Article 109 Where a drug regulatory department fails to discover systemic risks of drug safety in a timely manner or fails to eliminate drug safety hazards within their supervision and administration region in a timely manner, the people's government at the same level or the drug regulatory department of the people's government at a higher level shall schedule a warning meeting with the person-in-charge of the drug regulatory department.

Where a local people's government fails to perform its drug safety duties or fails to eliminate serious drug safety hazards within their region in a timely manner, the people's government at a higher level or the drug regulatory department of the people's government at a higher level shall schedule a warning meeting with the person-in-charge of the local people's government.

The department and the local people's government shall forthwith adopt measures to rectify drug supervision and administration work.

The scheduled warning meeting and the rectification shall be included in the drug supervision and administration work review and appraisal records of the relevant department and the local people's government.

Article 110 A local people's government and its drug regulatory departments shall not use means such as drug inspection, examination, or approval. To restrict or exclude drugs of non-local MAHs or drug manufacturers from entering the locality.

Article 111 The drug regulatory departments and the professional and technical institutions for drugs established or appointed by the drug regulatory departments shall not participate in drug manufacture and business activities, and shall not recommend or supervise drug manufacture and sale in their names.

Staff of the drug regulatory departments and the drug professional and technical institutions established or appointed by the drug regulatory departments shall not take part in drug manufacturing and business activities.

Article 112 Where the State Council has other special administrative provisions on narcotic drugs, psychiatric drugs, toxic drugs for medical use, radioactive drugs, and pharmaceutical precursor chemicals., such provisions shall be followed.

Article 113 Upon discovery of illegal behaviors related to drugs which allegedly constitutes a criminal offense, the drug regulatory departments shall promptly forward the case to the public security authorities.

Where it is not necessary to pursue criminal liability in accordance with the law or criminal punishment is not required in accordance with the law, but it is necessary to pursue administrative liability, the public security authorities, the People's Procuratorate and the People's Court shall promptly forward the case to the drug regulatory departments.

Where the public security authorities, the People's Procuratorate and the People's Court seek assistance from the drug regulatory departments, the ecology and environment departments, etc., to provide inspection conclusion and confirmation opinion as well as decontamination of the involved drugs, the relevant departments shall promptly provide assistance.

Chapter XI

Legal Liability

Article 114 Illegal acts that violate this Law and constitutes a crime shall be subject to severe criminal liabilities in accordance with the law.

Article 115 Any organization that, without obtaining a Drug Manufacturing Certificate, Drug Distribution Certificate or Pharmaceutical Preparation Certificate for Medical Institution, manufactures or distributes drugs shall be ordered to close down, the drugs illegally produced or sold and the illegal gains there from shall be confiscated, and they shall be fined not less than fifteen times but not more than thirty times the value of the drugs illegally produced or sold (including the drugs sold and not sold, the same below). If the illegal values are less than RMB 100,000, it shall be counted as RMB 100,000.

Article 116 Where counterfeit drugs are produced or sold, the drugs illegally produced or sold and the illegal gains therefrom hall be confiscated, an order shall be given to suspend production or business operations for rectification, drug approval documents shall be revoked, and a fine of not less than fifteen times but not more than thirty times the value of the said drugs shall be imposed. If the illegal values are less than RMB 100,000, it shall be counted as RMB 100,000. If the circumstances are serious, the Drug Manufacturing Certificate, Drug Distribution Certificate or Pharmaceutical Preparation Certificate for Medical Institution shall be revoked and the corresponding application shall be refused for the next ten years. If the drug MAHs are overseas enterprises, their drug importation shall be banned for the next ten years. 

Article 117 Where inferior drugs are produced or sold, the drugs illegally produced or sold and the illegal gains therefrom shall be confiscated, and a fine of not less than ten times but not more than twenty times the value of the said drugs shall be imposed. If the value of the drugs illegally produced or sold are less than RMB 100,000, it shall be counted as RMB 100,000. If the illegal values are less than RMB 10,000, it shall be counted as RMB 10,000. If the circumstances are serious, an order shall be given to suspend production or business operations for rectification, until revocation of drug approval documents, Drug Manufacturing Certificate, Drug Distribution Certificate, and Pharmaceutical Preparation Certificate for Medical Institution.

