Our China lawyers frequently work with global pharmaceutical and health food companies, to develop and implement their China manufacturing, distribution systems, intellectual property protection, and other legal issues. An issue these companies encounter often in China is that due to business realities of the company, they find it necessary to relocate or move production of a certain drug, from one location in China to another. This may be a requirement where there has been a Change in the local manufacturer, a corporate restructuring, M&A, assignment or licensing of the underling IP rights, seeking a better deal on local taxes, or simply a temporary move due to renovation or expansion of the primary manufacturing facility.
In China, manufacture of a pharmaceutical product is registered to a particular location, to facilitate inspection of facilities and product tracking. When a move of the manufacturing operation occurs, the change should by law be registered, but often companies forget or neglect to do so. This is partly because the relevant regulations are scattered, and China has not yet implemented a unified regulation on management of the registration process, when the manufacturing of a pharmaceutical product is relocated. The rules currently on the books are spread across different regulations, and in many cases, vary and conflict, while at the same time restricting and impeding timely change of production for these products.
The China Food and Drug Administration (CFDA) appears to be aware of the situation and has made a move toward improvement recently when it set out to draft new unified regulations addressing this issue. The CFDA is currently drafting new Administrative Provisions on Streamlined Approval Formalities for Registration of the Change of Drug Production Sites and the Technical Guidelines for Researches into the Change of Drug Production Sites. Both sets of regulations will be revealed in initial draft form and available for public comment by November 13, of this year.
The CFDA seeks to more closely regulate this area, as a way to reduce potentially harmful effects of a change in production facility for pharmaceutical products which must be manufactured to precise specifications and medical standards, without impurities. Changes to the drug production facility may affect the quality, safety, and effectiveness of the drug produced. In evaluating a production facility, the CFDA looks to the inspection record of the individual facility, the effectiveness of operations within the facility, and the type of drug being produced in that particular facility.
To address these risks, the new draft regulations will classify changes of a pharmaceutical product facility into three levels based on several risk factors. The categories will be:
1. Significant Change: change in production facility is subject to formal review and approval by the CFDA;
2. Moderate Change: change in production facility likely permitted in most cases absent an opposition raised by the CFDA to the application;
3. Minor Change: change in production facility required to be reported to the CFDA, but may be freely implemented by the company.
The draft regulations also require that the pharmaceutical company and/or manufacturing company requesting approval for a change in production facility will be responsible for assessing the necessity and risk of the change in the production site, on the basis of reasoning that these parties have best access to information regarding research, development and production of the drugs at hand, and have the most comprehensive and accurate knowledge of the nature of the drug.
The China lawyers at Lehman, Lee & Xu continue to monitor new developments in the pharmaceutical and medical device industries, to ensure our clients have the latest information on changing laws and regulations in this industry as China seeks to spur innovation while raising production and health standards.