Chapter V

Distribution

Article 51 The undertaking of drug wholesale is subject to approval of the local drug regulatory department of the people's government of the province, autonomous region, or municipality directly under the central government and requires a Drug Distribution Certificate. The undertaking of drug retail is subject to approval of the drug regulatory department of the local people's government at or above the county level and requires the said certificate. No one may distribute drugs without the certificate.

The valid term and the scope of business shall be indicated in the Drug Distribution Certificate. For renewal of the certificate upon expiration, reexamination is required.

When granting the Drug Distribution Certificate, the drug regulatory department shall see to it that, apart from the requirements specified by the provisions in Article 52 of this Law, that drug purchases are made convenient.

Article 52 The undertaking of drug distribution activities shall meet the following requirements:

(1) have legally qualified pharmacists or other pharmaceutical professionals;

(2) have the premises, equipment, warehouses, and hygienic environment required for drug distribution;

(3) have the units or personnel necessary for quality control of the drugs to be distributed; and

(4) have rules and regulations in place to ensure drug quality and comply with the requirements of the Good Supply Practice for Pharmaceutical Products (GSP) formulated by the drug regulatory department under the State Council in accordance with this Law.

Article 53 The undertaking of drug distribution activities shall comply with the GSP.A quality management system for drug distribution shall be established and improved, to ensure that the whole chain of drug distribution continuously complies with statutory requirements.

The State encourages and guides the operation of retail drug chains. The headquarters of a retail drug chain shall establish a unified quality management system and perform management responsibilities for the business activities of the chain retailers.

The legal representative and the principal responsible person of a drug distributor shall be fully responsible for the drug distribution activities.

Article 54 The State adopts a classification system for prescription and non-prescription drugs. The specific measures shall be formulated by the drug regulatory department under the State Council together with the competent health department under the State Council.

Article 55 MAHs, drug manufacturers, drug distributors and medical institutions shall purchase drugs from an MAH or an enterprise qualified to engage in drug manufacture or distribution, except for procurement of Chinese medicinal materials which are not subject to approval administration.

Article 56 For the purchase of drugs, drug distributors shall establish and apply an examination and acceptance system and check the certificate of drug quality, labels, and other marks. Drugs that do not meet the requirements shall not be bought or sold.

Article 57 Drug distributors shall keep authentic and complete records when buying and selling drugs. Each record shall indicate the adopted name in China, dosage form, strength, product batch number, date of expiration, MAH, manufacturer, purchase or sale unit, amount purchased or sold (purchase or sale quantity), purchase or sale price, date of purchase or sale, and other items specified by the drug regulatory department under the State Council.

Article 58 Drug distributors shall retail drugs properly and include an accurate description of dosage and administration and precautions. Prescriptions for dispensing shall be checked, and no drugs listed in the prescription may be changed or substituted without authorization. Requests to dispense incompatible or over-dosage prescriptions and prescriptions may be dispensed only after the prescribing physician makes corrections or re-signs the order.

Drug distributors shall indicate the origin of the Chinese medicinal materials to be sold.

Legally qualified pharmacists or other pharmaceutical professionals shall be responsible for the drug management, prescription examination and dispensing, and guidance of rational use of drugs.

Article 59 A drug distributor shall establish and apply a system for drug storage, and take necessary measures to ensure quality, such as cold storage, protection against freezing and humidity, and avoidance of insects and rodents.

An examination system shall be applied for storing and releasing drugs from storage.

Article 60 Chinese medicinal materials may be sold at town and country fairs, except those otherwise specified by the State Council.

Chinese medicinal materials may be sold at urban and rural trade markets, unless otherwise stipulated by the State Council.

Article 61 MAHs and drug distributors engaged in online drug sales shall comply with the relevant provisions of this Law on drug distribution. Specific administrative measures shall be formulated by the drug regulatory department under the State Council jointly with the competent health department under the State Council.

