CHAPTER I GENERAL PROVISIONS CHAPTER II THE GRADING AND APPROVAL OF PROTECTION OF VARIETIES OF TRADITIONAL CHINESE MEDICINES CHAPTER III PROTECTION OF THE PROTECTED VARIETIES OF TRADITIONAL CHINESE MEDICINES CHAPTER IV PENALTIES CHAPTER V SUPPLEMENTARY PROVISIONS

Article 1 This decree is hereby formulated with the aims of raising the quality of all varieties of traditional Chinese medicines, of protecting the legal rights and interests of enterprises engaged in the production of traditional Chinese medicines, and of promoting the development of activities relating to traditional Chinese medicines.

Article 2 This Decree is applicable for all varieties of traditional Chinese medicines produced and/or prepared within the territory of China, including the traditional Chinese proprietary medicines, the extract and preparation of medicinal herbs, and the processed traditional Chinese herbs.

This Decree is not applicable for those varieties of traditional Chinese medicines applying for patent rights, which is subject to the law governing patent rights.

Article 3 The State practises graded protection for those varieties of traditional Chinese medicines stable in its quality and effective in its therapeutic results in order to encourage the research and development of new varieties of traditional Chinese medicines with clinical effectiveness.

Article 4 Health administrative departments under the State Council are responsible for the supervision and administration of activities relating to the protection of traditional Chinese medicines. The responsible departments at the state level in charge of the preparation and management of traditional Chinese medicines are to assist in the management of activities for the protection of all varieties of traditional Chinese medicines.

CHAPTER II THE GRADING AND APPROVAL OF PROTECTION OF VARIETIES OF TRADITIONAL CHINESE MEDICINES

Article 5 All varieties of traditional Chinese medicines covered by this Decree for protection shall be those listed as the standardized medicines at the state level. Application can be raised for those varieties listed, with the approval of health administrative departments under the State Council, as standardized medicines at the provincial/municipal/autonomous regional level.

All varieties covered by this Decree are divided into Grade 1 and Grade 2 in its protection.

Article 6 All varieties of traditional Chinese medicines conforming with 1 of the following requirements can apply for Grade 1 protection:

that

(1) are with special therapeutic results to a given disease;

(2) are prepared with natural medicinal herbs covered by Grade 1 protection by the state; and

(3) are applicable to the prevention and treatment of certain specific diseases.

Article 7 All varieties of traditional Chinese medicines conforming with 1 of the following requirements can apply for Grade 2 protection:

that

(1) are conforming with the stipulations set forth in Article 6, and are removed from Grade 1 protection;

(2) are with noticeable therapeutic results to a given disease; and

(3) are extracted, and/or specifically prepared with its effective ingredient from natural medicinal herbs.

Article 8 Any new variety of traditional Chinese medicines having been duly approved by health administrative departments under the State Council are subject to protection for a period as specified by the health administrative departments under the State Council, of which, if having been found conforming with the stipulations as set forth in Article 6 and/or Article 7, can apply, following the procedures as set forth in this Decree, for protection 6 months prior to the termination of the period for protection as approved specifically by health administrative departments under the State Council.

Article 9 Procedures of application for protection of the variety of traditional Chinese medicines:

(1) Enterprises engaged in the preparation of traditional Chinese medicines can apply for protection of their products that conform with the stipulations as set forth in Article 5, Article 6, Article 7 and Article 8. The application shall be submitted to the responsible departments of local province/municipality/autonomous region in charge of the preparation and management of traditional Chinese medicines for written verification, and to be further verified by local health administrative departments at the same level before its submission to the health administrative departments under the State Council. Under specific conditions, enterprises engaged in the preparation of traditional Chinese medicines may submit its application directly to the health administrative departments under the State Council, or, submit its application through the responsible departments at the state level in charge of the preparation and managements of traditional Chinese medicines for written verification.

(2) Health administrative departments under the State Council entrusts the National Committee on the Assessment of the Protected Traditional Chinese Medicinal Products P. R. C. for assessment which is to be completed with a conclusion within 6 months as of the date of its receipt of the application.

(3) Taking into account of the conclusion reached by the National Committee on the Assessment of the Protected Traditional Chinese Medicinal Products P.R.C. the health administrative departments under the State Council is to make a decision, after consulting with the responsible departments at the state level in charge of the preparation and management of traditional Chinese medicines, on whether a protection is to be granted. The health administrative departments under the State Council is to issue "the Certificate of Variety of Traditional Chinese Medicine under Protection" to those granted with a protection.

The health administrative departments under the State Council are responsible for the formulation of the National Committee on the Assessment of the Protected Traditional Chinese Medicinal Products P. R. C. by inviting, after consulting with the responsible departments at the state level in charge of the preparation and management of traditional Chinese medicines, experts of traditional Chinese medicines in areas of clinical activities, scientific research, laboratory experiments, administration and management to serve as members on the Committee.

Article 10 The applying enterprises shall submit adequate information material, as specified by the health administrative departments under the State Council, to the National Committee on the Assessment of the Protected Traditional Chinese Medicinal Products P.R.C..

Article 11 The health administrative departments under the State Council are to publish, on designated specialized papers, the varieties of traditional Chinese medicines granted with a protection, and that whose protection period is terminated.

CHAPTER III PROTECTION OF THE PROTECTED VARIETIES OF TRADITIONAL CHINESE MEDICINES

Article 12 The protection period lasts respectively for:

those under Grade 1 protection: 30 years, 20 years, and/or 10 years;

those under Grade 2 protection: 7 years.

