Order of the President of the People'sRepublic of China

(No. 45)

The Drug Administration Law of the People's Republic of China, revised at the20th Meeting of the Standing Committee of the Ninth National People’s Congresson February 28, 2001, is hereby promulgated and shall go into effect as ofDecember 1, 2001.

Jiang Zemin

President of the People's Republic ofChina
February 28, 2001

DRUG ADMINISTRATION LAW OF THEPEOPLE'S REPUBLIC OF CHINA

(Adopted at the 7th Meeting of the Standing Committee of the Sixth NationalPeoples Congress on September 20, 1984, revised at the 20th Meeting of theStanding Committee of the Ninth National Peoples Congress on February 28,2001)

CONTENTS

Chapter I General Provisions
Chapter II Control over Drug Manufacturers
Chapter III Control over Drug Distributors
Chapter IV Control over Pharmaceuticals in Medical Institutions
Chapter V Control over Drugs
Chapter VI Control over Drug Packaging
Chapter VII Control over Drug Pricing and Advertising
Chapter VIII Inspection of Drugs
Chapter IX Legal Liabilities
Chapter X Supplementary Provisions

Chapter I
GeneralProvisions

Article 1 This Law is enacted to strengthen drugadministration, to ensure drug quality and safety for human beings, to protectthe health of people and their legitimate rights and interests in the use ofdrugs.

Article 2 All institutions and individuals engaged inresearch, production, distribution, use, or drug administration in the People'sRepublic of China shall abide by this Law.

Article 3 The State develops both modern and traditionalmedicines to give full play to their role in prevention and treatment ofdiseases and in maintenance of health.

The State protects the resources of natural crude drugs and encourages thecultivation of Chinese crude drugs.

Article 4 The State encourages research and development ofnew drugs and protects the legitimate rights and interests of citizens, legalbodies and other institutions engaged in this field of endeavor.

Article 5 The drug regulatory department under the StateCouncil shall be responsible for drug administration nationwide. The relevantdepartments under the State Council shall be responsible for the relatedadministrative work within the limits of their duties.

The drug regulatory departments of the people’s governments of provinces,autonomous regions, and municipalities directly under the Central Governmentshall be responsible for drug regulation in their administrative areas. Therelevant departments of the said people’s governments shall be responsible forthe related regulatory work within the limits of their duties.

The drug regulatory department under the State Council shall cooperate withthe competent departments for comprehensive economic administration under theState Council in implementing pharmaceutical development programs and policiesformulated by the State for the pharmaceutical industry.

Article 6 The drug testing institutes established ordesignated by drug regulatory departments shall undertake the responsibility fordrug testing required for conducting drug review and approval and controllingdrug quality in accordance with law.

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Chapter II
Control overDrug Manufacturers

Article 7 The establishment of a drug manufacturer shall besubject to approval by the local drug regulatory department of the people'sgovernment of the province, autonomous region or municipality directly under theCentral Government and be granted the Drug Manufacturing Certificate, and, withthe certificate, the manufacturer shall be registered with the administrativedepartment for industry and commerce. No one may manufacturer drugs without the
certificate.

The valid term and the scope of manufacturing shall be indicated in the DrugManufacturing Certificate. For renewal of the certificate on expiration,reexamination is required.

When giving approval to the establishment of a newmanufacturer, the drug regulatory department shall see to it that, apart fromthe requirements specified by the provisions in Article 8 of this Law thatshould be met, the pharmaceutical development programs and policies formulatedby the State for the pharmaceutical industry are conformed to and preventduplicate construction.

Article 8 A drug manufacturer to be established shall meetthe following requirements:
(1) having legally qualified pharmaceutical andengineering professionals, and the necessary technical workers;
(2) havingthe premises, facilities, and hygienic environment required for drugmanufacturing;
(3) having the institutions and personnel capable of qualitycontrol and testing for drugs to be produced and the necessary instruments andequipment; and
(4) having rules and regulations to ensure the quality ofdrugs.

Article 9 Drug manufacturers shall conduct productionaccording to the Good Manufacturing Practice for Pharmaceutical Products (GMP)formulated by the drug regulatory department under the State Council on thebasis of this Law. The drug regulatory department shall inspect a drugmanufacturer as to its compliance with the GMP requirements and issue acertificate to the manufacturer passing the inspection.

The specific measures and schedule for implementing the GMP shall beformulated by the drug regulatory department under the State Council.

