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Supervision and Administration Regulation on Drug Circulation - 1999

(June 15, 1999)

(Temporary)

 

Chapter One: General Principles

Article 1: This Regulation is promulgated according to the Drug Administration Law of the People's Republic of China (hereafter referred to as Drug Administration Law) and related laws and regulations in order to strengthen drug supervision and administration, standardize drug circulation order and guarantee the quality of drugs.

Article 2: This Regulation applies to all the units and individuals that are involved in the purchase and sale of drugs.

Article 3: Local drug administration authorities at various levels are in charge of the implementation and administration of this Regulation. SDA is responsible for investigating and prosecuting major and complicated cases of illegal operations, as well as for supervising the implementation of this Regulation by local drug administration authorities at various levels.

Article 4: Drug administration authorities shall encourage and protect all units and individuals to supervise drug circulation in society. Every unit and individual has the right to report and charge any violation of this Regulation.

 

Chapter Two: Administration of the Sales of Drug-Manufacturing Enterprises

Article 5: A drug manufacturing enterprise may only sell drugs manufactured by itself.

Article 6: An office established by drug manufacturing enterprises may not sell products in the office. The office must accept the supervision management of local drug administration organizations. A drug manufacturing enterprise is liable for the activities of its offices.

Article 7: A drug manufacturing enterprise is not allowed to be engaged in the following sale activities:

(1) sell its products to units or individuals without a License for Drug Manufacturing Enterprise, License for Drug Operations Enterprise and Practicing License for Medical Units, and to individual medical practicioners and clinics from the countryside and individual medical practicioners and individual clinics in cities and towns;

(2) sell its products in illegal drug markets or other group trading markets;

(3) sell its RX products to OTC operations units;

(4) sell drugs with a modified production batch number;

(5) sell drugs with non-conforming insert sheets and labels;

(6) sell drugs violating administration regulations on approval numbers; and,

(7) other situations prohibited by laws or regulations.

Article 8: A drug-manufacturing enterprise is prohibited from providing drugs to units or individuals without a License for Drug Manufacturing Enterprise, License for Drug Operations Enterprise and Practicing License for Medical Units, as a way of repaying debts or providing loans.

 

Chapter Three: Administration of Drug Operations [Sales]

Article 9: According to the provisions of the Drug Administration Law, every drug operations unit or individual must obtain a License for Drug Operations Enterprise and business license, without which, no unit or individual is allowed to engage in drug sales.

Article 10: Authentic and complete purchase and sale records must be kept for drug wholesale operations. The purchase and sale records must have the following contents: date of purchase and sale, unit and individual of purchase and sale, quantity of purchase and sale; drug name, specifications, production batch number, manufacturing unit, approval number, signature of managing staff and responsible person, as well as other contents required by SDA. The purchase and sale records must be kept one year beyond the expiration period of a drug, but not less than three (3) years. For a drug without such purchase/sale records the matters shall be handled according to Article 47.

Article 11: Authentic and complete purchase records must be kept by drug retail enterprises. The items to be recorded in a drug purchase are listed in Article 10. The purchase records must be kept one year longer than the expiration period of a drug, but not less than two (2) years. The retail of Rx and OTC shall be carried out in accordance with the Regulation for the Administration of Rx and OTC.

Article 12: A drug wholesale enterprise may not engage in the drug retail business without approval; a drug-retail enterprise may not engage in the drug wholesale business without approval.

Article 13: Those involved in drug operations may not engage in the following activities:

(1) forging drug purchase or sale records;

(2) those without a License for Drug Manufacturing Enterprise, License for Drug Operations Enterprise and Practicing License for Medical Units, and individual medical practicioners and clinics from the countryside and individual medical practicioners and individual clinics in cities and towns who are engaged in drug purchase/sale activities in violation of this Regulation;

(3) participating in transactions involving illegal drug markets or other group trading, markets or providing drugs for these markets;

(4) selling Rx drugs to consumers who do not have a doctor's prescription;

(5) other situations prohibited by laws or regulations.

