China’s Pharmaceutical Industry: Driving Development Through Innovation—Delegates and Committee Members Hotly Discuss Drug Innovation

　　The Government Work Report pointed out that we must vigorously implement an innovation-driven development strategy, promote the deep integration of science and technology with the economy, and enhance the overall quality and competitiveness of the real economy. How to further boost pharmaceutical innovation in China has become a hotly debated topic among deputies and members attending this year’s Two Sessions.

　　The approval speed has noticeably accelerated.

　　The slow approval process and lengthy timelines have long been criticized by the industry. As a deputy to the National People's Congress and Chairman of Betta Pharmaceuticals Co., Ltd., Ding Lieming has, for many consecutive years, submitted proposals calling for faster approval of new drugs. However, at this year’s “Two Sessions” of the National People's Congress, Deputy Ding Lieming had a different perspective when discussing drug review and approval again.

　　“Right now, the pace of new drug approvals has clearly accelerated—and our company has personally felt this firsthand,” Ding Lieming told reporters with delight as he reviewed the upcoming new drug launches. “Last year, we received clinical approval for one new drug. We’ve also submitted applications for three Class 1.1 new drugs, and they’re currently undergoing expedited review. We estimate that these will enter clinical trials this year as well.”

　　In July 2015, the National Medical Products Administration launched a self-inspection and verification effort on clinical trial data for drugs. In August 2015, the State Council issued the "Opinions on Reforming the Review and Approval System for Drugs and Medical Devices," calling for an acceleration of the review and approval process for innovative drugs.

　　On February 26 of this year, the National Medical Products Administration issued an opinion clarifying that innovative drugs with significant clinical value, as well as drugs urgently needed in clinical practice and in short supply on the market, will be given priority review and approval. According to the opinion, a total of 17 drugs have been included in the priority review and approval program, including registration applications for innovative drugs with significant clinical value that have not yet been marketed either domestically or internationally, as well as innovative drugs transferred for production within China; and registration applications for drugs used to prevent and treat diseases such as AIDS, tuberculosis, and viral hepatitis, which demonstrate clear clinical advantages.

　　Before the opening of the National Two Sessions, Bi Jingquan, Director-General of the State Administration, stated at a press conference held by the State Council Information Office that in 2015, the number of drug reviews completed by the Drug Review Center increased by 90% compared to 2014, and the backlog of drug applications significantly decreased.

　　In the interviews, some deputies and committee members called for establishing a review and approval system that is tailored to the characteristics of traditional Chinese medicine and ethnic medicines, and for accelerating the approval process for these medicines.

　　Lei Jufang, a member of the National Committee of the Chinese People's Political Consultative Conference and Chairperson of Qizheng Tibetan Medicine, suggests that, while supporting and developing traditional ethnic medicines, we should also ensure that the quality of new drug reviews is not compromised. To this end, we could allow ethnic medicines with altered dosage forms to conduct clinical studies—selecting indications within their original scope of approval that are consistent with the characteristics of their new dosage form. Furthermore, when approving new drugs, only those indications that have already undergone clinical validation should be approved.

　　Wu Yiling, a member of the National Committee of the Chinese People's Political Consultative Conference, an academician of the Chinese Academy of Engineering, and Chairman of Yiling Pharmaceutical, also pointed out that, according to data from 2012 to 2015, both the approval speed and the number of approvals for patented traditional Chinese medicines in China were lower than those for chemical drugs.

　　Market conversion remains to be improved.

　　In the afternoon of March 5, the Hebei delegation held a plenary meeting at the Fourth Session of the 12th National People's Congress. At the meeting, Cai Dongchen, a deputy to the National People's Congress and Chairman of Shiyao Group, frankly stated that the commercialization of pharmaceutical research findings has been slow and faces numerous constraints, such as difficulties in getting drugs covered by medical insurance and challenges in tendering and price negotiations. He expressed his hope that the environment for translating innovative drugs into the market could continue to be improved, thereby accelerating the launch of innovative drugs onto the market.

　　In fact, the difficulty of translating innovative drugs into commercial success has been a collective concern among pharmaceutical industry representatives and CPPCC members for several consecutive years. Even as the review and approval process for new drugs has already been accelerated, attention to this issue remains high.