Drugs subject to special administration by the State, such as vaccines, blood products, narcotic drugs, psychotropic substances, toxic drugs for medical use, radioactive drugs, and pharmaceutical precursor chemicals, shall not be sold online.

Article 62 Third party platform providers for online drug sales shall file a record with the local drug regulatory department of the people's government of the province, autonomous region or municipality directly under the central government in accordance with the regulations of the drug regulatory department under the State Council.

Third party platform providers shall, in accordance with the law, examine the qualifications of MAHs and drug distributors requesting to operate on their platform to ensure that they comply with statutory requirements, and manage drug distribution activities carried out on their platform.

Where a third party platform provider discovers that an MAH or a drug distributor operating on its platform has violated provisions of this Law, it shall promptly stop the offense and immediately report the incident to the drug regulatory department of the local people's government at the county level. Where a serious illegal act is discovered, the third party platform provider shall immediately cease to provide services to the MAH or drug distributor.

Article 63 Newly discovered crude drugs or cultivated crude drugs introduced from abroad may be marketed only after approval by the drug regulatory department under the State Council.

Article 64 Drugs shall be imported via the ports where drug importation is permitted, and drug importers shall file a record with the local drug regulatory department at the port. The drugs shall be released by customs on the basis of the Drug Import Note issued by the said departments and shall not release drugs for which no Drug Import Note has been issued.

The drug regulatory department in the place where the port is located shall notify the drug control institutions to sample and test the drugs to be imported in accordance with the regulations of the drug regulatory department under the State Council.

The ports where drugs can be imported shall be proposed by the drug regulatory department under the State Council together with the General Administration of Customs and the proposal shall be submitted to the State Council for approval.

Article 65 Where a medical institution has urgent clinical needs for a small quantity of drugs to be imported, such drugs may be imported upon approval by the drug regulatory department under the State Council or by the people's government of the province, autonomous region or municipality directly under the central government authorized by the State Council. Imported drugs shall be used for specific medical purposes within designated medical institutions.

A small quantity of drugs brought into China by individuals for personal use shall be handled in accordance with the relevant regulations of the State.

Article 66 Anyone who wishes to import or export narcotic drugs or psychotropic substances that fall within the scope specified by the State shall produce the Import License or Export License issued by the drug regulatory department under the State Council.

Article 67 The importation of drugs with uncertain therapeutic value, serious adverse reaction, or other factors harmful to human health is prohibited.

Article 68 The drug regulatory department under the State Council shall designate drug control institutions to test the following drugs before they are marketed or at the time they are imported. Drugs that are untested or fail testing shall not be marketed or imported;

(1) drugs to be marketed in China for the first time;

(2) biological products specified by the drug regulatory department under the State Council; and

(3) other drugs specified by the State Council.

Chapter VI

Pharmacy Administration in Medical Institutions

Article 69 Medical institutions shall be staffed with legally qualified pharmacists or other pharmaceutical professionals who are lawfully qualified to take charge of the medical institution's drug management, check and dispense prescriptions, and offer reasonable medication guidance. No one who is not a pharmaceutical professional may work in pharmacies.

Article 70 For the purchase of drugs, medical institutions shall establish and apply an examination and acceptance system and check the certificate of drug quality, labels, and other marks. Drugs that do not meet the specified requirements shall not be bought or used.

Article 71 Medical institutions shall possess premises, equipment, warehousing facilities, and hygienic environment, establish and apply a system for drug storage, and take necessary measures to ensure drug quality, such as cold storage, protection against freezing and humidity, and avoidance of insects and rodents.

Article 72 Medical institutions shall adhere to the principle of safe, effective, economical and reasonable medication, comply with drug clinical application guidelines, clinical diagnosis and treatment guides and drug package insert. for rational use of drugs, and review the suitability of physician prescriptions and medication orders.

Non-medical institutions using drugs shall comply with the relevant provisions on use of drugs by medical institutions in this Law.

