A Legislative Prescription for the ills of the Drug Industry

The pharmaceutical industry in the PRC has long been plagued with problems such as the high cost of drugs, corruption and inferior quality medicines. In an attempt to rid China of such ills, the law has been amended. We take a look at what these amendments will mean for the future of pharmaceuticals in China.

On February 28 2001 the Standing Committee of the National People's Congress (NPC) significantly amended the PRC law on Administration of Pharmaceuticals  (中华人民共和国药品管理法)(the Law). The Law governs China's pharmaceutical industry, a multi-billion dollar industry that has attracted investment from most of the world's largest pharmaceutical companies and has been growing about 20% annually for several years. After more than a year and a half of drafting and deliberation, more than 100 articles were deleted, modified or added to the Law. Only four articles from the original Law were left untouched, and the total number of articles increased from 60 to 106. Because the changes were so extensive, the NPC Standing Committee restated the Law in its entirety rather than issuing a list of particular changes.

BACKGROUND

The Law was originally adopted in 1984 and became effective on July 1 1985. The amended Law will go into effect on December 1 2001. Generally, the amended Law follows the organizational structure of the original Law. The amended law strengthens the legislative foundation over pharmaceutical regulation, including approvals, manufacturing, storage, packaging, prescriptions, advertising and pricing. Several changes merely codify, at the legislative level, what had already been implemented through administrative regulations or in practice. The amended Law will apply to foreign-invested enterprises and market participants even though domestic issues within the PRC pharmaceutical industry and its evolving regulatory system largely drive the amendments.