o Provincial Drug Administrations (PDA):
This Regulation on Administration of Pharmaceutical Distribution Licenses (this Regulation) (Draft for Comment) is written to strengthen the administration of Drug Distribution Licenses in accordance with Drug Administration Law of The People's Republic of China (Drug Administration Law), Implementing Regulation of the Drug Administration Law (Implementing Regulation). The draft is hereby printed and distributed to you. Please organize relevant units to carefully review and submit comments for revisions to the Drug Distribution Division of our Department by September 10, 2002.
Market Supervision Department, SDA
August 30, 2002
Regulation on Administration of
Pharmaceutical Distribution Licenses
(Draft for Comments)
Chapter One: General Principles
Article 1: This Regulation is promulgated in accordance with Drug Administration Law, Implementing Regulation, and other relevant laws and regulations, to strength the administration of Drug Distribution License and to regulate drug distribution activities.
Article 2: This Regulation applies to all units and individuals engaged in drug distribution and its administration, and the application, issuance, renewal, annual inspection and change of a Drug Distribution License.
Article 3: SDA shall be responsible for national administration of Drug Distribution Licenses. PDA as well as their sub-bureaus at the county level shall be responsible for the issuance, renewal, annual inspection and change of Drug Distribution Licenses of wholesale and retail enterprises and other day to day work within their respective jurisdictions.
Article 4: The Drug Distribution License system will be implemented as one location for one license, and the drug distribution enterprises shall conduct their drug distribution work at the location approved by the authorities issuing the License. One license for multiple locations or one location requiring multiple licenses is not allowed.
Article 5: The Drug Distribution License is the legitimate certificate for an enterprise to conduct drug distribution. However, drug administration authorities may lawfully revoke, cancel, or withdraw a Drug Distribution License, no other enterprise nor any individual shall take over, seize, destroy, counterfeit, alter, lease, rent, and assign a Drug Distribution License.
Article 6: A Drug Distribution License includes its original and the duplicate, and both the original and duplicate have equal legal effect with the main contents including:
a) name of the enterprise, drug distribution location, location of warehouse (for wholesale enterprise), legal representative (responsible person), the number of the Drug Distribution License and the expiry date;
b) type of drug distribution: wholesale including delivery, retail (including chain stores);
c) scope of distributed products: TCM herbs, finished TCM, TCM preparation, bulk chemicals, chemical preparation, antibiotic, biochemical drug, radioactive drugs, serum, vaccines, blood products, diagnostic drug£¬OTC, and OTC Category B.
Article 7: The Drug Distribution License shall be printed exclusively by SDA, no other unit or individual may re-print it.
Chapter Two: Application and Issuance Procedures for a Drug Distribution License
Article 8: An enterprise established for drug wholesale or drug retail chain store enterprise (headquarters, distribution center) shall obtain a Drug Distribution License according to the following procedures:
a) The applicant shall submit the following application documents to the PDA when the enterprise is located:
1) application for the planned enterprise;
2) relevant documents to evidence that the requirements of the Standards for Establishing a Drug Wholesale Enterprise are met;
3) documents (copies) including certificates and resumes evidencing the identification, education, and professional qualifications of the legal representative (responsible person) and person responsible for quality;
4) proposed premises for operations, warehouse(s), and equipment;
5) other materials required by laws, regulations or PDA handling the application.
b) Within 30 working days of receipt of the complete set of application documents, the PDA shall conduct an inspection according to the Standards for Establishing a Drug Wholesale Enterprise, make a preliminary decision whether to approve and notify the applicant in writing.
c) Upon completion of the pre-establishment work, the applicant shall apply to the PDA for an acceptance inspection.
d) Within 30 working days of receipt of the application for acceptance inspection, the PDA shall organize an acceptance in accordance with the Acceptance Standards for Drug Distribution License (Wholesale), and if the inspection is passed, issue a Drug Distribution License, and if the inspection is not passed, the authorities who accepted the application shall notify the application with explanations.
