With the opening of epidemic control, Pfizer's PAXLOVID generic drugs have entered the public's vision. What exactly is a generic drug? What are the legal risks when selling and purchasing generic drugs? This article may give you some answers.

With the opening of the national epidemic control area on December 7, 2022, the COVID-19 spread rapidly, and the epidemic was in a blowout style. Within two weeks, it swept through many cities in the north, most of the residents were infected, and the elderly became a serious and deadly disaster area. After the shortage and high price of ibuprofen, merrill lynch and other drugs, Pfizer's anti COVID-19 drug Paxlovid (paxlovid) was popular because of its remarkable efficacy in treating severe cases, and its price in China was once promoted from 2300 yuan/box to 50000 yuan/box, but it was still hard to find a drug. For this reason, many people have turned to generic versions of Paxlovid.

What is a generic drug? A generic drug refers to a generic product that is identical to a trade name drug in terms of dose, safety, efficacy, quality, effect, and indication [0]. Generic drugs are drugs that correspond to original research drugs and can be copied by other drug manufacturers after the expiration of patent protection or other patent rights. On March 17, 2022, Pfizer Inc., in cooperation with the United Nations supported drug patent pool (MPP), signed an agreement with 35 companies in 12 countries to allow these companies to imitate one of the ingredients of Pfizer COVID-19 oral Paxlovid, 19 of which are Indian pharmaceutical factories [2]. According to The Economic Times, Bexovid, produced by Beximco Pharmaceutical in Bangladesh, is the first Paxovid generic drug to be listed in the world. However, currently, the most widely purchased and sold in China are Indian generic versions of Primovir (green box) [3] and Paxista (blue box) [4], which have also been priced at 10000 yuan per box.

Surprisingly, Yin Ye, CEO of BGI Group and Vice Chairman of BGI Gene, has recently sent a number of messages to his friends saying that the green box generic Primovir purchased by him and his friends contains a large number of counterfeit drugs, and after testing, it was found that there is no effective ingredient, nematrivir, in it. Dr. Kashi, a science blogger, also reported that a total of nearly 50 samples of the Indian generic drug Paxlovid have been tested, and nearly half of them may not contain the active ingredient nematrivir. Primovir, a green box generic drug, is close to mass destruction, only replacing nematrivir with oseltamivir or ritonavir.

Therefore, what legal risks do media friends have in purchasing or selling such generic drugs imported without the approval of the competent national authorities, as well as "fake drugs" that do not contain active ingredients, and do they still need to bear criminal responsibility?

Evolution of laws, regulations and judicial practice

In July 2018, the movie "I'm not the God of Medicine" starring Xu Zheng was released and exploded, making the story of the prototype Lu Yong widely known. In 2013, Lu Yong was arrested by the public security authorities for purchasing a counterfeit Indian anti cancer drug "Glivet" for his patients, and was prosecuted by the procuratorate for selling counterfeit drugs. However, after more than 300 patients' joint appeals and media attention, the procuratorate finally withdrew the lawsuit.

After that, discussions and debates continued for a long time about whether foreign generic drugs should be recognized as "counterfeit drugs", whether purchasing foreign generic drugs on behalf of others requires criminal responsibility, and whether it constitutes the crime of selling counterfeit drugs, or the crime of illegal operation, or the crime of omission. In judicial practice, there has also been a process from being recognized as the crime of selling counterfeit drugs to the crime of illegal operation, and then to not being recognized as a crime, Ultimately, due to the improvement of laws, regulations, and judicial interpretations, the dispute was settled.

Article 39 of the Drug Administration Law of the People's Republic of China (2015) stipulates that "The import of drugs must be reviewed by the drug regulatory department under the State Council, and those confirmed to meet quality standards, safety, and effectiveness can be approved for import, and a registration certificate for imported drugs can be issued." Article 48 stipulates that "production (including formulation, the same below) is prohibited." Selling counterfeit drugs "Drugs that are under any of the following circumstances shall be treated as counterfeit drugs: (2) Those that must be approved according to this Law but are produced or imported without approval, or those that must be inspected according to this Law but are sold without inspection." Therefore, before the amendment of the law in 2019, foreign generic drugs imported without approval were identified as "counterfeit drugs".