Article 14: A drug operations enterprise is prohibited from providing drugs to units without License for Drug Manufacturing Enterprise, License for Drug Operations Enterprise and Practicing License for Medical Units, as a way of repaying debts or providing loans.

Article 15: A drug operations enterprise is prohibited from providing to any unit or individual a counter, stand, invoice, tax receipt or licenses etc., as a way to engage in drug sales through conditions, lease, borrow or assignment of its License for Drug Operations Enterprise.

Article 16: If during the process of purchase/sale of drugs, a drug manufacturing or operations enterprise or medical unit discovers any fake drug, or drug of doubtful quality it shall duly report it to the local drug administration authority and may not sell, return or substitute the above-mentioned drug. If the above situation is discovered during inspection of an import drug, then the matter should be handled according to the Regulation for the Administration of Import Drugs.

Article 17: The corporate headquarters and each pharmaceutical chain store must obtain its own License for Drug Operations Enterprise.

Article 18: Except for nationally approved Chinese crude drug specialty markets, all other kinds of drug group trading markets are forbidden.

Article 19: Chinese crude drug markets may not sell other drug products. Prepared herbal medicine in small pieces and other Chinese crude drugs forbidden by the State may not be sold in the special markets for Chinese crude drugs.

Article 20: Group trading markets in cities and the countryside may sell locally produced Chinese crude drugs unless otherwise provided by national regulations. Sales of other drugs are forbidden.

Article 21: Any unit or individual is strictly prohibited from engaging in drug selling activities without a License for Drug Operations Enterprise. The following situations shall be treated as operating without a license:

(1) one with a License for Drug Operations Enterprise who operates in another location;

(2) an OTC operations unit which sells prescription drugs or otherwise engages in operations beyond its license scope;

(3) individual medical practicioners or individual clinics in cities and towns who violate relevant regulations regarding engaging in the purchase/sale of drugs;

(4) hospitals in the countryside or towns that violate Article 28 of this Regulation by acting as purchasing agents without the approval of drug administration departments at the county level;

(5) illegally purchase drugs from other units or enterprises;

(6) veterinary medicines operations units which sell drugs for human beings;

(7) those without a License for Drug Operations Enterprise who take advantage of conditions provided by a drug operations enterprise to engage in drug operations;

(8) those without a License for Drug Operations Enterprise who engage in the sale of import drugs;

(9) those who violate Article 5 and the first provision of Article 6 of this Regulation;

(10)those violating the first provision of Article 30 of this Regulation; and,

(11)other instances prohibited by laws and regulations.

Article 22: To sell in China import drugs which have already obtained the Import Drug License, a foreign drug manufacturer must choose a legal Chinese sales agent for import drugs.

Article 23: To engage in selling import drugs, according to the Regulation on the Administration of Import Drugs one must provide an operations enterprise officially sealed Import Drug License, and duplicate test report from Coastal Institute for Drug Control.

Article 24: A domestic sales agent importing drugs must file with SDA. If there is any change in the filed matter, the domestic sales agent must complete amending procedures.

Article 25: Import drugs sold in domestic markets must accept the supervision of local drug administration departments. The drug examination organizations at the provincial level have right to examine drugs of doubtful quality. When necessary, related organizations can ask NICPBP to provide standard products of the above-mentioned drugs for comparison, or examine those drugs in nearly coastal drug inspection organizations.

 

Chapter Four: Administration of Drug Purchasing

Article 26: Drug operation enterprises and medical units must purchase drugs from drug manufacturers with a License for Drug Manufacturing Enterprise and a License for Drug Operations Enterprise. Purchase of drugs through other channels is strictly prohibited. The purchase of Chinese crude drugs is an exception.

Article 27: Individual medical practicioners and individual clinics in cities and towns are not allowed to establish drug stores, or to be engaged in drug purchasing and selling activities.

Article 28: Individual medical practicioners and clinics in the countryside must purchase drugs from the nearby drug operation enterprises or their sales network. If there is no nearby drug operations enterprise or network, individual medical practicioners and clinics in the countryside, with the permission of drug administration departments at the county level, may entrust hospitals at the town level to purchase drugs for them. Other purchasing channels are strictly prohibited.