Article 9: An enterprise that wants to establish a drug retail enterprise or a drug store or drug retail chain store enterprise shall procure a Drug Distribution License in accordance with the following procedures:
a) The applicant shall submit the following documents to the local SDA authority at city level or the local SDA authority at county level but directly administrated by PDA where the contemplated enterprise is located:
1) application form for the contemplated enterprise;
2) relevant documents to evidence that the requirements under the Standard for Establishment of Drug Retail Enterprise are met;
3) identifications, education, professional certificates and resumes for the legal person or the responsible executives of the enterprise, as well as the executives responsible for quality assurance of the enterprise;
4) shop, warehouse, and equipment for the contemplated enterprise;
5) other documents required by laws, regulations or the local SDA sub-bureaus.
b) Within 30 working days of receipt of full set of application documents, the local SDA authority processing the application shall conduct an examination in accordance with Rules for the Establishment of Drug Retail Enterprise, taking consideration of the local population, transportation condition, and local demand, and then make a decision whether or not the contemplated enterprise is approved and then notify the applicant in writing.
c) Upon the completion of the establishment of the enterprise, the applicant shall apply to the original examining authorities for acceptance.
d) Within 15 working days of the receipt of the application for acceptance, local SDA authorities shall organize an inspection in accordance with Acceptance Standards of Drug Distribution License (Retail), and if the inspection is passed, issue a Drug Distribution License, and if the inspection is not passed, the authority who processed the application shall notify the applicant with explanation.
Article 10: Within 3 months, an applicant who was not accepted may apply for a second inspection for acceptance. However, if no application is made within 3 months, or if the applicant fails the second inspection, the applicant may not reapply within one year.
Article 11: After issuance of the Drug Distribution License, the newly established drug distribution enterprise shall apply for a GSP certificate in accordance with provisions under Article 13 of the Implementing Regulation. The original authority issuing the Drug Distribution License shall withdraw a Drug Distribution License from an enterprise if the enterprise in question fails to apply for GSP certificate or fail to obtain GSP certificate within 9 months from issuance of the with a Drug Distribution License.
Chapter Three: Application Requirements for a Drug Distribution License
Article 12: Standards for establishment of drug wholesale enterprise:
a) the design shall conform with the principal of reasonable layout;
b) the responsible person for the quality assurance of the enterprise shall be a practicing pharmacist with more than 3 years of drug distribution quality assurance experience and management experience;
c) the responsible persons for enterprise and for quality assurance shall strictly observe the relevant laws and regulations, have good business ethics, with no violations involving fake drug or inferior drug activity, and no criminal record;
e) able to meet the drug demand at the local medical institutes and drug stores; with stocks of 90% of the drugs on the National Basic Drug List, must ensure supply within 24-hours;
f) equipped with the warehouses suitable for drug storage including regular temperature, cool storage, and the refrigerated storage, and the total area of the warehouse shall not be less than 1500 m2, with the areas of cool storage shall not be less than 500 square meters;
g) registered capital for the establishment shall not be less than RMB 20 million;
h) Acceptance Standard for Drug Distribution License (Wholesales) shall be made by SDA.
Article 13: Requirements for establishment of drug retail enterprise:
a) For the sales of Rx drug, the staff of the enterprise must include practicing pharmacists£¬ registered pharmacists£¬or other pharmacy professionals holding the necessary professional certificate. Persons responsible for quality assurance shall have more than one year of drug store quality management experience.
b) Only the OTC Category B is allowed to be sold in the established enterprise in the remote areas with sparse population£¬where there is no professionals with pharmacy knowledge. Staff dealing with the sales of OTC Category B drugs shall have passed the examination organized by the local SDA authority at city level or the local SDA authority at county level but directly administrated by PDA..
c) the responsible persons for enterprise and for quality assurance shall strictly observe relevant laws and regulations, have good business ethics, and no criminal record.
d) The establishment shall have the necessary distribution shop, equipment, warehouse facilities with necessary sanitary conditions suitable for the drugs distributed;
e) stocks of drugs locally needed, ensure supply within 24 hours, stocks of drugs from the National Basic Drug List shall be determined by the local SDA authorities in accordance with local conditions.
f) A franchise drugstore agreement shall be executed for the establishment of franchise drugstore£¬the agreement shall define uniform quality standards, uniform drugstore name£¬centralized procurement. The agreement shall also set out provisions to define the training, mentoring, and supervision from the franchiser£¬the detailed provisions for the implementation of such obligations, as well as provisions for breach.
g) Acceptance Standards for Drug Distribution License (Retail) shall be promulgated by PDA according to this Regulation as reference and in accordance with Regulation for Drug Distribution Quality Management and filed for the record with SDA.
Chapter Four: Annual Inspection of Drug Distribution License
Article 14: Conducting an annual inspection is an important means for the license authorities to supervise the drug distribution enterprises. All drug distribution enterprises holding a Drug Distribution License shall be annually inspected.
