Traditional Chinese Medicine Struggling to Find Cure for Regulatory Woes in the U.S.

In November, the traditional Chinese medicine (TCM) Fuzheng Huayu Tablets passed the second phase of the U.S. Food and Drug Administration’s (FDA) clinical testing.

Before this, only one TCM drug had cleared the second of the three phases needed for a medicine to hit the U.S. market. That was Compound Salvia Droplet Pills (CDSP), made by the Tasly Group of Tianjin. CDSP has still not passed FDA’s third phase.

This means that no compound TCM drug has entered mainstream U.S. medical markets.

The first phase of FDA studies are usually conducted on healthy volunteers to determine the drug’s most frequent side effects. The emphasis during the second phase is on effectiveness. This step aims to obtain preliminary data on whether the drug works in people who have a certain disease or condition.

Phase three studies gather more information about safety and effectiveness, studying different populations and different dosages, and using the drug in combination with others.

TCM products include patented drugs, herbal ingredients, and decoction strips, which contain ingredients that result from boiling a substance. Compound TCM drugs are one variety of the patented type.

For a long time, TCM herbal ingredient products such as plant extracts and decoction strips accounted for more than 80 percent of TCM exports from China. Patented TCM drugs have always accounted for a small proportion. In 2012, China exported U.S.$ 270 million in patented TCM drugs, primarily to Hong Kong, Japan, Singapore, and Australia. These patented drugs remain almost unheard of in Europe and America, where the majority of TCM products are foodstuffs, health products, or plant ingredients, primarily consumed by Chinese communities.

Data from the China Chamber of Commerce for the Import and Export of Medicines and Health Products indicates that as of the third quarter of this year, the total export value of patented TCM drugs was down to U.S.$ 195 million.

Other data shows that Japan accounts for 80 percent of exports of patented TCM drugs and South Korea contributes 15 percent. China—the originator of TCM—exports only 3 to 5 percent.

Most people attribute Westerners’ inability to accept TCM to cultural differences and differences between Western and Chinese medical theory.

Shi Lichen, a senior partner at the Beijing-based consulting firm Alliance PKU Management Consultants Ltd., said the reason patented TCM drugs made in China are not leaving the country include questions over the effectiveness of ingredients and mechanisms, poor controllability, and poor quality standards.

The best choice for the internationalization of patented TCM drugs is to apply to register them with nations that are known to have high standards for drug regulation, thereby increasing the quality of production and research and development. However, as of now only a precious few Chinese drug companies have tried to make inroads with the FDA. Not many companies are interested in entering the European Union, where drug regulation is relatively more lax.

The reasons for that are that getting the go-ahead from the FDA for a drug costs a minimum U.S. $1 billion, the process takes a decade or more, and the chance of success is one in 6,000. Meanwhile, if a company wants to offer drugs on European or American markets, it must adhere to European or American standards, meaning that a pharmaceutical company must completely overhaul its agricultural centers, which grow base ingredients. All of that requires new investments of several hundred million yuan, the economics of which can stop even the most aggressive pharmaceutical company dead in its tracks.

A Shortcut

In the 1990s, the Ministry of Science and Technology chose a handful of patented TCM drugs to submit to the FDA for clinical testing. CDSP survived the first two steps, but the rest were never heard from again.

CDSP is used to treat coronary heart disease and angina. On December 9, 1997, it passed the FDA’s first phase of testing, but did not clear phase two until 2010. Over those thirteen years, Tasly spent several hundred million yuan on research and development.

The Shanghai Sundise Traditional Chinese Medicine Co. Ltd. submitted applications for Fuzheng Huayu to the FDA in 2006. It was quickly approved for testing, and after three years of case work, it formally entered into phase two of clinical testing. This step cost another three years and 70 million yuan.

Sundise chairman Bian Huashi said that compared to the routes taken by other compound TCM drugs, Huazheng Fuyu was afforded a shortcut. His company’s drug targets liver fibrosis, a condition that Western drugs have never been able to treat. This was precisely the reason the drug initially piqued the FDA’s interest.

Bian said the FDA attaches great value to data, and so the completeness and symmetry of information generated during the experimentation process were of utmost importance. In 2006, a company report indicated that of the 56,000 subjects who took Fuzheng Huayu during the first step of testing, not a single one had experienced an adverse reaction.

Over the following three years, Sundise made great effort in addressing production management, quality control, and information systems. The company installed software frequently used in FDA clinical testing and overhauled its electronic data management system, making it the first company in Asia to use that system.

Most other compound TCM drugs that have applied for FDA approval have all been rejected outright or eliminated in the second phase due to lack of reliable evidence or poor clinical testing.

Bian said Fuzheng Huayu has just entered the preliminary stage of phase three clinical testing. It is expected that the drug will finish this step in 2019.

Cracking the FDA

On average, the FDA approves fewer than twenty new drugs for sale every year.

The FDA attaches great importance to the growing and storage of base ingredients.

