With the implementation of the national “drug marketing authorization holder” system, overseas Marketing Authorization Holders (MAH) must improve their establishment of local representatives in China. The National Medical Products Administration (NMPA) outlined the direction for these representatives in the “Interim Provisions on the Management of Local Representatives of Overseas Drug Marketing Authorization Holders (Draft for Comments)” in July 2020. Although not yet officially promulgated, these provisions indicate the basic qualifications and responsibilities required.
Basic Qualifications for Local Representatives
- Legal Entity in China
The local representative must be a corporate legal entity established within mainland China (excl. Hong Kong, Macao and Taiwan). It can be a subsidiary but not a branch or a representative institution established by a foreign company in China. According to the Chinese Drug Administration Law and related regulations, the local representative should be an enterprise or other organization legally established within China that can bear legal responsibilities. Therefore, a branch office or representative office of a foreign company established in China cannot serve as the local representative because they are not typically independent legal entities and cannot assume independent legal responsibility. - Legal Responsibility
As per Article 136 of the Drug Administration Law, if the MAH is a foreign enterprise, the designated local representative in China is responsible for fulfilling relevant obligations, including civil, administrative, and criminal liabilities.
Basic Responsibilities of Local Representatives
According to the new Drug Administration Law and Interim Provisions, local representatives must bear joint and several liability for the entire lifecycle quality and safety of the drugs. Due to the practical limitations in supervising and penalizing overseas companies, local representatives are held accountable for legal responsibilities within China.
Large multinational pharmaceutical companies often complete registration, commercial agency, and drug surveillance through one or more subsidiaries in China. Small and medium-sized overseas pharmaceutical companies typically use drug distribution enterprises. Only one representative can be designated to perform these duties, integrating responsibilities such as registration, production, circulation, quality, customs, and pharmacovigilance.
Basic Obligations of Local Representatives
Local representatives must fulfill the following obligations:
- Establish a Quality Assurance System
Ensure continuous quality assurance and risk control. - Implement a Drug Traceability System
Provide traceability information and ensure the process’s traceability. - Annual Drug Reporting System
Report annually on the production, sales, post-market research, and evaluation of drugs in China. - Post-Marketing Change Management
Handle changes in marketed drugs as per regulations. - Post-Market Responsibilities
Manage recalls, quality complaints, and compensation, and report to the provincial drug supervision department. - Drug Surveillance System
Develop risk management plans and monitor adverse drug reactions. - Submit Standard Substances
Submit standard substances to the China National Institute for Food and Drug Control and accept sampling work by the drug supervision department. - Liaison with Overseas MAH
Cooperate with drug regulatory authorities for inspections and investigations at overseas MAH production sites.
Conclusion
Local representatives may have multiple roles, including customs service providers, domestic packaging manufacturers, or distribution enterprises. They need comprehensive quality assurance capabilities and the ability to perform duties under different regulatory fields. Even with some outsourced functions, they must manage entrusted third parties effectively to control risks and achieve mutual benefits and win-win outcomes for both parties.
Foreign drug marketing authorization holders can consider the following ways to establish a local representative in China:
- Set up a wholly-owned subsidiary in China: This subsidiary, as an independent legal entity, can meet the requirements of a domestic agent.
- Cooperate with a local Chinese enterprise: Select a qualified Chinese company to act as the domestic agent.
This arrangement ensures that the domestic agent can effectively represent the foreign marketing authorization holder in fulfilling legal responsibilities and obligations within China, including drug registration, market supervision, and after-sales service.
Contact Us
If you need support for China pharmacovigilance audit on your local representative or candidates in China, please contact us at info@accestra.com.