PRC Law on the Administration of Pharmaceuticals (Revised)

Article 3: The State develops modern and traditional medicines and fully exploits their function in the prevention and treatment of disease and in health care.

The State protects non-cultivated and non-domesticated medicinal resources and encourages the cultivation of traditional Chinese medicinal materials.

Article 4: The State encourages research and development of new pharmaceuticals and protects the lawful rights and interests of citizens and those of legal persons and other organizations in the research and development of new pharmaceuticals.

Article 5: The State Council's pharmaceutical regulatory department is charged with pharmaceutical supervision and administration nationwide. Relevant departments of the State Council are charged with pharmaceuticals related supervision and administration within the scopes of their respective duties.

The pharmaceutical regulatory departments of the people's governments of provinces, autonomous regions and municipalities directly under the central government are charged with pharmaceutical supervision and administration within their respective administrative areas. The relevant departments of the people's governments of provinces, autonomous regions and municipalities directly under the central government are charged with pharmaceuticals related supervision and administration within the scopes of their respective duties.

The State Council's pharmaceutical regulatory department shall cooperate with the State Council's department charged with the overall administration of the economy in implementing the pharmaceutical industry development plans and industrial policies formulated by the State.

Article 6: The pharmaceutical inspection institutes established or designated by pharmaceutical regulatory departments shall be responsible for carrying out the pharmaceutical inspections required for the examination and approval of pharmaceuticals and for the supervision and inspection of pharmaceutical quality.

PART TWO: ADMINISTRATION OF PHARMACEUTICAL PRODUCERS

Article 7: The establishment of a pharmaceutical producer shall be subject to the approval of the pharmaceutical regulatory department of the people's government of the province, autonomous region or municipality directly under the central government where the producer is located, which shall issue the producer a Pharmaceutical Production Licence upon approval. The producer shall register with the administration for industry and commerce on the strength of the Pharmaceutical Production Licence. The production of pharmaceuticals may not be engaged in without a Pharmaceutical Production Licence.

A Pharmaceutical Production Licence shall specify the term thereof and the scope of production. At the expiration of the term thereof, the producer shall be reexamined and issued a new licence.

When approving the establishment of pharmaceutical producers, pharmaceutical regulatory departments shall, in addition to basing their approvals on the conditions stipulated in Article 8 hereof, comply with the pharmaceutical industry development plans and industrial policies formulated by the State, so as to avoid redundant establishment of producers.

Article 8: The following conditions must be met when establishing a pharmaceutical producer:

(1) having pharmaceutical and engineering technicians whose qualifications have been recognized in accordance with the law and workers with the appropriate technical skills;

(2) having the factory, facilities and hygienic environment appropriate to the pharmaceutical producer's pharmaceutical production;

(3) having an organization, the personnel, and the necessary instruments and equipment to carry out quality control for, and quality inspections on, the pharmaceuticals to be produced; and

(4) having rules and regulations that ensure pharmaceutical quality.

Article 9: Pharmaceutical producers must arrange production in accordance with the Control of Pharmaceutical Production Quality Standards to be formulated by the State Council's pharmaceutical regulatory department in accordance herewith. Pharmaceutical regulatory departments shall certify whether pharmaceutical producers comply with the requirements of the Control of Pharmaceutical Production Quality Standards. Those producers that pass certification shall be issued written proof of certification.

The specific implementing procedures and implementation stages for the Control of Pharmaceutical Production Quality Standards shall be stipulated by the State Council's pharmaceutical regulatory department.

Article 10: With the exception of the preparation of traditional Chinese medicines ready for decoction, pharmaceuticals must be produced in accordance with State pharmaceutical standards and the production processes approved by the State Council's pharmaceutical regulatory department. Production records must be complete and accurate. If a change to a pharmaceutical producer's production process affects pharmaceutical quality, it must report such change to its original approval department for examination and approval.

Traditional Chinese medicines ready for decoction must be prepared in accordance with State pharmaceutical standards. Those of such medicines on which State pharmaceutical standards are silent must be prepared in accordance with the preparation standards formulated by the pharmaceutical regulatory departments of the people's government of the provinces, autonomous regions and municipalities directly under the central government. The preparation standards formulated by the pharmaceutical regulatory departments of the people's governments of the provinces, autonomous regions and municipalities directly under the central government shall be submitted to the State Council's pharmaceutical regulatory department for its records.

Article 11: The raw materials and excipients required in the production of pharmaceuticals must comply with the requirements for use thereof in pharmaceuticals.

Article 12: Pharmaceutical producers must subject the pharmaceuticals that they produce to quality inspection. A pharmaceutical that does not meet State pharmaceutical standards or a traditional Chinese medicine ready for decoction not prepared in accordance with the standards for the preparation of traditional Chinese medicines ready for decoction formulated by the pharmaceutical regulatory department of the people's government of the province, autonomous region or municipality directly under the central government may not leave the factory.

Article 13: Subject to the approval of the State Council's pharmaceutical regulatory department or the pharmaceutical regulatory department of the people's government of the province, autonomous region or municipality directly under the central government authorized by the State Council's pharmaceutical regulatory department, a pharmaceutical producer may produce pharmaceuticals upon entrustment by others.

PART THREE: ADMINISTRATION OF PHARMACEUTICAL TRADERS

Article 14: The establishment of a pharmaceutical wholesaler shall be subject to the approval of the pharmaceutical regulatory department of the people51s government of the province, autonomous region or municipality directly under the central government where the wholesaler is located, which shall issue the wholesaler a Pharmaceutical Trading Licence upon approval. The establishment of a pharmaceutical retailer shall be subject to the approval of the local pharmaceutical regulatory department at or above the county level of the place where the retailer is located, which shall issue the retailer a Pharmaceutical Trading Licence upon approval. The wholesaler or retailer shall register with the administration for industry and commerce on the strength of the Pharmaceutical Trading Licence. Pharmaceuticals may not be traded in without a Pharmaceutical Trading Licence.

A Pharmaceutical Trading Licence shall specify the term thereof and the scope of business. At the expiration of the term thereof, the pharmaceutical trader shall be re-examined and issued a new licence.

