On February 24, the General Office of the National Medical Products Administration (NMPA) issued an announcement stating that, to further standardize the handling of administrative penalty cases involving prepared slices of Chinese crude drugs, unify the discretion standards for administrative penalties, conduct case investigations in accordance with the law, and protect the legitimate rights and interests of citizens, legal persons, and other organizations, the NMPA has formulated the **Guiding Opinions on the Application Principles of Paragraph 2 of Article 117 of the Drug Administration Law of the People's Republic of China** in accordance with relevant laws and regulations, including the Administrative Penalty Law of the People's Republic of China, the Drug Administration Law of the People's Republic of China, and the Regulations for the Implementation of the Drug Administration Law of the People's Republic of China.

Appendix:

1. Guiding Opinions on the Application Principles of Paragraph 2 of Article 117 of the Drug Administration Law of the People's Republic of China

The Drug Administration Law of the People's Republic of China (hereinafter referred to as the "Drug Administration Law") fully considers the characteristics of prepared slices of Chinese crude drugs and specifically stipulates in Paragraph 2 of Article 117 (hereinafter referred to as "this Paragraph") the penalties for the production and sale of prepared slices of Chinese crude drugs that do not meet drug standards but do not affect safety and effectiveness.

To further standardize the handling of administrative penalty cases involving prepared slices of Chinese crude drugs, unify the discretion standards for administrative penalties, conduct case investigations in accordance with the law, and protect the legitimate rights and interests of citizens, legal persons, and other organizations, the following guiding opinions on the application principles of this Paragraph are formulated in accordance with relevant laws and regulations, including the Administrative Penalty Law of the People's Republic of China (hereinafter referred to as the "Administrative Penalty Law"), the Drug Administration Law, and the Regulations for the Implementation of the Drug Administration Law of the People's Republic of China (hereinafter referred to as the "Implementation Regulations").

1. In law enforcement regarding prepared slices of Chinese crude drugs, drug regulatory authorities shall implement the "Four Strictest" requirements, strengthen supervision over the production, sale, and use links, adhere to the principles of "legality, rationality, prudence, and impartiality", and firmly uphold the bottom line of drug safety.

2. When applying this Paragraph, drug regulatory authorities shall strictly follow the provisions of the Administrative Penalty Law and the Implementation Regulations on circumstances for lenient, mitigated, or no administrative penalties, conduct comprehensive discretion on penalty measures based on specific case facts and quality risks, and embody the principle of proportionality between punishment and offense.

3. Drug manufacturers and distributors shall strengthen quality management during production and distribution, adopt effective quality control measures, and ensure the quality of prepared slices of Chinese crude drugs.

4. Prepared slices of Chinese crude drugs to which this Paragraph applies are processed from natural plant, animal, and mineral medicinal materials. This Paragraph does not apply to Chinese medicinal formula granules or toxic prepared slices of Chinese crude drugs specified in the Measures for the Administration of Toxic Drugs for Medical Use.

5. The premise for applying this Paragraph is that the sources (including original species, medicinal parts, and processing at the place of origin) of the medicinal materials used for producing prepared slices of Chinese crude drugs and the processing techniques of the slices comply with relevant regulations, and it is limited to the following circumstances under Item 7 of Paragraph 3 of Article 98 of the Drug Administration Law: "other drugs that do not meet drug standards":

(1) Non-compliance with drug standards in terms of properties such as size, surface color, etc.;

(2) Non-compliance with drug standards in terms of inspection items such as moisture, ash, and medicinal debris impurities.

Where inspection items fail to meet standards, circumstances where other indicators do not meet standards shall be excluded.

6. The circumstances to which this Paragraph applies do not alter the nature of prepared slices of Chinese crude drugs that do not meet drug standards. Manufacturers and distributors shall recall non-compliant slices in accordance with relevant regulations, identify and analyze the causes, conduct safety risk assessments, and take measures based on the assessment results.

7. Drug regulatory authorities shall conduct objective and impartial investigations to confirm whether this Paragraph is applicable, and the parties shall actively cooperate. Where it is difficult to determine whether this Paragraph applies, drug regulatory authorities shall conduct risk assessment based on the specific circumstances of non-compliance with drug standards and verified facts, and if necessary, determine whether "safety and effectiveness are not affected" through expert demonstration or collective deliberation, and decide whether to apply this Paragraph.

8. During law enforcement, drug regulatory authorities shall collect and organize typical cases, strengthen case guidance, and ensure the correct implementation of this Paragraph. In addition, the following factors shall be considered: first, such circumstances still constitute the production and sale of substandard drugs; second, the harm and severity of illegal acts; third, whether the perpetrator has subjective intent; fourth, where Paragraph 2 of Article 117 of the Drug Administration Law is applied, the principle of proportionality between punishment and offense shall be embodied, and penalties shall be imposed based on specific case facts.