Where the decoction pieces of Chinese medicine produced and sold do not meet the national drug standards, but do not affect safety and effectiveness, an order shall be given to make rectifications within a time limit and a disciplinary warning shall be issued and a fine of not less than RMB 100,000 but not more than RMB 500,000 shall be imposed.

Article 118 Where manufactured or distributed drugs are counterfeit drugs, or are inferior drugs resulting in serious consequences, the legal representative, the principal responsible persons, the persons directly in charge, and other directly responsible persons shall be subject to a confiscation of income received from their institutions during the occurrence of the violations and a fine of not less than 30% but not more than three times the income, and they shall be banned from engaging in drug production and distribution for life and detained by the public security authorities for not less than five days but not more than fifteen days. 

Raw materials, excipients, packaging materials, and equipment used specifically for producing counterfeit or inferior drugs shall be confiscated.

Article 119 Where drug use institutions use counterfeit drugs or inferior drugs, they shall be punished in accordance with the provisions on the sale of counterfeit drugs and inferior drugs. In serious circumstances, and if the legal representative, the principal responsible persons, the persons directly in charge, and other directly responsible persons as well as other responsible personnel have a medical license, the medical license shall be revoked.

Article 120 Anyone who knows or should know that drug is counterfeit or inferior or falls under drugs prescribed in paragraph one of item (1) to item (5) in Article 124 of this Law and provides conveniences such as storage and transportation, the income from the illegal storage and transportation shall be confiscated, and a fine of not less than one time but not more than five times the illegal income shall be imposed. In serious circumstances, the offender shall be subject to a fine of not less than five times but not more than fifteen times. If the illegal values are less than RMB 50,000, it shall be counted as RMB 50,000.

Article 121 The quality testing results provided by the drug control institution shall be included in the penalty notification on counterfeit and inferior drugs.

Article 122 If anyone falsifies, alters, trades in, rents out, or illegally lends certificates or drug approval documents, the illegal income shall be confiscated and a fine of not less than one time but not more than five times the illegal income shall be imposed. In serious circumstances, a fine of not less than five times but not more than fifteen times shall be imposed, and the Drug Manufacturing Certificate, Drug Distribution Certificate, Pharmaceutical Preparation Certificate for Medical Institution, and drug approval documents shall be revoked. The legal representative, the principal responsible persons, the persons directly in charge, and other directly responsible persons as well as other responsible personnel shall be subject to a fine of not less than RMB 20,000 but not more than RMB 200,000 and be banned from engaging in drug production and distribution for the next ten years, and may be detained by the public security authorities for not less than five days but not more than fifteen days. If the illegal values are less than RMB 100,000, it shall be counted as RMB 100,000.

Article 123 Where an entity provides false certificates, data, materials, or samples, or fraudulently obtains a clinical trial permit, Drug Manufacturing Certificate, Drug Distribution Certificate, Pharmaceutical Preparation Certificate for Medical Institution or drug registration certificate, the relevant permit shall be revoked, and the corresponding application shall be refused for the next ten years and the entity shall be subject to a fine of not less than RMB 500,000 but not more than RMB 5,000,000. In serious circumstances, the legal representative, the principal responsible persons, the persons directly in charge, and other directly responsible persons as well as other responsible personnel shall be subject to a fine of not less than RMB 20,000 but not more than RMB 200,000 and be banned from engaging in the drug production and distribution activities for the next ten years, and may be detained by the public security authorities for not less than five days but not more than fifteen days. 

Article 124 In any of the following circumstances in violation of this Law, illegal gains, illegally manufactured, imported and distributed drugs and raw materials, excipients, packaging materials, and equipment used specifically for producing illegal drugs shall be confiscated, and the offender shall be ordered to stop production and business operations for rectification and shall be fined not less than fifteen times but not more than thirty times the value of the drugs illegally manufactured, imported, or distributed. If the illegal values are less than RMB 100,000, it shall be counted as RMB 100,000. In serious circumstance, the offender is subject to revocation of relevant approval documents until the Drug Manufacturing Certificate, Drug Distribution Certificate, or Pharmaceutical Preparation Certificate for Medical Institution is revoked. The legal representative, the principal responsible person, the persons directly in charge, and other directly responsible persons as well as other responsible personnel shall be subject to a confiscation of the income received from their institutions during the occurrence of the violations and a fine of not less than 30% but not more than three times the income, and they shall be banned from engaging in drug production and operation for ten years to life, and may be detained by the public security authorities for not less than five days but not more than fifteen days:

