Pharmaceutical Advertising 2019 Comparisons

Last Updated February 20, 2019

Contributed By Global Law Office

Law and Practice

Authors



Global Law Office dates back to 1984, when it became the first law firm in the People’s Republic of China to take an international perspective on its business. Its market-leading pharmaceutical and healthcare practice group provides 'one-stop' legal services in areas including drug research and development, clinical research organisations, pharmaceuticals, life sciences, biotechnology and medical devices; its clients include producers and distributors of medical supplies, hospitals and healthcare providers, as well as various investment funds in the sector. The firm advises clients on challenging legal issues in pharmaceutical and healthcare such as regulatory compliance, structuring transactions and contractual arrangements, realisation of pipelines and regional expansions, capital raising and project financing, M&A, reorganisations, IP protection, licensing and distribution arrangements, and the settlement of disputes involving adverse effects in clinical trials and medical treatment. Global also has close links to industrial associations and is involved in making recommendations on industry codes of conduct.

The major laws and regulations that regulate advertising on medicines in China include:

  • the Advertising Law;
  • the Regulations on Control of Advertisements;
  • the Anti-Unfair Competition Law;
  • the Law on the Protection of Consumer Rights and Interests;
  • the Drug Administration Law;
  • the Implementing Regulations of the Drug Administration Law;
  • the Measures for the Examination of Drug Advertisements;
  • the Standards for the Examination and Publication of Drug Advertisements;
  • the Administrative Provisions on Pharmaceutical Directions and Labels;
  • the Interim Measures for the Administration of Internet Advertising;
  • the Administrative Measures for Online Drug Information Services; and
  • the Nine Prohibitions for Strengthening Ethics in the Healthcare Field (the Nine Prohibitions).

The major self-regulatory codes that regulate advertising on medicines in China include:

  • the R&D Based Pharmaceutical Association Committee Code of Practice (the RDPAC Code) (RDPAC is a member of International Federation of Pharmaceutical Manufacturers & Associations (IFPMA));
  • the Draft Code of Conduct for Medical Representatives;
  • the Code of Ethics for Pharmaceutical Enterprises in China;
  • the Code of Ethics for Licensed Doctors in China;
  • the Code of Professional Ethics for Licensed Pharmacists in China; and
  • the Guidance for Application of Code of Professional Ethics for Licensed Pharmacists in China.

The self-regulatory codes generally apply to the members of the relevant associations, including member organisations and/or individual members.

For example, the RDPAC Code applies to RDPAC’s member companies (although the annotation further notes that the Code covers all relevant company employees as well as sub-contractors that carry out tasks on behalf of the company). The Code of Ethics for Pharmaceutical Enterprises in China in principle applies to its member organisations, including RDPAC and other associations.

Other self-regulatory codes apply primarily to individual members. The Code of Ethics for Licensed Doctors in China applies to licensed physicians, licensed assistant physicians, scholars, and health administrative personnel, as well as healthcare institutions and certain other organisations. The Code of Professional Ethics for Licensed Pharmacists in China and the Guidance for Application of Code of Professional Ethics for Licensed Pharmacists in China apply to all licensed pharmacists and other pharmaceutical technicians who temporarily perform the duties of licensed pharmacists.

These self-regulatory codes are not legally enforceable. They are contractual in nature and reflect a certain level of industry consensus among a large group of market players. Some of these self-regulatory codes may reflect higher standards than laws and regulations; others may elaborate on issues with respect to which the law is silent, such as the scope of communications allowed regarding off-label use of medicines and the level of substantiation required for promotional purposes. Certain self-regulatory codes such as the RDPAC Code also provide an alternative dispute resolution programme for its members including arbitration, mediation, and sanction procedures.

The Advertising Law covers commercial activities whereby business operators or service providers, through using certain forms of media, directly or indirectly, introduce and recommend products or services they are marketing.

The Legislative Affairs Commission of the Standing Committee of the National People’s Congress, in its interpretation of the Advertising Law, summarises the characteristics of advertisements. An advertisement is a commercial activity which:

  • transfers information to the public;
  • is through certain media, rather than direct communication between people;
  • is for-profit, ie, its purpose is to influence the public’s attitude towards goods and services;
  • has an identifiable beneficiary (the advertiser) and points to a specific commodity producer or service provider; and
  • is paid for by the advertiser, including its own labour cost, for creating and publishing the advertisement.