When approving the establishment of pharmaceutical traders, the pharmaceutical regulatory departments shall, in addition to basing their approvals on the conditions stipulated in Article 15 hereof, abide by the principles of rational geographic distribution and making the purchase of pharmaceuticals by the public convenient.

Article 15: The following conditions must be met when establishing a pharmaceutical trader:

(1) having pharmaceutical technicians whose qualifications have been recognized in accordance with the law;

(2) having a place of business, equipment, storage facilities and a hygienic environment appropriate to pharmaceutical trading;

(3) having a quality control organization or quality control personnel appropriate to pharmaceutical trading; and

(4) having rules and regulations ensuring the quality of the pharmaceuticals to be traded.

Article 16: Pharmaceutical traders must trade in pharmaceuticals in accordance with the Control of the Quality of Pharmaceutical Trading Standards to be formulated by the State Council's pharmaceutical regulatory department in accordance herewith. Pharmaceutical regulatory departments shall certify whether pharmaceutical traders comply with the requirements of the Control of the Quality of Pharmaceutical Trading Standards. Those enterprises that pass certification shall be issued written proof of certification.

The specific implementing procedures and implementation stages for the Control of the Quality of Pharmaceutical Trading Standards shall be stipulated by the State Council's pharmaceutical regulatory department.

Article 17: Pharmaceutical traders must establish and implement a system for the examination and acceptance of the pharmaceuticals that they purchase, the function of which system shall be to verify the pharmaceutical quality certificates and other marks. Pharmaceuticals that do not meet the specified requirements may not be purchased.

Article 18: When purchasing and selling pharmaceuticals, pharmaceutical traders must keep true and complete purchase and sale records. Purchase and sale records must indicate the pharmaceutical's generic name, dosage form, specifications, batch number, time of or until expiration, producer, purchasing (selling) work unit, quantity purchased (sold), purchase (sale) price, date of purchase (sale) and other particulars specified by the State Council's pharmaceutical regulatory department.

Article 19: The sale of a pharmaceutical by a pharmaceutical trader must be error free and accompanied by an accurate explanation of the directions for use, dosage and warnings. Compounded prescriptions must be checked and the pharmaceuticals specified on a prescription may not be changed or substituted without authorization. The compounding of prescriptions containing incompatibilities or overdoses shall be refused. If necessary, such a prescription may be compounded only after it has been corrected or signed anew by the issuing physician.

Pharmaceutical traders that sell traditional Chinese medicinal materials must indicate the places of origin thereof.

Article 20: A pharmaceutical trader must formulate and implement a system for the safe storage of pharmaceuticals, taking such necessary measures as refrigeration and precautions against freezing, moisture, insects, mice, etc. so as to ensure pharmaceutical quality.

Pharmaceuticals entering or leaving the warehouse must be subjected to a system of inspections.

Article 21: Traditional Chinese medicinal materials may be sold at urban and rural fairs and markets, unless otherwise stipulated by the State Council.

Pharmaceuticals other than traditional Chinese medicinal materials may not be sold at urban and rural fairs and markets. However, pharmaceutical retailers holding a Pharmaceutical Trading Licence may, within the stipulated scope, establish outlets in urban and rural fairs and markets to sell pharmaceuticals other than traditional Chinese medicinal materials. The specific procedures therefor will be formulated by the State Council.

PART FOUR: ADMINISTRATION OF MEDICINAL PREPARATIONS OF MEDICAL INSTITUTIONS

Article 22: Medical institutions must have pharmaceutical technicians whose qualifications have been recognized in accordance with the law. Non-pharmaceutical technicians may not directly engage in work involving pharmaceutical technology.

Article 23: The compounding of medicinal preparations by medical institutions shall be subject to the examination and agreement of the health administration department of the people's government of the province, autonomous region or municipality directly under the central government and the approval of the pharmaceutical regulatory department of the people's government of the province, autonomous region or municipality directly under the central government where it is located, after which the said pharmaceutical regulatory department shall issue the medical institution a Preparation Compounding Licence for a Medical Institution. Medicinal preparations may not be compounded without a Preparation Compounding Licence for a Medical Institution.

A Preparation Compounding Licence for a Medical Institution shall specify the term thereof. At the expiration of the term thereof, the medical institution shall be reexamined and issued a new licence.

Article 24: A medical institution that compounds medicinal preparations must have the facilities, management system, inspection instruments and hygienic conditions that can ensure the quality of the medicinal preparations.

Article 25: The medicinal preparations compounded by a medical institution must be products that the work unit needs for clinical reasons and that are not available on the market. Such medicinal preparations must be approved by the pharmaceutical regulatory department of the people's government of the province, autonomous region or municipality directly under the central government where the medical institution is located before they may be compounded. Compounded medicinal preparations shall be subjected to quality inspection in accordance with regulations. Those that are found to meet the standards shall be used in the medical institution on the strength of a physician's prescription. Under special circumstances, with the approval of the State Council's pharmaceutical regulatory department or the pharmaceutical regulatory department of the people's government of the province, autonomous region or municipality directly under the central government, medicinal preparations compounded by a medical institution may be used among designated medical institutions to make up for each other's needs.

Medicinal preparations compounded by medical institutions may not be sold on the market.

Article 26: Medical institutions must establish and implement a system for the examination and acceptance of the pharmaceuticals that they purchase, the function of which system shall be to verify the pharmaceutical quality certificates and other marks. Pharmaceuticals that do not meet the specified requirements may not be purchased or used.

Article 27: The prescriptions compounded by the pharmacy personnel of a medical institution must be checked and the pharmaceuticals specified on a prescription may not be changed or substituted without authorization. The compounding of prescriptions containing incompatibilities or overdoses shall be refused. If necessary, such a prescription may be compounded only after it has been corrected or signed anew by the issuing physician.

Article 28: A medical institution must formulate and implement a system for the safe storage of pharmaceuticals, taking such necessary measures as refrigeration and precautions against freezing, moisture, insects, mice, etc. so as to ensure pharmaceutical quality.

