Original Title: Shandong Provincial Drug Administration; Shandong Provincial Development and Reform Commission

Shandong Provincial Department of Science and Technology; Shandong Provincial Department of Industry and Information Technology

Shandong Provincial Department of Natural Resources; Shandong Provincial Department of Agriculture and Rural Affairs

Shandong Provincial Department of Commerce; Shandong Provincial Health Commission

Shandong Provincial Market Supervision Administration; Shandong Provincial Medical Security Bureau

Notice on Issuing Several Measures to Promote the High-Quality Development of the Traditional Chinese Medicine Industry in Shandong Province

Lu Ya Jian Gui [2021] No. 1

To the Market Regulation Bureaus, Development and Reform Commissions, Science and Technology Bureaus, Industry and Information Technology Bureaus, Natural Resources Bureaus, Agriculture and Rural Affairs Bureaus, Commerce Bureaus, Health Commissions, and Medical Security Bureaus of all cities:

We hereby issue to you the “Several Measures for Promoting the High-Quality Development of the Traditional Chinese Medicine Industry in Shandong Province.” Please implement these measures earnestly in accordance with local conditions.

Shandong Provincial Drug Administration Shandong Provincial Development and Reform Commission

Shandong Provincial Department of Science and Technology Shandong Provincial Department of Industry and Information Technology

Shandong Provincial Department of Natural Resources Shandong Provincial Department of Agriculture and Rural Affairs

Shandong Provincial Department of Commerce Shandong Provincial Health Commission

Shandong Provincial Market Supervision Administration Shandong Provincial Medical Security Bureau

March 1, 2021

(Disclosure Status: Proactively Disclosed)

Several Measures for Promoting the High-Quality Development of the Traditional Chinese Medicine Industry in Shandong Province

To promote the high-quality development of the traditional Chinese medicine (TCM) industry in Shandong Province and to expand and strengthen the sector, the following measures are formulated in accordance with the requirements of the “Notice of the CPC Shandong Provincial Committee and the People’s Government of Shandong Province on Issuing the ‘Several Measures for Promoting the Inheritance and Innovative Development of Traditional Chinese Medicine’” (Lu Fa [2020] No. 15) and the “Implementation Opinions of the National Medical Products Administration on Promoting the Inheritance and Innovative Development of Traditional Chinese Medicine” (Guo Yao Jian Yao Zhu [2020] No. 27), and in light of the actual conditions of our province.

I. Strengthening Source-Level Quality Management of Traditional Chinese Medicine

(1) Standardize the Cultivation and Breeding Processes of Traditional Chinese Medicinal Materials. Leveraging the province’s agricultural industry advantages and mechanisms such as Party branch-led cooperatives, and seizing the opportunity presented by rural revitalization, we will promote the large-scale and standardized development of production bases for traditional Chinese medicinal materials to establish regional production bases for authentic medicinal materials under the “Quality Lu Medicine” brand. Medicinal material cultivation and breeding bases are required to harvest medicinal materials according to age, season, and medicinal parts, thereby enhancing the scientific and standardized levels of cultivation and breeding.It is prohibited to cultivate medicinal herbs in unsuitable areas. The use of highly toxic, extremely toxic, or high-residue pesticides is strictly prohibited, as is the misuse of pesticides, antibiotics, and chemical fertilizers—particularly animal hormones, plant growth regulators, and herbicides.

(2) Accelerate the development of local standards for medicinal materials. Revise and improve the *Shandong Provincial Standards for Medicinal Materials* and the *Shandong Provincial Specifications for the Processing of Sliced Medicinal Materials*, and promote the implementation of Good Agricultural Practices (GAP) for medicinal materials. Encourage industry associations and enterprises to innovate and formulate group standards and enterprise standards for the cultivation and breeding of medicinal materials.

(3) Strengthen source control of Chinese herbal materials. Manufacturers of Chinese herbal slices and proprietary Chinese medicines shall procure herbal materials that meet quality standards for use in production. Guide Chinese medicine manufacturers to incorporate the management of the cultivation and breeding processes of Chinese herbal materials into their corporate quality management systems, and to sign quality assurance agreements with suppliers to ensure that the quality of bulk Chinese herbal materials is traceable and controllable.

