Article Source: The Economist

Original Title: Poor enforcement could jeopardize China's drug innovation policy

Online Archive:https:https://www.nature.com/articles/nbt1006-1182

A new five-year guideline for the drug industry issued by Chinas powerful National Development and Reform Commission (NDRC) has given high priority to the development of biotechs and linked the sectors growth with improvements in drug distribution and in the healthcare system. Although observers welcome the new policy as a remedy for some existing weaknesses of the pharmaceutical sector, many doubt that it will have the intended effect because of the reluctance of other government agencies to implement it.

NDRC, the government agency responsible for launching new reform initiatives and giving the final green light to key investments, released its Guideline on Pharmaceutical Industry Development for the 11th Five-Year Period (20062010) on September 4, 2006. I think the new policy means policymakers have been aware that without the demand [for] truly innovative drugs, there could not have been real innovation in the pharmaceutical industry, says Yuexing Wang, a spokesman for Beijing Pharmaceutical Group, one of Chinas top five pharmaceutical players.

The new policy ranks biopharmaceuticals as a field in which China can eventually compete successfully with developed countries, and emphasizes the need to use
life science toolsincluding genomics, bio-chips and proteomicsto boost research in conventional drug development. The policy also lists monoclonal antibodies, cell growth factors and genetically engineered vaccines as the key areas to support in the biopharmaceutical field. The biopharmaceutical sector is the fastest growing in the pharmaceutical industry with a 30% growth rate in production value, compared to a 19% growth rate in the industry as a whole, between 2000 and 2005.

Although the government budget associated with the new policy has not been disclosed, the new guideline aims to increase the amount of both public and private money spent in pharmaceutical R&D from the current 1% to 3% of pharma sales revenue by the end of 2010. The government hopes that large Chinese pharmaceutical groupswhich are mostly focusing on small moleculeswill invest in biotech research, but the new policy does not indicate how to reach this goal. Jingyu Bai, deputy chief for NDRCs biotech sector comments: The new [pharmaceutical] guideline is aimed at creating a clean environment and coordinating various resources to boost the biopharmaceutical industry, not simply at increasing money input. In particular, the guideline also promises to give greater pricing leeway to the makers of innovative drugs, whereas previously, NDRC forced pharmaceutical firms to slash their prices.

The trouble is that the market does not recognize the value of innovative biotech drugs. When briberies and low drug price instead of effectiveness of the treatment are the main criteria that make hospitals buy medicines and doctors prescribe them, few drugmakers would spend years-long efforts and billions of yuans in developing truly innovative drugs, says Xianping Lu, president of Shenzhen-basedChipscreen Biotech, whichis developing a medicinefor diabetes.

On the other hand,Chinas pharmaceutical sectors have been afflicted bythe huge number of drug-makers who produce metoo drugs. The overheatedcompetition leads to pricewars on the current genericdrugs instead of the development of innovative ones. Erythropoietin, for instance, has been manufactured by more than 20 biotech companies in China. Chinas biopharmaceuticals companies have owned several independent full patents in gene therapies and protein drugs, while the conventional chemical drug-makers have possessed nearly no complete patent of pharmaceutical compounds, says Ken Ren, general manager of Beijing-based consultant and CRO Accelovance. Among the 4,000 drugmakers in China, 10% are biopharmaceutical firms, producing 27 biotech products including therapeutic drugs, vaccines and protein chips.

Drugs of poor quality are reportedly quite common on the market. Despite efforts to introduce Good Manufacturing Practice standards between 2003 and 2004, which reduced the total number of pharmaceutical companies by 30%, there are still problems. Last June the Chinese press exposed Hangzhou-based Zhejiang Pukang Biotechnology Co. for producing a problematic hepatitis-A vaccinewhich accounts for 60% of the Chinese marketthat killed one child and made several hundred school children sick. This April, armillarisin injection, a drug for stomach problems produced by the second largest pharmaceutical Qiqihaer in Heilongjiang Province killed nine people and injured more than 50 others. And by July, another drug clindamycin injection produced by Anhui Huayuan Biotechnology Co. had caused about four deaths and several dozen injuries in Beijing, Harbin and Hangzhou. The big problem with these incidents is that all three drugs are formally registered and produced by leading State-owned pharmaceutical companies instead of fake drug makers.

Due to the repeated accidents and rising public complaints on drug safety, the authorities have been linking the innovation in the biopharmaceutical sector with the basic public health, says Song Jiang, chief analyst with Beijing-based drug consultant Consultech. Preceding the new policy by NDRC, Chinas State Food and Drug Administration (SFDA) in Beijing has already improved the evaluation criteria for so-called new drugswhich, in China, are often generics that have not been produced in the country.

In one move, in April, the SFDA stipulated that only the first generic producer has the branding right whereas latecomers could use only the academic name. This policy is designed to slash the competitiveness of generics producers to [direct] them towards innovations, Ren says. In addition, several senior officials at SFDA have been arrested in the past 15 months for corruption involving the approval process of drug and medical devices. Starting September 1st, SFDA launched a nationwide campaign to monitor whether previously approved drugs are qualified to be on the market.

Despite the ambitious goal of the new guideline, observers say implementing it might be very difficult. The previous practice [of easily approving new drugs regardless of their innovation] has established a vested interest group in SFDA and other ministries. NDRC can hardly shake the regime, although its power is bigger than other ministries, says Jiang. But Lu says the practice of SFDA and other ministries is understandable. You cannot [expect] Chinas new drug criteria to be as strict as the US FDA overnight. But in the past few years, we have seen that Chinas drug approval is becoming more and more professional, says Lu. I believe with the promoting efforts from NDRC, the criteria for evaluating new drugs will become truly international in the near future, he adds.