Pharmaceutical Administration Law (Mainland China)

Karl Zhang

On August 26, 2019, the Standing Committee of the National People’s Congress adopted the new Pharmaceutical Administration Law of the People’s Republic of China (the “Law”), which will go into effect on December 1, 2019.  In comparison with the old Pharmaceutical Administration Law, the main amendments are highlighted below:

1. Implementing the market launch license holder system

The state will implement a market license holder system for pharmaceutical administration.  A license holder shall be responsible under this Law for the safety, efficacy and quality control of the research, production, operation and usage processes for the product, as well as the non-clinical research, clinical trials, production management, post-market research, adverse effect monitoring and reporting, and the handling of drugs.  Other units and individuals who engage in activities such as drug development, production, operation, storage, transportation and use shall assume their corresponding responsibilities under the law.

Market license holders may produce and operate drugs on their own or retain a manufacturer on their behalf, provided that those manufacturers are qualified and are retained with the relevant retainer agreements executed.

The license holder may transfer the license with the approval of the drug regulatory authority under the State Council.  The transferee shall be capable of quality             management, risk control and liability compensation with respect to maintaining drug safety, efficacy and quality control, and perform the obligations of a market authorization holder.

2. Redefining counterfeit drugs and inferior drugs

Production (including preparation), sales and use of counterfeit or inferior drugs are prohibited.  A drug shall be regarded as a counterfeit drug if any of the following circumstances is present: (1) the ingredients contained in the drug are not consistent with those under the national drug standards; (2) a non-drug is passed off as a drug, or one type of drug is passed off as another type of drug; (3) the quality of the drug has deteriorated; or (4) the indications or functional indications specified by a drug exceed the scope of regulations.  A drug shall be considered as an inferior drug if any of the following circumstances is present: (1) the volume of ingredients in the drug fail to meet with the national drug standards; (2) the drug has been contaminated; (3) the shelf life of the drug is not specified or is altered; (4) the product batch number of the drug is not specified or is altered; (5) the drug has expired; (6) preservatives or excipients are added without authorization; or (7) the drug fails to conform with the drug standards in other aspects.  The production or importation of drugs without drug approval documents are prohibited, and the use of active pharmaceutical ingredients, packaging materials and containers which have not been examined and approved pursuant to applicable requirements is also forbidden.

Compared to the original Pharmaceutical Administration Law, the Law reverts the definition of counterfeit drugs and inferior drugs back to the efficacy and ingredient aspects and removes the controversial rule that a drug “produced or imported without prior approval” is directly deemed a counterfeit drug regardless of its efficacy or ingredients if the law required such approval.

3. Permitting online sales of prescription drugs

A market license holder or a pharmaceutical product enterprise that sells drugs online shall comply with relevant provisions on drug operations under this Law.  The specific administrative measures shall be prescribed by the drug regulatory authority under the State Council in conjunction with the sanitation and health authority under the State Council.  Drugs subject to special administration by the state such as vaccines, blood products, anesthetics, psychiatric drugs, medicinal toxic drugs, radioactive drugs, and precursors and chemicals used in the production of narcotics drugs shall not be sold online.

4. Encouraging innovation and giving priority to the examination and approval of drugs for children.

The state supports the innovation of drugs oriented towards clinical value and having specific or special medicinal efficacy on human illnesses, encourages the development and production of new drugs with new treatment mechanisms which treat seriously life-threatening illnesses or rare illnesses, as well as those with multi-target, systemic, regulatory and intervention functions, to promote the advancement of pharmaceutical technologies.

The state encourages the use of modern science and technology and research methods used for traditional Chinese medicine to carry out scientific and technical research of and drug development based on traditional Chinese medicine, establish and improve a technical examination system that conforms to the characteristics of traditional Chinese medicine, and promote the continuation and innovation of traditional Chinese medicine.

The State adopts effective measures to encourage the development and innovation of pediatric drugs, supports the development of new varieties, dosage forms and specifications of pediatric drugs that meet the physiological characteristics of children, and prioritizes the examination and approval of pediatric drugs.