Article 10 With the exception of the processing of preparedslices of Chinese crude drugs, a drug shall be produced in conformity with theNational Drug Standard and with the production processes approved by the drugregulatory department under the State Council, and the production records shallbe complete and accurate. When drug manufacturers make any change in theproduction process that may affect the drug quality, they shall submit thematter for examination and approval to the original approval authority.

Prepared slices of Chinese crude drugs shall be processed in conformity withthe national drug standards. Those not covered by the national drug standardsshall be produced according to the processing procedures formulated by the drugregulatory department of the people’s government of the province, autonomousregions, or municipality directly under the Central Government. The said
processing procedures shall be submitted to the drug regulatory department underthe State Council for the record.

Article 11 The drug substances and excipients for themanufacture of pharmaceutical products shall meet the requirements for medicinaluse.

Article 12 Drug manufacturers shall perform quality test ofthe drugs produced; no drugs that do not meet the national drug standards orthat are not produced according to the processing procedures for the preparedslices of Chinese crude drugs formulated by the drug regulatory department ofthe people’s government of the province, autonomous region, or municipalitydirectly under the Central Government may be released.

Article 13 A drug manufacturer may accept contractproduction of drugs upon approval by the drug regulatory department under theState Council, or by the drug regulatory department of the people’s governmentof a province, autonomous region, or municipality directly under the Central
Government authorized by the drug regulatory department under the StateCouncil.

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Chapter III
Control overDrug Distributors

Article 14 The establishment of a drug wholesaler shall besubject to approval of the local drug regulatory department of the people'sgovernment of the province, autonomous region or municipality directly under theCentral Government and be granted the Drug Supply Certificate; the establishmentof a drug retailer shall be subject to approval and be granted the saidcertificate by the local drug regulatory department at or above the countrylevel. With the certificate, the wholesaler and the retailer shall be registeredwith the administrative department for industry and commerce. No one maydistribute drugs without the certificate.

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

When giving approval to the establishment of a new distributor, the drugregulatory department shall see to it that, apart from the requirement specifiedby the provisions in Article 15 of this Law that should be met, the principlesof appropriate location and convenient purchase of drugs by the people areadhered to.

Article 15 A drug distributor to be established shall meet
the following requirements:
(1) having legally qualified pharmaceutical
professionals;
(2) having the business operation premises, equipment,warehouses and hygienic environment required for drug distribution;
(3)having the units or personnel for quality control over the drugs to bedistributed; and
(4) having rules and regulations to ensure the quality ofthe drugs to be distributed.

Article 16 Drug distributors shall conduct businessaccording to the Good Supply Practice for Pharmaceutical Products (GSP)formulated by the drug regulatory department under the State Council on thebasis of this Law. The drug regulatory department shall inspect a drugdistributor as to its compliance with the GSP requirements, and issue acertificate to the distributor passing the inspection.

The specific measures and schedule for implementing the GSP shall beformulated by the drug regulatory department under the State Council.

Article 17 For purchasing drugs, drug distributors shallestablish and apply an examination and acceptance system, and check thecertificate of drug quality, labels and other marks; no drugs that do not meetthe requirements may be purchased.

Article 18 Drug distributors shall keep authentic andcomplete records when purchasing and selling drugs. In the record shall beindicated the adopted name in China, dosage form, strength or size, batchnumber, date of expiry, manufacturer, purchase( or sale) unit, amount of the
drug purchased (or sold), purchase or sale price, date of purchase (or sale),and other items specified by the drug regulatory department under the StateCouncil.

Article 19 Drug distributors shall sell drugs properly andmake correct description of usage, dosage and cautions; prescription fordispensing shall be checked, and no drugs listed in the prescription may bechanged or substituted without authorization. They shall refuse to dispense
incompatible or over-dose prescriptions; when necessary, they may do thedispensing only after corrections or re-signing is made by the prescribingphysician.

Drug distributors shall indicate the origin of the Chinese crude drugs to besold.

Article 20 A drug distributor shall establish and apply asystem for drug storage, and take necessary measures to ensure quality, such ascold storage, protection against freeze and humidity and avoidance of insectsand rodents.

An examination system shall be applied for placing drugs in and releasingthem from storage.

Article 21 Chinese crude drugs may be sold at town andcountry fairs, except those otherwise specified by the State Council.

No drugs other than the Chinese crude drugs may be sold at town and country fairs, but drug retailers holding the Drug Supply Certificate may, within thespecified business scope, sell such drugs at stores they set up at the fairs.Specific measures shall be formulated by the State Council.

