Full article reprinted from PharmAsia News December 23, 2008
In a review of the major legal and regulatory measures that changed China's healthcare landscape in 2008, Chinese and European lawyers stated the merger of the State FDA into the Ministry of Health is likely to have the most significant impact into the future. Find out why...
Full article reprinted from PharmAsia News December 23, 2008
In a review of the major legal and regulatory measures that changed China's healthcare landscape in 2008, Chinese and European lawyers stated the merger of the State FDA into the Ministry of Health is likely to have the most significant impact into the future.
"The major event in 2008 was the restructuring of the SFDA, and its merger into the Ministry of Health," said Yang Chen, head of the China life sciences practice of the law firm Sidley Austin, based in Beijing.
The drug regulatory watchdog lost its autonomy in the September merger, and the drafting of new rules covering the pharmaceutical, biologics and medical device sectors must now pass through new levels of review and officialdom.
"The Ministry of Health will be substantially involved in legislation and will add a new layer of government scrutiny," Yang said during a Dec. 16 teleconference with industry executives and analysts that was co-sponsored by Sidley and PharmAsia News.
"SFDA will remain the key regulator, but the Ministry of Health will be responsible for formulating China's essential drugs list," said Yang. Prior to the merger, the health ministry was primarily in charge of China's government-operated hospitals (PharmAsia News, Sept. 19, 2008).
Fellow Sidley lawyer Adrian Emch, who focuses on healthcare regulation in China and the European Union, said during the teleconference that China's passage of its Anti-Monopoly Law last summer will similarly have an influence on the industry that ripples into the future.
"After 13 years of deliberations, China's Anti-Monopoly Law finally became operational in August of 2008," Emch said. "Under the Anti-Monopoly Law, a new system of merger control will be implemented."
The antitrust legislation puts the Ministry of Commerce in charge of reviewing potential mergers, including those in the pharmaceutical sector, that could violate the law, Emch said.
On the eve of the legislation's passage, leading executives at multinational companies, including at some pharmaceutical giants, expressed concern that the law could be used to counter a corporation's strong market position in China, or to forced licensing of blockbuster drugs.
Yang said that another major new rule, which appeared in the form of a "judicial interpretation issued by the Supreme People's Court in November, will make it simpler to prosecute doctors who accept bribes on criminal charges.
But because of the vagueness of the new offense, it could be possible for doctors who accept even a speaker's fee or other innocuous benefit from a drug maker or medical device manufacturer to be investigated and criminally charged. "This will have significant implications for pharmaceutical and medical device companies," she said.
A draft judicial interpretation circulated by the Supreme People's Court in early 2008 that aimed to clarify the grounds for criminal prosecution for counterfeiting drugs could have been a breakthrough in Chinese law on the topic if the document had been strengthened and finalized.
But "this judicial interpretation has not been implemented since," Yang said.
China's top court has never issued a final document on counterfeiting drugs, and the current law remains murky on the issue.
The PRC criminal law would have permitted prosecutors to level criminal charges against a maker of counterfeit medicines only when "the counterfeit drug caused substantial harm to human health," Yang said. But prosecutors would face a great difficulty in defining "substantial harm to human health," which the proposed judicial interpretation attempted to clarify.
Unlike the definition of a counterfeit drug in the U.S., China's definitions of counterfeit medicines for the purpose of criminal law do not cover the unauthorized use of trademarks or of trade names, Yang said. [Editor's note: Yang discussed the definition of drug counterfeiting under China's criminal law in an Insider's Analysis for PharmAsia News (PharmAsia News, Feb. 24, 2008).]
The very narrow terminology on counterfeit drugs under current Chinese law has made criminal prosecution difficult, and sometimes prosecutors and genuine drug producers have to pursue counterfeiters based on trademark infringement regulations, which carry less severe penalties.
"Maybe next year," Yang predicted, "the judicial interpretation on counterfeit drugs will be finalized."
- Kevin Holden
