China Issues Rules on Vaccine Manufacturing and Distribution

July 22, 2022, Covington Alert

On June 8, 2022, China’s National Medical Products Administration (“NMPA”) issued the Rules on the Administration of Vaccine Manufacturing and Distribution (“RAVMD”), a new implementing regulation for the Vaccine Administration Law (“VAL”). The RAVMD went into effect immediately upon issuance, with no apparent grace period.[1] The RAVMD is part of a continuing trend in China drug regulation of the government developing specialized rules governing vaccines.

Among other areas, the RAVMD focuses on vaccine manufacturing special restrictions, particularly contract manufacturing, requirements for annual quality reporting, and limits on distribution chains, which were initially set forth in the VAL and in pre-VAL policies established to address special concerns about vaccine quality. This client alert highlights and summarizes important takeaways of the RAVMD.

Restriction of New Vaccine Manufacturers

The RAVMD includes a general provision that China will strictly control the establishment of new vaccine manufacturing enterprises, requiring that their establishment comply with both regulatory and (undefined) industrial policy requirements. It is not clear from the RAVMD how and to what extent China will control entry into the vaccine manufacturing space.  However, this provision has been a focus of media coverage of the RAVMD, as it could allow local medical products authorities to make it more challenging to obtain drug manufacturing licenses for new facilities. Consolidation of the vaccine manufacturing and distribution industry to consist of a smaller group of more professionalized entities has been a long-term goal of China regulators in this area.[2]

Contract Manufacturing of Vaccines

China has long prohibited or restricted contract manufacturing of vaccines, even prior to the VAL. In accordance with this approach, and in contrast to therapeutic biologics, the VAL requires that a vaccine marketing authorization holder (“MAH”) have its own production capacity (i.e., facilities) and only allows “entrusted manufacturing” (i.e., contract manufacturing) of vaccines to third party manufacturers under limited circumstances, and only after NMPA has expressly approved such an arrangement.

Setting the bar even higher, the RAVMD restricts segmented manufacturing (e.g., separation of manufacture of intermediates and fill and finish operations) in most cases, providing that the contract manufacturer must be able to cover all stages of vaccine production, and the MAH may only contract out production of vaccine stock solution or preparation in the case of multi-conjugate or multivalent vaccines, subject to NMPA’s approval.[3]

The MAH must meet one of the following criteria to apply for approval for a contract manufacturing arrangement: (1) the Ministry of Industry and Information Technology projects a need for reserves of the vaccine and considers the MAH's existing production capacity to be inadequate; (2) the National Health Commission projects that the vaccine will be in urgent need and considers the current production capacity to be inadequate to meet demand; or (3) the arrangement is for production of multivalent vaccines. The RAVMD removes a requirement from a prior draft that for contract manufacture of multivalent vaccines, the entrusting party and the entrusted party must be two manufacturers that hold more than 50% of the equity or shares of the other party, or both be subsidiaries of a common parent holding more than 50% of the same drug manufacturer. Neither the VAL nor the RAVMD state whether these restrictions apply to overseas manufacturing operations, but they do not exempt them.

Other Significant Provisions

The RAVMD also covers the distribution of vaccines. Due to prior problems with the distribution of expired or substandard vaccines, the State Council’s 2016 vaccine distribution rules and ultimately the VAL require that vaccine sales be between the MAH and a local center for disease prevention and control). Earlier distribution rules permitted the use of qualified third-party distributors for transportation and storage. The RAVMD builds upon these prior rules and provides criteria for the evaluation and supervision of such third party distributors and limits the number of distributors a MAH can use to two per provincial-level region.

The RAVMD also contains a provision expressly prohibiting re-importation of foreign vaccines manufactured in China, presumably meaning that vaccines cannot be made in China by an overseas MAH and then reimported as imported drugs. This provision in the RAVMD appears to reinforce a rule that might be implied from other existing rules that prohibit use of domestic manufacturing facilities by overseas MAHs holding or seeking to hold marketing authorizations for imported drugs. There is also an older rule that vaccines specifically may not be produced in China according to a contract manufacturing arrangement with a foreign manufacturer.[4]

If you have any questions concerning the material discussed in this client alert, please contact the China-focused members of our Food, Drugs, and Devices practice: