what is clear is China’s goal to take the lead in pharmaceutical innovation, to become a launch pad of new meds. “China always had a plan, … a quiet and determined effort,” said Bass, and it’s about a national pride that doesn’t want to forever be left out in a global innovation discourse.

Indeed, China's Premier Li Keqiang, in his annual Report on the Work of the Government made to the Congress in March, stressed the government's determination to transform and upgrade the country's economy through innovation, to “accelerate R&D on and commercialization of” some emerging industries, and biopharmaceutical is one of five mentioned. 

“There is less the need to protect domestic industry than to play a leading role,” said Bass. Western companies will remain an “ever-present competitive force,” and gradually opening up that competition will force domestic firms to up their game, to stand on their own feet and not rely on subsidies, and gradually eliminate those who cannot keep up, said Bass.