China’s Human Genetic Resources Regulation: Key Points for Foreign Stakeholders

Latest changes to China’s human genetic resources regulation seek to make compliance requirements efficient for research and industry applications, but also ensure biosecurity goals. As the Implementation Rules for the Management Regulations of Human Genetic Resources come into force, we discuss the changes to the regulatory framework, ease in compliance procedures in some areas, and strengthened scrutiny in others.

Starting from July 1, 2023, the long-awaited Implementation Rules for the Management Regulations of Human Genetic Resources will come into effect in China. These aim to bring clarity to a series of operational questions regarding human genetic resources management in China and provide necessary regulation to protect national interests and ensure biosecurity. In this article, we present the main takeaways from the implementation rules and its impact on foreign companies working in the bio sector in China.

Background

On June 1, 2023, China’s Ministry of Science and Technology (MOST) announced the release of the “Implementation Rules for the Management Regulations of Human Genetic Resources” (the HGR Implementation Rules). The HGR Implementation Rules, scheduled to come into effect on July 1, 2023, mark a significant milestone in the regulation of human genetic resources (HGR) within China.

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Building on the pervious draft for public comment released on March 21, 2022, the HGR Implementation Rules provide comprehensive guidance and operational specifics for the management of HGR. They address various concerns and issues that have emerged since the implementation of the Regulations on the Management of Human Genetic Resources (HGR Regulations) in 2019. The HGR Implementation Rules also supplement the Biosecurity Law of the People’s Republic of China, which became effective on April 15, 2021. These laws and regulations have formed the regulatory framework for the protection of HGR in China.

According to the MOST, the HGR Implementation Rules clarify the responsibilities of the central and local governments, streamline the HGR administration, and establish an integrated mechanism to manage HGR in a scientific, rigorous, and efficient manner.

These rules reflect China’s heightened focus on strengthening the regulation of HGR to safeguard national biosecurity. The objective is to strengthen the protection of human genetic resources, promote their appropriate utilization, and enhance regulation and supervision. They also underscore the increased attention towards the oversight of providing HGR information to foreign parties and individuals.

What are the key changes introduced under the HGR Implementation Rules?

Narrower definition of HGR information

Under the HGR Implementation Rules, HGR information is defined as “human genes, genome data, and other information generated by using HGR materials.” Notably, the HGR Implementation Rules exclude clinical data, imaging data (such as ultrasound and CT scans), protein data, and metabolic data from this definition, and is thus a much narrower interpretation of the HGR Regulations of 2019. As such, studies that do not make use of specific genetic or genomic data will not be subject to the HGR Implementation Rules.

Changes in HGR collection and conservation requirements

To refine the scope of HGR information collection approval, the HGR Implementation Rules exclude common diseases, such as hypertension, diabetes, color blindness, and hemophilia, from the regulation of HGR of important genetic family lineages. The HGR Implementation Rules also remove specific collection requirements for rare diseases.

For large-scale population studies (which include, but are not limited to, cohort studies, cross-sectional studies, clinical studies, and constitutional studies), the HGR Implementation Rules increase the threshold of obtaining the HGR collection approval to over 3,000 cases. Previously, the threshold was 500 cases.

Meanwhile, the HGR Implementation Rules clarify that HGR collection activities involved in clinical trials to obtain the marketing authorization of related drugs and medical devices in China are not regarded as large-scale population study and thus do not need to apply for HGR information collection approval.

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Regarding conservation, the HGR Implementation Rules authorizes the MOST to establish a unified platform for administrative licensing, filing, and security review. HGR conservation units are required to obtain an administrative approval for the preservation of HGR and submit an annual report to the MOST by January 31 each year through the online applications and may be subject to spot checks to ensure compliance.

To be noted, the HGR Implementation Rules clarify that temporary conservation activities for teaching purposes or biobanking, carried out in accordance with legal requirements or clinical research protocol agreements after laboratory testing, are not regarded as the conservation of HGR, and thus do not need to get the administrative approval.

Delegation of regulatory authority to provincial departments

The HGR Implementation Rules provide further clarity on the delegation of supervisory authority and specify that the MOST may entrust relevant organizations for work related to HGR in accordance with the law.

Additionally, provincial administrative departments of science and technology may fulfill duties related to human genetic resources delegated to them by the MOST. The HGR Implementation Rules delineate the boundaries of the MOST’s regulatory authority, aligning with the principle of firm control and practical liberalization.

Tightening control over data protection and national security

The HGR Implementation Rules also stipulate situations that require a security review organized by MOST for the disclosure or sharing of HGR data with foreign entities.

Situations in which a security review should be conducted include:

• HGR information of important genetic family linkages;
• HGR information in specific areas;
• Exome sequencing and genome sequencing information with more than 500 cases;
• Other circumstances that may affect China’s public health, national security, and social and public interests.

Enforcement and due process rights

The HGR Implementation Rules emphasize the need for fair and proportionate administrative penalties, and specific penalty guidelines are expected to be established in the future.