PART FIVE: ADMINISTRATION OF PHARMACEUTICALS

Article 29: When developing a new pharmaceutical, true relevant information such as the production method and quality norms for, and results of pharmacological and toxicological experiments on the pharmaceutical must be submitted, together with specimens thereof, in accordance with the regulations of the State Council's pharmaceutical regulatory department. Only after the approval of the foregoing by the State Council's pharmaceutical regulatory department may clinical trials be conducted. The procedures for recognizing the qualifications of institutions that conduct clinical trials of pharmaceuticals shall be jointly formulated by the State Council's pharmaceutical regulatory department and the State Council's health administration department.

A new pharmaceutical that has been examined and approved after the completion of clinical trials shall be approved, and a "new pharmaceutical certificate" issued in respect thereof, by the State Council's pharmaceutical regulatory department.

Article 30: Research institutes for the appraisal of the non-clinical safety of pharmaceuticals and clinical trial institutions must respectively implement the standards for the control of the quality of non-clinical research of pharmaceuticals and the standards for the control of the quality of clinical trials on pharmaceuticals.

Standards for the control of the quality of non-clinical research of pharmaceuticals and standards for the control of the quality of clinical trials on pharmaceuticals will be formulated by the department determined by the State Council.

Article 31: The production of new pharmaceuticals or of pharmaceuticals for which State standards already exist shall be subject to the approval of, and the issuance of a pharmaceutical approval number by, the State Council's pharmaceutical regulatory department. However, the production of those traditional Chinese medicinal materials and those traditional Chinese medicines ready for decoction that are not subject to the issuance of approval numbers shall be exempt from the foregoing provision. The catalogue of traditional Chinese medicinal materials and traditional Chinese medicines ready for decoction subject to the issuance of approval numbers shall be formulated by the State Council's pharmaceutical regulatory department in conjunction with the State Council's department for the administration of traditional Chinese medicines.

A pharmaceutical producer may only commence production of a pharmaceutical after obtaining a pharmaceutical approval number therefor.

Article 32: Pharmaceuticals must comply with State pharmaceutical standards. Traditional Chinese medicines ready for decoction shall be handled in accordance with Paragraph Two of Article 10 hereof.

The PRC, Pharmacopoeia and the pharmaceutical standards promulgated by the State Council's pharmaceutical regulatory department are the State pharmaceutical standards.

The State Council's pharmaceutical regulatory department shall organize a pharmacopoeia committee. Such committee shall be charged with the formulation and revision of State pharmaceutical standards.

The pharmaceutical inspection institute of the State Council's pharmaceutical regulatory department is charged with the definition of State pharmaceutical standard products and control products.

Article 33: The State Council's pharmaceutical regulatory department shall arrange to have pharmacological, medical and other technical personnel appraise new pharmaceuticals and reappraise pharmaceuticals that have been approved for production.

Article 34: With the exception of traditional Chinese medicinal materials not subject to the issuance of approval numbers, pharmaceutical producers, pharmaceutical traders and medical institutions must purchase pharmaceuticals from enterprises qualified to produce or trade in pharmaceuticals.

Article 35: The State subjects narcotics, psychotropic pharmaceuticals, toxic pharmaceuticals for medicinal purposes and radiopharmaceuticals to special administration. The procedures for the administration thereof will be formulated by the State Council.

Article 36: The State implements a system for the protection of traditional Chinese medicine varieties. The specific procedures therefor will be formulated by the State Council.

Article 37: The State implements systems for the separate administration of prescription medicines and over-the-counter medicines. The specific procedures therefor will be formulated by the State Council.

Article 38: The import of pharmaceuticals that have no clear curative effects, that cause strong adverse reactions or that otherwise harm human health is prohibited.

Article 39: The import of a pharmaceutical shall be subject to an examination arranged by the State Council's pharmaceutical regulatory department. A pharmaceutical may only be approved for import and an imported pharmaceutical registration certificate issued therefor after the examination confirms that it meets quality standards and that it is safe and effective.

The procedures for the import of small quantities of pharmaceuticals by a medical work unit for a clinical emergency or by an individual for personal use shall be handled in accordance with the relevant State regulations.

Article 40: Pharmaceuticals must be imported through a port through which the import of pharmaceuticals is permitted and the import shall be registered by the importer with the pharmaceutical regulatory department of the place where the port is located. Customs shall release the imported pharmaceuticals on the strength of the Customs Passage Form for Imported Pharmaceuticals issued by the pharmaceutical regulatory department. Customs may not release imported pharmaceuticals without a Customs Passage Form for Imported Pharmaceuticals.

The pharmaceutical regulatory department of the place where the port is located shall notify the pharmaceutical inspection institute to carry out a spot check of imported pharmaceuticals in accordance with the regulations of the State Council's pharmaceutical regulatory department, and charge an inspection fee therefor in accordance with Paragraph Two of Article 41 hereof.

Ports through which the import of pharmaceuticals is permitted shall be proposed by the State Council's pharmaceutical regulatory department in conjunction with the General Administration of Customs and reported to the State Council for approval.

Article 41: The State Council's pharmaceutical regulatory department shall designate a pharmaceutical inspection institute to inspect the pharmaceuticals set forth below before their sale or at the time of their import; those pharmaceuticals that fail inspection may not be sold or imported:

(1) biological products specified by the State Council's pharmaceutical regulatory department;

(2) pharmaceuticals to be sold in China for the first time;

(3) other pharmaceuticals specified by the State Council.

The inspection fee items and fee rates chargeable for the pharmaceuticals stipulated in the preceding paragraph will be set and announced by the State Council's financial department in conjunction with the State Council's department in charge of pricing. The procedures for the collection of inspection fees will be formulated by the State Council's financial department in conjunction with the State Council's pharmaceutical regulatory department.

Article 42: The State Council's pharmaceutical regulatory department shall arrange for surveys of pharmaceuticals that have already been approved for production or import. The approval number or imported pharmaceutical registration certificate of pharmaceuticals that have unclear curative effects, that cause strong adverse reactions or that otherwise harm human health shall be revoked.