“In recent years, many TCM companies have tried to get their drugs into FDA clinical testing, which has caused the FDA to better understand plant drugs,” Bian said. “They’re beginning to understand that in the regulation of plant drugs, they should observe not only treatment efficacy, but they should also monitor whether the planting procedures for upstream materials are safe and stable.”

Warehouses for the storage of drug ingredients must be built to standards for temperature and humidity controls. The company puts this information in a database, so that FDA officials can monitor the results of various tests.

Previously, FDA testing of TCM ingredient quality was based on standards for Western compound drugs. This was costly and not in accordance with the characteristics of TCM ingredients. Bian says the U.S. Pharmacopeial Convention invited him to participate in drafting standards for TCM ingredients. Bian said once there are standards for TCM ingredients, there will be a basis for operations in the U.S. market.

Yu Zhibin, the vice director for the chamber of commerce’s TCM trade, said the FDA is gradually coming to approve of TCM and plant drugs.

“It’s not like before when their demands were like those for Western drugs: using a single ingredient to control indicators,” Yu said.

Domestic TCM companies have not been terribly active in pushing the export of their products. The process requires large expenditures of time and effort, and is plagued with uncertainty.

“There are many things that TCM companies themselves aren’t clear on,” an industry insider said. “Even domestic standards are vague. So they have no drive, no courage to go to the FDA.”

He said that all TCM drugs that have been submitted for FDA approval have been plant drugs and none contained toxic components. In China, however, patented TCM drugs pushed hardest by domestic pharmaceutical companies almost all contain toxic components.

Setting Standards

In early November this year, the China Food and Drug Administration (CFDA) issued a series of notices demanding that TCM companies clearly make note of the toxic components of their drugs and include warnings.

However, Shi said the CFDA’s demands on package inserts were made rashly.

“If you want to revise the inserts, you should redo the clinical testing and observation. Who’s going to oversee that work? Who’s going to be responsible? What’s the process going to be? None of that is clear at present. Just revising the inserts—that’s simple.”

Shi also said that there is no way to rely on the companies themselves to produce good research on the toxicity, pharmacology, and safety of their own drugs. Government departments must take the lead in such fundamental work, as well as in the establishment of standards and the approvals process.

“That is because nobody will acknowledge what the pharmaceutical companies do themselves—there’d be little significance,” Shi said. “But relevant domestic drug administration departments are a different story.”

In September, Britain’s Medicines and Healthcare Products Regulatory Agency issued a warning regarding the levels of toxins in some TCM drugs. The agency has since announced that it plans to ban the sale of all TCM patented drugs in Britain beginning in 2014.

Tasly Group chairman Yan Xijun said the only way to remedy the wide divergences in drug efficacies between different manufactures—and to close the gap between different categories, prescriptions, and manufacturing practices employed by those firms—is to establish unified assessment standards and methods for quality control. Only when standards are in place can we be assured of their safety and proper regulation, Yan said.

The FDA imposes clear demands on the manufacture of drugs. Tasly officials say they did work in five areas to get CDSP and other TCM patented drugs approved by the FDA.

The first was to establish a pharmaceuticals agriculture base that adhered to international Good Agricultural Practices standards. The second was to establish internal quality controls standards more rigorous than those of the Pharmacopoeia of China. The next was to improve quality control during their manufacturing processes—including overhauls of extraction, preparation, packaging, and other processes. The fourth was to make great investments in fundamental research. The final area was perfecting peripheral clinical pharmacological research.

All that poses an enormous challenge to the majority of domestic TCM companies, but even more pressure comes from the capital end. Bian said Chinese pharmaceutical companies are paying little attention to research and development on new drugs mainly due to cost concerns. They tend to opt for smaller investments, faster returns, and larger profits. The strategic advantage of most companies lies in their manufacturing. Most do not have their own research departments because those are costly to maintain.

Nevertheless, Sundise is exploring a model of cooperation between manufacturing, academia, research, and medicine to reduce the costs of R&D as much as possible. Bian said his company was founded with investments from the Shanghai University of Traditional Chinese Medicine, the East China University of Science and Technology, the Shanghai New Changning Group, Ltd., and BAHEAL Pharmaceutical Holdings Ltd. Having universities and research institutes as shareholders reduced the costs of drug development. Plus the professors and doctors involved could apply to science and education committees for research grants.

But Bian still feels short on cash. He said his company has spent 70 million yuan to get Fuzheng Huayu into the second phase of FDA testing. Of that, over 20 percent came from the Ministry of Science and Technology, more than 20 percent from the Shanghai government, and the rest came from the company itself. It is projected that phase three testing will cost another U.S.$ 100 million, most coming from the company’s coffers or via financial institutions.

Bian said he hopes his company will list in Shanghai next year. Sundise plans to spend the projected 1 billion yuan to be earned in an initial public offering on phase three testing for Fuzheng Huayu and on the development of other projects.