Article 73 Prescriptions dispensed by pharmacists or other drug professionals who are qualified in accordance with the law shall be checked, and no drugs listed in the prescriptions may be changed or substituted without authorization. The pharmacists shall refuse to dispense incompatible or over-dosage prescriptions and prescriptions may be dispensed only after the prescribing physician makes corrections or re-signs the order.

Article 74 To dispense pharmaceutical preparations, a medical institution shall be approved by the drug regulatory department of the people's government of the province, autonomous region or municipality directly under the central government and have a Pharmaceutical Preparation Certificate for Medical Institution. No one may dispense pharmaceutical preparations without the certificate.

The valid term shall be indication in the certificate. For renewal of the certificate upon expiration, reexamination is required.

Article 75 Medical institutions engaged in preparing drug preparations shall have facilities, management system, inspection equipment and hygienic environment for ensuring drug quality. 

When preparing drug preparations, medical institutions shall perform their duties in accordance with the approved process, and the required active drug ingredients, excipients, and packaging materials shall comply with medicinal requirements.

Article 76 The pharmaceutical preparations to be dispensed by the medical institutions shall be those that meet the clinical needs of the institution but are not available on the market and shall be subject to approval in advance by the local drug regulatory department of the people's government of the province, autonomous region, or municipality directly under the central government, with the exception of the preparations of traditional Chinese medicines otherwise specified by the laws. 

The quality of the dispensed pharmaceutical preparations shall be tested in accordance with regulations. Those that pass the testing may be used within the institution based on physician's prescription. In special cases, the pharmaceutical preparations dispensed by a medical institution may be used by other designated medical institutions, upon approval by the drug regulatory department under the State Council or by the drug regulatory department of the people's government of a province, autonomous region or municipality directly under the central government.

No pharmaceutical preparations dispensed by medical institutions may be marketed.

Chapter VII

Post-marketing Management

Article 77 MAHs shall formulate a drug post-marketing risk management plan and take the initiative to conduct drug post-marketing studies to further confirm the safety, efficacy, and quality management of drugs, and strengthen continuous management of marketed drugs.

Article 78 For drugs given conditional approval, MAHs shall adopt corresponding risk management measures and complete relevant studies within the stipulated period in accordance with regulations. Where MAHs are unable to complete the study within the stipulated period as required or are unable to prove that the benefits outweigh the risks, the drug regulatory department under the State Council shall handle the matter in accordance with the law, until the drug approval license is revoked.

Article 79 Changes in the drug manufacturing process shall be managed by classifications based on the risks and impact of changes on drug safety, efficacy and quality management. Major changes shall be subject to approval by the drug regulatory department under the State Council, and other changes shall be filed for record or reported in accordance with regulations of the drug regulatory department under the State Council.

MAHs shall, in accordance with regulations of the drug regulatory department under the State Council, comprehensively evaluate and confirm the impact of changes on drug safety, efficacy, and quality management.

Article 80 MAHs shall monitor for adverse reactions of marketed drugs, take the initiative to collect, track and analyze information on suspected adverse drug reactions, and promptly take risk control measures for drugs for which risks are identified.

Article 81 MAHs, drug manufacturers, drug distributors, and medical institutions shall regularly audit the quality, efficacy, and adverse reactions of the drugs that they manufacture, distribute, and use. Cases of suspected adverse drug reactions shall be reported promptly to the drug regulatory departments and the competent health departments. Detailed measures shall be formulated by the drug regulatory department under the State Council jointly with the competent health department under the State Council.

For drugs for which serious adverse reactions are confirmed, the drug regulatory department under the State Council or the drug regulatory departments of the people's governments of the provinces, autonomous regions or municipalities directly under the central government shall adopt emergency control measures based on actual conditions to stop manufacture, distribution, and use of the drugs, and shall organize an evaluation within five days and issue an administrative decision within fifteen days from the date of the evaluation conclusion in accordance with the law.