The HGR Implementation Rules grant the MOST and its local branches the authority to conduct regular inspections and supervision of entities that have previously been penalized for HGR violations or have unresolved risks. Random inspections are carried out for other entities, while special inspections are deployed for severe violations or urgent cases.

On the other hand, the HGR Implementation Rules promise to protect the due process rights of parties who are subject to penalties for violating the HGR Regulations.

In cases where administrative penalties are to be imposed, the MOST and its provincial branches shall inform the parties, in writing, of the content and facts, reasons, and basis of the proposed administrative penalties before making a decision and inform the parties their rights to defend themselves. Where the proposed administrative penalty falls within the scope of the hearing, the parties shall also be informed of their right to request a hearing.

How does the new regulation impact foreign stakeholders in China?

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One of the significant considerations from the HGR Implementation Rules pertains to foreign parties, as they may face additional limitations in the HGR handling, including collection, conservation, and utilization in China.

The recent HGR Implementation Rules, along with China’s data transfer and cybersecurity legislation, may pose additional challenges for life science companies operating in the country.

Definition of foreign parties

The definition of “foreign parties” in the HGR Implementation Rules is broad and encompasses not only foreign organizations and institutions but also entities established or under “actual control” by foreign entities or individuals. More specifically, the Article 12 contains specific information on foreign parties, as below:

• Foreign parties are defined as offshore organizations and institutions established or controlled by offshore organizations or individuals. Control is determined by holding more than 50 percent of shares, equity, voting rights, or similar rights and interests, either directly or indirectly, in a China-based entity.
• Foreign organizations or individuals that have control or decisive influence over strategic matters of a China-based entity, regardless of whether achieved through agreements, are considered to have control. This definition explicitly includes Variable Interest Entity (VIE) structures as “actual control.” Therefore, domestic Chinese companies with VIE structures must comply with HGR regulatory requirements as foreign entities.

Entities with a foreign minority shareholder, without control over operations or management, may not be regulated as a foreign entity. This may allow the MOST to waive oversight over research collaborations or clinical studies sponsored by such foreign-invested entities.

Additionally, Article 11 mentions that companies registered in Hong Kong or Macao, but controlled by Chinese entities, will be regulated as Chinese entities.

Requirements and restrictions for foreign parties

According to the HGR Implementation Rules, foreign parties conducting activities involving Chinese HGR materials or information are subject to some extra restrictions and requirements, such as:

• Foreign parties must work with a Chinese partner for collecting or preserving Chinese HGR materials within China. They need to establish cooperation agreements that address ownership of IP rights, benefit sharing, confidentiality, and other related matters in accordance with the law.
• Foreign parties, in collaboration with the Chinese partner, must guarantee Chinese units and their researchers to participate in the whole process and substantively, and share relevant rights and interests in accordance with the law. In the process of international scientific research cooperation, all records and data information generated from the use of HGR in China shall be fully open to the Chinese unit, and backup shall be provided to the Chinese unit.
• Where the HGR information is provided or open for use by foreign parties, the Chinese owner of the information shall report in advance to the [and submit a backup of the information, except for the international scientific research cooperation that has obtained administrative permission or international cooperative clinical trials that have completed the filing process.
• Foreign parties are prohibited from using Chinese HGR materials or information for purposes that endanger public health, national security, or social public interests of China or violate ethical principles. They should only use Chinese HGR materials or information for approved purposes by the MOST or agreed to by the resource providers.
• Foreign parties may not sell or purchase Chinese HGR materials.

While there are restrictions, the HGR Implementation Rules also introduce streamlined approval procedures for international scientific research collaborations, facilitating smoother cooperation between parties.

The HGR Implementation Rules specify requirements and procedures for international collaboration in clinical studies aimed at obtaining marketing authorization for drugs and medical devices in the PRC. While the MOST approval may not be necessary if the collaboration does not involve the export of HGR, prior filing with the MOST is still mandatory.

In addition, as previously discussed, the HGR Implementation Rules provide exemptions for international collaborative clinical trials conducted to obtain marketing approval for drugs or medical devices, even if the number of individuals from whom genetic resources are collected exceeds 3,000 cases.

These exemptions streamline the regulatory process for such trials, reducing administrative burdens. These provisions aim to facilitate international collaborations in research and clinical studies while maintaining regulatory oversight and ensuring compliance with relevant regulations.

How foreign companies can comply with the new rules

The HGR Implementation Rules reflect the Chinese government’s emphasis on national security and personal data protection. It also reveals the Chinese authorities’ caution allowing the engagement of foreign entities regarding human genetics resource information in China.

Compliance with these rules and fulfilling reporting obligations regarding activities involving HGR is therefore of utmost importance.

For multinational companies in the healthcare and life sciences industry operating in China, it is crucial to conduct a careful review of the HGR Implementation Rules and evaluate their implications for cross-border research initiatives and the handling of HGR.

Taking proactive measures to ensure compliance is essential, including reviewing existing cooperation agreements and license agreements with Chinese institutions and developing compliance policies for international cooperation projects involving HGR information.

By prioritizing compliance and adapting to the regulatory landscape, companies can navigate the requirements and continue their operations in a manner that aligns with the Chinese authorities’ perspectives.

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