(1) manufacture of import drugs without drug approval documents;

(2) manufacture or import drugs with drug approval documents obtained by deception;

(3) manufacture medicines using active drug ingredients that have not been reviewed and approved;

(4) sale of drugs that have not been evaluated as required;

(5) manufacture or sale of drugs prohibited by the drug regulatory department of the State Council;

(6) fabricate production or testing records; or

(7) make significant changes in the drug production process without approval.

The sale of drugs prescribed in item (1) to item (3) of the preceding paragraph, or the use of drugs prescribed in item (1) to item (5) of the preceding paragraph by drug use institutions, shall be punished in accordance with the provisions of the preceding paragraph. In serious circumstances, where the legal representative, the principal responsible person, the persons directly in charge, and other directly responsible persons as well as other responsible personnel that have a medical license, the medical license shall be subject to revocation.

The importation of a small number of drugs that are already legally marketed overseas without approval, if the circumstances are relatively minor, may be given lighter punishment or exempted from punishment in accordance with the law. 

Article 125 In any of the following circumstances in violation of this Law, illegal gains, illegally manufactured, imported and distributed drugs and raw materials, excipients, packaging materials, and equipment used specifically for producing illegal drugs shall be confiscated, and the offender shall be ordered to stop production and business operations for rectification and be fined not less than RMB 500,000 but not more than RMB 5,000,000 the value of the drugs illegally manufactured, imported, or distributed. In serious circumstances, the offender shall be subject to revocation of relevant approval documents, Drug Manufacturing Certificate, and Drug Distribution Certificate, and the legal representative, the principal responsible person, the persons directly in charge, and other directly responsible persons as well as other responsible personnel shall be subject to a fine of not less than RMB 20,000 but not more than RMB 200,000, and shall be banned from engaging in drug production and operation for ten years to life.

(1) conduct drug clinical trial without approval;

(2) use packing materials or containers which come into direct contact with drugs and which have not been reviewed and approved for drug manufacture or distribution; 

(3) use labels or packaging insert which have not been reviewed and approved.

Article 126 Except where provided in this Law, MAHs, drug manufacturers, drug distributors, drug non-clinical safety evaluation research institutions, and drug clinical trial organizations which do not comply with GMP, GSP, GLP, or GCP shall be ordered to make correction within the time limit and be given a disciplinary warning. Where correction is not made within the prescribed period, it shall be subject to a fine of not less than RMB 100,000 but not more than RMB 500,000. In serious circumstances, it shall be subject to a fine of not less than RMB 500,000 but not more than RMB 2,000,000 and be ordered to stop production for rectification until revocation of drug approval documents, Drug Manufacturing Certificate, and Drug Distribution Certificate. Drug non-clinical safety evaluation research institution and drug clinical trial organizations shall be banned from conducting drug non-clinical safety evaluation studies or drug clinical trials for the next five years. The legal representative, the principal responsible person, the persons directly in charge, and other directly responsible persons as well as other responsible personnel shall be subject to a confiscation of income received from their institutions during the occurrence of the violations and a fine of not less than 10% but not more than 50% the income, and shall be banned from engaging in drug production and distribution for ten years to life. 

Article 127 In any of the following circumstances in violation of this Law, the offender shall be ordered to make correction within the time limit and be given a disciplinary warning. Where correction is not made within the prescribed period, it shall be subject to a fine of not less than RMB 100,000 but not more than RMB 500,000. 

(1) conduct bioequivalence trial without filing;

(2) the clinical trial sponsor fails to promptly adjust the clinical trial plan, suspends or terminates clinical trial protocol, or fails to report to the drug regulatory department of the State Council during drug clinical trial, upon discovery of safety issues or other risks;

(3) fails to establish and implement a drug tracking system as required;

(4) fails to submit annual reports as required;

(5) does not file or report changes in drug manufacturing as required;

(6) fails to formulate a risk management plan after a drug goes to market; or

(7) does not conduct a drug post-marketing launch study or assessment as required.