Article 82 Where a drug has quality issues or other potential safety concerns, the MAH shall immediately stop selling the drug, notify relevant drug distributors and medical institutions to stop sales and use, recall the sold drugs, promptly announce recall information, stop manufacturing immediately if necessary, and report the situation on drug recall and handling to the drug regulatory departments and the competent health departments of the people's governments of the provinces, autonomous regions, or municipalities directly under the central government. The drug manufacturers, drug distributors, and medical institutions shall cooperate.

Where the MAH does not recall the drugs in accordance with the law, drug regulatory departments of the people's government of the provinces, autonomous regions, or municipalities directly under the central government shall order the MAH to recall the drugs.

Article 83 MAHs shall conduct periodic post-marketing evaluations on the safety, efficacy, and quality management of marketed drugs. If necessary, the drug regulatory department under the State Council may demand an MAH to conduct post-marketing evaluation or directly organize post-marketing evaluation.

Upon evaluation, the drug approval license of drugs with unclear efficacy, serious adverse reactions, or are otherwise harmful to human health shall be revoked.

Drugs of which the drug approval license is revoked shall not be manufactured or imported, sold or used.

Drugs of which the drug approval licenses are revoked or drugs which are expired. shall be destroyed or decontaminated in accordance with the law under the supervision of the drug regulatory departments.

Chapter VIII

Pricing and Advertising

Article 84 The State improves upon the drug procurement and administration system, monitors drug pricing, conducts investigations into costs and pricing, strengthens supervision and inspection of drug pricing, investigates and deals with acts of illegal drug pricing, such as monopoly pricing and aggressive campaigns, and safeguards drug prices.

Article 85 For drugs, the prices of which fluctuate based on market factors in accordance with the law, MAHs, drug manufacturers, drug distributors, and medical institutions shall fix the prices on the principles of fairness, rationality, good faith, and commensuration of price with quality to provide users with reasonably priced drugs.

When fixing and indicating retailing prices, MAHs, drug manufacturers, drug distributors and medical institutions shall abide by the regulations on control over drug prices formulated by the competent pricing department under the State Council. Exorbitant profits, monopoly pricing, and fraud are prohibited.

Article 86 MAHs, drug manufacturers, drug distributors, and medical institutions shall provide the actual buying and selling prices as well as quantity of the drugs purchased and sold, and other related data to the competent pricing department.

Article 87 Medical institutions shall provide patients with a list of drug prices, truthfully publicize the prices of common drugs in compliance with the specified measures, and promote reasonable use of drugs. Specific measures shall be formulated by the competent health department under the State Council.

Article 88 MAHs, drug manufacturers, drug distributors and medical institutions are prohibited from offering or accepting rake-offs or other benefits while purchasing and selling drugs.

MAHs, drug manufacturers, drug distributors or their agents are prohibited from offering, under any pretenses, money or things of value or other benefits to leading members, drug purchasers, physicians, pharmacists, or other related persons of the medical institutions where their drugs are used. Leading members, drug purchasers, physicians, pharmacists, or other related persons, on their part, are prohibited from accepting, under any pretenses, money or things of value or other benefits offered by MAHs, drug manufacturers, drug distributors, or their agents.

Article 89 Drug advertisements shall be subject to approval by the advertisement examination authorities determined by the people's government of the province, autonomous region, or municipality directly under the Central Government at the locality of the advertiser. No one may launch drug advertisements without approval.

Article 90 The content of drug advertisements shall be truthful and lawful. The package inserts approved by the drug regulatory department under the State Council shall be taken as the basis, and no false content may be contained in them.

No unscientific, categorical assertion, or guarantee of described function or safety may be included in drug advertisements. No names or images of government departments, research institutions, and academic institutions, or of experts, scholars, physicians, pharmacists and patients may be used as evidence for drug advertising.

Non-drug advertisements may not involve drug promotion.

