On 19 September 2012, SFDA released the Rules on Imposing Administrative Penalties for Drugs and Medical Equipment (Consultative Draft) (the “Draft”) and sought feedback from the public. The Draft shall apply to all types of violation regarding drugs and medical equipments, where SFDA has discretion on imposing administrative penalties.

Existing laws and regulations only grant SFDA the power to supervise the industry, but keep silent on the standards of imposing administrative penalties, which makes the cost for violation unpredictable and grants SFDA huge discretion in its supervision. The newly issued Draft might aim to narrow SFDA’s discretional power and thus set forth certain standards on administrative penalties over the drug and medical equipment industry. We believe that after the official issuance of such rule, it will provide the industry with much more certainty in daily operation.

Furthermore, we also note that although certain standards are proposed in the Draft, SFDA will still have the discretion (but limited within a certain scope) to impose penalties depending on the facts, specific circumstances of violation, product risk and the extent of social harm of such risk. The penalties are cataloged based on their respective applicable violation and an explicit list for determining the penalty is also include in the Draft. In some circumstances, the companies may be exempted from penalties if their violations are insignificant.

You can find the Draft at http://www.sda.gov.cn/WS01/CL0783/75034.html