For the purposes of this section, 'information' in the narrow sense refers to the factual description and introduction of products and services. Under the Law on the Protection of Consumer Rights and Interests, consumers are entitled to know the true information of the products and services, such as the price, place and date of manufacturing, and term of validity.

Advertising, on the other hand, is about making recommendations of products or services. Its main purpose is to generate a positive attitude in the audience towards the products or services being presented.

From a law enforcement perspective, the 'information' part of an advertisement is not subject to scrutiny from the Advertising Law perspective. For example, when reviewing the content of an advertisement, the State Administration for Market Regulation tends to carve out the information that is required by laws and regulations to be provided to consumers, and will only scrutinise the rest of the advertisement as a 'commercial advertisement'.

Whether disease awareness campaigns may qualify as advertising depends on whether the event is promotional in nature. If a disease awareness campaign simply provides general disease awareness information, then it is not likely to be regarded as advertising. If the information provided can be either individually or collectively viewed as pointing to a specific product, such information may be considered 'drug information' and the campaign may be considered promotional in nature and may fall into the scope of advertising. Under the Measures for the Examination of Drug Advertisements, 'drug information' may include drug names, diseases to which the drugs are applicable (functions and indications) or other drug-related content.

A disease awareness campaign may be carried out towards healthcare professionals, patients or the general public, and there is no legal difference based on the type of audience. In practice, however, if a disease awareness campaign targets the general public, law enforcement is more likely to regard the campaign as advertising.

The law in China is silent on whether press releases regarding medicines are allowed. In practice, press releases are allowed if they only contain strictly factual description, such as the completion of clinical studies, the obtainment of relevant market approval or the launch of a new product in a new jurisdiction. If the content of the press release exceeds such limited scope and includes elements of advertising, then it may fall into the scope of advertising and become subject to the Advertising Law.

There are generally no differences between press releases available in the specialised trade press and press releases in mainstream media.

The Advertising Law explicitly prohibits comparative advertising for medicines with respect to the medicine’s efficacy and safety.

To be clear, comparison may be allowed if the underlying activity is considered outside the scope of advertising. Under the RDPAC Code, comparison with other pharmaceutical products is generally allowed if the comparison is based on relevant and comparable aspects of the products and is capable of substantiation. Comparative claims, where possible, should not be misleading. However, this type of comparison is not viewed as advertising.

Under the Advertising Law and the Drug Administration Law, advertising may not refer to anything that is inconsistent with the medicine’s instructions as approved by the authorities. In addition, the RDPAC Code states that no pharmaceutical product shall be promoted for use in China until the requisite approval for marketing for such use has been given by the National Medical Products Administration (formerly known as China Food and Drug Administration (CFDA)). Therefore, advertising may not provide information on unauthorised medicines or unauthorised indications.

Similarly, in one-on-one visits with healthcare professionals, medical representatives are not allowed to provide information on unauthorised medicines or unauthorised indications, as more fully discussed in 3.3 Provision of Information to Healthcare Professionals.

There is no direct legal prohibition against providing information on unauthorised medicines or unauthorised indications during a scientific conference directed at healthcare professionals.

According to the RDPAC Code, off-label promotion is prohibited, but the prohibition is not intended to prevent the right of the scientific community and the public to be fully informed concerning scientific and medical progress. Also, it is not intended to restrict a full and proper exchange of scientific information concerning a pharmaceutical product, including appropriate dissemination of investigational findings in scientific or lay communications media and at scientific conferences.

Therefore, if the information on unauthorised medicines or unauthorised indications is confined to scientific exchanges and is not promotional in nature, it is generally allowed. On the other hand, if the information is promotional in nature, law enforcement may easily view it as prohibited advertising, especially if there is a large audience.

In one-on-one visits with healthcare professionals, medical representatives are not allowed to provide information on unauthorised medicines or unauthorised indications. Consistent with the RDPAC Code, if a healthcare professional initiates such a question, the medical representative must decline to provide an answer, but may refer the healthcare professional’s questions internally to the company’s medical affairs team.

Healthcare institutions in China generally do not procure drugs on their own initiative; instead, procurement is organised by the government through bidding rounds performed on bidding platforms. Thus, healthcare institutions usually do not have direct access to information on unauthorised medicines or unauthorised indications for purposes of preparing budgets. On the other hand, the relevant government departments involved in public bidding such as the NMPA (formerly known as CFDA), the National Health Commission and the State Medical Insurance Bureau may access such information.

