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China: Drug Administration Law Revised

(Oct. 31, 2019) On August 26, 2019, the Standing Committee of the National People’s Congress of the People’s Republic of China (PRC or China) adopted the revised PRC Drug Administration Law (2019 Law). This is the second comprehensive revision of the country’s primary pharmaceutical law since its first enactment in 1984. The revised Law will take effect on December 1, 2019, the same day the newly enacted PRC Vaccine Administration Law enters into effect.

Under the 2019 Law, drugs include traditional Chinese medicines, chemical drugs, and biological products. (2019 Law art. 2.)

Highlights of the 2019 Law

  1. Nationwide Drug Marketing Authorization Holder Regime to Be Established

In the past several years, a pilot drug marketing authorization regime has been implemented in selected areas in China. As a result of the 2019 Law, the regime will be established nationwide and require that the holder of a drug marketing authorization will be responsible for the safety, efficacy, and quality control of the drug throughout the entire process of the drug’s development, production, distribution, and use. (Art. 6.)

A drug marketing authorization holder is defined as an enterprise or research institution that has obtained a drug registration certificate. The holder may produce the drug by itself or mandate another drug manufacturing enterprise to produce the drug, subject to exceptions, such as for blood products or narcotic drugs. (Arts. 30 & 32.)

Foreign enterprises are allowed to hold Chinese drug marketing authorizations. Such an enterprise, however, must designate a Chinese enterprise to fulfill its obligations, and the two enterprises will bear joint and several liabilities. (Art. 38.)

  1. Importing Unapproved Drugs No Longer Punishable as Selling Counterfeit Drugs

Any drug being marketed within the territory of the PRC must be approved by the drug administration under the State Council, subject to exceptions, and a drug registration certificate must be obtained. (Art. 24.) Under the current Drug Administration Law, manufacturing or importing drugs without such approval are penalized as manufacturing or importing counterfeit drugs. (PRC Drug Administration Law (as amended April 24, 2015) art. 48, Westlaw China (by subscription).) Manufacturing or selling counterfeit drugs is criminally punishable under the PRC Criminal Law, and the Criminal Law refers to the definition of counterfeit drugs provided in the Drug Administration Law. As a result, importing unapproved drugs may constitute the crime of selling counterfeit drugs, even if the drugs have been lawfully approved in a foreign country.

The revised 2019 Law no longer treats unapproved drugs as counterfeit drugs simply because they have not obtained the Chinese approval, although manufacturing or importing drugs without obtaining the approval certificate is still prohibited. Offenders face administrative penalties, which include confiscation of property, forced suspension of business, a fine of up to 30 times the value of the drugs unlawfully manufactured or sold, and administrative detention of five to 15 days. (Arts. 98 & 124.)

It is worth noting that, according to the 2019 Law, importing a small amount of drugs that have been lawfully marketed in another country may be subject to mitigated penalties or exempted from penalties if the circumstances are relatively minor. (Art. 124.)

Updated October 31, 2019