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Chapter IV
Control overPharmaceuticals in Medical Institutions

Article 22 A medicalinstitution shall be staffed with legally qualified pharmaceuticalprofessionals. No one who is not a pharmaceutical professional may directlyengage in technical work in pharmacy.

Article 23 To dispense pharmaceutical preparations, amedical institution shall be subject to examination and permission by theadministrative department for health of the people’s government of the province,autonomous region or municipality directly under the Central Government, andupon approval by the drug regulatory department of the said people’s government,a Pharmaceutical Preparation Certificate for Medical Institution shall be issuedto it by the said drug regulatory department. No one may dispense pharmaceuticalpreparations without the certificate.

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

Article 24 To dispense pharmaceutical preparations, themedical institution shall possess the facilities, management system, testinginstruments and hygienic conditions for ensuring their quality.

Article 25 The pharmaceutical preparations to be dispensedby the medical institutions shall be ones that are to meet the clinic need ofthe institution but are not available on the market and shall be subject toapproval in advance by the local drug regulatory department of the people’sgovernment of the province, autonomous region or municipality directly under theCentral Government. The quality of the dispensed pharmaceutical preparations
shall be subject to test according to regulations; those passing the testing maybe used within the institution on the basis of the physician’s prescription. Inspecial cases, the pharmaceutical preparations dispensed by a medical
institution may be used by other designated medical institutions, upon approvalby the drug regulatory department under the State Council or by the drugregulatory department of the people’s government of a province, autonomousregion or municipality directly under the Central Government.

No pharmaceutical preparations dispensed by medical institutions may bemarketed.

Article 26 For purchasing drugs, medical institutions shallestablish and apply an examination and acceptance system, and check thecertificate of drug quality, labels and other marks; no drugs that do not meetthe specified requirements may be purchased or used.

Article 27 Prescriptions dispensed by pharmacists of medicalinstitutions shall be checked, and on drugs listed in the prescriptions may bechanged or substituted without authorization. The pharmacists shall refuse todispense incompatible or over-dose prescriptions; when necessary, they may dothe dispensing only after corrections or re-signing is made by the prescribing physician.

Article 28 A medical institution shall establish and apply asystem for drug storage, and take necessary measures to ensure drug quality,such as cold storage, protection against freeze and humidity and avoidance ofinsects and rodents.

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Chapter V
Control overDrugs

Article 29 The dossier on a new drug research anddevelopment including the manufacturing process, quality specifications, resultsof pharmacological and toxicological study, and the related data and the samplesshall, in accordance with the regulations of the drug regulatory departmentunder the State Council, be truthfully submitted to the said department forapproval, before clinical trial is conducted. Measures for verifying thequalifications of clinical study institutions for drugs shall be formulatedjointly by the drug regulatory department and the administrative department forhealth under the State Council.

When a new drug has gone through clinical trials and passed the evaluation, aNew Drug Certificate shall be issued upon approval by the drug regulatory department under the State Council.

Article 30 The institutions for non-clinical safetyevaluation and study and clinical study institutions shall respectivelyimplement the Good Laboratory Practice for Non-Clinical Laboratory Studies (GLP)and Good Clinical Practice (GCP).

The GLP and GCP shall be formulated by the department designated by the StateCouncil.

Article 31 Production of a new drug or a drug admitted bynational drug standards shall be subject to approval by the drug regulatorydepartment under the State Council, and a drug approval number shall be issuedfor it, which the exception of the Chinese crude drugs and the prepared slicesof Chinese crude drugs which where no control by approval number is exercised.The list of the Chinese crude drugs and the prepared slices of the Chinese crudedrugs to be controlled by the approval number shall be complied by the drugregulatory department under the State Council, in conjunction with the administrative department for traditional Chinese medicine under the State Council.

A drug manufacturer may produce the drug only after an approvalnumber is granted to it.

Article 32 Drugs shall meet the national drug standards. Theprovisions in the second paragraph of Article 10 of this Law shall be applicableto the prepared slices of Chinese crude drugs.

The Pharmacopoeia of the People’s Republic of China and the drug standardsissued by the drug regulatory department under the State Council shall serve asthe national drug standards.

The drug regulatory department under the State Council shall organize a pharmacopoeia commission, which shall be responsible for formulating and revising the national drug standards.

