China Mandates Full Drug Traceability for Insurance Reimbursement Starting July 2025

Starting July 1, 2025, designated medical institutions in China must scan drug traceability codes before settling reimbursements through the national medical insurance system. This regulatory shift, also covering work-related injury insurance, marks a new phase in China's push for end-to-end pharmaceutical traceability.

Jointly issued by the National Healthcare Security Administration (NHSA), Ministry of Human Resources and Social Security, National Health Commission, and National Medical Products Administration (NMPA), the policy sets clear expectations for marketing authorization holders (MAHs), manufacturers, distributors, and healthcare institutions.

Strategic Objectives and Regulatory Alignment

The initiative supports:

• Drug safety and public health protection
• Medical insurance fund oversight
• Digital transformation of pharmaceutical supply chains
• Compliance with the Drug Administration Law and related reform policies

It mandates full-process traceability, from production to reimbursement, via integration with the national unified medical insurance information platform.

Implementation Timeline and Requirements

Key Milestones

• July 1, 2025: Code scanning becomes mandatory for reimbursement. Uncoded drugs enter a temporary “non-code database.”
• January 1, 2026: All pharmaceutical institutions must achieve full traceability code collection and upload.

Scope of Application

• Applies to all drugs in the Basic Medical Insurance Drug Catalogue, excluding Traditional Chinese Medicine decoction pieces, formula granules, and in-hospital preparations.
• Retail pharmacies must display traceability codes on customer receipts.
• Injury rehabilitation institutions must accelerate traceability integration.

Infrastructure and Data Systems

The NHSA will:

• Build a three-code mapping database linking traceability codes, commodity codes, and insurance drug codes.
• Establish a packaging cascade database and traceability rule repository.
• Provide public access to traceability data for consumers and purchasers.

Impact on Manufacturers

This section outlines the implications for all manufacturers, both overseas and Chinese, who supply products to the Chinese market.

1. Production and Coding Compliance

• MAHs must assign traceability codes to all packaging levels per Chinese regulatory standards.
• Manufacturers must adapt production and packaging systems to meet China’s encoding rules, label placement, and data formats.

2. Data Integration and Upload

• Traceability data must be uploaded to the national insurance platform.
• Decentralized global operations may require new data management systems and dedicated compliance teams.

3. Supply Chain Adjustments

• Strengthen coordination with domestic distributors and logistics partners.
• Ensure traceability codes are accurately collected, verified, and uploaded throughout the importation and distribution process.

4. Market Access and Procurement Eligibility

• Traceability codes are now prerequisites for:
  • - Listing on provincial procurement platforms
  • - Participation in centralized volume-based procurement
• Non-compliant products may be excluded from bidding and reimbursement.

5. Compliance Risk Management

• Violations such as false uploads or code swapping may trigger administrative penalties.
• Manufacturers must establish internal compliance frameworks and engage with regulatory experts to ensure alignment.

6. Encoding Standards and System Compatibility

• Manufacturers must choose between GS1 and EDMC encoding standards, both officially recognized by the NMPA.
• The choice affects traceability system integration, downstream scanning compatibility, and long-term compliance strategy.
• GS1 is preferred for global interoperability, while EDMC may be more familiar to legacy systems in China.

7. Operational Burden and Workflow Challenges

• Manual scanning of unit-level codes at high-volume dispensing points (e.g., tertiary hospitals) has led to increased pharmacist workload and longer patient waiting times.
• Manufacturers should consider packaging design and barcode placement to facilitate efficient scanning and reduce bottlenecks.

8. Digital Infrastructure and Reporting

• China’s traceability system uses a three-tier coding structure: batch-level, warehouse-level, and retail-level codes.
• Manufacturers must ensure their systems can generate, associate, and report these codes accurately to the NHSA platform.

9. Penalties for Non-Compliance

Violations such as false uploads, missing codes, or code swapping can result in:

• Administrative fines
• Suspension of product registration
• Revocation of manufacturing licenses
• Import bans and reputational damage

10. Pharmacopoeia Alignment
As of October 1, 2025, all marketed drugs must comply with the 2025 edition of the Chinese Pharmacopoeia. Manufacturers must assess and update registration standards, packaging, and quality control protocols accordingly.

Recommended Actions for Stakeholders

Pharmaceutical stakeholders may consider the following steps to support compliance and readiness:

• Assess traceability compliance across all product lines intended for the Chinese market.
• Integrate traceability systems with China’s national medical insurance platform.
• Engage proactively with local authorities and procurement platforms to clarify technical and procedural requirements.
• Monitor regulatory developments and enforcement trends related to traceability and reimbursement.
• Collaborate with compliance experts to navigate implementation challenges and mitigate risk.

Further Information

The official announcement is available via the NHSA WeChat platform and the NHSA website.

For tailored guidance on compliance timelines, technical standards, and strategic alignment, please contact Cisema.

GET IN TOUCH

🌐 Send us your enquiry

📚 Request our whitepapers

📣 Sign up for our newsletter