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Compliance and enforcement

Enforcement

What measures are in place to enforce the laws governing medicinal products?

The legal recourse against falsified or illegally distributed medicines can be found under the Drug Administration Law, the Product Quality Law, the Consumer Protection Law and the Criminal Law. Violations can be addressed with either administrative or criminal procedures.

Breaches of licensing requirements, quality standards, good clinical, manufacturing and distribution practices and labelling rules (among other things) will mainly be enforced by the China Food and Drug Administration (CFDA) and their respective local counterparts. The CFDA is also responsible for initiating administrative procedures against falsified or illegal drug distribution. Parties that manufacture, distribute or sell counterfeit drugs face penalties including:

  • confiscation of counterfeits and illegal revenues;
  • administrative fines;
  • revocation of manufacturing permits; and
  • orders to cease infringement and illegal operations.

Breaches of the promotional rules for pharmaceutical products are generally enforced by the State Administration of Industry and Commerce (SAIC) and its local counterparts.

Dishonest practices

What mechanisms are in place to combat bribery, fraud, collusion, counterfeiting and other dishonest practices in the pharmaceutical sector?

The People’s Court is the main body charged with enforcing against fraud, adulteration, counterfeiting, bribery and other serious offences in drug marketing and promotion that constitute crimes. The criminal process is initiated by the Public Security Bureau, which is responsible for criminal investigations, and the People’s Procuratorate, which is responsible for indictment. If convicted by the court, parties manufacturing, distributing or selling falsified or adulterated medicines may be subject to criminal fines. Further, the personnel in charge of the organisation responsible for the wrongdoing may face criminal detention, fixed-term or life imprisonment or – in the most serious cases – the death penalty.

If the nature of bribery is not criminal but commercial, the local counterparts of the SAIC can investigate and impose administrative fines of 10% to 30% of the illegally generated business turnover, according to the latest proposed draft revision to the Anti-unfair Competition Law. The National Health and Family Planning Commission also maintains a blacklist to debar drug companies and individuals from participating in public tenders. Once blacklisted in a province, the relevant company and individual will be prohibited from selling drugs in that province for two years and will have less likelihood in winning hospital tenders in all other provinces in China.

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