The drug testing institution affiliated to the drug regulatory departmentunder the State Council is responsible for defining the national drug standard substance and reference substance.

Article 33 The drug regulatory department under the StateCouncil shall organize experts in pharmaceutical, medical and other fields toevaluate new drugs and re-evaluate the drugs already approved forproduction.

Article 34 Drug manufacturers, drug distributors and medicalinstitutions shall purchase drugs from pharmaceutical enterprises, which arequalified for production or distribution, with the exception of the Chinesecrude drugs where no control by approval number is exercised.

Article 35 The State exercises special control over narcoticdrugs, psychotropic substances, medicinal toxic drugs and radioactive pharmaceuticals. Measures for the control in this respect shall be formulated bythe State Council.

Article 36 The State adopts a protection system for certaintraditional Chinese medicine preparations. The specific measures shall beformulated by the State Council.

Article 37 The State adopts a classification system forprescription and non-prescription drugs. The specific measures shall beformulated by the State Council.

Article 38 The importation of drugs with uncertaintherapeutic efficacy, serious adverse reaction, or other factors harmful tohuman health is prohibited.

Article 39 Evaluation of drugs to be imported shall beorganized by the drug regulatory department under the State Council. A drug maybe imported only upon approval granted after the fact that it conforms to thequality specifications and is safe and effective is affirmed throughexamination, and an import drug license shall be issued.

As to small amounts of drugs to be imported for urgent clinical need of medical institutions or for personal medication, formalities for import shall be completed in accordance with the relevant regulations of the State.

Article 40 Drugs shall be imported via the ports where drugimportation is permitted, and be registered by the drug importers with the localdrug regulatory departments for the record. The customs shall release the drugson the basis of the Drug Import Note issued by the said departments, and may notrelease those drugs for which no Drug Import Note is issued.

The drug regulatory department in the place where the port is located shall notify the drug testing institutions to conduct sampling and testing of thedrugs to be imported according to the regulations of the drug regulatory department under the State Council, and sampling fees shall be charged inaccordance with the provisions of the second paragraph of Article 41 of thisLaw.

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

Article 41 The drug regulatory departmentunder the State Council shall designate drug testing institutions to test thefollowing drugs before they are marketed or at the time they are imported; nodrugs that fail to pass the testing may be marketed or imported;
(1)biological products specified by the drug regulatory department under the StateCouncil;
(2) drugs to be marketed in China for the first time; and
(3)other drugs specified by the State Council.

The testing items to be charged for the drugs listed in the preceding paragraph and the rates of fees shall be decided on and publicized by the financial department together with the competent pricing department under theState Council. Measures for collecting fees for testing shall be formulated andannounced by the financial department together with the drug regulatory department under the State Council.

Article 42 The drug regulatory department under the StateCouncil shall organize investigations of the drugs to the production orimportation of which it has granted approval; it shall withdraw the approvalnumber or Import Drug License issued to drugs with uncertain therapeuticefficacy, serious adverse reaction, or other factors harmful to humanhealth.

No drugs whose approval numbers or import drug licenses have been withdrawnmay be produced, distributed or used. Those already produced or imported shallbe destroyed or disposed of under the supervision of the local drug regulatorydepartment.

Article 43 The State adopts a system for drugreserve.

When major disasters, epidemic situations or other emergencies occurin the country, the department specified by the State Council may transfer drugsfrom the enterprises to meet the urgent need.

Article 44 The State Council shall have the power torestrict or prohibit the exportation of the drugs which are in short supplywithin the country.

Article 45 Anyone who wishes to import or export narcoticdrugs and psychotropic substances that fall within the scope specified by theState shall produce the Import License or Export License issued by the drugregulatory department under the State Council.

Article 46 The newly-discovered crude drugs or cultivatedcrude drugs introduced from abroad may be marketed only after examination andapproval by the drug regulatory department under the State Council.

Article 47 Measures for the control over the folk crudedrugs customarily used in certain regions shall be formulated by the drugregulatory department together with the administrative department fortraditional Chinese medicines under the State Council.

Article 48 Production (including dispensing, the same below)and distribution of counterfeit drugs are prohibited.

A drug is a counterfeit drug in any of the following cases:
(1) theingredients in the drug are different from those specified by the national drugstandards; or
(2) a non-drug substance is simulated as a drug or one drug issimulated as another.