Article 15: SDA shall be responsible for organizing annual national inspection of the Drug Distribution License, PDAs shall be responsible for the implementation of the annual inspection within their respective jurisdictions, which includes the annual inspection plan, implementation rules, defining the responsibilities, and establishment of annual inspection records system. Article 16: Scope of annual inspection:
a) name of enterprise, distribution location, warehouse location, legal representative enterprise (responsible person), quality assurance executive, distribution method, distribution scope, affiliates and other significant items as well as the changes from previous time.
b) quality assurance system and operation condition changes;
c) lawful business operation record of drug distribution of the enterprise;
d) implementation of GSP by the enterprise;
e) other items the license issuing authorities may require.
Article 17: Method of conducting an annual inspection:
a) Before the 15th of March of every year, the enterprise shall apply for an annual inspection of Drug Distribution License by submitting annual inspection documents to the original license issuing authorities. Before the 30th of April, the original license issuing authorities shall examine the conduct of the enterprise during the previous year.
b) An on-site inspection shall be conducted by the licenses issuing authorities for at least 25% of the total enterprises which apply for an annual inspection. A on-site inspection must be conducted in the following stations,
1) the enterprise was newly established the previous year;
2) the enterprise failed to pass the annual inspection of the previous year;
3) the enterprise is one where a quality incident occurred;
4) an enterprises for which a license issuing authority determines that an on-site inspection is necessary;
5) other enterprise randomly determined.
c) The enterprises published by SDA as exempt an annual inspections or an enterprise that passed GSP certificate may be exempted from an annual inspection within the annual inspection exemption period or within one year upon the receipt of the GSP certificate. For a year in which a renewal of Drug Distribution License is needed, an annual inspection of Drug Distribution License and the renewal of Drug Distribution License may be conducted simultaneously.
Article 18: The result of annual inspection shall be recorded by the license issuing authorities and the duplicated of the Drug Distribution License marked with an Annual Inspection seal.
An enterprise that fails to apply for the annual inspection shall be deemed to have failed to pass the annual inspection.
Chapter Five: Change of the Scope of Drug Distribution License and Renewal of Drug Distribution License
Article 19: To change any of the permitted items in Drug Distribution License, the enterprise shall apply to the original license issuing authority for such change. The permitted items(s) shall not be changed without approval. The original license issuing authority shall confirm whether or not the change(s) can be made within 15 working days of receipt of the enterprise application. The expiry date of the changed Drug Distribution License remains unchanged.
When an enterprise is under investigation for unlawful business activities, the license issuing authorities shall suspend the application for change of Drug Distribution License of the enterprise before the case is closed or sanctions have been imposed.
Article 20: An enterprise which wants to change its distribution location, warehouse location or increase the warehouse areas or expand the distribution scope of the enterprise, shall procure the approval from the original license issuing authorities and the change shall not be implemented until a GSP certificate is issued.
Article 21: An enterprise that wants to change the method of drug distribution or to change from non legal person into a legal personal must re-apply for a new Drug Distribution License in accordance with the provision under Article 8 and Article 9 of this Regulation.
Article 22: When an affiliate or an enterprise that is under any competent administrative entity is to change the Drug Distribution License, an application signed by the legal person of the enterprise or the competent administrative entity shall be submitted
Article 23: After the change of the permitted items(s) over a Drug Distribution License, the original license issuing authorities shall record the change and the date of the change on the duplicates of the Drug Distribution License.. The original of the Drug Distribution License shall be re-issued to reflect the change..
Article 24: The validity period of a Drug Distribution License shall be 5 years, 6 months prior to the expiration, the enterprise holding the license shall apply for the renewal of the Drug Distribution License at the original license issuing authorities to continue drug distribution. The original licenses issuing authority shall examine in accordance with the previous procedure to issue the Drug Distribution License.. If the requirements are met, then the old Drug Distribution License shall be withdrawn and a new license issued. If the requirements are met, the original licenses issuing authorities shall withdraw the Drug Distribution License.
Chapter Six: Daily Management of Drug Distribution License
Article 25: SDA and PDAs are responsible for the administration of the issuance, renewal, annual inspection and change of Drug Distribution License at State level and at their respective jurisdictions.. When misconduct is identified at any of lower level administration during the course of issuance, renewal, change, and annual inspection of Drug Distribution License, the higher administration is entitled to make the correction.
Article 26: Authorities issuing Drug Distribution License shall designate an expert to manage Drug Distribution License work and establish records system for issuance, renewal, annual inspection and change of Drug Distribution License and computers should be employed. The progress status of the issuance, renewal, annual inspection and change of Drug Distribution License should be duly reported to the higher level administration authorities.