A pharmaceutical whose approval number or imported pharmaceutical registration certificate has been revoked may not be produced, imported, sold or used. Those of such pharmaceuticals that have already been produced or imported shall be destroyed under the supervision or otherwise disposed of by the local pharmaceutical regulatory department.

Article 43: The State implements a pharmaceutical reserve system.

When a major disaster, epidemic or other sudden event occurs in the country, the departments specified by the State Council may requisition the pharmaceuticals of enterprises on an emergency basis.

Article 44: The State Council has the power to restrict or prohibit the export of pharmaceuticals that are in short supply in the country.

Article 45: An entity importing or exporting narcotics, or psychotropic pharmaceuticals falling within the scope specified by the State, must be in possession of an Import Permit or Export Permit issued by the State Council's pharmaceutical regulatory department.

Article 46: Medicinal materials that are newly discovered or are introduced from abroad may only be sold subject to the examination and approval of the State Council's pharmaceutical regulatory department.

Article 47: The procedures for the administration of medicinal materials commonly used by people in certain regions will be formulated by the State Council's pharmaceutical regulatory department in conjunction with the State Council's department for the administration of traditional Chinese medicines.

Article 48: The production (here and hereafter including the compounding) and sale of fake pharmaceuticals is prohibited.

A pharmaceutical shall be deemed a fake pharmaceutical if:

(1) the ingredients of the pharmaceutical do not conform with the ingredients specified in the State pharmaceutical standard; or

(2) it is a non-pharmaceutical product being passed off as a pharmaceutical or it is a pharmaceutical being passed off as another pharmaceutical.

A pharmaceutical shall be treated as a fake pharmaceutical if:

(1) the State Council's pharmaceutical regulatory department has prohibited the use thereof;

(2) this Law requires that approval be obtained for the production or import of the pharmaceutical but it is produced or sold without such approval, or this Law requires that the pharmaceutical be inspected but it is sold without having been inspected;

(3) it has turned;

(4) it has been contaminated;

(5) it was produced with pharmaceutical raw materials for which this Law requires an approval number, but no such approval number has been obtained; or

(6) the indication(s) or primary function(s) indicated on the pharmaceutical exceed/exceeds the stipulated scope of indications or primary functions.

Article 49: The production and sale of inferior pharmaceuticals are prohibited.

Pharmaceuticals the ingredient content of which does not conform with State pharmaceutical standards shall be deemed inferior pharmaceuticals.

A pharmaceutical shall be treated as an inferior pharmaceutical if:

(1) the time of or until expiration thereof is not indicated or has been altered;

(2) the batch number thereof is not indicated or has been altered;

(3) its expiration date has passed;

(4) the packaging materials or the container in direct contact with the pharmaceutical has not been approved;

(5) a colorant, preservative, flavouring, corrective or excipient has been added to it without authorization; or

(6) another circumstance not conforming with pharmaceutical standards exists.

Article 50: The name of a pharmaceutical as specified in the State pharmaceutical standards shall be the generic name of the pharmaceutical. A term that is already being used as the generic name of a pharmaceutical may not be used as a pharmaceutical trademark.

Article 51: The personnel of pharmaceutical producers, pharmaceutical traders and medical institutions who come into direct contact with pharmaceuticals must undergo an annual physical examination. Personnel who have contracted a contagious disease or another illness that could contaminate pharmaceuticals may not engage in work that involves direct contact with pharmaceuticals.

PART SIX: ADMINISTRATION OF THE PACKAGING OF PHARMACEUTICALS

Article 52: Packaging materials and containers that are in direct contact with pharmaceuticals must comply with the requirements for use with pharmaceuticals and the standards for ensuring human health and safety and shall be subject to examination and approval by the pharmaceutical regulatory department at the same time as the pharmaceuticals are approved and examined.

Pharmaceutical producers may not use unapproved packaging materials and containers that are in direct contact with pharmaceuticals.

The pharmaceutical regulatory department shall order a halt to the use of those packaging materials and containers in direct contact with pharmaceuticals that do not meet the standards.

Article 53: Pharmaceutical packaging must satisfy pharmaceutical quality requirements and must be convenient for storage, transport and medical use.

Traditional Chinese medicinal materials must be packaged prior to transportation. The product name, place of origin, date and the transferor must be indicated on the packaging and a mark indicating they meet quality standards affixed thereto.

Article 54: A label must be printed on or affixed to pharmaceutical packaging and directions for use included therewith in accordance with regulations.

The label or the directions must indicate the pharmaceutical's generic name, ingredients, specifications, producer, approval number, product batch number, production date, time of or until expiration, indication(s) or primary function(s), method of administration, dosage, contraindications, adverse reactions and warnings.

The prescribed mark must be printed on the labels of narcotics, psychotropic pharmaceuticals, toxic pharmaceuticals for medicinal purposes, radiopharmaceuticals, pharmaceuticals for external use and prescription medicines.

PART SEVEN: ADMINISTRATION OF PHARMACEUTICAL PRICING AND ADVERTISING

Article 55: For pharmaceuticals legally subject to government pricing or government guidance in pricing, the government's department in charge of pricing shall rationally set and adjust prices in accordance with the pricing principles stipulated in the PRC, Pricing Law and on the basis of the average social costs, market supply and demand and the public's ability to pay, so as to balance quality and price, eliminate inflated prices and protect the legitimate interests of pharmaceutical users.

Pharmaceutical producers, pharmaceutical traders and medical institutions must implement government set prices and government guideline prices and may not raise prices in any form whatsoever without authorization.

Pharmaceutical producers shall provide to the government's department in charge of pricing the true costs of producing and trading in a pharmaceutical. They shall provide such information in accordance with the law and may not refuse to report, or make a false or incomplete report of, the same.

Article 56: For pharmaceuticals legally subject to market-regulated pricing, pharmaceutical producers, pharmaceutical traders and medical institutions shall set prices in accordance with the principles of fairness, reasonableness, good faith and balance of quality and price, so as to provide pharmaceutical users with pharmaceuticals at a reasonable price.

