Consistency evaluation: what it means for Chinese generics

The GCE (Generics Consistency Evaluation), launched by the former drug regulatory authority (the CDFA), was aimed at improving the quality of Chinese generic drugs. According to the Opinions on the Evaluation of the Consistency of Quality and Efficacy of Generic Drugs issued by the State Council in 2016, the deadline for 289 categories of generics included in the National Essential Drugs List (2012) to pass the GCE was set at the end of 2018. Those failed will no longer be approved for registration.

The core of the GCE is to review the quality and efficacy of the generic drug in comparison with the corresponding brand-name version. The result is mostly assessed by the bioequivalence (BE) trials, in which case, the reference drug is strictly limited to brand name drugs as in most countries. 

Previously, some generics were used as reference drugs in the evaluation procedure, causing biased results. The GCE, as the government believes, shall reinforce the public confidence in domestic generic drugs, decrease the public medicine expenses as well as facilitate the development of pharmaceutical industry.

Challenge for the Chinese generics

As far as the local generic manufacturers are concerned, the GCE is a matter of life and death.

According to statistics, the cost for the GCE for a single type of generic pharmaceutical, including the expenses for pharmaceutical research and bioequivalence trials etc., varies from 5 million RMB to 10million RMB regardless of the results. Once a generic drug fails the GCE, the company will get nothing in return. Some small enterprises have no option but to quit the game due to this concern.

Out of economic considerations, even large drug manufactures have chosen to abandon generics that have no market competitiveness. It is foreseeable that the coming years will witness the disappearance of numerous generic drugs.

For those who stand out in this big game, they are rewarded with better equipment to compete with branded rivals. 

So far, local governments such as Shanghai, Jiangsu, Ningxia, Shaanxi, and Jilin have issued documents supporting drugs that passed the GCE with respect to procurement, hospital use, pricing and so on.

Challenge for PharmaMNCs

How would the GCE affect the multinational pharmaceutical companies? Well, the effects are in the long run.

Theoretically, when the patent of a brand name drug expires, any generic version can enter the market at a more competitive price, thereby lowering the price of the original drug and leading to a so-called “patentcliff” phenomenon.

In the Chinese market, however, brand name drugs produced by multinational pharmaceutical companies have hardly experienced any real patent cliff. This is because the Chinese government has been offering preferential treatment for branded drugs that are already off patent, with the objective of encouraging multinational drug makers to introduce more innovative drugs into China.

Nevertheless, it is believed that the rise of the Chinese generic pharmaceuticals will inevitably reduce the need for this historically determined policy, and eventually make it history.

The ultimate goal for the Country is to keep the drugs affordable and effective while stay innovative. To achieve this goal, it is essential to have both brand name drugs and trustable generic drugs. 

In essence, the GCE is a step towards the future patent cliff in China.

Emma Qian

HFG Law&Intellectual Property