The administration of pharmaceutical affairs shall be executed in accordance with the regulations of this Act. Any matter not provided for in this Act shall be governed by the regulations of other relevant laws. For matters that are regulated by the Controlled Drug Management Act. These regulations shall apply with purity.
The term "pharmaceutical affairs" used in the preceding Paragraph shall refer to medicaments, pharmaceutical firms, pharmacies and other relevant matters.

For purposes of this Act, the term "competent authority" shall mean the Ministry of Health and Welfare at the central government level, the municipal governments at the municipal level, and the county/city governments at the county/city level.

The central competent health authority may establish a special organization to be in charge of the administration of medicaments. The municipal and county (city) government may also establish a similar organization if necessary and with the approval of higher authorities
concerned.

The term "medicaments" as used in this Act shall refer to drugs and medical devices.

The term "drugs for dined trials" as used in this Act shall refer to the drugs whose therapeutic efficacy and safety are not yet verified and which are provided for exclusive use in the pharmacological assessment of toxicity on animals or in clinical trials.

The term "drugs" as used in this Act shall refer to any of the following raw materials and preparations:
1. Drugs which are listed in the Chinese Pharmacopoeia, or in the Pharmacopoeia of other countries, the official National Formularies or any of their supplements recognized by the central competent health authority;
2. Drugs which are not included in the preceding Sub-paragraph but are used in diagnosing, curing, alleviating or preventing the diseases of human beings;
3. Other drugs which are sufficient to affect the body structure and physiological functions of human beings; or
4. Drugs which are used in preparing such drugs set forth in the preceding three Sub-paragraphs.

Distributors and manufacturers of drugs catagorized and announced by the central competent health authority, shall establish their own tracibility system for tracing the source and tracking the flow of the drugs according to their industry modes.
The central competent health authority shall establish the tracibility report system in the preceding Paragraph; the business in the preceding Paragraph shall use electronic methods to declare the information of the traceability system. The electronic declaration method shall be prescribed by the central competent health authority.
The regulations governing the establishment, matters to be recorded, examination and other matters to be complied with for the traceability system mentioned in the preceding Paragraph shall be prescirbed by the central competent health authority.

The term "new drugs" as used in this Act shall refer to drugs which are of the preparations having new compositions, new therapeutic compounds or new method of administration as verified and recognized by the central competent heath authority.

The term "preparations" as used in this Act shall refer to drugs which are processed and compounded from raw materials into a specific pharmaceutical form and dosage.
Preparations are classified into medicines to be prescribed by physicians, medicines designated by physicians, pharmacists and/or assistant pharmacists, over-the-counter drugs, and preparations of inherited formulation.Regulations governing the clarification and review of over-the-counter drugs and the manufacturing and sale of inherited formulation set forth in the preceding Paragraph, and regulations governing the management of the sale or over-the-counter drugs and inherited formulations and other matters requiring compliance shall be formulated by the central health competent authority.

The term "over-the-counter drugs" as used in this Act shall refer to drugs which are processed and manufactured from raw materials without retaining their original names, with the drugs contained therein being limited to level not in excess of the limitations of use thereof as specified by the central competent health authority, and characterized by mild action, non-accumulativeness, long storage life and easy administration, and duly indicated with their efficacy, dosage, and use, and the serial number of permit for over-the-counter drugs indicated, and which can be used for the treatment of illnesses without requiring the instructions of physicians.

The term "preparations of inherited formulation" as used in this Act shall refer to medicines which are prepared in accordance with traditional Chinese prescriptions, and have medical efficacy, as selected and published by the central competent health authority.

The term "controlled drugs" as used in this Act shall refer to controlled drugs specified in Article 3 of the Controlled Drug Management Act.

The term "strongly poisonous drugs" as used in this Act shall refer to drugs which are included in the Table of Strongly Poisonous Drugs in the Chinese Pharmacopoeia. Those not included in the Table of Strongly Poisonous Drugs shall be designated by the central competent health authority.

The term "medical device", as used in this Act, shall refer to any instruments, machines, apparatus, materials, software, reagent for in vitro use, and other similar or related articles, which is used in diagnosing, curing, alleviating, or directly preventing human diseases, regulating fertility, or which may affect the body structure or functions of human beings, and do not achieve its primary intended function by pharmacological, immunological or metabolic means in or on the human body.
The central competent health authority shall establish Regulations Governing the Management of Medical Devices in regards to its scope, classification, management, and other matters in accordance with practical needs.

