China's Drug Supply Regulations Come into Effect

China’s Administrative Measures for Supervising the Quality of Drug Supply and Use¹ (referred to as the Administrative Measures), published by the State Administration for Market Regulation (SAMR), took effect on Jan. 1, 2024. 

The Administrative Measures comprises 7 chapters, encompassing a total of 79 articles. It mainly addresses the administration of drug supply license, obligations of businesses supplying drugs and medical institutions using drugs, as well as regulators’ supervision of stakeholders in drug supply and use.

Table 1: Contents of Administrative Measures for Supervising the Quality of Drug Supply and Use

This article focuses on requirements that companies must fulfill to get drug supply licenses, the obligations imposed on drug suppliers, and the regulatory measures implemented by authorities concerning specific supply activities, such as sales outsourcing.

1. Terms

Before delving into the specific regulations, it is helpful to familiarize with the terms used in the Administrative Measures.

1. Drug wholesaler refer to a drug supply company that buys drugs and sells them to drug manufacturers, drug suppliers, and medical institutions.

2. Drug retail chain enterprise consist of a headquarters, a distribution center, and some stores. Under the management of the headquarters, the enterprise implements large-scale and group management operations.

3. Drug retail company means a drug supplier that purchases pharmaceuticals and sells them directly to customers.

4. Drug user institutions include medical institutions, disease prevention and control organizations, etc.

2.  Conditions for Obtaining a Drug Supply License

In China, each drug supply license is designated with a unique code. The initial letter of the code corresponds to different entities as follows:

• A: drug wholesaler;

• B: headquarters of a drug retail group;

• C: store under a drug retail group;

• D: single drug retail store (not part of a chain).

2.1 Conditions for getting a drug supply license

As per the Administrative Measures, a company engaged in pharmaceutical wholesale/retail activities must meet the following conditions:

Table 2: Conditions for getting a drug wholesale/retail license

2.2 Dossier for drug supply license application

After obtaining a business license, a drug supplier company must apply for a drug supply license, which will be valid for 5 years after issued by the local medical products administration at the county level or higher. The application should include the following documents:

1. Application form for drug business license;

2. Information of the quality management organization; documents relevant to the academic qualifications and work experience of the principal person in charge, qualified person in charge, and the person in charge of the quality management department;

3. Qualification certificates and employment documents of the pharmacists or other pharmaceutical technicians;

4. Documents related to the methods and scope of supplying medicines;

5. Drug quality management rules and system; a list of key facilities & equipment for display and storage;

6. Information of the business premises, equipment, and storage facilities, and surrounding sanitary environment, etc.; documents relevant to the property rights, rights of use, layout plan regarding the business premises, warehouses, rooms, etc.

7. Other documents specified by laws and regulations.

3. Responsibilities in Drug Supply Activities

3.1 Main responsible persons

According to the Administrative Measures, the legal representative and the principal person in charge of a drug supply company shall be responsible for the comprehensive drug supply activities.

The principal person in charge should be responsible for overall daily management of the company, including the appointment of a dedicated qualified person in charge.

The qualified person in charge is fully responsible for drug quality management to ensure the quality of drugs.

3.2 Responsibilities throughout the supplying process

Drug suppliers should ensure full compliance with regulations throughout the drug supply process. They should adhere to GSP, ensuring that the drugs are sold and stored at locations approved by the medical products administration. The methods and scope of supply should align with the specifications stated on the drug supply license.

3.3 Medicines banned from sales

Drug supply companies are prohibited from supplying vaccines, drugs exclusively prepared and used in medical institutions, Chinese patent medical granules, and any other drugs that are prohibited by China from being supplied by companies.

In addition, drug retail companies are not allowed to sell anesthetics, category I psychotropics, radiopharmaceuticals, medical chemical precursors, anabolic agents, peptide hormones (except insulins), pregnancy termination drugs, and any other drugs forbidden by China to be sold through retail.

3.4 Requirements for managing drug retail chain

The headquarters of a drug retail chain should fulfil the following responsibilities:

• Establishing and improving a QMS;

• Unifying the corporate logo, rules, computer system, personnel training, procurement and distribution, bill management, as well as standards for pharmaceutical care.

• Managing the supply activities of its affiliated retail stores.

3.5 Conditions and responsibilities for outsourcing storage and transportation

If a marketing authorization holder (MAH)/supplier outsources storage and transportation of drugs, it should assess the quality assurance and risk management capabilities of the outsourced party.

The MAH/supplier should sign an entrustment agreement with the outsourced party, clearly defining the responsibilities for drug quality, operational rules and processes, and other details.

Regular audits should be conducted to oversee and supervise the performance of the outsourced party.

4. Inspection of drug suppliers

As stipulated by the Administrative Measures, medical products administrations at levels higher than the county level should determine the frequency of inspections.

Considering the diverse range of supplied products, drug supply companies are subjected to different inspection frequencies as outlined below.

Table 3: Inspection frequencies for drug supply companies

Contact BaiPharm if you are interested in knowing more about China's drug regulations.