A drug shall be treated as a counterfeit drug in any ofthe following cases:
(1) its use is prohibited by the regulations of the drugregulatory department under the State Council;
(2) it is produced or importedwithout approval, or marketed without being tested, as required by thisLaw;
(3)it is deteriorated;
(4) it is contaminated;
(5) it is producedby using drug substances without approval number as required by this Law; or
(6) the indications or functions indicated are beyond the specifiedscope.

Article 49 Production and distribution of substandard drugsare prohibited.
A drug with content not up to the national drug standards isa substandard drug.
A drug shall be treated as a substandard drug in any ofthe following cases;
(1) the date of expiry is not indicated or isaltered;
(2) the batch number is not indicated or is altered;
(3) it isbeyond the date of expiry;
(4) no approval is obtained for the immediatepackaging material or container;
(5) colorants, preservatives, spices,flavorings or other excipients are added without authorization; or
(6) othercases where the drug standard are not conformed.

Article 50 A drug name listed in the national drug standardis an adopted name in China. Such an adopted name may not be used as atrademark.

Article 51 Staff members of drug manufacturers, drugdistributors and medical institutions who are in direct contact with drugs shallundergo health checkup annually. No one who suffers from infectious diseases orany other diseases which may cause contamination to drugs may engage in any workin direct contact with drugs.

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Chapter VI
Control overDrug Packaging

Article 52 Immediate packaging materials and containersshall meet the requirements for medicinal use and the standards for ensuringhuman health and safety. They shall, along with the drugs, be subject toexamination and approval by the drug regulatory department.

No drug manufacturers may use immediate packaging materials and containersfor 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 qualityrequirements and be convenient for storage, transportation and medical use.

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

Article 54 A label shall be printed or stuck on the drugpackage together with an insert sheet, as required by regulations.

In the label or insert sheet shall be indicated the adopted name of the drugin 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 fortopical use, and non-prescription drugs.

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Chapter VII
Control overDrug Pricing and Advertising

Article 55 For drugs the prices of which are fixed or guidedby 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 anddemand in the market, and public affordability, rationally fix and adjust theprices, in order to ensure that price is commensurate with quality, eliminateexcessively high price, and protect the legitimate interests of users.

Drug manufacturers, drug distributors and medical institutions shallimplement prices fixed or guided by the government. No one may raise prices inany matter without authorization.

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

Article 56 For drugs the prices of which are adjustable withthe 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 theusers 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 StateCouncil. Usurious profits and fraud in pricing that harms the users’ interestsare prohibited.

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

Article 58 Medical institutions shall provide the patientswith a list of drug prices; and the medical institutions designated by medicalinsurance provider shall truthfully publicize the prices of drugs in common usein compliance with the specified measures, in order to ensure reasonable use ofdrugs. Specific measures shall be formulated by the administrative departmentfor health under the state Council.

Article 59 Drug manufacturers, drug distributors and medicalinstitutions are prohibited from offering or accepting, in private, off-the-bookrake-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 themedical institutions where their drugs are used. Leading members of medicalinstitutions, drug purchasers, physicians, or other related persons, on theirpart, are prohibited from accepting, under any pretences, money or things ofvalue or other benefits offered by drug manufacturers and drug distributors ortheir agents.

Article 60 Drug advertisements shall be subject to approvalby the drug regulatory department of the people’s government of the province, autonomous region or municipality directly under the Central Government wherethe enterprise is located, an approval number of drug advertisement shall beissued. 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 theiradvertisements may not be released by mass media or disseminated to the generalpublic by other means.

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

No unscientific, categorical assertion or warranty of described function maybe 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.

No-drug advertisements may not deal with drug promotion.

Article 62 Drug regulatory departments of the people’sgovernments of provinces, autonomous regions or municipalities directly underthe 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, andput forward suggestions for their handling, and the said authority shall dealwith such cases according to law.

Article 63 Where drug pricing and advertising are notgoverned by the provisions of this Law, the provisions of the Pricing Law of thePeople’s Republic of China and the Advertisement Law of the People’s Republic of China shall be applicable.

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Chapter VIII
Inspectionof Drugs

Article 64 Drug regulatory departments shall have the powerto 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 medicalinstitutions. No institutions or individuals concerned may resist thesupervision 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 inspectionwhich they come to know in the course of supervision and inspection.