(4) Strengthen the management of specialized Chinese herbal medicine markets. Strictly implement Shandong Province’s relevant quality management systems for Chinese herbal medicine markets; clarify market management responsibilities in accordance with the principle of “whoever establishes the market is responsible for its management.” Support specialized Chinese herbal medicine markets in vigorously developing modern commercial services, improving supporting infrastructure, and promoting the large-scale and standardized development of the markets. Intensify inspection and sampling efforts, severely crack down on illegal and non-compliant activities, and focus on regulating the order of Chinese herbal medicine operations.

II. Encouraging the Development of the Prepared Chinese Herbal Slices Industry

(5) Support the upgrading of Chinese herbal slice manufacturers. Guide local Chinese herbal slice manufacturers to establish herbal material cultivation and breeding bases to ensure a stable and controllable supply of herbal materials. Support high-standard, high-quality development of Chinese herbal slice manufacturers specializing in the processing of major varieties of authentic regional herbal materials. Encourage Chinese herbal slice manufacturers to extend their industrial chains, moving upstream into herbal material cultivation and breeding and downstream into the distribution of Chinese herbal slices.

(6) Optimize the procedures for adding new varieties in TCM decoction piece production. Establish reporting procedures for TCM decoction piece manufacturers adding new varieties. Manufacturers must possess the necessary production and testing capabilities for new varieties and report relevant details to the local drug production regulatory authorities prior to production.

(7) Launch pilot programs for contract manufacturing of TCM decoction pieces. Drawing on relevant requirements for drug marketing authorization holders, formulate management measures for contract manufacturing of TCM decoction pieces. For TCM decoction pieces with low clinical demand, complex processing techniques, and situations where production costs exceed the ex-factory price, permit contract manufacturing among TCM decoction piece manufacturers within the province.

(8) Launch pilot programs for fresh-cut processing at the place of origin. Focusing primarily on major varieties of authentic Shandong medicinal materials, formulate a catalog of medicinal material varieties suitable for fresh-cut processing at the place of origin based on their characteristics. Support manufacturers of TCM decoction pieces and proprietary Chinese medicines in either directly harvesting and processing these catalog varieties at the place of origin or contracting with local medicinal material growers to perform fresh-cut processing. Explore the integrated development of on-site processing and preparation, and incorporate the fresh-cut processing process into the quality assurance systems of TCM manufacturers.

(9) Support the high-quality development of the Chinese herbal slice distribution sector. Encourage pharmaceutical wholesalers with modern logistics capabilities to engage in third-party logistics services for Chinese herbal slices and other pharmaceuticals, and encourage wholesalers specializing in Chinese herbal slices to transition into modern pharmaceutical logistics enterprises. Support the establishment of pharmaceutical wholesalers equipped with modern logistics capabilities. Wholesalers specializing in Chinese herbal slices must possess warehousing facilities commensurate with their scope and scale of operations; in principle, warehouse floor space shall not be less than 3,000 square meters.

(10) Improve policies governing the circulation of TCM decoction pieces. In accordance with public medication needs and clinical prescription requirements, pharmaceutical distribution enterprises and medical institutions may purchase, sell, and use TCM decoction pieces produced by manufacturers in compliance with national drug standards and processing specifications established by the provincial drug regulatory authorities where the manufacturers are located.

III. Promoting the Preservation and Innovation of Traditional Chinese Medicine

(11) Support innovation and R&D in TCM decoction pieces. Support TCM manufacturers with R&D capabilities to study new processing methods and technologies for TCM decoction pieces under the guidance of TCM theory, combining traditional processing methods with modern production techniques, with a focus on varieties of authentic medicinal materials from our province and those in high demand for clinical TCM practice. Actively promote the incorporation of processing standards for clinically urgent TCM decoction pieces into our province’s TCM decoction piece processing specifications.

(12) Advance the R&D and production of TCM formula granules. Accelerate the formulation and revision of provincial standards for TCM formula granules; guide provincial manufacturers of TCM formula granules in establishing quality standards; and promote collaborative research on the material basis of TCM formula granules among manufacturers, universities, research institutions, and medical institutions. Develop on-site inspection standards for the production of TCM formula granules and strengthen regulatory oversight of TCM formula granules.

