Regulatory Focus™ > News Articles > Asia Regulatory Roundup: Pharmacy Sues CFDA Over Drug Monitoring System (2 February 2016)

Asia Regulatory Roundup: Pharmacy Sues CFDA Over Drug Monitoring System (2 February 2016)

Posted 02 February 2016 | By Nick Paul Taylor 

Asia Regulatory Roundup: Pharmacy Sues CFDA Over Drug Monitoring System (2 February 2016)

Welcome to our Asia Regulatory Roundup, our weekly overview of the top regulatory news in Asia.

Pharmacy Sues CFDA Over Alibaba Electronic Drug Monitoring System

Yontinhe Group has filed a lawsuit against the China Food and Drug Administration (CFDA). The case relates to an electronic drug monitoring system that CFDA introduced in 2013 in collaboration with a subsidiary of the Chinese tech giant Alibaba.

CFDA and Ali Health, the Alibaba subsidiary, purportedly created the system, which made pharma companies and pharmacies use barcodes that connected their products to an official database, to curb the rise of fake medicines in China. However, the ability of the system to deliver on this promise has been questioned since the early days of the initiative, with observers seeing uncertain benefits and extra costs. Now, Yontinhe Group has flagged up another set of concerns in a case it has brought against CFDA.

The lawsuit is focused on the role of Ali Health in the project and the potential conflicts of interest it creates, notably because the tech company is itself involved in online medicine sales. “Operating the electronic drug monitoring network means Ali Health can access and use detailed sales data of drug industry competitors like ourselves,” Yontinhe Group said in a statement translated by Reuters. “How can we and other drug companies have a chance to compete on an equal playing field?” The use of a for-profit partner and the legitimacy of the bidding process are also subject to scrutiny.

Yontinhe Group has suffered directly as a consequence of the drug monitoring system. Faced with the need to invest to comply with the requirements — an outlay the company claims would amount to nearly $2 million, Caixin reports — Yontinhe Group refused to upgrade its computer system. CFDA responded by revoking its license. Other pharmacy groups have made major investments to comply with the system. Laobaixing reportedly spent around $12 million, one-third of its profits, to bring its operation into line with the barcoding system, despite having doubts about its legitimacy.

The lawsuit raises questions about the long-term value Laobaixing and others will derive from their investments. For now, CFDA appears keen to maintain the system, although an anonymous source told Caixin the regulator is set to drop Ali Health. The decision, which was reportedly communicated to pharmacies, wholesalers and drugmakers last week, will result in responsibility for supporting the initiative transferring to a nonprofit. In doing so, CFDA would deflect concerns about the role of Ali Health, although questions about the legal basis and effectiveness of the system would remain.

Yontinhe Statement (Chinese), Reuters, Caixin

EU Calls for Pakistani Regulators to Collaborate to Tackle Illegal Drug Problem

A European Union report has called on regulators in Pakistan to collaborate to tackle the production and trafficking of illegal drugs. The idea is that by working together, the narcotics and pharmaceutical regulatory organizations can stop illegal activities without disrupting the legitimate supply of drugs.

Officials in the EU made the comments in a 335-page report into the Special Incentive Arrangement for Sustainable Development and Good Governance, an initiative also known as GSP+. The section on Pakistan highlights the creation of the Drug Regulatory Authority of Pakistan (DRAP) as one of the positive steps the country has taken to regulate the availability of narcotic drugs and psychotropic substances for use in the fields of medicine and science. Yet, while welcoming this development, the EU officials think DRAP could achieve more by working with the Narcotics Control Division.

The report calls for DRAP officials to work with their peers in the Narcotics Control Division to tackle both the demand for and supply of illegal drugs. As it stands, the country is falling short in this area. “Pakistan still suffers of weaknesses in its capacity to monitor illicit activities,” the authors of the report wrote. One suggestion is to carry out a survey of drug users to gauge the scale of the problem facing authorities in Pakistan.

Whether the leaders of DRAP and other agencies in Pakistan are capable of delivering the agenda put forward by the report is open to question. Some groups are continuing to push for the removal of the CEO of DRAP and, as the EU report notes, corruption is an ongoing problem. The hiring of a CEO with industry experience was presented as an attempt to stop corruption, but it is too early to tell whether this has proven effective. EU officials are looking to the United Nations Convention against Corruption review to provide guidelines on how Pakistan should proceed.

EU Report

Chinese Generic Drug Quality Drive Set to Continue in 2016

CFDA is set to continue its generic drug quality drive into 2016. The regulator made the commitment at a national conference, at which it listed the quality of generic drugs as one of six areas in which it wants to ratchet up its activities in the year ahead.

Officials spent the back half of 2015 pushing to raise the standards of generic drugs in China, notably by trying to filter out substandard applications and enforcing new manufacturing standards, but have yet to achieve all of their goals. A pilot study to assess whether CFDA can further improve processes for the evaluation of medicines is slated for the coming year, while the raising of the quality of drugs in China is one of the regulator’s overarching goals.

The focus on medical devices, which saw CFDA introduce a raft of new documents last year, is also set to carry on into 2016. CFDA wants to reform the classification and approval systems for medical devices, as well as take steps to raise standards and encourage research and development. Planned initiatives include taking steps to ensure timely starts to the verification of data from clinical trials of medical devices.

Other areas of focus for CFDA include efforts to ratchet up of the investigation and punishment of wrongdoers, a push to increase product sampling and the placing of more powers in the hands of local authorities. Some of these initiatives also apply to the food industry, a field in which CFDA has tried over the past year to establish systems that will prevent the scandals that have blighted it in recent years.

CFDA Agenda (Chinese)

CFDA Posts Explainer on Incoming Medical Device Naming Rules

CFDA has released an explainer for its incoming rules on the naming of medical devices. The rules set a model for naming medical devices, something CFDA is expecting will prevent the use of misleading, unscientific or inaccurate product labels.

When the rules come into force on 1 April, CFDA will expect medical devices to carry generic names based on short, defining phrases, such as “drug-eluting coronary stent.” The use of such accepted and widely understood terms is at the center of the CFDA rules. At the same time, CFDA is hoping the rules will filter out the use of words it deems undesirable.

By automatically prohibiting the use of certain terms, CFDA thinks it can stop the use of names that blatantly fail to match up to its requirements for clarity and scientific accuracy. The regulator designed the rules following more than a year of planning, which included conversations with medical device manufacturers, inspectors and regional regulatory units.

CFDA Statement (Chinese)


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