Article 91 Where drug pricing and advertising are not covered by the provisions of this Law, the provisions of the Pricing Law of the People's Republic of China, the Anti-monopoly Law of the People's Republic of China, the Law of the People's Republic of China Against Unfair Competition, and the Advertising Law of the People's Republic of China shall govern.

Chapter IX

Stockpile and Supply

Article 92 The State implements a drug stockpile system by the establishment of national and local drug stockpile.

In the event of serious disasters, epidemic outbreaks or other emergencies, urgent drug deployment may be carried out in accordance with the provisions of the Emergency Response Law of the People's Republic of China.

Article 93 The State implements an essential drugs system to select essential drugs of appropriate quantities, better organize manufacturing and stockpile, improve the supply capacity for essential drugs, and satisfy the need for essential medications for disease prevention and treatment.

Article 94 The State establishes a drug supply monitoring system to promptly gather, compile, and analyze the supply information of drugs in shortage, implement advance drug shortage warnings, and take countermeasures.

Article 95 The State implements an administration to supply a list of drugs in shortage. Detailed provisions shall be formulated by the competent health department under the State Council jointly with the drug regulatory department under the State Council.

Where an MAH stops manufacture of drugs in shortage, it shall report to thedrugregulatorydepartmentundertheStateCouncilorthedrugregulatorydepartment of the people's government of the province, autonomous region, or municipality directly under the Central Government.

Article 96 The State encourages the research, development, and manufacture of drugs in shortage, and implements priority review and approval for drugs in shortage in urgent clinical needs or new drugs for prevention and treatment of serious infectious diseases and rare diseases.

Article 97 The State Council may restrict or prohibit exportation of drugs in shortage. Where necessary, the relevant State Council departments may adopt measures such as organizing the manufacturing, implementing price intervention, or expanding importation to secure drug supply.

Chapter X

Regulation

MAHs, drug manufacturers, and drug distributors shall ensure drug manufacture and supply in accordance with regulations.

Article 98 The manufacture (including preparation, same hereinafter), sale, or use of counterfeit or inferior drugs is prohibited.

A drug shall be deemed a counterfeit drug in any of the following circumstances:

(1) the ingredients in the drug are not compliant with the ingredients stipulated in the national drug standards;

(2) a non-drug substance is substituted for a drug or one drug is substituted for another;

(3) a deteriorated drug; or

(4) the indications or functions indicated are beyond the specified scope.

A drug shall be deemed as an inferior drug in any of the following circumstances:

(1) the ingredients of the drug are not compliant with the national drug standards;

(2) a contaminated drug;

(3) the validity period is not indicated or is altered;

(4) the product batch number is not indicated or is altered;

(5) it is beyond the date of expiration;

(6) preservatives or excipients are added without authorization; or

(7) any other cases that do not conform to the national drug standards.

The manufacture or importation of drugs without a drug approval license is prohibited. The use of active drug ingredients, packaging materials, or containers for drug manufacturing, which have not been reviewed and approved in accordance with the provisions, is prohibited.

Article 99 Drug regulatory departments shall, in accordance with the laws and regulations, supervise and inspect drug research and development, manufacturing, distribution, and use of drugs by institutions, and other activities, and where necessary, conduct extended inspection on institutions and individuals providing products or services for drug research and development, manufacture, distribution, and use. Relevant organizations and individuals shall cooperate and shall not refuse inspection or conceal information.

Drug regulatory departments shall implement intensive supervision and inspection for high-risk drugs.

Where there is evidence to prove that there are safety hazards, drug regulatory departments shall, based on supervision and inspection findings, adopt measures such as issuing a warning, scheduling an interview, ordering a correction within a stipulated period, or suspending manufacture, distribution, use, and importation, and shall promptly announce inspection and the outcome.

When conducting supervision and inspection, the drug regulatory departments shall present their credentials and keep commercial secrets which have come to their knowledge during supervision and inspection confidential.