(13) Strengthen the cultivation of major proprietary Chinese medicine (PCM) varieties. For PCM varieties with significant clinical value, high technological content, and promising market prospects, encourage full utilization of policies related to the reform of the review and approval system—such as the classification of Chinese medicine registration—to conduct secondary development, improvement, and optimization through modern technological means; encourage manufacturers to conduct quality evaluations of PCM products within the same variety to enhance their quality competitiveness, and strengthen the cultivation of major PCM varieties in our province.Establish a catalog of TCM proprietary medicine varieties with clinical advantages in our province and encourage their clinical use by medical institutions within the province.

(14) Support the research and development of new TCM drugs.Promote the stepwise transformation of classic TCM formulas into hospital-prepared formulations and further into new TCM drugs, and establish a clinical value assessment system that aligns with the characteristics and practical realities of TCM clinical treatment. Encourage the development of new TCM drugs through approaches such as integrating disease and syndrome, developing specialized drugs for specific diseases, or formulating TCM based on syndrome patterns; support the research, development, and application of TCM products urgently needed in clinical practice, such as pediatric medicines. Support manufacturers in strengthening cooperation with universities and research institutions, and encourage industry associations to establish platforms for the exchange of R&D information.

(15) Support enterprises in strengthening quality inspection. Encourage TCM manufacturers to collaborate with drug testing institutions and research institutes to jointly develop internal quality control standards for TCM.Standard reference materials listed in the *Shandong Provincial Standards for Chinese Medicinal Materials* and the *Shandong Provincial Specifications for the Processing of Chinese Herbal Slices*, excluding national pharmaceutical reference materials, shall be prepared, calibrated, stored, and distributed by provincial-level pharmaceutical inspection institutions. For statutory reference materials not available on the market, Chinese medicine manufacturers may calibrate them independently or commission provincial-level pharmaceutical inspection institutions to calibrate them before use.

(16) Strengthen the protection of TCM product varieties. In accordance with relevant national requirements, support marketing authorization holders or applicants in promptly registering and declaring relevant patent information during the research, development, and production of innovative TCM products, improved new TCM products, and compound TCM preparations based on ancient classic formulas, thereby fully leveraging the protective role of systems such as TCM product variety protection and intellectual property protection.

(17) Encourage a premium pricing model for high-quality TCM. Encourage TCM manufacturers to strengthen quality control by establishing traceability systems and TCM herbal cultivation and breeding bases, thereby promoting a premium pricing model for high-quality TCM decoction pieces that are sourced reliably, have controllable quality, and are traceable throughout the production process.

IV. Reforming the Management of Medical Institution Preparations

(18) Improve the registration management of medical institution preparations. Further refine Shandong Province’s registration management system for medical institution preparations. For TCM preparations formulated based on TCM theory and with a usage history of at least five years within the same medical institution, the submission of key pharmacodynamic and clinical study data may be waived when applying for registration, and toxicity test data may be conditionally waived.

(19) Improve the application procedures for commissioned preparation of TCM preparations. Optimize the filing management of commissioned preparation of TCM preparations; encourage medical institutions to select pharmaceutical manufacturers with high standards of quality management for commissioned preparation; and support county-level medical communities and urban medical groups in centrally preparing TCM preparations.

(20) Standardize the transfer and use of TCM preparations among medical institutions. Clinically urgent TCM preparations with an approval number or filing number may, upon approval, be transferred and used within medical consortia, medical communities, urban medical groups, and specialized medical alliances in our province, and the period for such transfer and use shall be extended to 2 years.

V. Strengthening Quality Supervision of Traditional Chinese Medicine

(21) Intensify supervision and inspection efforts. Address prominent issues in the production and operation of TCM by strengthening supervision and inspection, increasing sampling and testing efforts—primarily focused on TCM decoction pieces while extending to upstream and downstream sectors—continuously conducting risk monitoring to identify and mitigate potential risks, and carrying out concentrated quality rectification campaigns for the production and operation of TCM decoction pieces as well as special inspections of TCM manufacturers.

