China is a multi-ethnic country with a large population offering unique human genetic resources. International cooperation in the field of human genetic resources is increasing. Therefore, the collection, preservation, and usage of human genetic resources are very important for China. Against this background, China’s State Council, the country’s top administrative authority, issued the Regulation of Human Genetic Resources (the “Regulation”) on 28 May 2019.
Old regime
In 1998, Interim Measures for the Management of Human Genetic Resources (“1998 Interim Measures”) was issued by the Human Genetic Resources Management Office. As the 1998 Interim Measures were issued by a ministry-level authority, they are relegated to a lower legal hierarchy compared to measures issued by the State Council and laws issued by the Standing Committee of the People’s Congress. This means that do not contain adequate authority within the relevant legal hierarchy. It only has 12 clauses briefly specifying the responsible department and application documents for international cooperation and transfer of human genetic resources abroad.
It has been more than 20 years since the 1998 Interim Measures came into effect. The 1998 Interim Measures have not perfected the allocation of legal liability, i.e. who is the responsible person/party and what liabilities are to be assumed, and contain a vague penalty clause. Penalties have only been imposed in three cases since the 1998 Interim Measures were issued, although interesting these have all been in recent years (2015, 2016, and 2018), which is perhaps indicative of the growing significance and use of human genetic resources.
Moreover, the existing management system has problems such as unclear responsibilities of all involved parties and an inadequate hierarchical framework with respect to management.
Regulation of human genetic resources
As a result of these issues, the State Council, issued the Regulation on 28 May 2019. The Regulation, which came into effect on 1 July 2019, replaces the 1998 Interim Measures and is significantly more detailed (including 47 clauses). It aims to:
(1) effectively protect and reasonably use human genetic resources and
(2) safeguard public health, national security, and public interests.
What are human genetic resources?
For the first time, the Regulation formally defines “human genetic resources.” Under the Regulation, the term “human genetic resources” includes the “materials of human genetic resources” and “information on human genetic resources.” The term “materials of human genetic resources” means genetic materials such as organs, tissues, and cells which contain human genomes, genes, and other genetic substances.
Restrictions on foreign entities
Under the Regulation, a foreign organisation or an institution formed or actually controlled by a foreign organization or individual (the “Foreign Entity”) shall not collect or preserve China's human genetic resources within the territory of China, and shall not transfer China's human genetic resources abroad.
Where a Foreign Entity needs to use China's human genetic resources to conduct scientific research activities, it shall comply with China's laws, administrative regulations, and other legal provisions, and cooperate with China's scientific research institutions, institutions of higher learning, medical institutions, and enterprises.
Where information on human genetic resources is provided to or allowed for use by a Foreign Entity, it shall be reported to the Ministry of Science and Technology so it can be recorded, and a copy of the information shall be submitted..
Transferring Chinese human genetic data out of China
Transferring Chinese human genetic data is generally prohibited under the Regulation. Transferring includes transporting, mailing or carrying the materials of China’s human genetic resources. Transferring Chinese human genetic data is only permitted for conducting scientific research through international cooperation. The Regulation lays down rules on how to apply for such permission. The Ministry of Science and Technology is responsible for approving such transfers. An application may be filed separately, or an application may be filed in the data transfer plan included in the application for scientific research through international cooperation.
Increasing penalties for violations
Unlike the 1998 Interim Measures, under which there were no detailed amounts for penalties, the Regulation specifies in detail all kinds of penalties and responsibilities. It imposes significant penalties for various kinds of violations. For example, a foreign-owned entity could be subject to fines of up to RMB 10 million, or 5-10 times any illegal gains that exceed RMB 1 million. The Regulation also imposes personal liability on responsible corporate officers of such entities; such officers can now be subject to fines of up to RMB 500,000 and lifetime debarment in serious cases.
Impact on relevant businesses
The Regulation only came into effect at the start of this month so it is too early to analyse its impact in any detail. However, it will undoubtedly have a significant impact on the cooperation of human generic research between Chinese institutions and their international counterparts. The publication of investigations on illegally transferring Chinese human generic data last year is an indication that China will strengthen the governance in this area. The adoption of the Regulation will only further strengthen China’s governance in this area. Therefore, unlike the previous two decades of enforcement of the 1998 Interim Measures, we expect to see active enforcement of the Regulation and an increase in the number of cases.
International and Chinese companies with operations that involve Chinese human generic data should review their current practices to make sure they comply with the Regulation.
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We have advised international companies on transferring Chinese human generic data under the 1998 Interim Measures and can help ensure compliance with the Regulation. If you would like to discuss the foregoing or any other related matters, please contact China managing partner Dr. Zhaofeng Zhou at zhaofeng.zhou@fieldfisher.com or counsel Min Huang at min.huang@fieldfisher.com