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

The drug regulatory department shall take administrative enforcement measuresto seal or seize the drugs and related materials that are proved to bepotentially harmful to human health and shall, within seven days, make an administrative decision on the matter in question. Where it is necessary to testsuch 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 StateCouncil and the drug regulatory departments of the people’s governments ofprovinces, autonomous regions and municipalities directly under the CentralGovernment shall regularly announce the results of selective testing of drugquality. Where the announcement is improper, it shall be corrected within thescope in which the original announcement is made.

Article 67 Where the party has objection to the results oftesting conducted by the drug testing institution, it may, within seven daysfrom the date it receives the testing results, apply for re-testing to the saiddrug testing institution, or to such an institution established or designated bythe drug regulatory department at the next higher level, and it may alsodirectly apply to the drug testing institution established or designated by thedrug regulatory department under the State Council. The drug testing institutionthat accepts the application shall, within the time limit specified by the drugregulatory department under the State Council, draw a conclusion from there-test.

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

Article 69 With regard to the drugs produced according tothe provisions of this Law by drug manufacturers not located in the region, nolocal people’s government or drug regulatory department may, by means ofdemanding drug testing or approval, restrict or deny their access to theregion.

Article 70 No drug regulatory department, or drug testinginstitution established by the department, or the institution specially engagedin 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 fordrug 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 adversedrug reaction. Drug manufacturers, drug distributors and medical institutionsshall make constant investigations into quality, therapeutic efficacy andreactions of the drugs produced, distributed and used by them. When seriousadverse 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 underthe State Council together with the administrative department for health underthe State Council.

With regard to drugs with confirmed serious adverse reactions, the drug regulatory department under the State Council or the drug regulatory departmentof the people’s government of province, autonomous region or municipalitydirectly under the Central Government may take urgent control measures tosuspend their production, distribution and use, and it shall, within five days,arrange for assessment and, within 15 days from the date the conclusion isdrawn, 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 accepttechnical instructions given by drug testing institutions set up by the localdrug regulatory departments.

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Chapter IX
LegalLiabilities

Article 73 Any drug manufacturer or distributor that,without obtaining Drug Manufacturing Certificate, Drug Supply Certificate orPharmaceutical Preparation Certificate for Medical Institution, manufactures ordistributes drugs shall be banned, the drugs illegally produced or sold and theillegal gains there from shall be confiscated, and they shall also be fined notless than two times but not more than five times the value of thedrugs (including the drugs sold and not sold, the same below). If a crime isconstituted, criminal liabilities shall be investigated in accordance withlaw.

Article 74 Where counterfeit drugs are produced or sold, thedrugs illegally produced or sold and the illegal gains shall be confiscated, anda fine not less than two times but not more than five times the value of thesaid drugs shall be imposed. The approval documents, if any, shall be withdrawnand an order shall be given to suspend production or business operation forrectification. If the circumstances are serious, the Drug ManufacturingCertificate, Drug Supply Certificate or Pharmaceutical Preparation Certificatefor Medical Institution shall be revoked. If a crime is constituted, criminalliabilities shall be investigated in accordance with law.

Article 75 Where substandard drugs are produced or sold, thedrugs illegally produced or sold and the illegal gains shall be confiscated, anda fine not less than, but not more than three times, the value of the said drugsshall also be imposed. If the circumstances are serious, an order shall be givento suspend production or business operation for rectification, or the drugapproval documents shall be withdrawn and the Drug Manufacturing Certificate,the Drug supply Certificate, or the Pharmaceutical Preparation Certificate forMedical 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 areengaged in production or sale of counterfeit or substandard drugs, if thecircumstances are serious, the persons directly in charge and the other personsdirectly responsible shall be prohibited from engaging in the drug production ordistribution within 10 years.

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

Article 77 Anyone who knows or should know that the drugsare counterfeit or substandard drugs provides conveniences such astransportation, keeping or storage of the drugs, all the earnings therefromshall be confiscated, and a fine not less than 50 per cent of, but not more than3 times, the amount of the illegal earnings shall also be imposed. If a crime isconstituted, criminal liabilities shall be investigated in accordance withlaw.

Article 78 The quality testing results provided by the drugtesting institution shall be contained in the penalty notification regardingcounterfeit and substandard drugs, except in cases specified in the provisionsof Subparagraphs (1), (2), (5) and (6) of the third paragraph of Article 48 andthe 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 clinicaltrial that does not implement the GMP, GSP, GLP or GCP according to regulationsshall be given a disciplinary warning and shall be instructed to rectify withina time limit. If it fails to do so, it shall be instructed to suspend productionor business operation or other work for rectification and shall also be finednot less than RMB 5,000 yuan but not more than RMB 20,000 yuan. If thecircumstances are serious, the Drug Manufacturing Certificate, Drug SupplyCertificate or the qualifications of the institution for drug clinical trialshall be annulled.