Article 128 Where drug packaging does include a label, or a packaging insert is not included as required, or where relevant information or the prescribed mark are not included as required, or where the literature does not include the relevant information or the prescribed mark as required, except for those treated as counterfeit or inferior drugs, an instruction for rectification and a disciplinary warning shall be given. If the circumstances are serious, the drug approval documents shall be revoked. 

Article 129 Where a drug MAH, drug manufacturer, drug distributor, or medical institution fails to procure drugs from a drug MAH or an enterprise which is qualified to manufacture or distribute drugs in violation of this Law, it shall be ordered to make rectification and illegally purchased drugs and the illegal gains therefrom shall be confiscated, and it shall be subject to a fine of not less than two times but not more than ten times the value of the drugs illegally purchased. In serious circumstances, the offender shall be subject to a fine of not less than ten times but not more than thirty time the value and revocation of relevant approval documents, Drug Manufacturing Certificate, Drug Distribution Certificate, and Pharmaceutical Preparation Certificate for Medical Institution. If the illegal values are less than RMB 50,000, it shall be counted as RMB 50,000.

Article 130 Where a drug distributor fails to keep records for procurement and sale of drugs as prescribed, fails to state the dosage and administration of retail drugs correctly, or fails to make prescriptions, the offender shall be ordered to make correction within the time limit and be given a disciplinary warning. In serious circumstances, drug approval documents shall be revoked.

Article 131 Where a third party platform provider for online drug transactions fails to perform its obligations, such as examine qualifications, report incidents, and cease to provide online services in violation of this Law, the offender shall be ordered to make correction and subject to a confiscation of illegal income and a fine of not less than RMB 200,000 but not more than RMB 2,000,000. In serious circumstances, the offender shall be ordered to stop production for rectification and be subject a fine of not less than RMB 2,000,000 but not more than RMB 5,000,000.

Article 132 For importation of drugs that have obtained drug approval licenses, where the importer fails to file records with the drug regulatory departments of the designated port for importation in violation of this Law, the offender shall be ordered to make correction within the time limit and be given a disciplinary warning. Where correction is not made within the prescribed period, it shall be subject to revocation of relevant drug approval documents. 

Article 133 Where a medical institution sells self-made preparations in violation of this Law, it shall be ordered to make correction, and be subject to a confiscation of preparations illegally sold and the illegal gains therefrom and a fine of not less than two times but not more than five times of the value of the illegally sold preparations. In serious circumstances, the offender is subject to a fine of not less than five times but not more than fifteen times of the illegal value. If the illegal values are less than RMB 50,000, it shall be counted as RMB 50,000.

Article 134 Where a drug MAH fails to monitor adverse drug reactions or report suspected adverse drug reactions as required, the offender shall be ordered to make correction within the time limit and be given a disciplinary warning. Where correction is not made within the prescribed period, it shall be subject to production suspension and be fined not less than RMB 100,000 but not more than RMB 1,000,000.  

Where a drug distributor fails to report suspected adverse drug reactions as required, the offender shall be ordered to make correction within the time limit and be given a disciplinary warning. Where correction is not made within the prescribed period, it shall be subject to production suspension for rectification and be fined not less than RMB 50,000 but not more than RMB 500,000. 

Where a medical institution fails to report suspected adverse drug reactions, the offender shall be ordered to make correction within the time limit and be given a disciplinary warning. Where correction is not made within the prescribed period, it shall be subject to a fine of not less than RMB 50,000 but not more than RMB 500,000.

Article 135 Where a drug MAH is ordered by the drug regulatory department of the people's government of the province, autonomous region, or municipality directly under the Central Government to recall a drug but refuses, it shall be subject to a fine of not less than five times but not more than ten times the value of the drug to be recalled. If the illegal values are less than RMB 100,000, it shall be counted as RMB 100,000. In serious circumstances, drug approval documents, Drug Manufacturing Certificate, and Drug Distribution Certificate shall be revoked. The legal representative, the principal responsible person, the persons directly in charge, and other directly responsible persons as well as other responsible personnel shall be subject to a fine of not less than RMB 20,000 but not more than RMB 200,000. Where a drug manufacturer, drug distributor or medical institution refuses to cooperate in the recall, it shall be subject to a fine of not less than RMB 100,000 but not more than RMB 500,000.