Article 29: Hospitals at the town level must purchase drugs from drug operation enterprises with a License for Drug Operations Enterprise. Other purchasing channels are strictly prohibited.

Article 30: If entrusted by an individual medical practicioner or individual clinic in the countryside to purchase drugs, hospitals at the town level may only demand reasonable fees. Hospitals at the town level are not allowed to make profits from these activities.

Hospitals at the town level are strictly prohibited from entrusting or contracting with individuals to purchase drugs.

Article 31: Drug operations enterprises, medical units and individual medical praticioners in the countryside are not allowed to be engaged in the following drug purchasing activities:

(1) purchasing drugs from units and individuals without a License for Drug Manufacturing Enterprise and License for Drug Operations Enterprise.

(2) purchasing drugs from illegal drug markets;

(3) purchasing preparations made by medical units;

(4) purchasing drugs that are not within the operations scope of the drug operation units;

(5) purchasing drugs from channels prohibited in Article 28 and Article 29 of this Regulation;

(6) other instances prohibited by laws and regulations.

Article 32: To purchase drugs, authentic and complete purchasing records must be established. The records shall be kept in accordance with the provisions of Article 10 of this Regulation.

Violations by medical units or individuals of the provisions of Article 11 and Article 32, purchasing without establishing records, shall be handled according to the provisions of Article 47 of this Regulation.

Article 33: To purchase import drugs, drug operations enterprises and medical units must demand the import drug operations enterprise provide the Import Drug License as well as duplicates of the Drug Examination Report of the Coastal Institute for Drug Control, attach the seal of operations enterprise and file a copy for examination purposes.

 

Chapter Five: Administration of Drug Salespersons

Article 34: A drug manufacturing and operations enterprise shall be liable for all the activities of its salespersons within the scope of the entrusted authority.

Article 35: A drug salesperson may not engage in drug sales activities for a second enterprise.

Article 36: A drug salesperson engaged in drug operations shall meet the following qualifications:

(1) have a high school education or above, receive training on relevant knowledge and regulations concerning drugs and medicines;

(2) have a clean record.

Article 37: Drug administration departments at the provincial level are in charge of the administration of training salespersons regarding legal matters of drugs. Drug administration departments at city level are responsible for the implementation of specific training programs.

Article 38: When selling drugs, a salesperson shall show the following credentials:

(1) duplicate of License for Drug Manufacturing Enterprise, License for Drug Operations Enterprise and Business License with the enterprise seal attached;

(2) the original of the letter of authorization with the seal of the consigning enterprise, and the seal or signature of the legal person of the consigning party; the letter of authoritation should clearly define the scope of authority; and,

(3) identification card of the salesperson.

Drug operations enterprises and medical units must examine the above-mentioned documents, establish examination file, and file documents of the purchase or sale records according to the provisions of this Regulation.

 

Chapter Six: Sanctions

Article 39: Violation of provision four of Article 7 of this Regulation, modifying the production batch number which is beyond expiration period, shall be treated as selling low quality drugs, and shall be sanctioned according to related provisions of the Drug Administration Law.

Violation of provision four of Article 7 of this Regulation, modifying the production batch number of medicines which are within expiration period shall be sanctioned according to Article 53 of Drug Administration Law.

Violation of provision five of Article 7 of this Regulation shall be sanctioned according to Article 53 of Implementation Regulations of the Drug Administration Law.

Selling drugs in violation of the provisions of Article 7 of this Regulation shall be sanctioned with a warning and /or fine of RMB £§20,000 - 30,000.

Article 40: Drug operations in violation of the provisions of Article 13 of this Regulation shall be sanctioned with a warning and /or fine of RMB £§2,000 - 30,000.

Article 41: Purchasing drugs in violation of the provisions of Article 31 of this Regulation shall be sanctioned with a warning and/or fine of RMB £§1,000 - 30,000.

Article 42: Violations of Article 15 of this Regulation, releasing, borrowing or conveying License for Drug Operations Enterprises shall be sanctioned with a warning and/or fine of RMB£§10, 000 - 30,000.

