ii CHINA'S HEALTHCARE SECTOR, DRUG SAFETY, AND THE U.S. -CHINA TRADE INMEDICAL PRODUCTS HEARING BEFORE THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ONE HUNDRED THIRTEENTH CONGRESS SECOND SESSION THURSDAY, APRIL 3, 2014 Printed for use of the United States-China Economic and Security Review Commission Available via the World Wide Web: www.uscc.gov UNITED STATES-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION WASHINGTON: 2014 iii U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION Hon. DENNIS C. SHEA, Chairman Hon. WILLIAM A. REINSCH, Vice Chairman Commissioners: CAROLYN BARTHOLOMEW DANIEL M. SLANE PETER BROOKES SEN. JAMES TALENT ROBIN CLEVELAND DR. KATHERINE C. TOBIN JEFFREY L. FIEDLER MICHAEL R. WESSEL SEN. CARTE P. GOODWIN DR. LARRY M. WORTZEL MICHAEL R. DANIS, Executive Director The Commission was created on October 30, 2000 by the Floyd D. Spence National Defense Authorization Act for 2001 § 1238, Public Law No. 106-398, 114 STAT. 1654A-334 (2000) (codified at 22 U.S.C. § 7002 (2001), as amended by the Treasury and General Government Appropriations Act for 2002 § 645 (regarding employment status of staff) & § 648 (regarding changing annual report due date from March to June), Public Law No. 107-67, 115 STAT. 514 (Nov. 12, 2001); as amended by Division P of the “Consolidated Appropriations Resolution, 2003,” Pub L. No. 108-7 (Feb. 20, 2003) (regarding Commission name change, terms of Commissioners, and responsibilities of the Commission); as amended by Public Law No. 109-108 (H.R. 2862) (Nov. 22, 2005) (regarding responsibilities of Commission and applicability of FACA); as amended by Division J of the “Consolidated Appropriations Act, 2008,” Public Law Nol. 110-161 (December 26, 2007) (regarding responsibilities of the Commission, and changing the Annual Report due date from June to December). The Commission’s full charter is available at www.uscc.gov. iv June 10, 2014 The Honorable Patrick J. Leahy President Pro Tempore of the Senate, Washington, D.C. 20510 The Honorable John A. Boehner Speaker of the House of Representatives, Washington, D.C. 20515 DEAR SENATOR LEAHY AND SPEAKER BOEHNER: We are pleased to notify you of the Commission’s April 03, 2014 public hearing on “China’s Healthcare Sector, Drug Safety, and the U.S.-China Trade in Medical Products.” The Floyd D. Spence National Defense Authorization Act (amended by Pub. L. No. 109-108, section 635(a)) provides the basis for this hearing. At the hearing, the Commissioners received testimony from the following witnesses: Dr. Christopher J. Hickey, Country Director, U.S. Food and Drug Administration, People's Republic of China; Dr. Karen Eggleston, Faculty Director, Asia Health Policy Program, Stanford University; Dr. Yanzhong Huang, Senior Fellow for Global Health Policy, Council on Foreign Relations; Xiaoqing Lu Boynton, Director, Albright Stonebridge Group; Benjamin Shobert, Managing Director, Rubicon Strategy Group, and Senior Associate, National Bureau of Asian Research; Rod Hunter, Senior Vice President, International Affairs, PhRMA; Ralph Ives, Executive Vice President, Global Strategy and Analysis, AdvaMed; Allan Coukell, Senior Director, Drugs and Medical Devices, The Pew Charitable Trusts; Charles Bell, Programs Director, Consumers Union; Dr. Ginger Zhe Jin, Professor of Economics, University of Maryland; and Dr. Roger Bate, Visiting Fellow, American Enterprise Institute. This hearing address China’s recent healthcare reforms, market access for U.S. medical goods and services in China, and the safety of medical products imported from China into the United States. This hearing also consider whether U.S. drug and medical device makers are able to compete in China’s market. It will also assess the U.S. Food and Drug Administration’s ongoing efforts to regulate drugs and drug ingredients imported from China into the United States. We note that prepared statements for the hearing, the hearing transcript, and supporting documents submitted by the witnesses are available on the Commission’s website at www.USCC.gov. Members and the staff of the Commission are available to provide more detailed briefings. We hope these materials will be helpful to the Congress as it continues its assessment of U.S.-China relations and their impact on U.S. security. The Commission will examine in greater depth these issues, and the other issues enumerated in its statutory mandate, in its 2014 Annual Report that will be submitted to Congress in November 2014. Should you have any questions regarding this hearing or any other issue related to China, please do not hesitate to have your staff contact our Congressional Liaison, Reed Eckhold, at (202) 624-1496 or via email at [email protected]. Sincerely yours, Hon. Dennis C. Shea Hon. William A. Reinsch Chairman Vice Chairman v CONTENTS THURSDAY, APRIL 03, 2014 CHINA'S HEALTHCARE SECTOR, DRUG SAFETY, AND THE U.S.-CHINA TRADE INMEDICAL PRODUCTS Opening Statement of Chairman Dennis C. Shea (Hearing Co-Chair) ...............................................................................................................................01 Prepared Statement .................................................................................................................................03 Opening Statement of Vice Chairman William Reinsch (Hearing Co-Chair) ...............................................................................................................................05 Prepared Statement .................................................................................................................................07 Administration Panel Administrative Panel Introduction by Vice Chairman William Reinsch (Hearing Co-Chair) ...............................................................................................................................08 Statement of Dr. Christopher J. Hickey Country Director, U.S. Food and Drug Administration, People's Republic of China ..........................09 Prepared Statement .................................................................................................................................13 Administrative Panel: Question and Answer .............................................................................................24 Panel I: Policy Challenges in China’s Healthcare Sector Panel I Introduction by Vice Chairman William Reinsch (Hearing Co-Chair) ...............................................................................................................................38 Statement of Dr. Karen Eggleston Faculty Director, Asia Health Policy Program, Stanford University ....................................................40 Prepared Statement .................................................................................................................................43 Statement of Dr. Yanzhong Huang Senior Fellow for Global Health Policy, Council on Foreign Relations ...............................................67 Prepared Statement .................................................................................................................................69 Statement of Xiaoqing Lu Boynton Director, Albright Stonebridge Group ..................................................................................................75 Prepared Statement .................................................................................................................................77 Panel II: Question and Answer ..................................................................................................................81 Panel II: Market Access for U.S. Medical Goods and Services in China Panel II Introduction by Chairman Dennis Shea (Hearing Co-Chair) ...............................................................................................................................98 Statement of Mr. Benjamin Shobert Managing Director, Rubicon Strategy Group .......................................................................................99 Prepared Statement ...............................................................................................................................102 vi Statement of Mr. Rod Hunter Senior Vice President, International Affairs, PhRMA ........................................................................113 Prepared Statement ...............................................................................................................................116 Statement of Mr. Ralph Ives Executive Vice President, Global Strategy and Analysis, AdvaMed .................................................124 Prepared Statement ...............................................................................................................................126 Panel II: Question and Answer ...............................................................................................................131 Panel III: The Safety of Medical Product Imports from China into the United States Panel III Introduction by Vice Chairman William Reinsch (Hearing Co-Chair) .............................................................................................................................152 Statement of Mr. Allan Coukell Senior Director, Drugs and Medical Devices, The Pew Charitable Trusts .........................................153 Prepared Statement ...............................................................................................................................156 Statement of Mr. Charles Bell Programs Director, Consumers