In China, not all categories of medicines can be advertised to the general public. The Advertising Law strictly prohibits advertising for several special categories of medicines such as narcotic drugs, psychotropic drugs, toxic drugs for medical use, radioactive drugs, and other special drugs, pharmaceutical precursor chemicals and medicines for drug rehabilitation treatment. In addition, the Standards for the Examination and Publication of Drug Advertisements prohibits advertising of pharmaceutical preparations made by healthcare institutions, drugs for the military and drugs approved to be manufactured on a trial basis.

For all other prescription-only medicines, advertising is only permitted in specialised pharmaceutical or medical journals jointly designated by the Ministry of Health and the NMPA. No prescription-only medicines can be advertised in the mass media or promoted in any other manner targeting the general public. Specifically, according to the Standards for Examining and Publishing Drug Advertisements, companies are prohibited from distributing to the general public for free the specialised pharmaceutical or medical journals containing the permitted advertising for prescription-only medicines.

Therefore, only over-the-counter medicines may be advertised to the general public, and such advertising must comply with the substantive and procedural requirements. Under the Advertising Law, the Drug Administration Law and the Measures for the Examination of Drug Advertisements, drug advertisements shall be subject to approval from the drug regulatory department of the provincial-level government where the company is located (ie, local NMPA), which is more fully discussed in 6.1 Requirements for Prior Notification/Authorisation.

There are also certain restrictions with respect to the format and medium of medicines-specific advertising. For example, medicines-specific advertising cannot be disguised as programmes introducing knowledge about health and well-being, and is not allowed on media that target minors or introduced towards children or in the name of children.

Lastly, medicines-specific advertising must comply with all requirements that apply to advertising in general. With respect to the content, for example, the Advertising Law states that advertising cannot contain national symbols, words such as 'national', 'supreme' or 'best', and obscene, violent and discriminatory language. Statistical citations and patent references must be true and accurate. In addition, advertising cannot degrade the goods and services of others.

Certain restrictions also apply to the format and medium of advertising in general, for example, advertising cannot be broadcast or published in the form of news reports. Outdoor advertisements cannot be placed on military facilities or traffic signs, or in certain areas controlled by national institutions, cultural heritage reservations and scenic spots. Without prior consent or request, advertisements cannot be sent to people’s residence or transportation devices, or sent via electronic messages, and electronic messages should contain the sender’s identity, contact information and ways to unsubscribe from the messages

As advertising of prescription-only medicines is either prohibited entirely or only permitted in specialised pharmaceutical or medical journals jointly designated by the Ministry of Health and the NMPA, advertising directed at the general public is only available for over-the-counter medicines.

Under the Advertising Law, pharmaceutical advertising must contain the drug’s contraindications and adverse reactions. For over-the-counter medicines, the advertisement should clearly state “Please follow the instructions for the drug or purchase and use it under the guidance of a pharmacist.”

Also, pharmaceutical advertising cannot contain:

  • assertions or guarantees of efficacy and safety;
  • specifications concerning the cure rate or efficacy rate;
  • comparisons with other drugs;
  • endorsements by a spokesperson; or
  • anything that is inconsistent with the approved instructions.

The requirements and prohibitions are more specifically described in the Standards for the Examination and Publication of Drug Advertisements, as set forth below.

Pharmaceutical advertising directed at the general public must meet the following requirements:

  • a pharmaceutical advertisement shall indicate the nonproprietary name of the drug, warning, drug advertisement approval number (waived if broadcast on radio), and drug manufacturing approval number;
  • the advertisement shall also include the name of the drug manufacturer or distributor – words such as 'consultation hotline' or 'consultation number' cannot appear alone;
  • advertisement of over-the-counter medicines shall also indicate the logo '(OTC)'; and
  • the name of the drug cannot be replaced by its registered trademark, unless the approved trade mark is the name of the drug in its text format.

For the required content, the fonts and colours must be clearly visible and easily identifiable. When released on TV, movies, internet, display screens, such content should last no less than five seconds.