Article 136 Where the drug MAH is an overseas enterprise, and the appointed enterprise legal persons in China fail to perform relevant obligations in accordance with this Law, the provisions of this Law on the legal liability of drug MAH shall apply.

Article 137 Any of the following acts shall be subject to heavier punishment within the scope of punishment in accordance with this Law:

(1) substitute narcotics, psychotropic substances, toxic drugs for medical use, radioactive drugs or pharmaceutical precursor chemicals for other drugs, or vice versa;

(2) produce or sell counterfeit or inferior drugs of which the main users are pregnant and parturient women, infants and children;

(3) manufacture and sale of counterfeit or inferior biological products;

(4) manufacture and sale of counterfeit or inferior drugs which cause personal injuries;

(5) repeated violations of manufacture and sale of counterfeit or inferior drugs; or

(6) refuse or evade supervision and inspection, forge, destroy, or conceal relevant evidential materials, or use seized or confiscated items without approval.

Article 138 Where a drug control institution issues a false Certificate of Analysis (CoA), it shall be ordered to make correction and be given a disciplinary warning, and be subject to a fine of not less than RMB 200,000 but not more than RMB 1,000,000. The persons directly in charge and other directly responsible persons shall be demoted, removed, or dismissed in accordance with the law, illegal income shall be confiscated, and a fine of not more than RMB 50,000 shall be imposed. In serious circumstances, the qualification for testing shall be annulled. Where the drug control institution issues false testing conclusions and causes damages, it shall bear the corresponding liability of compensation for losses. 

Article 139 Administrative punishment prescribed in Article 115 to Article 138 of this Law shall be decided by the drug regulatory departments of people's governments at or above the county level in accordance with division of work. The revocation of a permit or certificate shall be decided by the original issuing departments. 

Article 140 Where a drug MAH, drug manufacturer, drug distributor or medical institution violates the provisions of this Law in staff recruitment, the drug regulatory departments or the competent health departments shall order the drug MAH, drug manufacturer, drug distributor or medical institution to dismiss the staff, and impose a fine of not less than RMB 50,000 but not more than RMB 200,000.  

Article 141 Where a drug MAH, drug manufacturer, drug distributor or medical institution gives or receives rake-offs or other benefits in the course of purchasing and selling drugs, or the drug MAH, drug manufacturer, drug distributor, or its agent gives or receives rake-offs or other improper gains to leading members, drug purchasers, physicians, and pharmacists of medical institutions using their drugs, the market regulatory department shall confiscate the illegal income and impose a fine of not less than RMB 300,000 but not more than RMB 3,000,000. In serious circumstances, the business license of the drug MAH, drug manufacturer and drug distributor shall be revoke and the drug approval documents, Drug Manufacturing Certificate and Drug Distribution Certificate shall be revoked by the drug regulatory departments.

Where a drug MAH, drug manufacturer or drug distributor bribes State officials in the process of drug development, manufacture, and distribution, the legal representative, the principal responsible person, the persons directly in charge, and other directly responsible persons as well as other responsible personnel shall be banned from engaging in drug production and operation for life. 

Article 142 Where leading members and procurement staff of a drug MAH, drug manufacturer, or drug distributor receives rake-offs or other improper gains in drug procurement and sale activities from other drug MAHs, drug manufacturers, drug distributors, or their agents, the illegal income shall be confiscated and punishment shall be imposed in accordance with the law. In serious circumstances, the offenders shall be banned from engaging in drug production and operation for the next five years.

Where leading members, drug purchasers, physicians, and pharmacists of a medical institution receives rake-offs or other improper gains from a drug MAH, drug manufacturer, drug distributor, or its agent, the competent health departments or the said medical institution shall impose punishment and confiscate the illegal income. In serious circumstances, their licenses to practice shall be revoked.

Article 143 Persons who violate the provisions of this Law in fabricating or disseminating false drug safety information, if it constitutes a violation of security administration, the public security authorities shall impose security administration punishment in accordance with the law. 

Article 144 Where a drug MAH, drug manufacturer, drug distributor or medical institution harms users of their drugs in violation of this Law, it shall bear compensation liability in accordance with the law.