(2) Qualification of Products for Application of This Paragraph

Paragraph 2 of Article 117 of the Drug Administration Law fully considers the complex factors affecting the quality of prepared slices of Chinese crude drugs and has certain particularities. The circumstance that "prepared slices of Chinese crude drugs do not meet drug standards but do not affect safety and effectiveness" mainly refers to "other drugs that do not meet drug standards" under Item 7 of Paragraph 3 of Article 98 of the Drug Administration Law, which still falls under the category of substandard drugs. The drug standards referred to in this Paragraph include the Pharmacopoeia of the People's Republic of China, other national drug standards, provincial standards for Chinese medicinal materials, and processing specifications for prepared slices of Chinese crude drugs. If manufacturers and distributors of prepared slices of Chinese crude drugs are involved in other provisions of Article 98, this Paragraph shall not apply.

Drug manufacturers and distributors shall strengthen quality management during production and distribution, adopt effective quality control measures, and ensure the quality of prepared slices of Chinese crude drugs. For prepared slices of Chinese crude drugs that do not meet drug standards, manufacturers and distributors shall recall them in accordance with relevant regulations, identify and analyze the causes, conduct safety risk assessments, and take measures based on the assessment results.

(3) Scope of Prepared Slices for Application of This Paragraph

Prepared slices in the Pharmacopoeia of the People's Republic of China refer to drugs processed from medicinal materials that can be directly used in clinical practice or for pharmaceutical preparation production. Most prepared slices of Chinese crude drugs are derived from naturally grown medicinal materials, which are greatly affected by their growing environment. There may be cases where they fail to meet drug standards in terms of size, surface color, etc., but do not affect safety and effectiveness. Toxic slices shall be subject to strict management and this Paragraph shall not apply. Chinese medicinal formula granules are industrial products with uniform quality produced in accordance with specified standards and processes and shall comply with all drug standards. Therefore, the prepared slices of Chinese crude drugs referred to in the Guiding Opinions do not include toxic prepared slices of Chinese crude drugs specified in the Measures for the Administration of Toxic Drugs for Medical Use or Chinese medicinal formula granules.

(4) Circumstances for Application of This Paragraph

Prepared slices of Chinese crude drugs have complex sources, diverse processing methods, and numerous influencing factors. The setting of various indicators in drug standards can only approximate the true value and cannot fully reflect their safety and effectiveness. Therefore, there may be cases where prepared slices of Chinese crude drugs fail to meet individual drug standard indicators but do not affect safety and effectiveness. Among them, the source is an important indicator for identifying the authenticity of prepared slices of Chinese crude drugs; properties, identification, inspection, extractives, characteristic spectra, content determination, etc., are main indicators affecting effectiveness; microbial limits, sulfur dioxide residues, pesticide residues, heavy metals and harmful elements, mycotoxins, etc., are main indicators affecting safety. Considering the large latitude span in China and significant differences in temperature and humidity between the north and south, the moisture and ash content of prepared slices of Chinese crude drugs may fail to meet drug standards due to environmental factors but not affect safety and effectiveness. However, circumstances where non-compliance with moisture and ash content leads to non-compliance with other indicators shall be excluded.

Therefore, the premise for applying Paragraph 2 of Article 117 of the Drug Administration Law is that the sources (including original species, medicinal parts, and processing at the place of origin) of the medicinal materials used for producing prepared slices of Chinese crude drugs and the processing techniques of the slices comply with relevant regulations. Manufacturers and distributors of prepared slices of Chinese crude drugs shall strengthen quality supervision and extend supervision to the cultivation and processing of medicinal materials at the place of origin as much as possible to ensure compliance with drug standards. The applicable circumstances are limited to: non-compliance with drug standards in terms of properties such as size, surface color, etc.; non-compliance with drug standards in terms of inspection items such as moisture, ash, and medicinal debris impurities, excluding cases where other indicators fail to meet standards and affect safety and effectiveness.

(5) Subject of Burden of Proof and Determination Mechanism

The determination of whether Paragraph 2 of Article 117 of the Drug Administration Law applies shall be based on objective and impartial investigations by drug regulatory authorities, and the parties shall actively cooperate.

Where it is difficult to determine whether Paragraph 2 of Article 117 of the Drug Administration Law applies, drug regulatory authorities shall conduct risk assessment based on the specific circumstances of non-compliance with drug standards and verified facts, and if necessary, determine whether "safety and effectiveness are not affected" through expert demonstration or collective deliberation, and decide whether to apply Paragraph 2 of Article 117 of the Drug Administration Law.

(6) Strengthening Case Guidance to Promote the Correct Implementation of This Paragraph

During law enforcement, drug regulatory authorities shall collect and organize typical cases, strengthen case guidance, and ensure the correct implementation of this Paragraph and the uniformity of law enforcement standards.