China's Ministry of Commerce Releases Draft Guidelines for Classified and Tiered Management of Retail Pharmacies to Address Industry Fragmentation

On November 23, the Ministry of Commerce issued a notice soliciting public comments on the “Guiding Opinions on the Classified and Graded Management of Retail Pharmacies Nationwide (Draft for Comment).”

The explanatory notes on the draft notice point out that in recent years, China’s pharmaceutical retail market has demonstrated a development trend characterized by steady growth, structural optimization, and quality upgrading. Statistical data show that in 2017, the total sales volume of the national pharmaceutical retail market reached RMB 400.3 billion, a year-on-year increase of 9.0%. There were 5,409 pharmaceutical retail chain enterprises and 454,000 retail pharmacy outlets across China.

However, at present, the issues of small scale, fragmentation, and disorder in the pharmaceutical retail industry remain prominent. The overall levels of standardization, informatization, and intensification are relatively low, while management standards and service capabilities among pharmacies vary significantly, thereby constraining the effective implementation of prescription drug sales and medication management services. In some regions, the distribution of retail pharmacy outlets is unbalanced, with insufficient drug supplies in certain remote areas. This results in inconveniences and economic burdens for patients when purchasing medications, indicating that the industry’s potential to support broader health initiatives has not yet been fully realized.

There is a significant gap between the overall development level of the industry and the requirements of the “three-medical linkage” reform involving healthcare delivery, medical insurance, and pharmaceuticals, making it difficult to support and facilitate the implementation of key reform tasks such as tiered diagnosis and treatment, modern hospital management, universal health insurance, drug supply assurance, and comprehensive regulation.

Implementing classified and tiered management for retail pharmacies helps accelerate the transformation and upgrading of the pharmaceutical retail industry, lays a foundational groundwork for deepening the coordinated reform of medical care, health insurance, and pharmaceuticals (“Three-Medical” linkage), enhances management capabilities for both regulatory authorities and enterprises, and enables patients to access high-quality medicines and services more affordably and conveniently, thereby fostering a superior medication-purchasing environment.

Notice Clarifies Main Tasks:

(I) Determination of Classification Categories. In accordance with current laws and regulations, retail pharmacies are classified into three categories based on their operational conditions and compliance status: Category I pharmacies are permitted to sell Class B over-the-counter (OTC) drugs; Category II pharmacies are permitted to sell OTC drugs, prescription drugs (excluding prohibited and restricted drugs), and traditional Chinese medicine (TCM) decoction pieces; Category III pharmacies are permitted to sell OTC drugs, prescription drugs (excluding prohibited drugs), and TCM decoction pieces. Operational conditions and compliance status include factors such as the pharmacy’s capability to ensure drug quality, staffing of pharmaceutical technical personnel, and records of administrative penalties.

(II) Establish Grading Standards. Based on the classification results, Class II and Class III pharmacies shall be graded into three levels—A, AA, and AAA—in ascending order according to their operational service capabilities. Operational service capabilities encompass factors such as service environment conditions, supply assurance capacity, personnel qualifications and training, pharmaceutical care service level, construction of traceability systems and degree of informatization, integrity in business operations, science popularization education, and convenience services for the public.

(3) Strictly standardize procedures. Local commerce departments, in conjunction with drug regulatory authorities, shall be responsible for the classified and graded management of retail pharmacies. Classification and grading shall ensure open and transparent standards, standardized and orderly procedures, full traceability of processes, and fair and impartial results.

(4) Implement dynamic management. All retail pharmacy outlets that have legally obtained a Drug Operation License and are conducting normal business operations shall be fully included within the scope of management. The results of classification and grading shall be dynamically verified at least once annually. Based on routine monitoring and inspection information from relevant departments, as well as reports and complaints, retail pharmacies that fail to meet the classification and grading standards or engage in serious illegal or dishonest conduct shall have their category or level downgraded accordingly. Retail pharmacies experiencing substantial changes in operating conditions or service capabilities may proactively request an adjustment to their category or level.

(5) Improve supporting policies. Local commerce and drug regulatory departments shall earnestly implement the spirit of the “decentralization, control, and service” reform, coordinate and advance the classification and grading of retail pharmacies, achieve the “five unifications” (unified standards, unified organization, unified public disclosure, unified application, and unified adjustment), and avoid increasing the burden on enterprises. Commerce and health administrative departments shall encourage highly rated pharmacies to strengthen coordination with medical institutions and provide related services such as filling outpatient prescriptions dispensed from hospitals. Medical insurance management departments shall give priority to signing medical insurance service agreements with highly rated pharmacies and including them in the network of designated pharmacies. It is encouraged to leverage highly rated pharmacies to provide medical insurance expense settlement services for medications used in the treatment of special outpatient diseases and chronic outpatient conditions.

“The Notice” sets clear objectives:

By 2020, a classified and tiered management system for retail pharmacies had been basically established across most provinces and municipalities in China, with sound operational mechanisms; retail pharmacies were clearly positioned and operated in a standardized manner, with significantly enhanced pharmaceutical care capabilities and professional standards; drug supplies were adequate, safe, effective, reasonably priced, and easily accessible, effectively aligning with and supporting the coordinated reforms of healthcare, medical insurance, and pharmaceuticals (the “Three-Medical Linkage”), thereby basically meeting the public’s health needs; the level of informatization management in the drug retail industry was substantially improved, and the scientific rigor and effectiveness of industry supervision were markedly enhanced.

By 2025, a unified national regulatory and policy framework for the classified and graded management of retail pharmacies will be basically established, with effective inter-departmental coordination and collaboration. The pharmaceutical retail industry will see further improvements in informatization, intensification, and standardization, reaching internationally leading standards of modernization. This will achieve a higher-level balance between health supply and demand and significantly enhance consumer satisfaction. A relatively comprehensive smart management model and precision regulatory system for the pharmaceutical retail industry, centered on creditworthiness, will be formed.

[Original Link]

http://file.mofcom.gov.cn/article/gkml/201811/20181102809771.shtml