Introduction
The Chinese government has regulated activities involving the use of human genetic resources (HGRs) since 1998. New regulations that came into effect in 2019 prohibited foreign entities from collecting genetic material within China, and also restricted transfers of both the genetic material itself and also related data out of China. Accompanying implementing rules took effect in July of this year, but despite this and other guidelines and interpretations issued by the Ministry of Science and Technology (MOST), several critical aspects of the regime remain opaque.
In this briefing, Richard Bird and Ya Ma share learnings from recent experience supporting foreign biopharmaceutical companies conducting collaborative research projects in China - which addresses several of those key uncertainties in the precise application of the HGR related rules.
The key HGR-related regulations
- The Administrative Provisions on Human Genetic Resources effective from 1 July 2019 (HGR Provisions)
- The Biosecurity Law effective from 15 April 2021 (Biosecurity Law)
- The Implementing Rules of the Administrative Provisions on Human Genetic Resources effective from 1 July 2023 (the HGR Implementing Rules)
- MOST guidelines on the process and filing requirements for the HGR-related administrative approvals, filings and reporting, effective from 1 July 2023 (the HGR Guidelines)
What are ‘human genetic resources’?
There is a varying level of detail across the various regulations on the two central definitions of HGR materials and HGR data. The following is a synthesis:
- “HGR materials” refers to organs, tissues, cells and other genetic materials that contain human genomes, genes and other genetic substances; this includes patient laboratory samples such as blood, saliva, urine, semen, cerebrospinal fluid, pleural/ peritoneal effusion, blood/ bone marrow smears, hair (with hair follicles), tissue/ tissue sections or samples or cell cultures. Other human secretions, body fluids, swabs, etc. that do not contain cellular materials are not considered to be HGR materials.
- “HGR data” refers to data and other information generated through processes performed on HGR materials, and includes information relating to genes, genomes, transcriptomes, epigenomes, and ctDNA and other nucleic acid biomarkers, as well as associated disease or ethnographic indicators. HGR data does not include general laboratory test data (such as blood or urine routines, liver and renal function data, blood tests, etc.), clinical data, imaging data or metabolic data to the extent it does not contain any genetic information (as would be expected).
The main features of the HGR regulations
The HGR regime comprises various rules of relevance to foreign pharmaceutical companies engaged in scientific research activities in China:
- A foreign organisation or foreign-controlled organisation is prohibited from collecting or storing Chinese HGR materials within China (and also from transferring Chinese HGR materials out of China).
- When a foreign organisation or foreign-controlled organisation intends to conduct scientific research activities utilising Chinese HGR materials (either inside or outside of China), it is required to collaborate with a Chinese R&D institution, university, medical institution or enterprise, and to obtain MOST approval (and, if applicable, exit certification). Certain exemptions apply, notably including for authorised clinical trials in China.
- Each transfer of HGR data (outside of an approved international scientific research collaboration, as above) has to be filed with MOST, along with a back-up copy of the data. The filing requirement also extends to transfers of HGR data abroad in connection with academic conferences or for publication in an overseas journal etc.
- In certain limited circumstances, both scientific research collaborations that use Chinese HGR materials, or transfers of HGR data out of China, may be subject to an additional security review by MOST.
The Chinese counterparty must be fully involved in all aspects of the research comprising an international scientific research collaboration, and be able to access all resulting HGR data and other records and materials.
A joint report of the research program will need to be filed with MOST within six months of the conclusion of the research (or, if earlier, the validity period of the approval). Among other things, the report will need to describe how the research program was carried out and how the HGR materials were used and disposed of, the results of the research and document the involvement and roles of both parties.
What constitutes ‘Chinese HGR materials’?
The term ‘Chinese HGR materials’ is not defined.
MOST has confirmed to us informally that Chinese HGR materials comprise HGR materials collected from Chinese nationals, both within and outside of China. This has two implications:
- HGR materials collected from non-Chinese nationals is not regulated by the HGR rules, even if the collection occurs in China. Some commercial suppliers of HGR materials in China have in fact begun offering ethnically labelled materials collected from non-Chinese individuals.
- On the other hand, if a foreign pharmaceutical company intends to conduct research in China on imported HGR materials, it will be important to obtain and maintain records that - as far as possible - demonstrate that these materials were not collected from any Chinese nationals. Suppliers may not be able to accommodate that requirement in practice.
Imported HGR materials would be subject to a quarantine approval by Chinese Customs, and this should be factored into any research plan and timeline.
What is a foreign-controlled organisation?
An entity incorporated in China that is ‘controlled’ by a foreign party is treated as if it were a foreign party. This naturally includes wholly owned Chinese subsidiaries (wholly-foreign owned entities (WFOEs)) as well as majority owned joint-venture entities.
But the concept of ‘control’ extends to:
- Chinese entities over which a foreign organisation has significant rights of influence over the entity’s decision-making and management.
- The ability to direct or exert significant influence over the entity’s decision-making or management through investment, contracts, or other arrangements.
There has been some debate whether a Chinese operating entity under a variable interest entity (VIE) structure would also be regarded as being foreign-controlled. VIEs are commonly employed by Chinese biotech firms to obtain overseas listings while continuing to operate in controlled sectors in China that are off-limits for foreign investment [1]. On paper there is little doubt that a VIE would meet the definition of a foreign-controlled organisation. However, MOST might in practice take a more lenient view if the ultimate beneficial owners of the business are demonstrably Chinese, and no foreign investor has substantial influence over management decisions.
MOST has declined to take a public view on this question, although the use of VIE by overseas listed biotech companies is known to be widespread.
On the other hand, the HGR Implementing Rules confirms that Hong Kong and Macau companies that are “domestic invested” are treated as if they were Chinese entities under HGR rules.
