Newly revised drug administration law adopted After deliberation

Closed in Beijing on August 26, 2019, the Twelfth Session of the Standing Committee of the 13th National People's Congress adopted the Revised Edition of the Drug Administration Law of the People's Republic of China, which shall be put in force as from December 1, 2019, marking the second systematic and structural major revision of the Law since its promulgation in 1984. The remarkable results of pharmaceutical reforms and effective practices were transformed into laws to beef up rule of law for public health. 

Summarize the results of reforms with comprehensive & systematic revision 

The Drug Administration Law (DAL) constitutes the basic law for drug supervision in China. The current DAL was enacted in 1984, first overhauled in 2001, and partially revised in 2013 and 2015. The promulgation and implementation of DAL has played a huge role in regulating drug production and management activities, strengthening drug supervision and management, ensuring the safety of public drug use, and promoting the development of the pharmaceutical industry. However, with the development of the social economy and the pharmaceutical industry, gaps loomed large between the current DAL and the new requirements of the CPC Party Central Committee and the State Council on drug safety, the new expectations of the people for drug safety, and the new situation facing drug supervision and industrial development, featuring the scarcity of measures to encourage innovation, inadequate penalties for illegal acts, and relatively backward scientific supervision methods. To adapt to the current new requirements, new expectations, and new situation, further improve drug safety governance system and drug safety management capabilities, the 12th and 13th National People's Congress Standing Committee incorporated DAL Amendment into their five-year legislation planning to accelerate the revision. 

In October 2018, the DAL Amendment Draft was submitted to the Sixth Session of the Standing Committee of the 13th National People's Congress for initial deliberation, and subsequent solicitation of public comments. During the deliberation, taken into account that no major revisions have been made since the DAL revision in 2001, it was recommended that the results of the reform of the pharmaceutical sector and effective practices over the years be raised to the law, and the draft amendments be changed to the revised drafts. In April 2019, the Tenth Session of the Standing Committee of the 13th National People's Congress deliberated the Revised Draft of DAL, which has been passed by voting on August 26, 2019 at the third deliberation of the Twelfth Session of the Standing Committee of the 13th National People's Congress. 

The newly revised DAL fully implements the Four Strictest requirements of the Party Central Committee on drug safety, clarifies the mission of drug administration as protecting and promoting public health, establishes the focus on people's health, and adheres to the basic principles of risk control, whole process supervision and collateral social supervision, requiring the establishment of a scientific and strict supervision and management system to comprehensively improve the quality of medicines and ensure their safety, effectiveness and accessibility. These fully embody DAL Revision's adherence to people-centredness, problem-oriented solutions, respect of law, international perspective, reform & innovation, as well as the unequivocal position, fundamental compliance and basic requirements of the scientific development. 

Encourage R&D to Ensure Accessible Supply 

In August 2015, the State Council issued the Opinions on Reforming the Review & Approval System for Drugs and Medical Devices (the State Council [2015] No. 44). In October 2017, the General Offices of the CPC Party Committee and the State Council issued the Opinions on Deepening the Reform of Review & Approval System to Encourage Innovation in Drugs and Medical Devices (General Office [2017] No. 42), focusing on the five themes ofinnovation, quality, efficiency, system, and capability, proposed to encourage drug R&D innovation, carry out pilot programs for Marketing Authorization Holders, reform clinic trial management protocols, accelerate marketing review and approval, and a series of other major reform measures with historical and innovative significance. In the past few years, the drug administration reform has been vigorously promoted and achieved remarkable results. The newly revised DAL has solidified the effective reform measures into legal results to encourage the R&D and innovation of new drugs, and laid a more solid legal foundation for further reform of the pharmaceutical sector.

DAL supports drug innovations that are clinically value-oriented and have a clear or specific therapeutic effect on human diseases. It encourages the R&D of new drugs with new therapeutic mechanisms, new drugs for treatment of serious life threatening diseases or orphan diseases, and new drugs with multi-targeted systemic regulatory interventions, and encourages the R&D and innovation of drugs for pediatric use. 

Establish and improve the drug review & approval system. Improve the efficiency and optimize the review and approval process through a series of measures, encompassing the establishment of communication and exchange, expert consultation and other systems; the transformation of clinical trial examination & approval system to the implied licensing system within a timeline; and the record-filing management for bioequivalence tests and drug clinical trial institutions. 

Meanwhile, DAL will give priority to the review and approval of short supplied new drugs and pediatric drugs catering to urgent clinical needs, drugs for the prevention of major infectious diseases and rare diseases; as well as to conditioned marketing approval for drugs against diseases that are seriously life-threatening and have no proven effective treatment, and drugs urgently needed for public health. 

All sectors of the society pay close attention to the shortage of commonly used drugs and emergency (first aid) drugs in China. The newly revised DAL provides a special Chapter on Pharmaceutical Reserves and Supplies, clarifying the state's drug reserve system, drug supply & demand monitoring system, list management system and prioritized drug review system for short-supplied drugs, involving multiple departments' synergy to strengthen drug supply security. 