Pharmaceutical producers, pharmaceutical traders and medical institutions shall abide by the regulations on the administration of pharmaceutical pricing of the State Council's department in charge of pricing when setting and marking the retail prices of pharmaceuticals. Price fraud that is carried out for the purpose of reaping windfall profits or that prejudices the interests of pharmaceutical users is prohibited.

Article 57: Pharmaceutical producers, pharmaceutical traders and medical institutions shall provide to the government's department in charge of pricing such information as the actual prices and quantities, etc. of the pharmaceuticals purchased and sold by them.

Article 58: A medical institution shall provide its patients with a price list of the pharmaceuticals they are using. Furthermore, medical institutions designated by a medical insurance scheme shall truthfully publish the prices of their frequently used pharmaceuticals and strengthen their administration of the reasonable use of pharmaceuticals in accordance with the stipulated procedures. The specific procedures therefor will be formulated by the State Council's health administration department.

Article 59: Pharmaceutical producers, pharmaceutical traders and medical institutions are prohibited from secretly giving or accepting rebates or other benefits off the books when selling or purchasing pharmaceuticals.

Pharmaceutical producers, pharmaceutical traders and their agents are prohibited from proffering property or other benefits under any guise to such relevant personnel of the medical institutions that use their pharmaceuticals as the persons in charge, pharmaceutical procurement personnel, physicians, etc. Such relevant personnel of medical institutions as the persons in charge, pharmaceutical procurement personnel, physicians, etc. are prohibited from accepting property or other benefits under any guise that are proffered by pharmaceutical producers, pharmaceutical traders or their agents.

Article 60: Advertising for a pharmaceutical shall be subject to the approval of the pharmaceutical regulatory department of the people's government of the province, autonomous region or municipality directly under the central government in which the enterprise is located and a pharmaceutical advertising approval number shall be issued therefor. Advertisements for which no pharmaceutical advertising approval number has been obtained may not be published.

Prescription pharmaceuticals may be introduced in specialized medical and pharmacological journals jointly designated by the State Council's health administration department and the State Council's pharmaceutical regulatory department. However, such pharmaceuticals may not be advertised in the mass media or otherwise advertised or publicized to the public.

Article 61: The content of pharmaceutical advertisements must be true and lawful and based on the directions for use approved by the State Council's pharmaceutical regulatory department. Such advertisements may not contain false claims.

Pharmaceutical advertisements may not contain unscientific assertions or guarantees of efficacy and may not use the name or image of a State authority, medical research work unit, academic institution, expert, scholar, physician or patient as proof.

Advertisements for non-pharmaceutical products may not contain publicity for pharmaceuticals.

Article 62: The pharmaceutical regulatory department of the people's government of a province, autonomous region or municipality directly under the central government shall inspect the pharmaceutical advertisements it has approved and shall inform the advertising regulatory department of advertisements that violate this Law or the PRC, Advertising Law and submit a proposal for the handling thereof. The advertising regulatory department shall handle the matter in accordance with the law.

Article 63: Where this Law is silent on the pricing and advertising of pharmaceuticals, the provisions of the PRC, Pricing Law and the PRC, Advertising Law shall govern.

PART EIGHT: SUPERVISION OF PHARMACEUTICALS

Article 64: After a pharmaceutical regulatory department has examined and approved an application for pharmaceutical development, pharmaceutical production or trading, or a medical institution51s use of pharmaceuticals, it has the power to supervise and inspect the same in accordance with laws and administrative regulations. The relevant work units and individuals may not refuse to cooperate therewith or conceal information.

When a pharmaceutical regulatory department conducts supervision and inspections, it must present supporting documentation and must maintain the confidentiality of the technical secrets and business secrets of the subject learned while conducting the supervision or inspection.

Article 65: Depending on supervision or inspection requirements, the pharmaceutical regulatory departments may conduct spot checks of pharmaceutical quality. Specimens for spot checks shall be taken in accordance with regulations and no fee may be charged therefor. The expenses required therefor shall be listed as expense items in accordance with State Council regulations.

The pharmaceutical regulatory departments may take the administrative enforcement measures of placing under seal or impounding pharmaceuticals for which they have proof they may be harmful to human health, as well as the related materials; if they take such measures, they shall render a decision on their administrative handling of the matter within seven days. If the pharmaceutical requires inspection, the decision on the administrative handling of the matter must be rendered within 15 days from the date of issue of the inspection report.

Article 66: The State Council's pharmaceutical regulatory department and the pharmaceutical regulatory departments of the people's governments of the provinces, autonomous regions and municipalities directly under the central government shall regularly announce the results of spot checks of pharmaceutical quality. If an announcement contains an error, such error must be corrected within the scope of coverage of the original announcement.

Article 67: If a party concerned objects to the inspection result of the pharmaceutical inspection institute, it may apply for re-inspection to the original pharmaceutical inspection institute or a pharmaceutical inspection institute established or designated by the pharmaceutical regulatory department one level higher, or apply directly for a new inspection to a pharmaceutical inspection institute established or designated by the State Council's pharmaceutical regulatory department, within seven days of the date of receipt of the pharmaceutical inspection result. The pharmaceutical inspection institute handling the re-inspection must render its inspection conclusion within the time specified by the State Council's pharmaceutical regulatory department.

Article 68: A pharmaceutical inspection institute shall, in accordance with regulations and on the basis of the Control of Pharmaceutical Production Quality Standards and the Control of the Quality of Pharmaceutical Trading Standards, conduct post-certification follow-up inspections of the pharmaceutical producers and pharmaceutical traders that it has certified as qualified.

Article 69: Local people's governments and pharmaceutical regulatory departments may not use such means as requiring the conduct of pharmaceutical inspections, examination and approval, etc. to limit or bar the entry into their areas of pharmaceuticals produced in accordance herewith by pharmaceutical producers not located in their areas.

Article 70: Pharmaceutical regulatory departments, the pharmaceutical inspection institutes that they have established and the institutions professionally engaged in pharmaceutical inspections that they have designated may not participate in the production of, or trading in, pharmaceuticals, or use their own names to recommend pharmaceuticals or supervise the manufacture or sale of pharmaceuticals.