The Standards for the Examination and Publication of Drug Advertisements prohibits the following content in pharmaceutical advertising directed at the general public:

  • The drug’s indications, main cures or pharmaceutical effects included in pharmaceutical advertisements shall be consistent with the same in the approved Instructions, and shall not be intentionally exaggerated or concealed or contain any theory or view not included in the Instructions.
  • Pharmaceutical advertisements shall be accurate and scientific, and shall not include:
    1. representation or warranty without scientific basis about efficacy;
    2. specification about the cure rate or efficacy rate;
    3. comparison of the efficacy or safety with other drugs;
    4. expression or implication about the applicability to all diseases or symptoms without scientific basis;
    5. wording such as “safe with no toxic or side effects” or “little toxic and side effects”, or expressly or impliedly description of the proposed Chinese medicines as “natural” with safety guarantee;
    6. expression or implication that the drugs proposed are a must-have in daily life or for a disease;
    7. expression or implication that the drugs is needed in stressful life or can improve exam results, physical strength, or intelligence; or
    8. language without scientific basis such as “the latest technology” “the highest technology” or “the most advanced production method”.
  • Over-the-counter medicine advertisements should not take advantage of the public’s lack of medical knowledge and use medical and pharmacy terms which are difficult for the public to understand and which easily cause confusion, resulting in public misunderstanding of the efficacy and safety of the drugs.       
  • Pharmaceutical advertisements shall promote and encourage reasonable use of drugs, and shall not directly or indirectly encourage wrong or excessive purchase or use of drugs, and shall not contain
    1. unscientific inappropriate presentations which may cause the public unnecessary worry or panic about the health or diseases or mislead the public that not using the drug may attract or worsen any diseases;
    2. promotion of the proposed drugs by offering free medical treatments, gifts, lucky draw, free drugs or prizes;
    3. expressions similar to “must-have for the household”;
    4. guarantees such as “refund guaranteed” or “insured by an insurance company”; or
    5. general evaluation including assessment, ranking, recommendation, designation, selection or award information.
  • Pharmaceutical advertisements shall not be released
    1. in the name or image of any medical science and research institution, academy, healthcare institution, healthcare expert, doctor or patient;
    2. in the name of any government agency or its staff; or
    3. in the name of image of the military, military members, equipment or facility.
  • Pharmaceutical advertisements cannot include contents related to any public information, public incident or other public interest, such as information about disease, economic development or scientific achievements other than medical achievements.
  • Pharmaceutical advertisements shall not include any name, address, contact details, treatment program, treatment methods of any healthcare institutions, or any content regarding free medical treatment, hotline consultation, special out-patient services or other medical services.

Patient organisations registered as formal associations are uncommon in China. Therefore, the law in China is silent on the interactions between patient organisations and industry, such as whether companies can sponsor patient organisations’ meetings.

The interactions between patients and the industry are restricted. Although the RDPAC Code encourages companies to make clinical trial information more publicly available to patients as well as healthcare professionals, in practice, if a patient makes an enquiry to a pharmaceutical company about its drugs and indications, the company can only provide a consultation response through its medical affairs team and the information must be consistent with the information in the instructions already approved by the authorities.

Regarding the direct distribution of drugs to patients, under the Provisions for Supervision of Drug Distribution, prescription-only medicines and a sub-category of over-the-counter medicines are generally prohibited to be offered to patients for free, 'buy one, get one free' or other quantity related promotion model. Donating prescription-only medicines to patients in a charity activity, such as donations made under patient assistance programmes (PAP), is not explicitly regulated in the current Chinese laws and regulations. However, it is widely understood that PAP are by nature a charity activity that aims to provide drug assistance to financially burdened patients seeking to obtain drugs that are critical to their lives. Under charitable PAP conducted by qualified person, offering free prescription-only medicines is not prohibited.

Under the Advertising Law, no endorsement can be made in advertising for medicines, whether or not made by healthcare professionals.

Both over-the-counter medicines and prescription-only medicines can be advertised to healthcare professionals (other than the categories for which advertising is prohibited entirely under the Advertising Law and the Standards for the Examination and Publication of Drug Advertisements). For prescription-only medicines, the advertising should be clearly marked “This advertisement is for medical and pharmaceutical professionals only.” Over-the-counter medicines should be clearly marked “Please follow the instructions for the drug or purchase and use it under the guidance of a pharmacist.”

Otherwise, the requirements and prohibitions for advertising directed at healthcare professionals are similar to the requirements and prohibitions for advertising directed at the general public. The scope of information is subject to the same Advertising Law and Standards for the Examination and Publication of Drug Advertisements, as discussed in 4.1 Main Restrictions on Advertising to the General Public and 4.2 information Contained in Advertising to the General Public.

