A China-Focused, US-Based Specialty Pharmaceutical Company China Regulatory and Commercialization Backgrounder June 2012

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Regulatory and Commercialization Overview Pre-launch

Post-launch

Regulatory Process

Registration Process

Timeline

3-5 years for products already approved in a major market

Commercialization Process

Pricing National + provincial

3 months post-launch

Reimbursement National + Provincial

2 years post-launch

Bidding Provincial

2 years post-launch to get onto major tenders

Hospital listing Individual

3-5 years post-launch

o The time to reach critical mass is influenced by both regulatory and commercial entry /access hurdles. o Key skills and capabilities required at both levels in order to ensure commercial success. 2

Regulatory Environment

o

Current government policy is designed to promote and favor innovation and innovative brands.

o

The new Provisions for Drug Registration were implemented 10/1/07; the regulations for global trials, IPR and data protection is improving – policy improvements are significant, but execution of new polices lags.

o

The CTD format of the application package can now be used in China – no need to adjust and amend to a China format; but Chinese translation and dossier part 1 of the summary are still required.

o

The QC test requirement for chemical investigational products’ CTA has been eliminated since the implementation of the new Provisions of Drug Registration.

o

China regulatory system became more open and transparent, with more transparent. communications and cooperation between companies and regulators.

o

Better GCP compliance by rigid monitoring, auditing and inspection. Registration

Pricing

Reimbursement

Bidding

Hospital listing 3

Drug Registration Process Dossier preparation in Mandarin

Overall Times 3-6 months

Dossier submission

CTP Process

SFDA preliminary review

30 working days

Sample test

60/90 working days

No

5 working days

CDE review

80/90 working days

About 12 months

Yes CTP approval or waiver

20+10 working days

Clinical trial Actual Time + 3-6 months

Clinical trial final report preparation in Mandarin Report and other documents submission

Maybe IDL or Manufacturing License

SFDA Preliminary review Product failed

CTP: Clinical Trial Permit CDE: Center of Drug Evaluation

No

CDE review Yes SFDA final approval

120/150 working days About 12 months 20+10 working days

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General Regulatory Process

o Two submissions, two review stages with two approvals  Clinical trial stage for CTP (clinical trial permission) approval.  Market approval stage for IDL (import drug license) or LML (local manufacture license) approval.

o No clear separation between IND and NDA  Conduct of clinical trial must obtain approval from the authority (SFDA), i.e., CTP.  The dossier required for CTP was quite similar to that required for final approval.

 However, the authority has gradually recognized the difference between them; in practice, the CMC requirement was lowered.

Registration

Pricing

Reimbursement

Bidding

Hospital listing 5

Chinese Regulatory Requirement

o No rolling submission system for new data generated during the review process except for those have been approved to go through special review procedure e.g. innovation drug or some drugs for cancer/HIV/rare disease o Rigid local Chinese clinical data request for China registration; bridging study concept is not accepted o For a local registration trial (IDL as well as manufacturing license)  The efficacy study shall be “statistically powered” and at least,  100 patients per arm for chemical drug

 A PK study maybe required additionally to a local registration or global clinical trial.

Registration

Pricing

Reimbursement

Bidding

Hospital listing 6

Pricing o

In the case of patent protected molecules, China allows for internationally based pricing.  Composition of matter for all drugs except biologicals  Indication/use patent for biologicals

o

A national pricing system is approved followed by regional adaptation i.e., price needs to be approved province by province.

o

Originator drugs with a filed compound patent in China would enjoy a favorable status in bidding and price negotiations with central and regional authorities. However, the pricing policy is now under revision for more stringent control and a new one will/might be released during 2012.

o

Bidding remains the key influence and regulator on hospital prices. Bidding is managed at a regional level and, increasingly, at a city level.

o

The price within the supply chain needs to be carefully monitored and managed so as to avoid potential price cuts going forward.

Registration

Pricing

Reimbursement

Bidding

Hospital listing 7

Reimbursement o

There are two levels of reimbursement drug lists: national lists and provincial lists.

o

There are two national reimbursement drug lists: once the national list is updated, the provincial lists will be updated accordingly.  

RDL with class B drugs is updated every four years .The latest update of RDL was in 2009. EDL with class A drugs was established in 2009 and new additions are in preparation.  

List A will consist of widely-used, low-priced products, and use of the national version by provincial governments will be compulsory. It will be dominated by cheap, domestically-produced generic drugs. Products included in list A will be fully reimbursed. List B will contain some higher-priced products, and provincial governments will be free to compile their own lists, in which a minimum 85% of products must come from the NRDL. Provincial authorities are free to choose the composition of the remaining 15%. Patient co-payments will be levied on drugs from list B, but reimbursement levels for individual products may vary according to provincial policies.

o

The pre-requisite to be eligible for the listing is to have a minimum of two years of commercial sales.

o

Listing is by molecule, not by brand. 

o

The generic name is used in the reimbursement list with a clear description of formulation. In some cases, the reimbursement is limited to certain indications of the drug.

Price cuts always follow once the drug is listed the first time and reimbursed.

Registration

Pricing

Reimbursement

Bidding

Hospital listing 8

Bidding – Hospital Tendering

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There is no national bidding system in China. The tender purchasing process is regionally driven – the policy varies at both provincial and city levels.

o

Tender purchasing is now used for all drug categories and the quantity of drugs which are purchased through tender has increased. To lose a tender in key cities will have significant impact on the sales. The impact on revenue is immediate.

o

In most of the key provinces, hospital listing can only be applied after winning the tender.

o

It takes between 3 and 12 months once a product is on the tender.

o

The final decision will be made by a tender committee which is mainly composed of tender officials and pharmacists.

o

A distributor is appointed to bid the tender on behalf of the manufacturers. At the same time, extensive documentation needs to be provided in addition to pricing-related data i.e., a product’s safety and efficacy.

o

Increasingly, price remains the single most important factor in determining the bidding outcome.

Registration

Pricing

Reimbursement

Bidding

Hospital listing

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Hospital Listing

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In China, to be purchased by a hospital, the drug has to have been reviewed and approved by the listing and drug review committee , which consists of department heads (clinicians), pharmacy heads(pharmacists) and hospital directors.   

The new drug application has to be firstly approved by department head and is then submitted to the pharmacy for the approval. The same hospital listing process also applies to a new strength or formulation or line extension. This is process needs to happen hospital by hospital and city by city which is labor and capital intensive.

o

The listing process is reviewed periodically, usually once or twice per year. The interval is not fixed and varies from hospital to hospital.

o

Drugs that do not win the tender are not eligible for hospital listing.

o

Hospitals tend to limit the number of drugs in one category. In other words, it is difficult for a new product get listed if a number of similar products are already available.

Registration

Pricing

Reimbursement

Bidding

Hospital listing 10

Distribution

o It is critical to understand the role of distributors in China before coming up with the distribution strategy. o Unlike their Western counterparts, Chinese distributors can play an important role much beyond logistics and money collection. They can add tremendous value to:  Bidding  Hospital listing  Price lobbying

o Sciclone/ NovaMed’s partnership with key national distributors, e.g., Sinopharm, the only national distributor, helps to leverage their established network to manage the bidding, facilitate the hospital listing , etc.

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A China-Focused, US-Based Specialty Pharmaceutical Company China Regulatory and Commercialization Backgrounder June 2012

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