Personalized cancer treatments, cell and gene therapies and regenerative medicine often don’t fit neatly into a traditional drug approval pathway. So China has established a new approval track to give local patients faster access to emerging innovations.
“This is considered a first-in-the-world regulation that gives biomedical technologies an alternative track that they refer to as the tech track,” said Boyang Yang, founder of the global longevity fund Immortal Dragons.
The new policy is aimed at boosting access to advanced therapies for Chinese patients, according to the global law firm Morgan Lewis. But the change could also shake up the licensing landscape for Chinese biotechs and global pharma companies amid a steep rise in dealmaking.
At the same time the U.S., which is growing increasingly nervous about losing its share of the drug development pie, has been pushing back against relations between China and U.S. companies with regulations like the Biosecure Act, which is designed to restrict those ties, and now, a new proposal in Congress that would provide oversight to U.S. investments in Chinese companies.
For China, the new regulatory pathway would create “a ‘land domestically first’ option, reducing the pressure for Chinese innovators to license out prematurely,” Morgan Lewis wrote.
Known as order 818, the Regulations on the Administration of Clinical Research and Clinical Translation and Application of New Biomedical Technologies went into effect on May 1 and allows certain types of gene editing treatments, personalized cell therapies or xenotransplantation to skip the traditional drug approval process and follow a parallel pathway.
“Then we will have an arms race, but in a good way where our regulatory bodies will try to facilitate the development of biotech."
Boyang Yang
Founder, Immortal Dragons
While this new track could ramp up access to novel therapies, it may also require contract changes for Western drug companies operating in China.
Once research into the technology has cleared a specified safety and preliminary efficacy bar, the clinical trial initiator can apply for translation approval so it can become a paid treatment for patients, according to Morgan Lewis. Where a standard pathway to approval follows three phases of clinical trials that can take years, this bypasses that process potentially giving patients faster access to cutting-edge approaches for rare diseases or advanced-stage cancers.
Other countries, including Japan and South Korea, have also developed alternative frameworks for advanced regenerative medicine.
In the U.S., initiatives like the 21st Century Cures Act have also aimed to speed drug development. But Yang said China’s approach could inspire other more conservative regulatory bodies to follow suit with a more flexible approach that supports innovation.
“Then we will have an arms race, but in a good way where our regulatory bodies will try to facilitate the development of biotech,” he said.
While order 818 allows technologies to move forward quickly, it does include guardrails.
“It imposes some pretty strict rules on investigator-initiated trials, so they are up to date with international standards,” Yang said. “Prior to this, IITs in China were in a bit of the Wild West,” he said.
Based on Yang’s analysis, there are three main rules that international companies must follow if they opt to use the tech track instead of the traditional drug approval pathway.
First, companies using the tech track must partner with a designated “Level 3 Grade A” hospital in China. Many drug companies were already working in these facilities because they are most equipped to run clinical research.
Second, drug companies using the 818 pathway also can’t charge patients for experimental treatments that haven’t received translation approval, Yang said. Foreign companies must also meet specified criteria to participate in the tech track.
“Order 818 didn’t impose new rules in terms of who can be the sponsor of clinical research,” Yang said.
For now, companies must follow already established guidelines laid out by what’s known as the foreign investment negative list, which imposes restrictions on investors in certain markets. Whether foreign companies can access the pathway is a gray area, according to Morgan Lewis.
Renegotiating Chinese contracts
While many companies may not need to renegotiate contracts with Chinese firms, some may need to make changes.
“If your plan involved charging the test subjects a fee, then yes, you have to renegotiate and make sure you have enough funding,” Yang said.
Companies might also have to rethink milestone payments tied to specific benchmarks, such as an IND approval or an NDA submission, that won’t exist under the new pathway, according to Morgan Lewis. They will also need to continue complying with strict data handling requirements, Yang said. China, like many other nations, bars companies from exporting data and has established specific information-retention requirements, he noted. But as is often the case in China, enforcement could be a wild card.
“When we deal with Chinese regulations, the spirit of the law is way more important than the letter of the law,” he said.
In the past, China has changed course quickly when officials determined that a regulation is more restrictive in practice than originally intended, he said.
And importantly, the goal of order 818 is to accelerate biotech research.
“If any clause, any regulation from this order might stifle the development of biotech, likely they will not enforce, or they will make modifications,” Yang said.
Ultimately, if it works as planned, the tech track could benefit both foreign companies and China, as the country continues to expand its reach in biopharma.
“China is a very good destination for CROs, CDMOs, for partnerships with other international pharma companies where China is still playing a supporting role,” Yang said. “They want to play catch-up, but the U.S. is definitely still the leading player. I would say the U.S. will benefit a lot. If their Chinese partners are thriving, their international partners will thrive.”
