China to Reform Oversight of Drug Prices, GMP Compliance

China’s State Council is ordering the China Food and Drug Administration, and other agencies, to implement stricter policies to reform the country’s regulation of drug prices, GMP compliance and pharmaceutical marketing.

The sweeping reforms would affect major components of China’s drug system, tightening regulations for approval, manufacturing and distribution of medicines, according to a summary of the State Council’s directive by the law firm Sidley Austin.

Under the policy, the CFDA is required to enhance monitoring of GMP compliance, create a registry of medical representatives, and improve approval procedures as well as good clinical practice inspections. Some of the orders are at odds with China’s laws, which complicates their implementation, the law firm said.

The State Council is also authorizing agencies to use conditional approvals, negotiations, centralized procurement programs, insurance coverage and compulsory licenses in order to ensure newly launched generic and branded drugs are not priced higher in China than in other countries. The policy empowers agencies to conduct drug price inspections when prices of medicines rise abnormally and restricts medical representatives from promoting drug sales.

The implications of these measures for drug prices remain unclear, Sidley Austin said. For example, the State Council does not specify whether sponsors can raise drug prices in tandem with increases in overseas markets.

The policy mandates that the agencies encourage the consolidation of drug manufacturers and distributors in order to establish large flagship institutions. This could prompt mergers and acquisitions in the drug industry, the law firm said.

One pilot program, which offers drug product licensing to domestic research and development institutions and their personnel in 10 provinces, will be extended nationwide, according to the law firm.

In the coming months, agencies will implement changes that further clarify the council’s reform, the law firm said.

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