People who suffer problems due to drug quality issues may seek compensation from the drug MAH and the drug manufacturer and may also seek compensation from the drug distributor and medical institution. Upon receiving a claim for compensation, the entity is responsible for compensation. After the compensation has been made, it may seek recovery on the compensation in accordance with the law.

Where counterfeit or inferior drugs are manufactured or sold knowingly, in addition to seeking compensation, the victims or their immediate relatives may also seek indemnity of ten times the payment amount or three times the damages. Where the added compensation amount is less than RMB 1,000, it shall be counted as RMB 1,000.

Article 145 Where a drug regulatory department or its designated drug professional and technical institutions participate in drug manufacturing and business activities, it shall be ordered by its higher-level competent administrative department to make correction, and its illegal income shall be confiscated. In serious circumstances, the persons directly in charge and other directly responsible persons shall be punished in accordance with the law.

Where the staff of a drug regulatory department or a drug professional and technical institution established or appointed by the drug regulatory department participate in drug manufacturing and business activities, they shall be punished in accordance with the law.

Article 146 Where a drug regulatory department or its designated drug control institution illegally collects inspection fees during drug supervision and inspection, the relevant government department shall order it to return the fees and punish the persons directly in charge and other directly responsible persons in accordance with the law. In serious circumstances, the qualification for testing shall be annulled.

Article 147 Where a drug regulatory department commits any of the following acts in violation of this Law, the relevant permit shall be revoked, and the persons directly in charge and other directly responsible persons shall be punished in accordance with the law:

(1) approve drug clinical trials which do not satisfy the criteria;

(2) issue drugregistrationcertificatesfordrugswhichdonotsatisfythecriteria; or

(3) issue a Drug Manufacturing Certificate, Drug Distribution Certificate, or Pharmaceutical Preparation Certificate for Medical Institution to organizations which do not satisfy the criteria.

Article 148 Where a people's government at or above the county level commits any of the following acts in violation of this Law, the persons directly in charge and other directly responsible persons shall be given a demerit or serious demerit. In serious circumstances, such individuals shall be demoted, removed, or dismissed:

(1) conceal, withhold, or omit information or make false reports of drug safety incidents;

(2) fail to promptly eliminate serious regional drug safety hazards and causing a severe drug safety incident within their administrative region or recurrent serious drug safety incidents; or

(3) incompetence in the performance of duties which causes serious adverse effects or serious losses.

Article 149 Where a drug regulatory department commits any of the following acts in violation of this Law, the persons directly in charge and other directly responsible persons shall be given a demerit or serious demerit. In relatively serious circumstances, they shall be demoted or removed and in serious circumstances, they shall be dismissed:

(1) conceal, withhold, or omit information or make false reports of drug safety incidents;

(2) do not promptly investigate and deal with drug safety violations upon discovery;

(3) fail to promptly discover systemic risks of drug safety, or fail to promptly eliminate drug safety hazards within their supervision and administration region, resulting in serious effects; or

(4) do not perform drug supervision and administration duties, resulting in serious adverse effects or serious losses.

Article 150 Where drug supervision and administration officers abuse their powers, engage in malpractice for personal gains, or neglect their duties, they shall be punished in accordance with the law.

Where the persons directly in charge and other directly responsible persons of a drug regulatory department fail to discharge their duties or commit misconduct in the investigation and punishment of illegal acts involving counterfeit or inferior drugs, they shall be subject to heavier punishment in accordance with the law.

Article 151 The value of products mentioned in this Chapter shall be calculated based on the marked prices of the drugs illegally produced or sold. Where there is no marked price, the value shall be calculated according to the market prices of drugs of the same type.

Chapter XII

Supplementary Provisions

Article 152 Measures for cultivation, collection and breeding of Chinese medicinal materials shall be regulated in accordance with the provisions of applicable laws and administrative regulations.

Article 153 Measures for traditional crude drugs customarily used in certain regions shall be formulated by the drug regulatory department together with the competent department for traditional Chinese medicines under the State Council.

Article 154 Measures for enforcement of this Law by the Chinese People's Liberation Army and Chinese Armed Police Force shall be formulated by the State Council and Central Military Commission in accordance with this Law.

Article 155 This Law shall go into effect as of December 1, 2019.