Article 100 Drug regulatory departments may sample and test drug quality based on the needs of supervision and inspection. With regard to selective sampling and testing, samples shall be taken in accordance with the relevant regulations, and no fees shall be charged. Any sample taken for testing shall be purchased. Necessary expenses shall be listed and covered in accordance with the regulations of the State Council.

For drugs and related materials that are known to be potentially harmful to human health, the drug regulatory department may seal or seize them and shall, within seven days, make an administrative decision. Where it is necessary to make an assessment, it shall, within fifteen days from the date the testing report is issued, make an administrative decision.

Article 101 The drug regulatory department under the State Council and the drug regulatory departments of people's governments of provinces, autonomous regions and municipality directly under the central government shall announce the results of selective sampling and testing of drug quality. Where the announcement is improper, a correction shall be made within the scope of the original announcement. 

Article 102 Where the party objects to the results of testing, it may, within seven days from the date it receives the results, apply for re-testing to the original drug control institution, or to an institution established or designated by the drug regulatory department at the next higher level, and it may also directly apply to the drug control institution established or designated by the drug regulatory department under the State Council. The drug control institution that accepts the application shall, within the time limit specified by the drug regulatory department under the State Council, draw a review conclusion from the re-test.

Article 103 Drug regulatory departments shall inspect compliance with GMP, GSP, GLP, and GCP by MAHs, drug manufacturers, drug distributors, drug non-clinical safety evaluation research institutions, and drug clinical trial organizations, and supervise them to make sure that they continuously comply with statutory requirements.

Article 104 The State establishes a professional and specialized team of drug inspectors who are familiar with drug laws and regulations and have professional knowledge of drugs.

Article 105 Drug regulatory departments establish drug safety credit record for MAHs, drug manufacturers, drug distributors, drug non-clinical safety evaluation research institutions, drug clinical trial organizations, and medical institutions to record issuance of permits, regular supervision and inspection findings, and investigations and handling of illegal acts, and shall make the records available to the public in accordance with the law and promptly update them. They may increase the frequency of supervision and inspection for entities with poor credit records and may implement joint punishment in accordance with the provisions of the State.

Article 106 Drug regulatory departments shall list their email addresses and phone numbers to accept enquiries, complaints, and reports, and shall promptly reply, verify, and handle enquiries, complaints, and reports in accordance with the law. For verified reports, the whistleblower shall be rewarded in accordance with the relevant provisions.

Drug regulatory departments shall keep the identity information of whistleblowers confidential and protect their legitimate rights and interests. Where a whistleblower lodges a report against their employer, the employer shall not retaliate against the whistleblower by way of rescission, amendment of their labor contract, or otherwise.

Article 107 The State implements a unified announcement system for drug safety information. General information on national drug safety, drug safety warnings, and serious drug safety incidents, as well as information on investigations and handling thereof and other information required by the State Council to be announced on a unified basis, shall be announced by the drug regulatory department of the State Council on a unified basis. Drug safety warnings, serious drug safety incidents, and information on investigations and handling thereof which have an impact on a specific region may be announced by the drug regulatory department of the people's government of the relevant province, autonomous region, or municipality directly under the Central Government. Unauthorized announcement of the aforesaid information is prohibited.

Announcement of drug safety information shall be prompt, correct, comprehensive, and accompanied by necessary explanations to avoid misunderstanding.

No organization or individual shall fabricate or disseminate false drug safety information.

Article 108 The people's governments at or above the county level shall formulate emergency plans for drug safety incidents. MAHs, drug manufacturers, drug distributors, and medical institutions shall formulate their own action plans for handling drug safety incidents and organize and conduct training and drills.

Upon occurrence of a drug safety incident, a people's government at or above the county level shall organize countermeasures without delay in accordance with the emergency plan. The relevant organization shall forthwith adopt effective measures to handle the matter and prevent escalation.