The personnel of pharmaceutical regulatory departments, the pharmaceutical inspection institutes that they have established and the institutions professionally engaged in pharmaceutical inspections that they have designated may not participate in the production of, or trading in, pharmaceuticals.

Article 71: The State implements a system for reporting adverse reactions caused by pharmaceuticals. Pharmaceutical producers, pharmaceutical traders and medical institutions must frequently inspect the quality and efficacy of, and the reactions from, the pharmaceuticals that they produce, trade in or use. If they discover serious adverse reactions possibly related to a pharmaceutical being used, they must report the same in a timely manner to the pharmaceutical regulatory department and the health administration department of the people's government of the province, autonomous region or municipality directly under the central government concerned. The specific procedures therefor shall be formulated by the State Council's pharmaceutical regulatory department in conjunction with the State Council's health administration department.

The State Council's pharmaceutical regulatory department or the pharmaceutical regulatory department of the people's government of a province, autonomous region or municipality directly under the central government may take the emergency control measure of halting the production, sale and use of a pharmaceutical that has been confirmed to cause serious adverse reactions and shall arrange for the expert evaluation of such pharmaceutical within five days. The said department shall render a decision on the administrative handling of the matter within 15 days of the date the expert conclusion is issued.

Article 72: The pharmaceutical inspection organizations or personnel of pharmaceutical producers, pharmaceutical traders and medical institutions shall be subject to the business guidance of the pharmaceutical inspection institute established by the local pharmaceutical regulatory department.

PART NINE: LEGAL LIABILITY

Article 73: If pharmaceuticals are produced or traded in without a Pharmaceutical Production Licence, Pharmaceutical Trading Licence or Preparation Compounding Licence for a Medical Institution, such operation shall be closed down in accordance with the law, the pharmaceuticals illegally produced or sold and the illegal income derived therefrom confiscated and a fine of not less than twice and not more than five times the merchandise value of the illegally produced or sold pharmaceuticals (here and hereafter including both the pharmaceuticals that have been sold and those that have not) shall be imposed. If a criminal offence is constituted, the criminal liability of the perpetrator shall be pursued in accordance with the law.

Article 74: If fake pharmaceuticals are produced or sold, the pharmaceuticals illegally produced or sold and the illegal income derived therefrom shall be confiscated and a fine of not less than twice and not more than five times the merchandise value of the illegally produced or sold pharmaceuticals shall be imposed; if the perpetrator holds a pharmaceutical approval certificate therefor, such certificate shall be revoked and it shall be ordered to suspend production or business and undergo rectification. If the case is serious, the Pharmaceutical Production Licence, Pharmaceutical Trading Licence or Preparation Compounding Licence for a Medical Institution shall be revoked. If a criminal offence is constituted, the criminal liability of the perpetrator shall be pursued in accordance with the law.

Article 75: If inferior pharmaceuticals are produced or sold, the pharmaceuticals illegally produced or sold and the illegal income derived therefrom shall be confiscated and a fine of not less than once and not more than three times the merchandise value of the illegally produced or sold pharmaceuticals shall be imposed; if the case is serious, an order to suspend production or business and undergo rectification shall be issued or the pharmaceutical approval certificate and the Pharmaceutical Production Licence, Pharmaceutical Trading Licence or Preparation Compounding Licence for a Medical Institution shall be revoked. If a criminal offence is constituted, the criminal liability of the perpetrator shall be pursued in accordance with the law.

Article 76: The personnel directly in charge and other directly responsible personnel of an enterprise or other work unit, the circumstances of whose production or sale of fake or inferior pharmaceuticals are serious, shall not be permitted to engage in the production of, or trade in, pharmaceuticals for ten years.

The raw materials, excipients, packaging materials and production equipment exclusively used in the production of the fake or inferior pharmaceuticals by the producer shall be confiscated.

Article 77: If anyone provides such facilitating conditions as transportation, safekeeping or storage for what he knows or ought to know to be fake or inferior pharmaceuticals, all revenue derived from the transportation, safekeeping or storage thereof shall be confiscated and a fine of not less than 50% and not more than three times the illegal revenue shall be imposed. If a criminal offence is constituted, the criminal liability of the perpetrator shall be pursued in accordance with the law.

Article 78: The punishment notice for fake or inferior pharmaceuticals must indicate the quality inspection results issued by the pharmaceutical inspection institute, except in the circumstances specified in Items (1), (2), (5) and (6) of Paragraph Three of Article 48 and Paragraph Three of Article 49 hereof.

Article 79: If a pharmaceutical producer, pharmaceutical trader, research institute for the appraisal of the non-clinical safety of pharmaceuticals or clinical trial institution fails to implement the Control of Pharmaceutical Production Quality Standards, the Control of the Quality of Pharmaceutical Trading Standards, the standards for the control of the quality of non-clinical research of pharmaceuticals or the standards for the control of the quality of clinical trials on pharmaceuticals, it shall be warned, and ordered to correct the matter within a specified time limit; if it fails to correct the matter within the specified time limit it shall be ordered to suspend production or business and undergo rectification and fined not less than Rmb5,000 and not more than Rmb20,000. If the case is serious, its Pharmaceutical Production Licence, Pharmaceutical Trading Licence or qualifications as an institution for conducting clinical trials of pharmaceuticals shall be revoked.

Article 80: If a pharmaceutical producer, pharmaceutical trader or medical institution violates Article 34 hereof by purchasing pharmaceuticals from an enterprise that does not have a Pharmaceutical Production Licence or Pharmaceutical Trading Licence, it shall be ordered to correct the matter, its illegally purchased pharmaceuticals shall be confiscated and it shall be fined the equivalent of not less than twice and not more than five times the merchandise value of the illegally purchased pharmaceuticals. If there is illegal income, such illegal income shall be confiscated. If the case is serious, its Pharmaceutical Production Licence, Pharmaceutical Trading Licence or medical institution practice licence shall be revoked.