(22) Enhance TCM Testing Capabilities. Value traditional TCM skills; establish an expert database for professionals in the identification and processing of TCM materials; and guide industry associations in conducting training on TCM material identification skills. Continue to thoroughly assess testing capabilities to improve enterprises’ quality testing capacity and standards. Encourage localities to establish third-party testing institutions; standardize the outsourcing of testing by TCM manufacturers; and ensure the accuracy and reliability of test results.

(23) Strengthen the monitoring of adverse drug reactions in traditional Chinese medicine. Promptly organize assessments of risk signals identified during monitoring and implement risk control measures. Enhance the monitoring and analysis of adverse drug reactions in traditional Chinese medicine, and urge manufacturers to fulfill their primary responsibilities for pharmacovigilance. Strengthen the management of product labels and package inserts, and promote the revision and improvement of relevant content—such as contraindications, adverse reactions, and precautions—in the package inserts of marketed traditional Chinese medicines.

(24) Formulate guidance on penalties for TCM decoction pieces. Based on the actual conditions of our province, research and formulate guidance on penalties for TCM decoction pieces, clarifying the scope of application and requirements for situations where TCM decoction pieces do not meet drug standards but do not affect safety or efficacy, and provide guidance on the investigation and handling of related violations involving TCM decoction pieces.

(25) Promote the development of a traceability system for traditional Chinese medicine. Promote the joint development of an information-based traceability system for traditional Chinese medicine by relevant departments, advancing the initiative in batches by product type and process stage, and accelerating the progress of traceability system development for key products and critical stages. Establish a province-wide information-based traceability platform for traditional Chinese herbal slices and guide enterprises to proactively develop their own traceability systems. Encourage the production and use of small-packaged, barcoded traditional Chinese herbal slices to gradually achieve traceability throughout the entire production and distribution process of traditional Chinese herbal slices.Encourage industry associations to organize enterprises to build traceability systems and establish industry-wide model brands.

VI. Enhancing Regulatory Capabilities

(26) Strengthen the training of TCM professionals. Strengthen the development of TCM regulatory teams, accelerate the professionalization and specialization of TCM reviewers and inspectors, and improve the graded and categorized management system. Strengthen cooperation with TCM colleges and universities to jointly train specialized TCM regulatory professionals.

(27) Strengthen the development of technical support systems. Strengthen the development of key technical support systems, including testing and inspection, review and approval, audit and verification, and monitoring and evaluation. Advance the development of “smart regulation,” innovatively utilizing modern information technologies such as big data, the internet, and cloud computing to promote the sharing of information regarding drug inspections, testing, investigations, adverse reaction monitoring, and traceability.

(28) Strengthen scientific research on TCM regulation. Relying on universities and research institutions, intensify research on fundamental and strategic issues in TCM regulation. Using the Shandong Provincial Food and Drug Testing Institute as a base, strengthen the development of the National Medical Products Administration’s Key Laboratory for Major Specialty TCM Products and the Shandong Provincial Engineering Laboratory for TCM Standard Innovation and Quality Evaluation.

VII. Strengthening Collaboration and Coordination

(29) Strengthen the Implementation of Responsibilities. TCM enterprises and medical institutions shall strictly enforce TCM quality standards and technical specifications, and establish and improve quality assurance and traceability systems. Relevant departments at all levels across the province shall, in accordance with the “Four Strictest” requirements, earnestly implement the provisions of the “Shandong Province Traditional Chinese Medicine Regulations,” carry out relevant work measures according to their respective responsibilities, and effectively ensure the quality and safety of TCM.

(30) Foster a New Framework of Collaborative Governance and Shared Benefits. All departments must strengthen their awareness of collaboration, coordinate efforts, and form a cohesive force to meet the clinical needs of traditional Chinese medicine. Actively publicize policy measures for the development of the traditional Chinese medicine industry, guide enterprises and the public to participate in an orderly manner, and create a favorable social environment that promotes the high-quality development of the province’s traditional Chinese medicine industry.

This document shall take effect on April 1, 2021, and remain valid until March 31, 2026.