Article 80 Any drug manufacturer, drug distributor ormedical institution that, in violation of the provisions of Article 34 of thisLaw, purchases drugs from the enterprises without Drug Manufacturing Certificateor Drug Supply Certificate shall be instructed to rectify, the drugs illegallypurchased shall be confiscated, and it shall be fined not less than two timesbut not more than five times the value of the drugs purchased; the illegalgains, if any, shall be confiscated. If the circumstances are serious, the DrugManufacturing Certificate, Drug Distribution Certificate, or the license for themedical institution shall be revoked.

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

Article 82 If anyone falsifies, alters, alters, trades in,rents out or lends the certificates or drug approval documents, the illegalgains shall be confiscated and a fine not less than, but not mort than threetimes, the amount of the illegal gains shall be imposed; if there are no illegalgains, a fine not less than RMB 20, 000 yuan but not more than RMB 100,000 yuanshall be imposed. If the circumstances are serious, the Drug ManufacturingCertificate, Drug Supply Certificate or Pharmaceutical Preparation Certificatefor Medical Institution of the party that sells, rents out or lends it shall berevoked. If a crime is constituted, criminal liabilities shall be investigatedin accordance with law.

Article 83 If anyone, inviolation of the provisions of this Law, obtains the Drug ManufacturingCertificate, Drug Distribution Certificate, Pharmaceutical PreparationCertificate for Medical Institution, or drug approval documents by providingfalse certificates, documents and data, or samples, or by other fraudulentmeans, the said certificates shall be revoked and the documents shall bewithdrawn, his applications for such certificates or approval documents shall berejected within five years, and a fine not less than RMB 10, 000 yuan but morethan RMB 30, 000 yuan shall also be imposed.

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

Article 85 Any drug distributor that violates the provisionsof Article 18 and 19 of this Law shall be instructed to rectify and be given adisciplinary warning. If the circumstances are serious, the Drug SupplyCertificate shall be revoked.

Article 86 Where the drugs with labels or marks are not inconformity with the provisions of Article 54 of this Law, except for thosetreated as counterfeit or substandard drugs, an instruction for rectificationand a disciplinary warning shall be given. If the circumstances are serious, theapproval documents for the drugs shall be withdrawn.

Article 87 Where a drug testing institution issues a falsetesting report, if it constitutes a crime, criminal liabilities shall beinvestigated in accordance with law; if it does not constitute a crime, theinstitution shall be instructed to rectify and be given a disciplinary warning,and also be fined not less than RMB30, 000 yuan but not more than RMB 50, 000yuan. The persons directly in charge and the other person directly responsibleshall, in accordance with law, be punished with demotion, dismissal, orexpulsion and also be fined not more than RMB 30, 000 yuan. The illegal gains,if any, shall be confiscated. If the circumstances are serious, thequalification for testing shall be annulled. If the testing result issued by thedrug testing institution is not true to fact and losses are thus occasioned, theinstitution shall bear corresponding liability of compensation for losses.

Article 88 The administrative sanctions prescribed inArticle 73 through Article 87 of this Law shall be determined by the drugregulatory departments at or above the county level according to the division ofresponsibility defined by the drug regulatory department under the StateCouncil. Revocation of the Drug Manufacturing Certificate, Drug SupplyCertificate and Pharmaceutical Preparation Certificate for Medical Institutionor withdrawal of the drug approval documents shall be determined by thedepartment that issued the certificate or the approval documents.

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

Article 90 Drug manufacturers, drug distributors or medicalinstitutions that offer or accept, in private, the rake-offs or other benefitsin the course of purchasing and selling drugs or drug manufacturers, drugdistributors or their agents that offer money or things of value or otherbenefits to leading members, drug purchasers, physicians, or other relatedpersons of the medical institutions where their drugs are used shall be finednot less than RMB 10, 000 yuan but not more than RMB 200, 000 yuan by theadministrative department for industry and commerce, and the illegal gains, ifany, shall be confiscated. If the circumstances are serious, the said departmentshall revoke the business licenses of the drug manufacturers or drugdistributors and inform the drug regulatory department of the matter, whichshall revoke their Drug Manufacturing Certificate, or Drug Distribution Certificate. If a crime is constituted, criminal liabilities shall beinvestigated in accordance with law.