Article 81: If the importer of a pharmaceutical for which an imported pharmaceutical registration certificate has been obtained fails to register the import with the pharmaceutical regulatory department of the place where the port through which the import of pharmaceuticals is permitted is located in accordance with this Law, it shall be warned and ordered to correct the matter within a specified time limit; if it fails to correct the matter within the specified time limit, its imported pharmaceutical registration certificate shall be revoked.

Article 82: If a licence or a pharmaceutical approval certificate is forged, altered, bought, sold, leased out or lent, the illegal income derived therefrom shall be confiscated and a fine of not less than once and not more than three times the illegal income shall be imposed; if there is no illegal income, a fine of not less than Rmb20,000 and not more than Rmb100,000 shall be imposed. If the case is serious, the seller's, lessor's or lender's Pharmaceutical Production Licence, Pharmaceutical Trading Licence, Preparation Compounding Licence for a Medical Institution or pharmaceutical approval certificate shall be revoked as well. If a criminal offence is constituted, the criminal liability of the perpetrator shall be pursued in accordance with the law.

Article 83: If the provisions hereof are violated by providing false certificates, documents, information or specimens or using other fraudulent means to obtain a Pharmaceutical Production Licence, Pharmaceutical Trading Licence, Preparation Compounding Licence for a Medical Institution or pharmaceutical approval certificate, the Pharmaceutical Production Licence, Pharmaceutical Trading Licence, Preparation Compounding Licence for a Medical Institution or pharmaceutical approval certificate shall be revoked, no application of the perpetrator shall be accepted for five years and a fine of not less than Rmb10,000 and not more than Rmb30,000 shall be imposed.

Article 84: If a medical institution puts on the market a medicinal preparation that it formulated, it shall be ordered to correct the matter, the illegally sold medicinal preparation shall be confiscated and it shall be fined not less than once and not more than three times the merchandise value of the illegally sold medicinal preparation. If there is illegal income, such illegal income shall be confiscated.

Article 85: If pharmaceutical trader violates Article 18 or 19 hereof, it shall be ordered to correct the matter and warned. If the case is serious, its Pharmaceutical Trading Licence shall be revoked.

Article 86: If a pharmaceutical label does not comply with Article 54 hereof, the perpetrator shall be ordered to rectify the matter and warned, in addition to the pharmaceuticals being treated as fake or inferior pharmaceuticals. If the case is serious, the approval certificate for the said pharmaceutical shall be revoked.

Article 87: If a pharmaceutical inspection institute issues a sham inspection report and such act constitutes a criminal offence, its criminal liability shall be pursued in accordance with the law. If no criminal offence is constituted, it shall be ordered to correct the matter and given a warning, and the work unit shall additionally be fined not less than Rmb30,000 and not more than Rmb50,000. The personnel directly in charge and other directly responsible personnel shall be demoted, relieved of their positions or dismissed and fined not more than Rmb30,000, in accordance with the law. If there is illegal income, such illegal income shall be confiscated. If the case is serious, the inspection qualifications of the institute shall be revoked. If losses arise due to the untruthfulness of the inspection results issued by a pharmaceutical inspection institute, the institute shall be liable for the corresponding damages.

Article 88: The administrative punishments specified in Articles 73 to 87 hereof shall be decided by pharmaceutical regulatory departments at and above the county level in accordance with the division of responsibilities stipulated by the State Council's pharmaceutical regulatory department. Decisions on the revocation of Pharmaceutical Production Licences, Pharmaceutical Trading Licences, Preparation Compounding Licences for a Medical Institution, medical institution practice licences and pharmaceutical approval certificates shall be rendered by the original issuing or approval department.

Article 89: Violations of the provisions of Article 55, 56 or 57 hereof on the administration of pharmaceutical pricing shall be punished in accordance with the PRC, Pricing Law.

Article 90: If a pharmaceutical producer, pharmaceutical trader or medical institution secretly gives or accepts rebates or other benefits when selling or purchasing pharmaceuticals, or if a pharmaceutical producer, pharmaceutical trader or an agent thereof proffers property or other benefits to such relevant personnel as the persons in charge, pharmaceutical procurement personnel, physicians, etc. of a medical institution that uses its pharmaceuticals, it shall be fined not less than Rmb10,000 and not more than Rmb200,000 by the administration for industry and commerce; if there is illegal income, such illegal income shall be confiscated. If the case is serious, the administration for industry and commerce shall revoke the business licence of the pharmaceutical producer or pharmaceutical trader and notify the pharmaceutical regulatory department, which shall revoke the producer's or trader's Pharmaceutical Production Licence or Pharmaceutical Trading Licence. If a criminal offence is constituted, its criminal liability shall be pursued in accordance with the law.

Article 91: If such relevant personnel of a pharmaceutical producer or pharmaceutical trader as the persons in charge, the pharmaceutical procurement personnel, etc. accept property or other benefits proffered by another pharmaceutical producer, pharmaceutical trader or an agent thereof when selling or purchasing pharmaceuticals, they shall be disciplined and their illegal income confiscated in accordance with the law. If a criminal offence is constituted, their criminal liability shall be pursued in accordance with the law.

If such relevant personnel of a medical institution as the persons in charge, pharmaceutical procurement personnel, physicians, etc. accept property or other benefits proffered by a pharmaceutical producer, pharmaceutical trader or an agent thereof, they shall be disciplined by the health administration department or their work unit and their illegal income shall be confiscated. If the circumstances of an illegal act committed by a practising physician are serious, his licence to practise shall be revoked by the health administration department. If a criminal offence is constituted, the criminal liability of the perpetrator(s) shall be pursued.

Article 92: If a provision concerning the administration of pharmaceutical advertising hereof is violated, punishment shall be imposed in accordance with the PRC, Advertising Law, the advertising approval number shall be revoked by the pharmaceutical regulatory department that issued such number and no applications for the examination and approval for the advertising of the product in question shall be accepted for a period of one year. If a criminal offence is constituted, the criminal liability of the perpetrator shall be pursued in accordance with the law.

If a pharmaceutical regulatory department fails to perform its duty of examining a pharmaceutical advertisement in accordance with the law and the advertisement it approved for publication contains falsehoods or other content that violates laws or administrative regulations, the personnel directly in charge and other personnel directly responsible shall be disciplined in accordance with the law. If a criminal offence is constituted, their criminal liability shall be pursued in accordance with the law.