Adhere to whole process management & control to ensure that the responsibilities of various parties are well met 

Drug safety is closely related to public life and health. On the basis of earnestly summarizing the experience of drug management in the international community, the newly revised DAL further clarifies that drug safety should follow the basic principles of risk management, full process control, and social co-governance. Taking the Drug Marketing Authorization Holder (MAH) System as the main line, further clarify the quality and safety responsibility of the drug life cycle, and firmly defend the public safety bottom line. 

The drug MAH is responsible for the effectiveness and quality reliability of the drug during the whole process of drug R&D, production, distribution and use. The newly revised DAL has an ad hoc Third Chapter: Marketing Authorization Holder, which provides comprehensive and systematic regulations on the conditions, rights, obligations and responsibilities of the MAH. 

It highlights the whole process information requirements for drugs. The engagement of drug R&D, production, distribution and use shall follow laws, regulations, rules, standards and norms to ensure that the information in the whole process is true, accurate, complete and traceable. 

The newly revised DAL also imposes strict regulations for the R&D, production and circulation of pharmaceuticals. It is stipulated that the development of drugs should follow the Good Laboratory Practice for Non-Clinical Laboratory Studies and GCP, and ensure that the whole process of drug R&D consistently meets the statutory requirements. The MAH shall establish a drug quality assurance system and strictly supervise drug-marketing release. The MAH shall comprehensively evaluate and verify the impact of alterations items on the safety, effectiveness and quality controllability of drugs per the national regulations. At the same time, the MAH should be required to establish and implement a traceability system to ensure traceability of drugs. 

The newly revised DAL also sets clear requirements for post-marketing management of drugs. It is stipulated that an annual reporting system shall be established, and the MAH shall report the production and sales of drugs, post-marketing research, risk management, etc. to the drug regulatory authorities in accordance with regulations. Furthermore, the MAH should take the initiative to carry out the post-marketing research, further confirm the drug safety, effectiveness and quality controllability, and take timely risk control measures for drugs with identified risks. If damage is caused to the drug user, the liability shall be borne by the MAH according to law. 

In addition, the newly revised DAL has strengthened the drug life cycle management concept from the aspects of pharmacovigilance, supervision and inspection, credit management, and emergency response, refined and improved the treatment measures of the drug regulatory authorities to improve the efficiency of supervision. 

The revision also reiterated the concept of social co-governance for drug safety, highlighting the responsibilities of local governments, relevant departments, pharmaceutical industry associations, news media, etc., and their synergy to ensure drug safety. 

Severe and well-placed punishment for serious violations of the law 

The newly revised DAL comprehensively augmented the penalties for illegal acts and specifically stipulates in Articles that if a crime is committed in violation of the provisions of this Law, criminal responsibility shall be investigated according to law, and high-pressure punishment upon illegal and criminal activities endangering drug safety shall be maintained in a clear-cut manner. 

Augmented the penalties to offenders in terms of property. For illegal activities such as unlicensed production and distribution, production and sale of counterfeit drugs, the amount of fines rose from 2-5 times the value of the medicines unlawfully made or sold (including both sold and unsold pharmaceuticals, which also applies below) to 15-30 times, where the value is less than RMB 100,000, it is uniformly counted as RMB 100,000: that is, the minimum fine is RMB 1.5 million. The fine for the production and sale of substandard drugs is also increased from 1-3 times the value of goods to 10-20 times.

Augmented the penalties to offenders in terms of qualifications. The qualification penalty for the responsible person for counterfeit and substandard drugs shall be escalated from ten years ban to lifelong ban from the industry. For enterprises whose licenses are revoked for the production and sale of counterfeit drugs, their corresponding applications shall not be accepted within ten years.

Added the penalties in terms of personal freedom. The public security organs may detain the relevant responsible personnel for 5-15 days for illegal production and sale of counterfeit and substandard drugs with serious consequences, as well as the falsification, fabrication or acquisition of licenses by fraud.

For enterprises seriously violating the law, the newly revised DAL implements specific and targeted penalty to offenders, while the enterprise is being punished per law, its legal representative, principal responsible person, directly responsible person in charge and other responsible personnel shall also be subject to punishment, including confiscation of the income earned during the period of the violation, fines, and ban from the industry for a certain period of time or even a lifetime. 

The newly revised DAL also improved the civil liability system. Including the clarification of liabilities of the drug MAH and manufacturer and distributor for damage; the stipulation that the agent of overseas MAH shall be jointly and severally liable with the MAH; the effectuation of charge-back system for civil liability; and the punitive damages the victim may request for the production of counterfeit and substandard drug, and intentional sale or use of it. 

While beefing up the penalties for violations, the newly revised DAL strictly implements the principle of offense-punishment equivalency, distinguishing between minor illegal activities and serious violations with grave consequences, and focuses on cracking down serious illegal acts or those with subjective intent.