Various blacklist systems are being implemented in a number of areas of Chinese administration, and from 1 October 2012 there will be a blacklist system in place for pharmaceutical security. Pharmaceutical companies are advised to pay close attention to this.

According to the trial version of the Provisions on the Administration of a Drug Safety Blacklist (“Blacklist Provisions”) published by the State Food and Drug Administration (“SFDA”) on 13 August 2012, if any of the following events occur, the entities and those individuals in the pharmaceutical industry who are directly responsible will be added to the blacklist by the SFDA and to the counterpart list at provincial level:

  1. Medicine approval certificates, medicine production licenses, medicine trading licenses or pharmaceuticals permits for medical institutes are revoked due to the manufacturing or distribution of counterfeit drugs or sub-standard drugs;
  1. Medical devices registration certificates, medical devices manufacturing licenses or medical devices trading licenses are revoked due to medical devices being manufactured without the appropriate certificate, serious cases of national standards or industry standards not being met and medical devices being manufactured or delivered which do not meet legal requirements and which result in serious consequences; 
  1. Concealing relevant information or providing false materials during applications for relevant administrative licenses;
  1. Obtaining relevant administrative licenses, certificates or other qualifications by providing false documents and samples or by other improper means, such as cheating or bribery;
  1. Fabricating or intentionally destroying a site, destroying relevant evidence, refusing or evading supervision and inspection, refusing to provide relevant materials, unauthorised use of articles that have been seized or distrained during the investigation process; 
  1. Receiving a criminal penalty due to crimes relating to drugs and medical devices;
  1. Severe quality and security incidents occurring as a result of any other illegal manufacturing or distribution of drugs and medical devices or intentionally aggravated and unlawful acts relating to drugs and medical devices which could cause serious harm.

In addition to being blacklisted, the entities in situation three above will be barred from applying for the relevant administrative licenses for one year, and the entities in situation four will be barred from applying for the administrative licenses for three years in addition to a revocation of the licenses.

The blacklist information will be published on the official websites of SFDA and its counterpart at the provincial level, in general for two years from the date of the penalty. After expiration of the two-year period, the blacklist information will be moved to the blacklist database for public inquiry. This means the blacklist history cannot be deleted once it is recorded.

It is not uncommon to see the above-listed situations, particularly situations three and four, in practice. The consequence of such blacklisting will undoubtedly be a detriment to life sciences companies in the future; these companies are therefore advised to scrutinise their business compliance to avoid being included on the blacklist.