Article 93: If a pharmaceutical producer, pharmaceutical trader or medical institution violates the provisions hereof causing loss to a pharmaceutical user, it shall be liable for compensation in accordance with the law.

Article 94: If a pharmaceutical regulatory department violates the provisions hereof by committing any of the acts set forth below, the higher authority in charge of it or the supervising authority at a higher level shall order it to recover the illegally issued certificate, or to revoke the pharmaceutical approval certificate, and subject the personnel directly in charge and other directly responsible personnel to administrative punishments; if a criminal offence is constituted, their criminal liability shall be pursued in accordance with the law:

(1) issuing an enterprise with proof of certification of its compliance with the Control of Pharmaceutical Production Quality Standards or Control of the Quality of Pharmaceutical Trading Standards when the enterprise does not meet such standards, or failing to perform its duty of subjecting enterprises that have obtained proof of certification to follow-up inspections in accordance with regulations, or failing to order enterprises that do not meet the conditions for certification to rectify the matter or to revoke their proof of certification in accordance with the law;

(2) issuing a Pharmaceutical Production Licence, Pharmaceutical Trading Licence or Preparation Compounding Licence for a Medical Institution to a work unit that does not meet the statutory conditions;

(3) issuing an imported pharmaceutical registration certificate for a pharmaceutical that does not meet the import conditions; or

(4) approving the conduct of clinical tests or issuing a new pharmaceutical certificate or pharmaceutical approval number to an entity that does not meet the clinical testing conditions or production conditions.

Article 95: If a pharmaceutical regulatory department or a pharmaceutical inspection institute that it has established or an institute professionally engaged in pharmaceutical inspections that it has designated participates in the production of, or trading in, pharmaceuticals, its superior authority or the supervisory authority at a higher level shall order it to correct the matter and if there is illegal income, such illegal income shall be confiscated. If the case is serious, the personnel directly in charge and other directly responsible personnel shall be subjected to administrative punishments in accordance with the law.

If personnel of a pharmaceutical regulatory department, or of a pharmaceutical inspection institute that it has established or of an institute professionally engaged in pharmaceutical inspections that it has designated participate in the production of, or trading in, pharmaceuticals, they shall be subjected to administrative punishments in accordance with the law.

Article 96: If a pharmaceutical regulatory department or a pharmaceutical inspection institute that it has established or designated illegally charges inspection fees when conducting inspections for supervisory purposes, the relevant government department shall order it to refund the fees and the personnel directly in charge and other directly responsible personnel shall be subjected to administrative punishments in accordance with the law. If the circumstances of the illegal charging of inspection fees by the department or institute are serious, its inspection qualifications shall be revoked.

Article 97: Pharmaceutical regulatory departments shall perform their supervision and inspection duties in accordance with the law and supervise enterprises that have obtained Pharmaceutical Production Licences or Pharmaceutical Trading Licences as to whether they engage in the production of, or trading in, pharmaceuticals in accordance herewith.

If an enterprise that has obtained a Pharmaceutical Production Licence or Pharmaceutical Trading Licence produces or sells fake or inferior pharmaceuticals, then, in addition to pursuing the legal liability of the said enterprise in accordance with the law, the personnel directly in charge and other directly responsible personnel of the pharmaceutical regulatory department who have been neglectful or derelict in their duties shall be subjected to administrative punishments in accordance with the law. If a criminal offence is constituted, their criminal liability shall be pursued in accordance with the law.

Article 98: A pharmaceutical regulatory department shall order a lower level pharmaceutical regulatory department that has carried out an administrative act in violation hereof to rectify the matter within a specified time limit. If it fails to do so within the specified time limit, the higher level department has the power to change or shut down the lower level department.

Article 99: If personnel of pharmaceutical regulatory departments abuse their authority, practise graft or are derelict in their duties and the same constitutes a criminal offence, their criminal liability shall be pursued in accordance with the law. If the same is not sufficient to constitute a criminal offence, they shall be subjected to administrative punishments in accordance with the law.

Article 100: If an enterprise's Pharmaceutical Production Licence or Pharmaceutical Trading Licence is revoked pursuant to this Law, the pharmaceutical regulatory department shall notify the administration for industry and commerce to amend or cancel the registration of such enterprise.

Article 101: The merchandise value stipulated in this Part shall be calculated according to the marked price of the illegally produced or sold pharmaceutical. If there is no marked price, the merchandise value shall be calculated according to the market price of similar pharmaceuticals.

PART TEN: SUPPLEMENTARY PROVISIONS

Article 102: For the purposes of this Law, the following terms have the meanings set forth below:

The term "pharmaceutical" means a substance that is to be used to prevent, treat or diagnose human illnesses and to purposely regulate human physiological functions and that is required to have (an) indication(s) or primary function(s), method of administration and dosage, and includes traditional Chinese medicinal materials, traditional Chinese medicines ready for decoction, prepared traditional Chinese medicines, chemical raw materials for pharmaceuticals and medicinal preparations made therefrom, antibiotics, biochemical pharmaceuticals, radiopharmaceuticals, blood serum, vaccines, blood products and diagnostic pharmaceuticals, etc.

The term "excipients" means the vehicles and additives used in the production of pharmaceuticals and the compounding of prescriptions.

The term "pharmaceutical producer" means an enterprise that produces pharmaceuticals as its sole line of business or as a sideline.

The term "pharmaceutical trader" means an enterprise that trades in pharmaceuticals as its sole line of business or as a sideline.

Article 103: The procedures for the administration of the cultivation, gathering and raising of traditional Chinese medicinal materials will be formulated separately by the State Council.

Article 104: The State subjects the circulation of prophylactic biological products to special control. The specific procedures therefor will be formulated by the State Council.

Article 105: The specific procedures for the implementation hereof by the People's Liberation Army will be formulated by the State Council and the Central Military Commission on the basis hereof.

Article 106: This Law shall be implemented as of December 1 2001.