In the policy and regulatory sphere in China, 2024 was a year for focusing on innovative medicines, with broad activity that included an initiative enabling developers to set the price of their innovative small molecules, expediting the investigational new drug (IND) review process for novel drugs and opening up the cell and gene therapy sector to direct foreign investment.
For China’s biopharma industry, especially contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs), it was also a year of unease given the looming prospect of the US BIOSECURE Act.
Innovative Drug Pricing
In early February, to support innovative drug development and streamline the government procurement process for novel medicines, the National Healthcare Security Administration (NHSA), the agency that oversees health insurance schemes and is in charge of annual drug price negotiations, introduced a new working mechanism with a scoring method defined by the agency.
Developers can use the system to self-assess the novelty of their small molecules and it allows them to set the price of a product with a certain high score without government intervention. The fixed price can then be maintained for five years without the risk of a steep price cut.
Similarly, the pricing of innovative drugs and insurance coverage for these were a major topic of discussion at the China BioMed Innovation and Investment Conference in December. Specifically, the low profitability of many local biotech companies and a loss of innovative drugs to overseas markets were identified as the main motives behind China’s central government advocating health insurance reforms, especially the role of commercial insurance coverage.
The developments would seem to indicate both the government and the industry’s desire to stabilize market expectations and motivate R&D innovation at home.
Aligning With Global Norms
China’s National Medical Products Administration (NMPA) in February granted the first approval worldwide for Roche’s crovalimab, an anti-C5 monoclonal antibody, for patients aged 12 years or older with paroxysmal nocturnal hemoglobinuria who have not previously received complement inhibitors. This significant nod ahead of major regulatory authorities in the US, EU and Japan indicated the Chinese regulator’s efforts to approve important foreign innovative drugs more quickly.
In a reflection of the NMPA’s efforts to synchronize itself with global standards, a one-year program was launched by the administration in July to shorten IND review times for innovative drugs to 30 working days after submission - the same timeline as the US Food and Drug Administration’s. The pilot program is running from August 2024 to July 2025.
While this appears to be step forward to speeding up processes, the initiative came with some limitations. For instance, vaccines and cell and gene therapies are excluded and developers must have obtained regulatory clearances for at least three clinical trials either in China or overseas to be eligible.
In addition, the program is running only in selected provinces, cities and sites and not nationwide. On the municipal and provincial level, for example, Shanghai and Guangdong province have announced plans to expedite their local IND processes.
Opening Up The Healthcare Sector
Potentially significantly for foreign pharma firms, China took steps to open up its healthcare sector in 2024. In the third quarter, the government issued a notice on allowing direct foreign investment in the cell and gene therapy area and developing related technologies and products in four free-trade zones in the country.
The government also announced in the same notice that wholly foreign-owned hospitals could be established in nine cities across the country, opening the door to moving on from the previous model of foreign investments mostly in joint ventures to run such facilities. Later in November, the government released specific criteria for investors and setting up and operating such hospitals under this initiative.
This deregulatory approach was also reflected in a pilot program, due to complete at the end of 2026, that will allow non-end-to-end manufacturing for certain biologics, which will increase flexibilities for cross-provincial and cross-broader manufacturing involving sites in China.
BIOSECURE Impact
Casting a long shadow over the whole of 2024 was the prospect of the BIOSECURE legislation in the US, which if passed would limit US interactions with “companies of concern” in China, including potentially some major CROs/CDMOs.
Since the US House Select Committee introduced the draft bill in January, it passed through two approvals by the Senate Committee in March and the House Committee in May. In September, the US House of Representatives passed the bill with strong bipartisan support and it was sent to the Senate for a vote.
Towards the end of the year, the legislation had not been included in the US defence bill, although it may still be a topic of talks in 2025.
China-based CROs and CDMOs went through ups and downs in response to the threat posed by the Act’s provisions throughout the year. Other than share price swings, it may also have influenced decisions made by such Chinese (and other) companies.
For instance, WuXi AppTec, one of the five named firms in the bill, sold its cell and gene therapy subsidiaries, US-based Advanced Therapies and UK-based Oxford Genetics, on 24 December to Altaris, a healthcare industry-focused equity investment firm based in the US.
Key Themes For 2025
Considering the one-year pilot program that intends to halve the IND review time for innovative drugs is due in calendar Q3 of this year, subsequent discussions and actions on continuation of this policy may occur, depending on the outcomes.
On the reform of current health insurance programs, in the final two months of 2024 the NHSA released notices seeking to recruit discussion committee members, including commercial health insurance and medical information technology firms, and issued case studies to help guide the planned reforms.
On top of this, the high-profile discussions about innovative drug pricing and insurance coverage that took place at multiple industry conferences in 2024 indicate potential policy changes in these areas this year.
(Senior Editor Dexter Jie Yan in Shanghai contributed to this story.)