Article 91 Any leading members, purchasers or other relatedpersons of drug manufacturers or distributors that, in the course of drugpurchasing or selling, accept money or things of value or other benefits offeredby other manufacturers, distributors or their agents shall be given sanctionsaccording to law, and the illegal gains shall be confiscated. If a crime isconstituted, criminal liabilities shall be investigated in accordance withlaw.

Leading members, drug purchasers, physicians or other related persons ofmedical institutions who accept money or things of value or other benefitsoffered by drug manufacturers, drug distributors or their agents shall be givensanctions by the administrative department for health or the institutions towhich they belong, and the illegal gains shall be confiscated. With regard tolicensed physicians who seriously violate laws, the administrative departmentfor health shall revoke their licenses for medical practice. If a crime isconstituted, criminal liabilities shall be investigated in accordance withlaw.

Article 92 Any violation of the provisions of this Lawrelated to the control over drug advertising shall be punished pursuant to theprovisions of the Advertisement Law of the People’s Republic of China, the drugregulatory department that issues the advertisement approval number shallwithdraw it and shall, within one year, reject any application for approval ofadvertising for the drug in question. If a crime is constituted, criminalliabilities 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 approvedfor issuance contains false information or other content violating laws oradministrative regulations, administrative sanctions shall, in accordance withlaw, be given to the persons directly in charge and the other persons directlyresponsible. If a crime is constituted, criminal liabilities shall beinvestigated in accordance with law.

Article 93 Drug manufacturers, drug distributors or medicalinstitutions that violate the provisions of this Law and thus cause harm andlosses to users of drugs shall bear the liability of compensation in accordancewith law.

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

(1) issuing the GMP and 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 theenterprises that have obtained the certificates, or failing to instruct, inaccordance with law, the enterprises not complying with the requirements torectify or withdraw their certificates;

(2) issuing the Drug Manufacturing Certificate, Drug Supply Certificate orPharmaceutical Preparation Certificate for Medical Institution to theenterprises or institutions that do not comply with the statutory requirements;

(3) issuing an Import Drug License to the drug that doest not comply 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 testinginstitution established by the department or institutions specially engaged indrug testing designated by the department is involved in drug production ordistribution, it shall be instructed by the authority at the next high level orthe supervisory body to rectify, and the illegal gains, if any, shall beconfiscated. If the circumstances are serious, administrative sanctions shall begiven to the persons directly in charge and the other persons directlyresponsible in accordance with law. Any staff member of the drug regulatorydepartment, drug testing institution established by the department orinstitution specially engaged in drug testing designated by the department whois involved in drug production or distribution shall be given an administrativesanction in accordance with law.

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

Article 97 Drug regulatory departments shall, in accordancewith law, perform their duties of supervision and inspection and shall see to itthat the enterprises holding the Drug Manufacturing Certificate or Drug Supply 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 Supply Certificate produce or sell counterfeit or substandard drugs, the legalliabilities of such enterprises shall be investigated and, in addition, thepersons directly in charge and the other persons directly responsible of thedrug regulatory departments who neglect their duty or commit dereliction of dutyshall be given administrative sanctions in accordance with law. If a crime is constituted, criminal liabilities shall be investigated in accordance withlaw.

Article 98 The drug regulatory department shall instruct thedrug 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 thepower to alter or annual the action which is not put right within the timelimit.

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

Article 100 Where a Drug Manufacturing Certificate or DrugDistribution Certificate is revoked in accordance with this Law, the drugregulatory department shall notify the administrative department for industryand commerce to alter or cancel the registration.

Article 101 The value of products mentioned in this Chaptershall be calculated on the basis of the marked prices of the drugs illegallyproduced or sold; where there is no marked price, the value shall be calculatedaccording to the market prices of drugs of the same kind.

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Chapter X
SupplementaryProvisions

Article 102 The terms used in this Law are defined asfollows:
Drugs refer to articles which are used in the prevention, treatmentand diagnosis of human diseases and intended for the regulation of the physiological functions of human beings, for which indications, usage and dosageare established, including Chinese crude drugs, prepared slices of Chinese crudedrugs, traditional Chinese medicine preparations, chemical drugs substances andtheir 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 bythe State Council.

Article 104 The State exercises special control over thecirculation of preventive biological products. Specific measures shall beformulated by the State Council.

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

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