Article 141 of the Criminal Law of the People's Republic of China stipulates that "Whoever produces or sells counterfeit drugs shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also be fined... The term counterfeit drugs mentioned in this article refers to drugs and non drugs that are classified as counterfeit drugs or treated as counterfeit drugs in accordance with the provisions of the Drug Administration Law of the People's Republic of China." [6] Therefore, before 2014, the act of selling foreign generic drugs has been recognized as the crime of selling counterfeit drugs. [7]

After September 2014, the country's attitude towards foreign imports of generic drugs began to change. Article 11 (2) of the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate on Several Issues Concerning the Application of Law in Handling Criminal Cases Involving Drug Safety Hazards (FS2014 No. 14, hereinafter referred to as the "Interpretation of Handling Criminal Cases Involving Drug Safety Hazards") "The sale of a small amount of drugs processed privately based on traditional folk formulas, or the sale of a small amount of foreign or overseas drugs imported without approval, without causing harm to others or delaying diagnosis and treatment, if the circumstances are significant and the harm is not significant, shall not be considered a crime."

In September 2016, Article 4 of the Opinions of the Supreme People's Procuratorate on Fully Performing Procuratorial Functions to Provide Strong Judicial Guarantee for Promoting the Construction of a Healthy China emphasizes again "The sale of a small amount of privately processed drugs based on traditional folk formulas, or the sale of a small amount of unapproved imported foreign and overseas drugs without causing harm to others or delaying diagnosis and treatment, as well as the production and sale of drugs that are not for profit and have the nature of self-help and mutual assistance by patients, shall not be treated as a crime. For cases where there is a significant dispute between the determination of crime and non crime, timely report to the higher procuratorial organ for instructions 。”
Article 17 of the "Supplementary Provisions to the Provisions of the Supreme People's Procuratorate and the Ministry of Public Security on the Standards for Filing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Organs (I)" (GTZ [2017] No. 12) promulgated in April 2017 "Anyone who produces or sells counterfeit drugs shall be prosecuted for filing a case. However, the sale of a small amount of drugs processed privately based on traditional folk formulas, or the sale of a small amount of foreign or foreign drugs imported without approval, without causing harm to others or delaying diagnosis and treatment, unless the circumstances are significant and the harm is not significant."

Article 98 of the Drug Administration Law of the People's Republic of China, revised in 2019, cancels the provision that "drugs that must be approved but are not approved for production or import, or that must be inspected but are sold without inspection in accordance with this Law, are considered fake drugs.". At this point, foreign generic drugs imported without approval are not considered counterfeit drugs, and purchasing or selling generic drugs on behalf of others no longer constitutes the crime of selling counterfeit drugs. However, the provisions of "prohibiting the production and import of drugs without obtaining drug approval documents." have been retained.

In March 2022, the "Interpretation on Handling Criminal Cases Against Drug Safety" was revised, Article 18 of the "Interpretation" (Gao Jian Fa Shi Zi [2022] No. 1) further clarifies that "Anyone who privately processes or sells the aforementioned drugs based on traditional folk formulas in a small amount, without causing harm to others or delaying diagnosis and treatment, or who does not engage in the production, import, or sale of drugs with the nature of self-help or mutual assistance for profit purposes, shall not be considered a crime."

From the changes in laws, judicial interpretations, and policy documents, it can be seen that since the Lu Yong incident, the public, procuratorial, and legal parties have gradually reached a consensus that selling a small amount of unapproved imported foreign generic drugs without causing harm to others or delaying treatment is no longer considered a crime. However, if foreign generic drugs are sold for profit and the sales amount reaches a large amount, does it constitute a crime? With the consensus reached on the concept that generic drugs are no longer recognized as "counterfeit drugs" in foreign countries, even if the number of sales is large, they will no longer be recognized as the crime of selling counterfeit drugs. However, in judicial practice, because the seller does not have a drug trading license, they will be recognized as constituting the crime of illegal trading.