In scenarios where the ostensible ‘Chinese’ partner in an international collaboration project is deemed to be ‘foreign-controlled’, it would be essential to additionally involve a qualified Chinese counterparty, such as an authorised medical institution or CRO, with delegated responsibility for the collection and handling of HGR materials, etc.
MOST approval for international scientific cooperations
A Sino-foreign joint research or collaboration project involving either the collection, storage or use of Chinese HGR materials, or the transfer of any HGR materials to a foreign or foreign-controlled organisation parties can only be carried out with the approval of MOST [2]. Certain exemptions apply, as explained below.
The threshold requirement for approval is the use of Chinese HGR materials in the collaboration. It is therefore irrelevant whether the foreign party obtains any HGR data as a result of the collaboration. However, once the project is approved, resulting HGR data may be shared with the foreign party - and no separate record filing is required.
The application is made jointly by the collaboration parties (both foreign and Chinese parties) by submitting, among other documents:
- Ethics Committee (EC) approval from each of the foreign party (with Chinese translation) and the Chinese party.
- If the HGR material is being obtained from a commercial supplier, rather than being collected by either of the parties themselves, then the ethics approval should instead be obtained from the supplier - related to the original collection of the HGR materials (usually in a medical institution). The approved use and the associated informed patient consents will need to be sufficiently broad to cover all aspects of the research.
- If the foreign party is unable to provide an EC approval, it can instead submit a written acknowledgement of the EC approval of the Chinese party.
- Study plan/ protocol.
- A full copy of the collaboration agreement (with Chinese translation). No redactions are permitted.
- Letter of undertaking issued by the medical institutions carrying out collection and/or storage of HGR materials in China (if applicable).
The application process is multi-stage, with the following statutory timeline:
- Chinese party to file online, submitting scanned copies of the application documents for pre-checking.
- Five business days for MOST to complete formalities review and request supplemental documents, if needed.
- The statutory timeline will be paused while supplementary documents are filed.
- Chinese party to submit physical filing of the application dossier - five business days for MOST to review and accept the application.
- MOST to make technical review and approve or reject the application - within 20 business days.
According to MOST’s published data, its average review timeline is 16 business days from the time it accepts the application.
In practice, the application may take two to three months to complete, including the time taken to prepare the application package, although we have heard of applications being granted more quickly.
Are there any exemptions?
Clinical trials
Clinical trial studies carried out by qualified medical institutions in China for the purposes of submitting for applications for drug approval also in China, are exempted. The exemption is subject to the proviso that no HGR materials are to be transferred outside of China.
Such clinical trials carried out within China instead only need to be filed with MOST (instead of an approval being needed). The filing should specify the details of the Chinese HGR materials involved, the trial protocol and EC approval. The filing, which is made online, can only be made by the Chinese party, which in the case of clinical trials will generally be the medical institution acting as the principal investigator in trial.
The HGR Implementing Rules clarify that the filing for a clinical trial also allows the trial results to be shared with the foreign party (i.e., even if these materials include HGR data) - and no separate record filing is required either.
The HGR Implementing Rules also clarify that no separate permit is required to collect genetic material in the course of the clinical trial either.
No substantive involvement by the foreign party
FAQs issued by MOST last year permit international collaborative research to be conducted using Chinese HGR materials without an approval, provided that the foreign party: (i) does not participate substantively in the research; and (ii) does not obtain access to any of the results of the research (i.e., ‘research-related data’ or ‘research results’).
Examples would be if the foreign party is only:
- Funding/ subsidising the research.
- Providing study drugs.
- Providing logistical support, such as an EDC (electronic data capture) system or other study equipment.
The caveat is a significant one though. The foreign party will not be able to access any of the results of the research, irrespective of whether or not these include any HGR data.
Security review
As explained above, HGR data can be shared with a foreign organisation or foreign-controlled organisation:
- If a Sino-foreign international collaboration has been approved by MOST (without a separate record filing being needed to share the results).
- If a Sino-foreign clinical trial in China has been filed with MOST (also without a separate record filing being needed to share the results).
- By making a record filing with MOST in advance, including submitting a back-up copy of the HGR data being shared.
However, in the latter case (i.e., where no previous approval has been given by MOST), MOST can require a security review to be undertaken. The HGR Implementing Rules clarify that security review will be required in respect of:
- HGR data related to genetically significant family lineages, such as uncommon hereditary diseases or other inherited conditions over three or more generations within a specific family group.
- HGR data related to specific regions in China, including, for example, genetic distinct long-term populations within a specific region of China.
- Exome and genome sequencing of more than 500 individuals.
MOST may also undertake a security review if it deems, in its discretion, that sharing data with a foreign party may impact public health, national security or the public interest.
Patents
Under HGR Provisions, patents arising from Sino-foreign international research collaborations involving Chinese HGR materials have to be jointly-applied-for and jointly-owned. The regulation is ambiguous as to whether this ownership position can be displaced in the contract.
Rights of usage of patents, as well as allocations of ownership (and use) of the results of the collaboration certainly can be addressed in the contract (to be achieved through contractual allocations of ownership of data and related intellectual property rights, working in combination with confidentiality undertakings and restrictions on disclosure).
________
[1] By way of background, foreign investment is prohibited in the development and application of technology for use in diagnosis and treatment relating to human stem cells and genes. Under a VIE structure, a foreign holding company controls the Chinese biotech company through contractual arrangements while the equity interests are held by Chinese individuals/ entities.
[2] Starting from 1 July 2023, MOST delegated authority for reviewing administrative applications for HGR-related approvals, filings and reporting to the China National Centre for Biotechnology Development (CNCBD).
