Chapter VI Control over the Packaging of Drugs

Article 52 Immediate packaging materials and containers shall meet the requirements for medicinal use and the standards for ensuring human health and safety. They shall, along with the drugs, be subject to examination and approval by the drug regulatory department.

No drug manufacturers may use immediate packaging materials and containers for which no approval is obtained.

If the immediate packaging materials and containers are not up to standard, the drug regulatory department shall give orders stopping the use of such materials and containers.

Article 53 Drug packaging shall conform to drug quality requirements and be convenient for storage, transportation and medical use.

Chinese crude drugs shall be packed for transportation. On each package shall be indicated the name of the drug, the origin of production, the date of consignment and the name of the consignor, with a quality certification mark attached.

Article 54 A label shall be printed on or attached to the drug package together with an insert sheet, as required by regulations.

In the label or insert sheet shall be indicated the adopted name of the drug in China, its ingredients, strength, manufacturer, approval number, product batch number, production date, date of expiry, indications or functions, usage, dosage, contraindications, adverse drug reactions, and precautions.

Specified marks shall be printed in the label of narcotic drugs, psychotropic substances, toxic drugs for medical use, radioactive pharmaceuticals, drugs for topical use, and non-prescription drugs.

Chapter VII Control over Drug Pricing and Advertising

Article 55 For drugs the prices of which are fixed or guided by the government according to law, the competent pricing department of the government shall, on the pricing principle stipulated in the Pricing Law of the People’s Republic of China and on the basis of average social cost, supply and demand on the market, and public affordability, rationally fix and adjust the prices, in order to ensure that price is commensurate with quality, eliminate excessively high price, and protect the legitimate interests of users.

Drug manufacturers, drug distributors and medical institutions shall implement prices fixed or guided by the government. No one may raise prices in any manner without authorization.

Drug manufacturers shall provide the truthful manufacturing and operation cost to the competent pricing department of the government. No one may refuse to or falsely or deceptively report the cost.

Article 56 For drugs the prices of which are adjustable with the market according to law, drug manufacturers, drug distributors and medical institutions shall fix the prices on the principles of fairness, rationality，good faith and commensuration of price with quality, in order to provide the users with drugs of reasonable prices.

When fixing and indicating retailing prices, drug manufacturers, drug distributors and medical institutions shall abide by the regulations on control over drug prices formulated by the competent pricing department under the State Council. Usurious profits and fraud in pricing that harms the users’ interests are prohibited.

Article 57 Drug manufacturers, drug distributors and medical institutions shall provide the actual buying and selling prices and quantity of the drugs purchased and sold, and other related data to the competent pricing department of the government.

Article 58 Medical institutions shall provide the patients with a list of drug prices; and the medical institutions designated by medical insurance provider shall truthfully publicize the prices of drugs in common use in compliance with the specified measures, in order to ensure reasonable use of drugs. Specific measures shall be formulated by the administrative department for health under the State Council.

Article 59 Drug manufacturers, drug distributors and medical institutions are prohibited from offering or accepting, in private, off-the-book rake-offs or other benefits in the course of purchasing and selling drugs.

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

Article 60 Drug advertisements shall be subject to approval by the drug regulatory department of the people’s government of the province, autonomous region or municipality directly under the Central Government where the enterprise is located, an approval number of drug advertisement shall be issued. No one may launch advertisements without the approval number.

Prescription drugs may be introduced in the medical or pharmaceutical professional publications jointly designated by the administrative department for health and the drug regulatory department under the State Council, but their advertisements may not be released by mass media or disseminated to the general public by other means.

Article 61 The content of drug advertisements shall be truthful and lawful, and the insert sheet approved by the drug regulatory department under the State Council shall be taken as the basis, and no false content may be contained in them.

No unscientific, categorical assertion or warranty of described function may be contained in drug advertisements; no names or images of government departments, medical or pharmaceutical research institutions, academic institutions, or experts, scholars, physicians and patients may be used as evidence for drug advertising.

Non-drug advertisements may not deal with drug promotion.

Article 62 Drug regulatory departments of the people’s governments of provinces, autonomous regions or municipalities directly under the Central Government shall inspect the drug advertisements approved by them, and inform the advertisement regulatory authority of those advertisements that violate this Law or the Advertisement Law of the People’s Republic of China, and put forward suggestions for their handling, and the said authority shall deal with such cases according to law.