Article 7 of the 2014 Interpretation on Handling Criminal Cases Against Drug Safety (FS2014 No. 14) stipulates that "Anyone who violates national drug management laws and regulations, fails to obtain or use a forged or altered drug trading license, and illegally trades in drugs, if the circumstances are serious, shall be convicted and punished for the crime of illegal trading in accordance with the provisions of Article 225 of the Criminal Law." "Those who commit the acts mentioned in the preceding two paragraphs and have an illegal business operation amount of more than 100000 yuan or an illegal income amount of more than 50000 yuan shall be recognized as" serious circumstances "as stipulated in Article 225 [8] of the Criminal Law;"; "If the amount of illegal business operations is more than 500000 yuan, or the amount of illegal gains is more than 250000 yuan, it shall be recognized as" the circumstances are particularly serious "as stipulated in Article 225 of the Criminal Law.". That is to say, if the sales amount reaches 100000 yuan or the profit reaches 50000 yuan, it constitutes the crime of illegal business operation. Comparing the legal punishment range of the crime of selling counterfeit drugs with the crime of illegal business operation, it can be seen that the punishment for the crime of illegal business operation is even heavier than that for the crime of selling counterfeit drugs.

When the "Interpretation on Handling Criminal Cases Against Drug Safety" was revised in 2022, the above provisions constituting the crime of illegal trading were deleted. At this point, the sale of foreign regular generic drugs is no longer considered a crime of illegal operation.

Does that mean that selling unapproved imported generic drugs is completely without legal risk?

Legal risk and administrative penalty risk

First of all, there is a legal risk of administrative penalties for the sale of imported generic drugs. Vendors have the form of liability for confiscated drugs, illegal income, and fines. For business operators, there are also forms of liability such as suspension of business for rectification, revocation of drug trading licenses, accountability of legal representatives, prohibition of professional qualifications, and detention. "However, those who purchase a small amount of drugs that have been legally marketed abroad for their own use or mutual assistance, not for profit, will not be punished or given a mitigated punishment.".

The provisions of Article 124 of the Drug Administration Law of the People's Republic of China "Anyone who violates the provisions of this Law and commits one of the following acts shall be confiscated of the drugs illegally produced, imported, or sold, as well as the illegal income, as well as the raw materials, auxiliary materials, packaging materials, and production equipment specifically used for illegal production, ordered to suspend production or business for rectification, and concurrently fined not less than 15 times but not more than 30 times the value of the drugs illegally produced, imported, or sold. If the value of the drugs is less than 100000 yuan, it shall be calculated as 100000 yuan. If the circumstances are serious, the drugs shall be revoked." "The legal representative, the principal responsible person, the directly responsible person in charge, and other responsible persons shall be confiscated of the income received from their unit during the period of the illegal act, and shall be fined not less than 30% but not more than three times the income earned, and shall be prohibited from engaging in drug production and trading activities for ten years to life,", "And may be detained by the public security organ for not less than five days but not more than fifteen days: (1) producing or importing drugs without obtaining drug approval documents. However, it is also stipulated that" if a small amount of drugs that have been legally marketed abroad are imported without approval, and the circumstances are relatively minor, they may be mitigated or exempted from punishment according to law. ""

Legal Risk and Criminal Crime Risk

As mentioned earlier, purchasing and selling officially imported generic drugs on behalf of others is no longer considered a crime of selling counterfeit drugs or illegal business operations, but this does not mean that all sales do not constitute a crime. This needs to be determined based on the specific situation of foreign drugs, and there may be legal risks that constitute the crime of impairing drug management, the crime of selling counterfeit drugs, and the crime of selling substandard drugs. [9]

In March 2021, Article 7 of the Criminal Law Amendment (11) added the "crime of impairing drug management", "Whoever violates the regulations on drug administration and commits any of the following acts, which are sufficient to seriously harm human health, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined; if he causes serious harm to human health or if there are other serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined:" Producing or importing drugs without obtaining relevant approval documents or knowingly selling the aforementioned drugs. "Whoever commits the act mentioned in the preceding paragraph and simultaneously constitutes the crime specified in Articles 141 and 142 of this Law or any other crime, shall be convicted and punished in accordance with the provisions on the heavier punishment."