Article 27: PDAs or their sub-bureaus at the country level shall establish a database for the auditors of Drug Distribution License, and be responsible for the training, examining and administration of the auditors. Auditor of Drug Distribution License shall be responsible for on-site inspection and acceptance during the course of issuance, renewal, annual inspection and change of Drug Distribution License.
GSP certification inspector may join the inspection and acceptance work of issuance, renewal, annual inspection and change of Drug Distribution License once the inspector completes appropriate training.
Article 28: If an enterprise loses the Drug Distribution License, the enterprise shall immediately report to the original licenses issuing authorities and publish an announcement on newspaper(s). The original license issuing authorities will issue Drug Distribution License to the enterprise according to the items approved in the original approval 2 months after the newspaper announcement.
Article 29: An enterprise which fails to conduct the drug distribution business within 3 months after the enterprise is issued with the Drug Distribution License, or an enterprise no longer conducts drug distribution business for a period longer than 6 months, the original license issuing authority shall withdraw the Drug Distribution License from the enterprise.
Article 30: An enterprise which suspends the business shall apply to the license issuing authority within 30 working days for cancellation of Drug Distribution License and return the original and duplicate of Drug Distribution License to the license issuing authority.
Article 31: When drug distribution business of an enterprise is terminated or closed, the Drug Distribution License shall be cancelled and taken back.
Article 32: Licenses issuing authorities may temporarily keep a Drug Distribution License in verifying license matters, for a period not to exceed 10 days.
Article 33: The original of Drug Distribution License shall be put in a place at where it can be easily seen, enterprise holding Drug Distribution License can apply for a duplicate from original license issuing authorities.
Article 34: Drug Distribution License shall not be copied without prior consultation. When there is a need for the enterprise to submit the copy of Drug Distribution License to other entity, a prior consent shall be obtained from the original issuing authority, the use of copy should not be permitted unless the original license issue authorities seal the copy of the Drug Distribution License.
Article 35: The lower level administration of the license issuing authorities shall not pre-approve the Drug Distribution License without consultation with higher level administration.
Article 36: The format, numbering of the original and duplicate of Drug Distribution License, as well as the format, forms and instruction for filling out the form as well as other significant requirements for issuance, renewal, annual inspection and change of Drug Distribution License shall be made exclusively by SDA.
Chapter Seven: Sanctions
Article 37: The sanction provisions of Article 73 of Drug Administration Laws shall apply for the enterprise whose business exceeds the scope of distribution and methods of drug distribution stated in the Drug Distribution License.
Article 38: The sanction provision of Article 82 of Drug Administration Laws shall apply for the cases of counterfeiting, altering, leasing, renting, and assigning of a Drug Distribution License.
Article 39: A fine of RMB 10,000 - RMB 30,000 shall be imposed for a change of business location or warehouse location without prior consultation or in the violation of Article 19 of this Regulation, for a serious case£¬the license issuing authorities shall revoke the Drug Distribution License.
Article 40: For an enterprise which fails to pass the annual inspection, the license issuing authorities shall order the enterprise to make the corrections within a prescribed time. If enterprise still fails to pass, the license issuing authorities shall revoke the Drug Distribution License and announce the name of the enterprise publicly.
Article 41: If an enterprise obtains the Drug Distribution License by way of fraud such as use of fake document, data, during the issuance, renewal, annual inspection and change of a Drug Distribution License, the license issuing authority shall order the enterprise to make the corrections within a prescribed time, and a fine of RMB 10,000 - RMB 30,000 shall be imposed as penalty. For a serious case£¬the license issuing authority shall revoke Drug Distribution License.
Article 42: No application shall be accepted from an enterprise or individual within 5 years after revocation of the Drug Distribution License of the enterprise or individual.
Article 43: The sanction provisions of Article 74 of Implementing Regulation shall apply to an enterprise that fails to apply for a change in Drug Distribution License when such change is required to be registered at the original license issuing authorities.
Article 44: For other violations of this Regulation, the original license issuing authorities shall order the enterprise to make the corrections, warn the enterprise and impose fines on the enterprise not exceeding RMB 10,000. For a serious case£¬the license issuing authorities shall revoke the Drug Distribution License.
Chapter Eight: Miscellaneous
Article 45: The Drug Distribution License referred in this Regulation includes both the original and the duplicate of Drug Distribution License. Article 46: This Regulation is applicable to foreign-invested enterprises which conduct drug distribution business, except for provisions otherwise stated in other specific laws and regulation governing foreign-invested enterprises.
Article 47: This Regulation shall be interpreted by SDA.
Article 48: This Regulation shall become effective from the date of issuance, and the implementation rules shall be made by PDAs in accordance with this Regulation.