Article 63 Where drug pricing and advertising are not governed by the provisions of this Law, the provisions of the Pricing Law of the People’s Republic of China and the Advertisement Law of the People’s Republic of China shall be applicable.

Chapter VIII Inspection of Drugs

Article 64 Drug regulatory departments shall have the power to supervise and inspect, according to law and administrative regulations, matters related to drug research and development, which it has given approval, to drug production and distribution, and to the use of drugs by medical institutions. No institutions or individuals concerned may resist the supervision and inspection or conceal any facts.

When people from drug regulatory departments conduct supervision and inspection, they shall show their identification documents, and they shall keep confidential the technical and business secrets of the persons under inspection which they come to know in the course of inspection.

Article 65 Drug regulatory departments may conduct selective testing of drug quality in light of the need of supervision and inspection. Sampling for selective testing shall be carried out according to relevant regulations, and no fees whatever may be charged for sampling or testing. The necessary expenses shall be listed and covered in accordance with the regulations of the State Council.

The drug regulatory department shall take administrative enforcement measures to seal or seize the drugs and related materials that are proved to be potentially harmful to human health and shall, within seven days, make an administrative decision on the matter in question. Where it is necessary to test such drugs, it shall, within 15 days from the date the testing report is issued, make the administrative decision.

Article 66 The drug regulatory department under the State Council and the drug regulatory departments of the people’s governments of provinces, autonomous regions and municipalities directly under the Central Government shall regularly announce the results of selective testing of drug quality. Where the announcement is improper, it shall be corrected within the scope in which the original announcement is made.

Article 67 Where the party has objection to the results of testing conducted by the drug testing institution, it may, within seven days from the date it receives the testing results, apply for re-testing to the said drug testing institution, or to such an institution established or designated by the drug regulatory department at the next higher level, and it may also directly apply to the drug testing institution established or designated by the drug regulatory department under the State Council. The drug testing institution that accepts the application shall, within the time limit specified by the drug regulatory department under the State Council, draw a conclusion from the re-test.

Article 68 Drug regulatory departments shall, in accordance with regulations and on the basis of the GMP and GSP, make follow-up inspections on the certified drug manufacturers and distributors.

Article 69 With regard to the drugs produced according to the provisions of this Law by drug manufacturers not located in the region, no local people’s government or drug regulatory department may, by means of demanding drug testing or examination, restrict or deny their access to the region.

Article 70 No drug regulatory department, or drug testing institution established by the department, or the institution specially engaged in drug testing designated by the department may be involved in production or distribution of drugs, or recommend drugs in its name or have the supervisor for drug production or sale named after it.

No staff members of drug regulatory departments, of drug testing institutions established by the departments or of institutions specially engaged in drug testing designated by the departments may be involved in drug production or distribution.

Article 71 The State applies a system of report on adverse drug reaction. Drug manufacturers, drug distributors and medical institutions shall make constant investigations into quality, therapeutic efficacy and reactions of the drugs produced, distributed and used by them. When serious adverse drug reactions possibly induced by drug use are discovered, they shall, without delay, report the matter to the local drug regulatory departments and administrative departments for health of the people’s governments of provinces, autonomous regions and municipalities directly under the Central Government. Specific measures shall be formulated by the drug regulatory department under the State Council together with the administrative department for health under the State Council.

With regard to drugs with confirmed serious adverse reactions, the drug regulatory department under the State Council or the drug regulatory department of the people’s government of a province, autonomous region or municipality directly under the Central Government may take urgent control measures to suspend their production, distribution and use, and it shall, within five days, arrange for assessment and, within 15 days from the date the conclusion is drawn, make an administrative decision on how to deal with the case.

Article 72 Drug testing sections of the drug manufacturers, drug distributors and medical institutions and their staff members shall accept technical instructions given by drug testing institutions set up by the local drug regulatory departments.

