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China Cancels Centralized Approval Process for B2C, B2B Online Drug Trading Licenses, 1/22/17

China's State Council, the country's cabinet, has announced that it is canceling the centralized examination and approval process for issuance of two types of license that grant the right for an enterprise to establish self-operated B2B and B2C online pharmaceutical trading platforms. The change is part of the "Decision of the State Council on Cancelling the Third Group of 39 Administrative Approval Items Designated by the Central Government for Implementation by Local Governments," which will also see the cancellation of the centralized approval process for licenses across a variety of other sectors.

The China Food and Drug Administration (CFDA) requires companies engaged in online drug sales to obtain an "Internet Drug Trading Service Qualification Certificate," valid for 5 years. The certificate comes in three different classes - A, B , C - each corresponding to a different scope of services; Class A allows operation of a third-party online B2B drug trading platform, Class B allows operation of a self-operated B2B online drug trading platform, and Class C allows operation of a self-operated B2C online drug trading platform.

Following the cancellation of the approval process for B and C licenses, provincial branches of the China Food and Drug Administration (CFDA) are to intensify their oversight of A, B, and C licenses given to pharmaceutical manufacturers, pharmaceutical wholesalers, and pharmaceutical retailers, in order to more tightly control the online pharmaceutical trading industry. CFDA branches must also create an online information announcement system to facilitate public record searching and guidance for the safe use of drugs. CFDA branches must also create testing mechanisms for online pharmaceutical retailers, with more regular inspections and punishments for violations.

Various analysts of the online pharmaceutical trading industry said that canceling the approval process of the B license will make it easier for B2B drug makers, distributors, and partners to establish e-commerce channels. The cancellation of the approval process for C licenses is likely to benefit retail drug chain enterprises, of which there are nearly 1,000 major players, as they can enter the online drug e-commerce market more easily.

The CFDA has issued 831 "Internet Drug Trading Service Qualification Certificates" to date, including 41 Class A, 195 Class B, and 598 Class C licenses.

The CFDA also published information regarding national drug coding with a system composed of standard codes, supervisory codes, and category codes, which can be used to trace a drug back to its manufacturer. The first batch of standard codes includes 163,800 domestic pharmaceuticals and 3,754 imported drugs. Consumers can look up any given drug's information and verify authenticity through its electronic supervisory code.

Editor's Note: Drug standard codes are used for national drug registration information management and do not appear on the packaging. Supervisory codes are listed on drug packaging.

Keywords: regulation mobile healthcare m-commerce B2B e-commerce Internet license B2C State Council China Food and Drug Administration online healthcare


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