State Council Approves '13th Five-Year' Food and Drug Safety Plan with Traceability System as Key Focus

Recently, Premier Li Keqiang of the State Council presided over an executive meeting of the State Council, which officially approved the “13th Five-Year” National Plan for Food and Drug Safety. The plan aims to effectively safeguard people’s health and well-being through institutional mechanisms, ensuring that the general public can consume food and use medicines without safety concerns.

First, strengthen supervision across the entire process. Implement local governments’ responsibilities, particularly at the county level, for ensuring food safety; increase daily oversight of key areas and entities such as schools and small street vendors; conduct in-depth source control of pesticide and veterinary drug residues; take stringent measures to crack down on illegal additives and other violations; and strictly prevent systemic risks. Enhance oversight of the authenticity of clinical trial data for pharmaceuticals; accelerate the establishment of verifiable and traceable mechanisms throughout all stages of drug production and distribution; severely combat the manufacture and sale of counterfeit drugs; and strictly prevent pharmaceutical safety incidents.

Second, strengthen spot checks and risk warnings. Enhance the professional capacity building of inspector teams, improve the inspection and testing system, implement full-coverage sampling inspections for all categories and varieties of food, blood products, vaccines, and essential medicines, and improve capabilities in risk monitoring, assessment, and emergency response. Establish an authoritative information release mechanism.

Third, strengthen technical support. Accelerate the formulation and revision of national food safety standards, and implement initiatives to upgrade standards for drugs, medical devices, and cosmetics. Promote pilot programs for government procurement of services in the registration and review of drugs and medical devices, and prioritize the review and approval of innovative drugs with clinical value and drugs urgently needed for clinical use. Leverage “Internet Plus” and big data to implement intelligent online supervision, and strictly enforce safety responsibilities across all stages of food and drug production, distribution, usage, testing, and regulation.

It is also evident from the key components of the plan that building a drug traceability system will become an industry priority. From a safety perspective, the entire process—from production and distribution to final consumption—must be fully documented, backed up with data, and compliant with regulatory policy requirements. For pharmaceutical manufacturers, distributors, and chain pharmacies, establishing a traceability system is urgent.

Notably, the Drug Electronic Supervision Network, previously led by the China Food and Drug Administration (CFDA) and operated by Ali Health, will cease updates as of March 1 this year, ushering in greater uncertainty for third-party drug traceability systems.

The so-called electronic drug supervision code, which is the digital barcode on drug packaging, allows consumers to access production and distribution information by scanning the code, serving as an "ID card" for the medication. Meanwhile, once the drug enters the distribution channel, relevant information should be entered into systems used by distributors and pharmacies to facilitate regulatory oversight and enable batch processing in the event of issues. From the perspectives of practical effectiveness and medication safety, the electronic supervision code is essential.

However, the implementation of the drug supervision code system was far from satisfactory. As it was not a mandatory measure, pharmaceutical companies showed little enthusiasm. According to data provided by industry insiders, only about 40% of drugs entering the distribution channel previously carried electronic supervision codes, while more than 60% had never been included in the electronic drug supervision system. This indicates that the impact of the electronic supervision system, from its inception to its suspension, was limited.

One reason is the redundancy within the regulatory system. Under the current pharmaceutical regulatory framework, there are a series of oversight mechanisms, including Good Manufacturing Practice (GMP), Good Supply Practice (GSP), and unannounced inspections. Although the electronic drug supervision code advocates for end-to-end traceability down to the terminal level, this system has not played a significant role within the regulatory framework, making it a case of “widely acclaimed but poorly adopted.”

Another factor is the issue of profitability. According to calculations, the hardware investment for pharmaceutical manufacturers and distributors to install electronic regulatory code systems ranges from tens of thousands of yuan. When labor and operational costs are included, the annual expenditure is substantial. However, the returns are limited. Regarding the most pressing concern—product safety—recalls can be executed using production batch numbers and other identifiers, making electronic regulatory codes unnecessary for this purpose. An unexpected consequence of electronic regulatory codes is their ability to reflect a company’s inventory, sales, and procurement data. If such data falls into the hands of commercial entities, it could play a decisive role in inter-company competition.

Consequently, last year, a group of enterprises dominated by chain pharmacies began to oppose the drug supervision code, leading to lawsuits directly targeting the China Food and Drug Administration (CFDA) and Ali Health. Under pressure, the drug supervision code was suspended. The subsequently issued Good Supply Practice for Pharmaceutical Products stipulated that “enterprises shall establish computer systems that meet operational and quality management requirements and fulfill drug traceability obligations.” Primary responsibility was thus assigned to pharmaceutical companies, which could either build their own systems or partner with platform-based enterprises such as Ali Health. This marked the advent of commercialized electronic regulatory systems, prompting Ali Health to launch its “Ma Shang Fang Xin” (Code Assured) service—essentially a continuation of the original electronic drug supervision code system.

However, the newly launched system incorporates an additional layer of commercial application logic beyond the original government-endorsed pure regulatory framework. According to the official website of the “Ma Shang Fang Xin” platform, in addition to overseeing production and distribution processes, the system can integrate enterprise marketing, campaign operations, value-added services, and more, thereby serving as another “entry point” beyond the product itself.

On January 21 this year, the State Council abolished the approval requirements for Class B and Class C licenses in pharmaceutical e-commerce, officially ushering the sector into an era characterized by “strict market entry and lenient exit,” thereby imposing higher demands on the drug regulatory system. Meanwhile, the China Food and Drug Administration (CFDA) released information related to the “National Drug Code Standard Data,” stating that the standard code, together with the regulatory code and classification code, constitutes the national drug coding system and enables traceability. The first batch of published standard codes covered 163,800 domestically produced drugs and 3,754 imported drugs.

“The 13th Five-Year Plan” for Food and Drug Safety also mentions the implementation of online smart supervision by leveraging “Internet Plus” and big data, and the strict enforcement of safety responsibilities across all stages of food and drug production, distribution, use, testing, and regulation.

How the “Internet Plus” and smart implementation pathways for food and drug safety supervision can provide promising opportunities for breaking through the challenges in online food and drug sales.

Analysts believe that, given the critical impact of food and drugs on public health, policymakers have long maintained a prudent stance. The recent promotion of “Internet Plus” from a regulatory perspective sends a positive signal, suggesting that a more open approach may be adopted toward online channels for food and pharmaceutical products in the future.

This argument is not without basis. Previously, during the approval process for qualifications in pharmaceutical e-commerce, an industry insider told reporters that the biggest challenge in online drug sales is trust. From the perspectives of safe medication use and regulated distribution, a robust regulatory system can help consumers quickly access information on drug production and distribution channels, thereby fostering consumer trust in the online pharmaceutical supply chain.

He pointed out that while regulatory improvements may seem distant from the industry, they are in fact closely intertwined. Once a socialized, corporate, and consumer-friendly regulatory framework is established, its impact will cascade to the industrial level, providing more credible endorsement for online pharmaceutical sales and helping to expand their market share.

According to relevant data, the scale of pharmaceutical e-commerce was approximately RMB 15 billion in 2015 and reached RMB 20 billion in 2016. As of January this year, more than 800 enterprises had obtained licenses for pharmaceutical e-commerce operations. However, pharmaceutical e-commerce has not yet gained widespread consumer recognition; hospital pharmacies and retail drugstores remain the preferred channels. Addressing this lack of consumer awareness would serve as a significant driving factor for growth.