Chapter IX Legal Liabilities

Article 73 Any drug manufacturer or distributor that, without obtaining Drug Manufacturing Certificate, Drug Distribution Certificate or Pharmaceutical Preparation Certificate for Medical Institution, manufactures or distributes drugs shall be banned, the drugs illegally produced or sold and the illegal gains therefrom shall be confiscated, and they shall also be fined not less than two times but not more than five times the value of the drugs (including the drugs sold and not sold, the same below). If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Article 74 Where counterfeit drugs are produced or sold, the drugs illegally produced or sold and the illegal gains shall be confiscated, and a fine not less than two times but not more than five times the value of the said drugs shall be imposed. The approval documents, if any, shall be withdrawn and an order shall be given to suspend production or business operation for rectification. If the circumstances are serious, the Drug Manufacturing Certificate, Drug Distribution Certificate or Pharmaceutical Preparation Certificate for Medical Institution shall be revoked. If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Article 75 Where substandard drugs are produced or sold, the drugs illegally produced or sold and the illegal gains shall be confiscated, and a fine not less than, but not more than three times, the value of the drugs shall also be imposed. If the circumstances are serious, an order shall be given to suspend production or business operation for rectification, or the drug approval documents shall be withdrawn and the Drug Manufacturing Certificate, the Drug Distribution Certificate, or the Pharmaceutical Preparation Certificate for Medical Institution shall be revoked. If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Article 76 Where enterprises or other institutions are engaged in production or sale of counterfeit or substandard drugs, if the circumstances are serious, the persons directly in charge and the other persons directly responsible shall be prohibited from engaging in the drug production or distribution within 10 years.

The drug substances, excipients, packaging materials and manufacturing equipment specially used for producing counterfeit or substandard drugs by any producer shall be confiscated.

Article 77 Anyone who knows or should know that the drugs are counterfeit or substandard drugs provides conveniences such as transportation, keeping or storage of the drugs, all the earnings therefrom shall be confiscated, and a fine not less than 50 per cent of, but not more than 3 times, the amount of the illegal earnings shall also be imposed. If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Article 78 The quality testing results provided by the drug testing institution shall be contained in the penalty notification regarding counterfeit and substandard drugs, except in cases specified in the provisions of Subparagraphs (1), (2), (5) and (6) of the third paragraph of Article 48 and the third paragraph of Article 49 of this Law.

Article 79 Any drug manufacturer, drug distributor, institution for non-clinical safety study, or institution for drug clinical trial that does not implement the GMP, GSP, GLP or GCP according to regulations shall be given a disciplinary warning and shall be instructed to rectify within a time limit. If it fails to do so, it shall be instructed to suspend production or business operation or other work for rectification and shall also be fined not less than RMB 5,000 yuan but not more than 20,000 yuan. If the circumstances are serious, the Drug Manufacturing Certificate, Drug Distribution Certificate or the qualifications of the institution for drug clinical trial shall be annulled.

Article 80 Any drug manufacturer, drug distributor or medical institution that, in violation of the provisions of Article 34 of this Law, purchases drugs from the enterprises without Drug Manufacturing Certificate or Drug Distribution Certificate shall be instructed to rectify, the drugs illegally purchased shall be confiscated, and it shall be fined not less than two times but not more than five times the value of the drugs purchased; the illegal gains, if any, shall be confiscated. If the circumstances are serious, the Drug Manufacturing Certificate, Drug Distribution Certificate, or the license for the medical institution shall be revoked.

Article 81 If any enterprise that imports drugs to which import drug license has been granted fails to register, in accordance with the provisions of this Law, for the record with the drug regulatory department in the place where the port is located and drug importation is permitted, it shall be given a disciplinary warning and be instructed to rectify within a time limit; if it fails to do so, the import drug license shall be revoked.

Article 82 If anyone falsifies, alters, trades in, rents out or lends the license or drug approval documents, the illegal gains shall be confiscated and a fine not less than, but not more than three times, the amount of the illegal gains shall be imposed; if there are no illegal gains, a fine not less than 20,000 yuan but not more than 100,000 yuan shall be imposed. If the circumstances are serious, the Drug Manufacturing Certificate, Drug Distribution Certificate or Pharmaceutical Preparation Certificate for Medical Institution of the party that sells, rents out or lends it shall be revoked, or the drug approval documents shall be withdrawn. If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Article 83 If anyone, in violation of the provisions of this Law, obtains the Drug Manufacturing Certificate, Drug Distribution Certificate, Pharmaceutical Preparation Certificate for Medical Institutions, or drug approval documents by providing false certificates, documents and data, or samples, or by other fraudulent means, the said certificates shall be revoked and the documents shall be withdrawn, his applications for such certificates or approval documents shall be rejected within five years, and a fine not less than 10,000 yuan but not more than 30,000 yuan shall also be imposed.

