On March 19, 2025, China’s National Healthcare Security Administration (NHSA) dropped an important announcement that’s shaking up how medications are tracked, insured, and dispensed. In a joint effort with the Ministry of Human Resources and Social Security, the National Health Commission, and the National Medical Products Administration, the NHSA is taking major steps to improve how drug traceability plays a role in the country’s healthcare system.
What’s the Big Deal?
The focus of this announcement is on the Drug Traceability Code (DTC) — a unique electronic identifier attached to every box of medicine. Think of it as a medicine’s digital fingerprint. By scanning and uploading this code at key points—during prescription, dispensing, and insurance billing—health authorities can track exactly where drugs are going and who’s using them.
Why now? The government is cracking down on fraudulent practices such as:
- Reselling insured medications
- Substituting prescribed drugs
- Faking or reusing prescriptions
- “Empty” pharmacy billing with no real patients or drugs involved
These practices not only waste medical insurance funds but also pose risks to patient safety.
Behind the Tech: How DTCs Work
With DTCs in place, every movement of a drug can be tracked and recorded. When a hospital or pharmacy scans a DTC:
- The data gets uploaded into a centralized system.
- Medical insurance systems cross-check the codes for red flags—like the same drug being claimed by multiple patients or facilities.
- Authorities are instantly alerted to inconsistencies or potential fraud.
This data-driven approach helps enforce transparency and accountability across the healthcare supply chain.
Pilot Program: Early Lessons
Back in April 2024, China launched a national pilot to test the DTC system across select institutions. By November 2024, the NHSA had publicly flagged 46 medical institutions for double-dipping—submitting the same drug codes more than once for reimbursement. That move sent a strong message: this isn’t just theory. The system works, and enforcement is real.
What’s Expected from Healthcare Providers
The announcement lays out clear expectations:
- Self-audit practices and clean up any irregularities
- Scan and collect DTCs accurately and consistently
- Avoid unethical behaviors, including sourcing from illegal suppliers or falsifying prescriptions
- Work with regulators to improve data sharing and enforcement
Hospitals, pharmacies, and local health bureaus are being asked to collaborate more closely than ever to build a robust system around medication traceability.
Why This Matters
Beyond fighting fraud, the DTC system also strengthens patient safety. If something goes wrong with a batch of medicine, authorities can quickly trace it back to its source. On the flip side, it ensures that insured patients actually receive the medications they’re prescribed—no more games behind the counter.
For pharmaceutical companies, this is a push toward more transparency and digital integration. For patients, it’s about trust, safety, and getting what they’re promised.
China’s move to integrate Drug Traceability Codes into medical insurance and occupational injury systems is a big step forward in modernizing healthcare oversight. It shows how smart regulation, paired with technology, can drive real change in protecting both public health and public funds.
How can CosmoTrace Help?
CosmoTrace plays a pivotal role in helping companies achieve regulatory compliance in China.
With a strong local presence, CosmoTrace consultants streamline the complex process of product registration and E-code acquisition, ensuring seamless navigation through China’s regulatory landscape. Beyond E-codes, CosmoTrace offers end-to-end support by converting event reporting files into the required formats, managing uploads to the appropriate platforms, and handling file errors and reporting.
This comprehensive support empowers companies to remain compliant while focusing on their core business operations.
