Penn condenses the basic sciences year that most schools have into a single semester, and this semester is pass/fail.
The next year reverts back to a more traditional grading system. If it isn't A/B/C/D then it's probably Honors/High Pass/Pass/Fail or some crap like that.
I'm a penn med student--first semester, is p/f, then the next two semesters are h/p/f, then we head to the clinics which has a more traditional grading system.