Article 84 Any medical institution that sells its own dispensed pharmaceutical preparations on the market shall be instructed to rectify, the preparations for illegal sale shall be confiscated, and a fine not less than, but not more than three times, the value of the said preparations shall be imposed, and the illegal gains, if any, shall be confiscated.

Article 85 Any drug distributor that violates the provisions of Articles 18 and 19 of this Law shall be instructed to rectify and be given a disciplinary warning. If the circumstances are serious, the Drug Distribution Certificate shall be revoked.

Article 86 Drugs with labels or marks not in conformity with the provisions of Article 54 of this Law shall be treated as counterfeit or substandard drugs, and in addition, an instruction for rectification and a disciplinary warning shall be given. If the circumstances are serious, the approval documents for the drugs shall be withdrawn.

Article 87 Where a drug testing institution issues a false testing report, if it constitutes a crime, criminal liabilities shall be investigated in accordance with law; if it does not constitute a crime, the institution shall be instructed to rectify and be given a disciplinary warning, and also be fined not less than 30,000 yuan but not more than 50,000 yuan. The persons directly in charge and the other persons directly responsible shall, in accordance with law, be punished with demotion, dismissal, or expulsion and also be fined not more than 30,000 yuan. The illegal gains, if any, shall be confiscated. If the circumstances are serious, the institution shall be disqualified for testing. If the testing result issued by the drug testing institution is not true to fact and losses are thus occasioned, the institution shall bear corresponding liability of compensation for the losses.

Article 88 The administrative sanctions prescribed in Article 73 through Article 87 of this Law shall be determined by the drug regulatory departments at or above the county level according to the division of responsibility defined by the drug regulatory department under the State Council. Revocation of the Drug Manufacturing Certificate, Drug Distribution Certificate and Pharmaceutical Preparation Certificate for Medical Institution or withdrawal of the drug approval documents shall be determined by the department that issued the certificate or the approval documents.

Article 89 Any violation of the provisions of Article 55, 56 or 57 of this Law governing the control over drug pricing shall be punished pursuant to the provisions of the Pricing Law of the People’s Republic of China.

Article 90 Drug manufacturers, drug distributors or medical institutions that offer or accept, in private, the rake-offs or other benefits in the course of purchasing and selling drugs or drug manufacturers, drug distributors or their agents that offer money or things of value or other benefits to leading members, drug purchasers, physicians, or other related persons of the medical institutions where their drugs are used shall be fined not less than 10,000 yuan but not more than 200,000 yuan by the administrative department for industry and commerce, and the illegal gains, if any, shall be confiscated. If the circumstances are serious, the said department shall revoke the business licenses of the drug manufacturers or drug distributors and inform the drug regulatory department of the matter, which shall revoke their Drug Manufacturing Certificate, or Drug Distribution Certificate. If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Article 91 Any leading members, purchasers or other related persons of drug manufacturers or distributors that, in the course of drug purchasing or selling, accept money or things of value or other benefits offered by other manufacturers, distributors or their agents shall be given sanctions according to law, and the illegal gains shall be confiscated. If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Leading members, drug purchasers, physicians or other related persons of medical institutions who accept money or things of value or other benefits offered by drug manufacturers, drug distributors or their agents shall be given sanctions by the administrative department for health or the institutions to which they belong, and the illegal gains shall be confiscated. With regard to licensed physicians who seriously violate laws, the administrative department for health shall revoke their licenses for medical practice. If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Article 92 Any violation of the provisions of this Law related to the control over drug advertising shall be punished pursuant to the provisions of the Advertisement Law of the People’s Republic of China, the drug regulatory department that issues the advertisement approval number shall withdraw it and shall, within one year, reject any application for approval of advertising for the drug in question. If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Where a drug regulatory department does not perform its duty of drug advertisement examination in accordance with law and the advertisement approved for issuance contains false information or other content violating laws or administrative regulations, administrative sanctions shall, in accordance with law, be given to the persons directly in charge and the other persons directly responsible. If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Article 93 Drug manufacturers, drug distributors or medical institutions that violate the provisions of this Law and thus cause harm and losses to users of drugs shall bear the liability of compensation in accordance with law.