Article 7 of the 2022 Interpretation on Handling Criminal Cases Involving Hazards to Drug Safety stipulates that "An act that impairs drug management shall be recognized as' sufficient to cause serious harm to human health 'as stipulated in Article 142-1 of the Criminal Law if it involves any of the following circumstances: (5) Importing drugs without obtaining relevant approval documents for drugs or knowingly selling the drugs mentioned above, and the drugs involved have not been legally listed overseas."
Foreign drugs also have mixed quality, including substandard drugs with insufficient raw materials and active ingredients, excessive impurities, and other drugs that are not legally marketed. These drugs may be "sufficiently harmful to human health.". Therefore, if the drugs purchased or sold on behalf of others are raw materials that have been repackaged or filled from abroad, or other drugs that have not been legally marketed, or even counterfeit or substandard drugs, there is still a legal risk of being prosecuted for criminal liability for "obstructing drug management," "selling counterfeit drugs," and "selling substandard drugs," (imaginative co operation).
epilogue

In the era of the epidemic, purchasing Paxlovid and its generic drugs for personal use and mutual assistance is a no-brainer, and there will be no excessive legal risks. However, when importing foreign drugs, sellers should still control the quality of the drugs and their conscience. They should not deceive the people by importing fake drugs, substandard drugs, or other drugs that are not legally listed in order to earn money. It is inevitable that there will be a price to pay for making a fortune.

References and Notes:

[0] Generic drugs_ Baidu Encyclopedia
[1] What are original research drugs and generic drugs? Why is the price difference so large?
[2] There are also five pharmaceutical companies in China, including Huahai Pharmaceutical, Puluo Pharmaceutical, Fosun Pharmaceutical, Jiuzhou Pharmaceutical, and Shanghai Disenault. Jiuzhou Pharmaceutical only produces APIs, while others can produce APIs and preparations simultaneously. However, it cannot be sold in mainland China.
[3] Produced by Astrica, no information has been found on Astrica's authorization and Primovir's approval for listing.
[4] Produced by Azista, a Bhutanese subsidiary of Hetero in India, Hetero, an Indian pharmaceutical manufacturer, has the official production license for Pfizer's original Paxlovid generic drug. However, the approval process for the listing of new drugs in India is relatively lengthy and complex. So Hetero registered a generic drug Paxista with Azista, its Bhutan based subsidiary, and quickly passed the listing approval in Bhutan.
[5] The Drug Administration Law of the People's Republic of China was promulgated in 1984 and subsequently revised four times in 2001, 2013, 2015, and 2019. In 2015 and earlier versions, it was stipulated that "those products that must be approved under this Law but are not approved for production or import, or those that must be inspected under this Law but are sold without inspection, are considered counterfeit drugs." The 2019 revision deleted the provision on counterfeit drugs.
[6] The content of the basis for determining "fake drugs" has been deleted from the Criminal Law Amendment (XI), but according to the judicial interpretation of the two high levels, fake drugs and substandard drugs continue to be determined in accordance with the provisions of the Drug Administration Law.
[7] "If the amount of sales or illegal profits is relatively large, some judgments have identified it as an imaginative joinder of the crime of selling counterfeit drugs and the crime of illegal business operation, and a heavier sentence will be imposed.".
[8] Article 225 of the Criminal Law, who, in violation of State regulations, commits one of the following illegal business operations, disrupting market order, if the circumstances are serious, shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and shall also, or shall only, be fined not less than one time but not more than five times the illegal gains; "If the circumstances are especially serious, he shall be sentenced to fixed-term imprisonment of not less than five years, and shall also be fined not less than one time but not more than five times the illegal gains or be sentenced to confiscation of property.".
[9] Prior to the promulgation of the Criminal Law Amendment (XI), there were also cases that were sentenced to the crime of smuggling goods prohibited from import and export by the state. "Unauthorized import of foreign drugs may not be considered as" counterfeit drugs "but may also constitute a crime | Judge's Case No. 11"