Article 13 The ingredient and formulae, and its technical know-how of the preparation for varieties under Grade 1 protection shall be kept as a secret within the protection period. Enterprises granted with "the Certificate of Variety of Traditional Chinese Medicine under Protection", the responsible departments for the preparation and management of traditional Chinese medicines, the health administrative departments concerned, and all units and individuals concerned shall not make it known to the public.

All departments, enterprises and units concerned having a responsibility of maintaining its secrecy shall establish, in pursuit of stipulations concerned formulated by the state, its security regulations.

Article 14 Any transference to areas outside the country of the ingredient and formulae, and its technical know-how for the preparation of varieties under Grade 1 protection shall be conducted in pursuit of the security regulations stipulated by the state.

Article 15 If a given variety of traditional Chinese medicines under Grade 1 protection is required for lengthening its protection period, enterprises concerned shall submit an application, in pursuit of the procedures as stipulated in Article 9 of this Decree, 6 months prior to the termination of its protection period. The lengthening period of protection shall be decided upon by the health administrative departments under the State Council taking into account of the assessment conclusion of the National Committee on the Assessment of the Protected Traditional Chinese Medicinal Products P.R.C.. However, the lengthening period shall not exceed the length of the protection period previously approved.

Article 16 The protection period for varieties of traditional Chinese medicines under Grade 2 protection can be lengthened for another 7 years.

The application for a lengthening of protection period for a given variety of traditional Chinese medicines shall be submitted by enterprises concerned, in pursuit of the procedures as stipulated in Article 9 of this Decree, 6 months prior to the termination of its protection period.

Article 17 The preparation of varieties of traditional Chinese medicines granted with a protection shall be limited to enterprises issued with "the Certificate of Variety of Traditional Chinese Medicines under Protection" period. However, it does not include those as stipulated in Article 19 of this Decree.

Article 18 If a given variety of traditional Chinese medicines granted with a protection by the health administrative departments under the State Council was prepared by more than 1 enterprise before its approval, those enterprises not having applied for "the Certificate of Variety of Traditional Chinese Medicines under Protection" shall submit its application, within 6 months as of its publication on designated specialized papers, to the health administrative departments under the State Council for issuance. The application shall be attached with reference material as stipulated in Article 10 of this Decree. The health administrative departments under the State Council shall designate a drug control institution to examine its quality, and shall take the following measures based on the results of the examination:

(1) to make an additional issuance, after consulting with the responsible departments at the state level in charge of the preparation and management of the traditional Chinese medicines, of "the Certificate of Variety of Traditional Chinese Medicines under Protection" to those having duly met the required standards established by the state; and

(2) to remove the previous approval of the said variety of traditional Chinese medicines, in pursuit of laws and regulations governing the management of medicines, if it fails to meet the required standards established by the state.

Article 19 Upon the proposal raised by the responsible departments at the state level in charge of the preparation and management of traditional Chinese medicines, and with the approval of health administrative departments under the State Council, relating to the replication preparation of the protected varieties of traditional Chinese medicines much in need of clinically, the health departments of the province/municipality/autonomous region, in which, the replicating enterprise is situated, may grant approval for replication preparation of the said protected variety. The enterprise shall make a reasonable amount of payment to the enterprise granted with "the Certificate of Variety of Traditional Chinese Medicines under Protection" for the transference of information of the ingredients and formulae, and technical know-how. The amount of payment is to be decided upon by both sides through consultation, or, to be decided upon by the health administrative departments under the State Council if no agreement is reached through consultation.

Article 20 Enterprises engaged in the preparation of the protected varieties of traditional Chinese medicines and responsible departments at the local level in charge of the preparation and management of traditional Chinese medicines shall, following the requirements raised by the health administrative departments at the provincial/ municipal/ autonomous regional level, constantly improve its working conditions and raise the quality of its products.

Article 21 Application for registration in areas outside the country of any protected variety of traditional Chinese medicines within the protection period is subject to the approval of the health administrative departments under the State Council.

Article 22 Any person responsible for the leakage of a secret as a result of violating the stipulation of Article 13 of this Decree is to be given with a disciplinary sanction by the department the said person is affiliated, or, by administrative bodies at a higher level; and is to be affixed the person's criminal responsibility according to law if the case constitutes a crime.

Article 23 Any violence of the stipulation of Article 17 of this Decree by replicating presumptuously the preparation of any protected variety of traditional Chinese medicines is to be regarded as the preparation of counterfeit medicine and to be dealt with according to law by the health administrative departments at county level and above.

The health administrative departments at the county level and above are to confiscate all products and illegal income of any preparation and sale of traditional Chinese medicines with a counterfeit "the Certificate of Variety of Traditional Chinese Medicines under Protection", and to impose a fine to any amount no more than 3 folds of the price of the variety legally prepared.

Judicial departments are to affix its criminal responsibility according to law if any activities as listed above constitute a crime.

Article 24 If any party refuses the ruling of the health administrative departments may apply for administrative reconsideration, or, lodge an administrative appeal following the stipulations concerned in law and administrative regulations.

CHAPTER V SUPPLEMENTARY PROVISIONS

Article 25 The requirements and forms for application for protection of varieties of traditional Chinese medicines are to be formulated by the health administrative departments under the State Council.

Article 26 The rights for the interpretation of this Decree rest on the health administrative departments under the State Council.

Article 27 The Decree comes into effect as of January 1,1993.