The term "pharmaceutical firms" as used in this Act shall refer to any of the following business undertakings:
1. Dealers of drugs or medical devices.
2. Manufacturers of drugs or medical devices.

The term "drug dealers" as used in this Act shall refer to any of the following business undertakings:
1. Business undertakings engaged in wholesaling, retailing, importing and exporting western pharmaceuticals; or
2. Business undertakings engaged in wholesaling, retailing, dispensing, importing and exporting Chinese herbal medicines.

The term "drug manufacturers" as used in this Act shall refer to business undertakings which are engaged in manufacturing and processing of drugs, wholesaling and exporting their own products, and importing raw materials for their own use.
The aforementioned drug manufacturers may only import the raw materials for own use after each import application has been approved by the central competent health authority. Raw materials for own use which have already been imported shall not be transferred or re-sold unless approved by the central competent health authority.
Drug manufacturers may engage in, concurrently, the retailing of their own products.

The term "dealers or medical devices" as used in this Act shall refer to the business undertakings which are engaged in wholesaling, retailing, importing and exporting of medical devices.
Provisions governing the dealers of medical devices set forth in this Act shall also apply to firms engaged in the rentals of medical devices.

The term "manufacturers of medical devices" as used in this Act shall refer to business undertakings which are engaged in manufacturing and assembling medical devices, wholesaling and exporting of their own products, and importing raw material for their own use.
Manufacturers of medical devices as specified in the preceding Paragraph may engage in, concurrently, the retailing of their own manufactured products.

The term "pharmacy" used in this Act shall refer to a premises where managed by a pharmacist or an assistant pharmacist, and drugs are legally prepared and dispensed.
Pharmacies defined in the preceding Paragraph may engage in, concurrently, the retailing of drugs and medical devices of certain level .
The scope and classifications of the medical devices of certain level mentioned in the preceding Paragraph shall be decided by the central competent authority.

The term "counterfeit drugs" as used in this Act shall refer to the drugs which are found to fall within any of the following circumstances after inspection or testing:
1. The drugs are manufactured without prior approval;
2. The active ingredients of the drugs are inconsistent with the ingredients thereof previously approved;
3. The drugs are packed or alternated with the products of others; or
4. The duration of validity marking or label of the drugs has been altered or replaced.

The term "misbranded drugs" as used in this Act shall refer to the approved drugs which are found to fall within any of the following circumstances after or inspection or testing:
1. The drugs which contain non-statutory coloring agents, preservatives, aromatics, flavoring agents and excipients without;
2. The quality, quantity or potency of the active ingredients contained in the drugs are inconsistent with those previously approved;
3. The whole or part of the drugs contain filthy or peculiar objects;
4. The drugs apparently demonstrate color change, turbidity, precipitation, hydrolysis or have decomposed due to corrosion;
5. The main therapeutic efficacy of the drugs is inconsistent with that previously approved;
6. The validity or storage life of the drugs has expired;
7. The drugs have been deteriorated as a result of overtime storage or improper method of storage;
8. The drugs are kept in containers made of deleterious substance or in recycled containers.

The term "prohibited drugs" as used in this Act shall refer to any of the following:
1. The poisonous or harmful drugs which are prohibited, by an order publicly announced by the central competent health authority, from manufacturing, dispensing, importing, exporting, selling or displaying; or
2. The drugs which are imported without prior approval, except the drugs which are carried into this country for personal use by passengers or service personnel on board of the means of transportation.
Quotas regarding the personal-use pharmaceuticals referred to in Subparagraph 2 of the preceding Paragraph shall be determined by the central health competent authority in conjunction with the Ministry of Finance.

The term "defective medical devices" as used in this Act shall refer to the medical devices which fall within any of the following circumstances after inspection or testing:
1. Which, when used, is liable to cause danger to life or body injury, or to mislead diagnosis;
2. Which contains toxic or hazardous substances and so be, when used, detrimental to the health of human beings;
3. Which has expired its duration of validity or the storage life; or
4. of which the quality, quantity or potency is inconsistent with those previously approved.

The term "advertisement of medicaments" as used in this Act shall refer to the act of advertising the medical efficacy of medicaments by means of communications means aiming to solicit and promote the sale thereof.

The term "labels" as used in this Act shall refer to the identification articles used to specify, in words, pictures or signs, on the container or package of drugs or medical devices.

The term "instructions" as used in this Act shall refer to the instruction sheets accompanied with pharmaceuticals or medical devices.