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Regulatory News | 09 February 2016 | By Nick Paul Taylor
Welcome to our Asia Regulatory Roundup, our weekly overview of the top regulatory news in Asia.
India has stopped exempting more than 70 drugs from customs duties. The ruling means companies that import any of the products or manufacture them within special economic zones will have to pay more tax, potentially giving local producers an advantage over foreign businesses.
Officials at the Central Board of Excise and Customs (CBEC) have targeted 15 drug formulations and around 60 bulk ingredients in the action, including products to treat cancer, HIV and hemophilia. The government is framing the decision as part of its drive to support local manufacturers, particularly those involved with the supply of active pharmaceutical ingredients (APIs). Officials are concerned about the consequences of Indian manufacturers relying on China for APIs, making them receptive to suggestions about how to tip the balance in favor of local bulk ingredient suppliers.
“Various people wanted the government to take measures to protect Indian interests,” Dr. GN Singh, the Drug Controller General of India, told NDTV. The Indian Drug Manufacturers Association (IDMA) is among the organizations to have lobbied for the removal of exemptions, an action it thinks will “provide a level playing field to Indian bulk drug manufacturers,” The Economic Times reports. In the days after news of the exemption withdrawal was published, other observers took a less favorable view of the decision, leading to attempts by IDMA, Singh and the skeptics to shape the narrative.
The debate is centered on whether the removal of the duty exemptions will lead to increases in drug prices. Kiran Mazumdar Shaw, managing director of leading Indian biotech Biocon, told BusinessLine the withdrawal could add 22% to the cost of supplying a drug. “These costs will pass down to the patients,” Shaw said. In contrast, IDMA President SV Veeramani thinks the action will have minimal effect on prices, a position that is based on an understanding that most of the affected products were already subject to 5% concessional duties. Veeramani expects the rate to now rise by 2.5%.
Singh has staked the middle ground, arguing that while the change creates the potential for price increases, the situation can be controlled. “We are aware of this problem. The health ministry and pharma officials are all taking steps to address this,” Singh said. “We won't allow prices to rise.”
CBEC Notice, BusinessLine, NDTV, The Economic Times
The Therapeutic Goods Administration (TGA) has seen a jump in requests to pay fees in installments after it changed its charging model. In the 2015-16 charging period, TGA received 51 requests to pay by installment, which represents a year-on-year increase of almost 90%.
TGA saw a similar surge in the number of requests for extensions to payment deadlines. In the most recent charging period, TGA received 20 such requests, around 50% more than were submitted in the previous year. The increases follow the July 1 switch between two exemption schemes, namely low value turnover (LVT) and annual charge exemption (ACE). Under the previous model, LVT, companies could apply to be exempt from certain fees if turnover was less than or equal to 15 times the annual charge. Under ACE, companies are only exempt until a product first generates turnover.
As TGA suspected, the changes have put pressure on companies with low-turnover products. TGA is willing to grant reasonable requests for extensions or installment plans during the transition to ACE, but some companies have nonetheless decided to take more drastic action. In 2015, firms pulled the registrations for 2033 medicines, one-third more than they did on average over the previous three years. Similarly, companies canceled the registrations of 2,229 medical devices. Once again, the figure represents a one-third increase over the mean average of cancellations in prior years.
TGA is trying to stop these issues from affecting the supply of vital medicines and medical devices with legislation that allows for charges to be waived in certain circumstances. To be granted such a waiver, a company must show that the annual charge would make it financially unviable to produce a drug or medical device that fulfills a particular role in public health. Since adopting ACE in July, TGA has granted exemptions to 82 products under this law, freeing manufacturers from paying charges of AU$547,835 ($402,346).
Even after making these waivers, the new scheme is proving financially rewarding for TGA. Across all of the categories of goods regulated by TGA, 22% of products are exempt under ACE, compared to 30% under LVT. The fall in the proportion of products that are exempt from charges has led to a rise in the amount of money TGA generates under the scheme. Over the past year, TGA has seen the amount it raises in charges increase by 13%. The regulator uses the money to support post-market monitoring.
China Food and Drug Administration (CFDA) is planning to intensify sampling and testing of medical devices. National leaders at the regulator are looking to their regional colleagues to take on some of the work and do a better job of coordinating their activities.
In a statement to outline the strategy, CFDA picked out the volume of sampling and the organization of work as areas in which it can improve. To improve the situation, CFDA has posted a seven-point manifesto, most of which is targeted at provincial outposts of the regulator. CFDA wants officials at these outposts to step up their sampling and testing of medical devices, while also doing more to follow up on results.
Bans on the production, import and distribution of medical devices sit alongside recalls on the list of actions CFDA is proposing to take against companies that fall short of its standards. The threat is one of the ways in which CFDA is trying to ensure that the suite of changes it has made to the regulation of the medical device industry over the past year has a meaningful impact on product quality. CFDA added to the changes this week with a document on the production of Class III medical devices.
CFDA Notice, More (Chinese)
The Japanese Pharmaceuticals and Medical Devices Agency (PMDA) has entered into a collaboration with the National Cancer Center Research Institute (NCCRI). PMDA and NCCRI will work together on tasks including cancer guidance.
Creation of cancer guidance is one of three tasks picked out by NCCRI in a statement to outline the terms of the collaboration. The partners also plan to cooperate on matters relating to clinical trials, post-marketing safety measures and training. Collectively, the initiatives are designed to support the advancement of regulatory science and cancer research initiatives in Japan.
PMDA and NCCRI have worked together in these areas in the past, notably through the exchange of personnel, and the new agreement builds upon the progress made in these earlier initiatives.
Press Release (Japanese)
The investigation into the role of an Alibaba subsidiary in a CFDA information technology system has advanced. Caixin reports software firms are now accusing the subsidiary, Ali Health, of charging excessive fees for licenses, unnecessarily driving up the cost of complying with the regulations. Caixin
Tags: Indian drug imports, CFDA, TGA, drug tariffs, cancer guidance