Article 94 Any drug regulatory department that violates the provisions of this Law and commits one of the following acts shall be instructed by the competent authority at the next higher level or the supervisory body to recall the certificates unlawfully issued or to withdraw the drug approval documents, and administrative sanctions shall be given to the persons directly in charge and the other persons directly responsible in accordance with law. If a crime is constituted, criminal liabilities shall be investigated in accordance with law:

(1)issuing the GMP or GSP certificates to the enterprises that do not comply with the corresponding requirements, failing to perform, in accordance with regulations, the duty of follow-up inspections in respect of the enterprises that have obtained the certificates, or failing to instruct, in accordance with law, the enterprises not complying with the requirements to rectify or withdraw their certificates;

(2)issuing the Drug Manufacturing Certificate, Drug Distribution Certificate or Pharmaceutical Preparation Certificate for Medical Institution to the enterprises or institutions not complying with the statutory requirements;

(3)issuing an Import Drug License to the drug not complying with the requirements for import; or

(4)granting approval for conducting a clinical trial, issuing a New Drug Certificate or a drug approval number, where the requirements for clinical trial or drug production are not fulfilled.

Article 95 If any drug regulatory department, drug testing institution established by the department or institution specially engaged in drug testing designated by the department is involved in drug production or distribution, it shall be instructed by the authority at the next higher level or the supervisory body to rectify, and the illegal gains, if any, shall be confiscated. If the circumstances are serious, administrative sanctions shall be given to the persons directly in charge and the other persons directly responsible in accordance with law.

Any staff member of the drug regulatory department, drug testing institution established by the department or institution specially engaged in drug testing designated by the department who is involved in drug production or distribution shall be given an administrative sanction in accordance with law.

Article 96 If any drug regulatory department or drug testing institution established or designated by the department, in violation of law, collects testing fees for supervision over drug testing shall be instructed by the relevant government department to return the fees, and administrative sanctions shall be given to the persons directly in charge and the other persons directly responsible in accordance with law. Any drug testing institution that collects testing fees in violation of law, if the circumstances are serious, shall be disqualified for drug testing.

Article 97 Drug regulatory departments shall, in accordance with law, perform their duties of supervision and inspection and shall see to it that the enterprises holding the Drug Manufacturing Certificate or Drug Distribution Certificate engage in drug production or drug distribution in accordance with the provisions of this Law.

Where enterprises holding the Drug Manufacturing Certificate or Drug Distribution Certificate produce or sell counterfeit or substandard drugs, the legal liabilities of such enterprises shall be investigated and, in addition, the persons directly in charge and the other persons directly responsible of the drug regulatory departments who neglect their duty or commit dereliction of duty shall be given administrative sanctions in accordance with law. If a crime is constituted, criminal liabilities shall be investigated in accordance with law.

Article 98 The drug regulatory department shall instruct the drug regulatory department at a lower level to put right, within a time limit, the administrative action taken in violation of this Law, and it shall have the power to alter or annul the action which is not put right within the time limit.

Article 99 Anyone responsible for drug regulation who abuses his power, engages in malpractice for personal gain or neglects his duty, if it constitutes a crime, shall be investigated for criminal liabilities in accordance with law; if it is not serious enough to constitute a crime, he shall be given administrative sanctions in accordance with law.

Article 100 Where a Drug Manufacturing Certificate or Drug Distribution Certificate is revoked in accordance with this Law, the drug regulatory department shall notify the administrative department for industry and commerce to alter or cancel the registration.

Article 101 The value of products mentioned in this Chapter shall be calculated on the basis of 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 kind.

Chapter X Supplementary Provisions

Article 102 The terms used in this Law are defined as follows:

Drugs refer to articles which are used in the prevention, treatment and diagnosis of human diseases and intended for the regulation of the physiological functions of human beings, for which indications, usage and dosage are established, including Chinese crude drugs, prepared slices of Chinese crude drugs, traditional Chinese medicine preparations, chemical drug substances and their preparations, antibiotics, biochemical drugs, radioactive pharmaceuticals, serum, vaccines, blood products and diagnostic agents .

Excipients refer to the vehicles and additives used for drug production and prescription dispensing.

Drug manufacturers refer to enterprises exclusively or partly engaged in drug production.

Drug distributors refer to enterprises exclusively or partly engaged in drug distribution.

Article 103 Measures for control over the cultivation, collection and breeding of Chinese crude drugs shall be separately formulated by the State Council.

Article 104 The State exercises special control over the circulation of preventive biological products. Specific measures shall be formulated by the State Council.

Article 105 Specific measures for enforcement of this Law by the Chinese People’s Liberation Army shall be formulated by the State Council and the Central Military Commission in accordance with this Law.

Article 106 This Law shall go into effect on December 1, 2001.