Since the release of the Human Genetic Resources Administration Rules ("HGR Rules") in May 2019, the Ministry of Science and Technology ("MOST") has finally issued its draft implementation rules for public comments ("Draft Rule") on March 21, 2022, which reflect the authorities' attitudes on some key issues, include the previous practical administration already adopted in the HGR Rules and its implementation guidelines, as well as shed some light on the potential changes in HGR administration in the near future.
Scope of "foreign parties" clarified
The Draft Rule restates the restrictions that an individual, entity or organization that is established or "actually controlled" by a foreign individual, entity or organization (a.k.a. a "foreign party") is prohibited from collecting, preserving and exporting HGR under the HGR Rules, which shall only be conducted by Chinese scientific and research institutions, higher education schools, medical institutions and enterprises (a.k.a. "Chinese parties"). The Draft Rule lists three circumstances with a catch-all clauses and adopts a "significant impact" principle to define "actual foreign control" as follows:
- a foreign party is holding or indirectly holding more than 50% of the shares, equity, voting rights, shares of property or other similar interests in the particular entity;
- although the holding of the shares, equity, voting rights, shares of property or other similar interests does not reach 50%, the voting rights or other interests enjoyed by such foreign party in the decision-making body will allow such foreign party to impose a significant impact on the resolutions, decision-making and internal management of the particular entity;
- a foreign party is able to exert significant impact on the particular person or entity's decision-making, operation and management and other major matters; or
- other circumstances as determined by the MOST.
Such definition clearly sets forth that companies registered in China but are controlled under the Variable Interest Entity ("VIE") structure via a series of agreements would be regarded as "foreign parties" and thus should be restricted to collecting, preserving and exporting HGR as mentioned above, which reflects the MOST’s previous attitude in practice. Sponsors in the international collaborative scientific research projects/clinical trials are recommended to be cautious in selecting and coordinating with Chinese collaborating parties such as the third-party labs, especially those third-party labs being "actually controlled" by foreign parties. The potential impact in practice on selecting collaborating medical institutions might be limited given that, at present, most of medical institutions approved by the Chinese authority for conducting clinical research/clinical trials are Chinese public medical institutions that you would not expect to be controlled by foreign parties.
Implications on international collaborative scientific research projects
The Draft Rule echoes and also provides more practical and detailed guidelines for the approval or record-filing requirements for international collaborative scientific research projects.
More "friendly" scope of clinical trials for drug and medical device market authorization
Though the approval for international collaborative scientific research projects, under the HGR Rules, can be waived and can be carried out by obtaining a record-filing with the MOST on the condition that it is carried out for the purpose of obtaining the market authorization of relevant drugs/medical devices in China and not involving exportation of HGR materials, in practice such exemption cannot apply if the third-party labs are engaged by the sponsor, for example, for detection analysis and residual sample disposal. Article 41 (2) of the Draft Rule removes this obstacle by specifying that such exemption can apply given that (i) the collection, testing, analysis and residual sample processing of the HGR involved are performed within the clinical institution; or (ii) the HGR involved are collected within the clinical institution, with the detection, analysis and residual sample disposal carried out within domestic lab(s) specified in the clinical trial protocol.
Clearer rules on exploratory research
Where the clinical trials are carried out with a record-filing on the above-mentioned conditions, the Draft Rule, for the first time clearly reflects the HGR administration office's previous practices in the official explanation document by specifying that the clinical trials related to exploratory research shall be subject to the prior approval by the MOST for international collaborative scientific research projects.
Exemption of foreign ethics review
The Draft Rule further sets forth that foreign ethics review for foreign sponsors can be waived in connection with the application for the approval of international collaborative scientific research projects, on the conditions that (i) all the collaborative research shall be completed in China; (ii) the collaborative content shall comply with ethical principles and not involve significant ethical problems; and (iii) the exemption of foreign ethics review is of no or little risk to trial subjects.