　　Xiao Wei, a deputy to the National People's Congress and Chairman of Kangyuan Pharmaceutical, pointed out that in practice, China’s national medical insurance catalog is typically adjusted every four to five years. Once an innovative drug is approved, if its launch falls outside the window for catalog adjustments, it will have to wait until the next round of adjustments. For innovative drugs, being excluded from the medical insurance catalog means long-term losses for the entire product line. Take Kangyuan Pharmaceutical’s Ginkgo Diterpene Lactone Glucamine Injection as an example: since it is not included in the national medical insurance catalog, its sales over the past three years have fallen short of 50 million yuan, and it has no sales records at most sample hospitals across the country.

　　Cai Dongchen, the representative, also pointed out that before Dingbenphthalide, a Class 1.1 new drug, was included in the National Medical Insurance Catalogue, it had suffered losses for six consecutive years. “Innovative drugs have patent protection for only 20 years, and the clinical development phase typically takes eight years. If we wait until the medical insurance catalog is adjusted every five years, the actual market sales period for innovative drugs within their patent term would be reduced to just a few years.”

　　Last September, due to the inexplicable removal of Betta Pharmaceuticals’ erlotinib hydrochloride from the list of anti-tumor targeted drugs covered by certain medical insurance programs in Shandong Province, Ding Lieming, as a representative, was compelled to submit a letter of appeal to the leaders of the Shandong Provincial Party Committee.

　　Before innovative drugs can be sold in hospitals, they still need to go through a bidding process. Representative Xiao Wei pointed out that, in principle, the drug bidding and procurement cycle is conducted once a year. However, the bidding cycles in various provinces typically last more than two years—some even exceed four years. When newly launched drugs fail to keep pace with the bidding process, it becomes extremely difficult for them to be included in supplementary or filed procurement lists.

　　Lu Chunyun, a deputy to the National People's Congress and Party Secretary of the Pharmaceutical High-tech Zone in Taizhou City, suggested perfecting the scientific evaluation mechanism for screening drugs included in the medical insurance drug list; incorporating the special achievements of the nation’s major new drug development initiatives into the medical insurance catalog; establishing a green channel for the timely addition and filing of newly launched innovative drugs during the drug procurement cycle, with the update cycle shortened to adjustments every two years and additions every year, and ensuring strict enforcement.

　　Looking forward to more measures to provide support.

　　In February 2015, the Ministry of Finance and the State Administration of Taxation jointly issued the “Notice on Value-Added Tax Policies Concerning the Subsequent Free Use of Innovative Drugs,” stipulating that in the future, pharmaceutical companies’ newly developed Class 1.1 drugs offered for free trial use by consumers will no longer be treated as sales subject to value-added tax. This is undoubtedly good news for companies engaged in innovative drug research and development.

　　At this year’s “Two Sessions,” deputies and committee members called on the government to provide greater policy support and protection for innovative drugs. Deputy Ding Lieming proposed establishing, at the national level, a multi-ministerial joint mechanism for negotiating prices of high-value medications. Under this mechanism, the prices for innovative drugs would be set through negotiation and adopted uniformly across all public hospitals nationwide. Once the prices are finalized, each province would directly implement them without conducting secondary negotiations at the provincial or municipal levels. The price negotiation mechanism should include both regular and ad hoc negotiations: regular negotiations would take place every two to three years, with appropriate adjustments made to the prices from the previous round; ad hoc negotiations would occur every six months, during which suitable procurement prices would be determined for newly launched products introduced during that period.

　　To ease the pressure on patients and the medical insurance fund, Ding Lieming, the representative, also suggested introducing a price competition mechanism: among similar products, the one with the lowest total treatment cost should be given priority in the formulary; alternatively, a reimbursement policy could be implemented that caps the total cost for treatments of the same therapeutic efficacy, thereby encouraging both patients and clinicians to choose products that offer the best value for money.

　　In addition, Ding Lieming, the representative, called on the state to appropriately extend the term of effective patent protection for innovative drugs and to establish links and coordination between drug registration and pharmaceutical patent matters.

　　Cai Dongchen, on behalf of the group, expressed the hope that the state would continue to implement and increase its financial support for major national science and technology programs, extend the duration of these programs, and keep pursuing them beyond 2020, thereby establishing a national innovation mechanism with enterprises as the main players.

　　Reporting media: China Pharmaceutical News

　　Report link: http://www.cnpharm.com/wzzt/lhzt2016/lhjj/2016/0308/97640.html