Article 43: Violations of Article 16 of this Regulation, the failure of drug manufacturing or operations enterprises and medical units to duly report fake drugs, low-quality drugs or drugs with suspicious quality to local drug administration departments shall be sanctioned with a warning and/or fine of RMB £§2,000 - 20,000. An enterprise selling, returning or substituting fake drugs or low-quality drugs shall be sanctioned according to the sanction provisions on selling fake drugs or low-quality drugs as provided in the Drug Administration Law. An enterprise selling, returning or substituting drugs with suspicious quality, which results in the failure of the investigation by drug administration departments, shall be sanctioned according Article 47 of this Regulation.

Article 44: Violations of Article 12, Article 17, Article 18, Article 19, Article 20, Article 21 and Article 35 shall be sanctioned according to Article 52 of the Drug Administration Law.

Article 45: Domestic sales agents for import drugs who purchase and sell import drugs without filing with relevant organizations shall be sanctioned with a warning and /or fined RMB £§10,000 - 30,000.

Article 46: Violation of this Regulation, selling or using import drugs without Import Drug License and Drug Examination Report, or forging/modifying Import Drug License and Drug Examination Report, shall be sanctioned according to Article 50 of Drug Administration Law and Article 48 of Implementation Regulations of Drug Administration Law

Failure to attach the seal of the supplying unit on the Import Drug License and duplicate of Drug Examination Report, or failure to demand the Import Drug License and Drug Examination Report when purchasing drugs, shall be sanctioned with a warning and/or fine of no more than RMB £§10,000.

Article 47: Violation of other provisions of this Regulation shall be sanctioned with a warning and/or fine of no more than RMB £§10,000.

Article 48: When implementing administrative sanctions, drug administration departments shall order the party to correct or stop its illegal act(s).

Drug administration departments at a higher level have the right to order drug administration departments at a lower level to correct wrong administrative actions.

Article 49: When implementing this Regulation, drug administration departments are strictly prohibited from abusing their powers, bending the law for personal gain and engaging in fraud, and neglecting their duties. The main leaders and person directly responsible of drug administration departments involved in the above-mentioned activities shall be seriously dealt with according to relevant provisions. If the action constitutes a crime, it shall be prosecuted according to the criminal law.

Article 50: If a party does not accept the sanctions determined by the drug administration departments, it may apply for administrative reconsideration or administrative appeal according to the provisions of relevant laws and regulations.

 

Chapter Seven: Miscellaneous

Article 51: Terms in this Regulation are defined as follows:

"Drug group trading market" means a market which has been prohibited by explicit order from engaging in drug purchase/sale activities, including drug trade fairs that not approved by the authorities. It means drug purchasing, storing, shipping and selling places where dealers without a license, borrowing from operators under protection of legal enterprises, or operators with a license in another location, gathering together and conducting independent or scattered spot drug purchases, warehousing, storage, transportation and sales activities.

"Domestic sales agent of import drugs" means the legal person of a licensed drug operations enterprise conducting domestic sales of import drugs according to its agreement signed with a foreign drug manufacturer.

"Operation in another location" means conducting drug operations in a place other than the registered place stated in License for Drug Operations Enterprise.

"Operations scope" means the drug operation product scope in the License for Drug Operations Enterprise.

In provision six of Article 7 of this Regulation, "selling drugs with modified production batch number" means an activity that does not constitute purchasing or selling fake or low-quality drugs according to the provisions of law.

In Article 2 of this Regulation, "drug purchasing and selling" does not include purchase of drugs by an individual for personal consumption.

The "individual medical practicioners and individual clinics in towns" does not include individual medical practicioners and clinics in the countryside.

"Cities" in this Regulation refers to cities at the prefecture level, not to cities at the county level.

Article 52: The provisions concerning the separate administration of drugs shall come into force after the implementation of Regulation for the Administration of Rx and OTC.

Article 53: If there is any conflict between this Regulation and previous documents on drug circulation administration, this Regulation shall govern.

Article 54: SDA is responsible for the interpretation of this Regulation.

Article 55: This Regulation is effective from August 1, 1999.

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