To apply for such exemption of foreign ethics review, according to the Draft Rule, foreign sponsors shall be the one to file the application, except that where there are multiple domestic medical institutions serving as Chinese collaborating sties, the application shall be filed by the domestic leading institution or the team leader of medical institutions. In the application for such exemption, authorization documents of the foreign sponsors and the review conclusion of the Chinese collaborating sites on the grounds that such exemption shall be granted and potential risks to trial subjects if such exemption is granted shall be provided.
Clarification on significant changes
The Draft Rule manages to clarify what is the scope of significant changes in the research/clinical trials which are required to apply for the approval of such changes with the Human Genetic Resource Administration of China ("HGRAC") under the MOST, which changes exclude the following:
- "changes in the number of research cases not exceeding 10% of the approved number and with the research protocol unchanged",
- "changes in participants other than the sponsors, the team leader, CROs or third-party labs or changes in the participants' names", and
- "changes in research protocol but not involved HGR species, number, and usages, or changes within the approved scope" from significant changes. This step forward is generally in line with the previous practices of the HGRAC, and to some extent, allows for more administrative flexibility for participants to make adjustments to their projects.
Takeaways related to HGR information exportation and open use
Further specification of security review
Under the HGR Rules, the security review will be triggered if provision of HGR information to foreign parties that might impact the public health, national security and social public interests of China. It has been hanging over participants of HGR-related activities but we are not aware of any such review in practice. The Draft Rule thus for the first time formally defines the scope of such security review as involving (i) HGR information of important genetic families; (ii) HGR information in specific areas; (iii) exome sequencing and genome sequencing information resources for over 500 people; and (iv) other information that may affect the public health, national security and public interests of China. However, the timeline and guidelines of such security review have not been further specified in the Draft Rule. Given China's increasing concerns for information security, this security review scheme is highly likely to be included in the finalized version and implemented in practice.
Significant changes in HGR information exportation and open use record-filings
Based on the Draft Rule, where there is any significant change in the exportation and open use of HGR information, collaborating parties shall cancel the record filed in time, upload the conclusion report, and make changes to the record-filing.
Information provision in the international collaboration projects
Though the Draft Rule has explicitly provided that separate data back-up and record-filing are not required for the sharing of data information generated from international collaboration projects, it should be noted that the exemption is only applied when the information is shared between collaborating parties, which includes trial sponsors, medical institutions, contract research organizations and third-party labs. Therefore, the requirements of record-filing and security review might still be triggered if the information will be shared and transferred to other parties beyond this scope, even if such sharing is relating to an international collaboration project. If the Draft Rule were to be implemented, participants shall still be cautious in the provision of HGR information to their affiliated parties and other parties beyond the limited scope of collaborating parties as identified above.
Detailed administrative supervision and punishment scheme
Finally, on the basis of the HGR Rules and relevant administrative laws and regulations, the Draft Rule further clarifies the administrative supervision rules, power distribution and administrative punishment procedures with respect to non-compliance of HGR-related activities. However, given that some of the requirements have been included in higher-level rules, e.g. the PRC Administrative Penalty Law, there are voices from the public to further streamline the finalized version focusing more on the specific HGR-related legal liabilities1. In this sense, chances are that the Articles related to the administrative supervision and punishments in the finalized version might be relatively different from the Draft Rule.
Conclusion
In general, we've seen efforts of the Draft Rule to further streamline the application process for HGR related activities, while some voices suggest to clarify certain points, for example, the timeline and guidelines regarding the security review. On the other hand, the Draft Rule is striving to enhance supervision of HGR and data security, and some follow-up regulatory documents might also be drafted and released in the near future guiding the interplay between HGR and other regulatory requirements (e.g., the protection of personal information). Attention should be paid to the legislation development and get ready to adapt to the relevant requirements once the Draft Rule comes out.
Authored by Lu Zhou, Sherry Gong, Jessie Xie, Tong Zhu, and Olivia Xie
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