Some of the prohibitions for advertising directed at the general public may not be applicable to advertising directed at healthcare professionals, such as the one stating that over-the-counter medicine advertisements should not take advantage of the public’s lack of medical knowledge and use medical and pharmacy terms, which are difficult for the public to understand and that easily cause confusion, resulting in public misunderstanding of the efficacy and safety of drugs.

Under the Advertising Law and the Drug Administration Law, advertising may not refer to anything that is inconsistent with the medicine’s instructions (similar to the Summary of Product Characteristics in Europe) as approved by the authorities. Therefore, advertising may not refer to data on file or other clinical studies that are not already included in the instructions.

The law in China does not prohibit companies from providing reprints of journal articles to healthcare professionals. Although generally allowed, under the RDPAC Code, quotations from medical and scientific literature or from personal communications should be faithfully reproduced (except where adaptation or modification is required in order to comply with any applicable regulations or administrative rules, in which case it must be clearly stated that the quotation has been adapted and/or modified) and the precise sources identified. Quotations should not change or distort the intended meaning of the author or the significance of the underlying work or study.

Prescription-only medicines cannot be advertised to the general public. For over-the-counter medicines – under the Advertising Law, the Drug Administration Law and the Measures for the Examination of Drug Advertisements – drug advertisements shall be subject to approval from the drug regulatory department of the provincial-level government where the company is located (ie, local NMPA), and an approval number for the drug advertisement shall be issued. No one is allowed to launch any drug advertisement without an approval number. The approval number is valid for one year.

After the approval is granted, the local NMPA will file the approved advertising with the NMPA for record and with the local State Administration for Market Regulation on the same provincial level for supervision and enforcement purposes. If advertising is made in provincial regions other than the place where the advertising is originally approved, such advertising should also be filed with the other local NMPAs for their records.

There is no legal requirement to adopt standard operating procedures (SOPs) or employ specific personnel. However, according to the RDPAC Code, a designated company employee with sufficient knowledge and appropriate qualifications should be responsible for approving all promotional communications. Alternatively, a senior company employee could be made responsible provided that he or she receives scientific advice on such communications from adequately qualified scientific personnel.

If the company entrusts an advertising agency to provide advertisement design or production or agent services on a commission basis, then, according to the Advertising Law, advertising agencies and advertisement publishers shall, in accordance with the law and administrative regulations, inspect and verify the relevant certification documents, and check the advertising contents.

Under the Interim Measures for the Administration of Internet Advertising, internet advertising may take various formats such as text, images, audio, video, or other forms on websites, web pages or in applications (such as WeChat). In addition to all restrictions regarding advertising in general, a few additional requirements apply to internet advertising. For example, internet advertising should be clearly marked as an 'advertisement'. Internet advertising cannot affect people’s normal use of the network. Online pop-ups should be clearly marked with a closing sign to ensure a one-click closure. Advertisers cannot deceive users into clicking on the advertising content. No advertisement or advertisement link will be attached to the e-mails sent by users without permission.

The Interim Measures for the Administration of Internet Advertising covers advertising on social media as part of 'internet advertising'. Therefore, advertising on social media is generally allowed to the extent internet advertising is allowed. However, all restrictions on advertising in general, such as the ones discussed under 4.1 Main Restrictions on Advertising to the General Public and 4.2 Information Contained in Advertising to the General Public, above, are still applicable.

The law in China does not explicitly require companies to include access restrictions on websites containing advertising or other information intended for healthcare professionals. In practice, many companies do have this arrangement in place.

In China, the anti-bribery legal system includes laws on both the administrative and criminal levels.

On the administrative level, the Anti-Unfair Competition Law, together with the Interim Provisions on Banning Commercial Bribery and a number of replies by the former State Administration for Industry and Commerce (SAIC) on the handling of commercial bribery acts, sets out the legal framework regulating commercial bribery. The key provision under the Anti-Unfair Competition Law states that business operators shall not resort to bribery, by offering money or goods or by any other means, to any of the following entities or individuals, in order to seek a transaction opportunity or competitive advantage:

  • any employee of the counterparty to a transaction;
  • any entity or individual entrusted by the counterparty to a transaction to handle relevant affairs; and
  • any entity or individual that is likely to take advantage of powers or influence to affect a transaction.

Penalties for violation include fines ranging from RMB100,000 to 3 million, confiscation of illegal gains and revocation of business licences in serious cases.

In practice, with respect to hospitals (but not other types of healthcare institutions), law enforcement takes the view that the purchase of medicines 'pierces' through the hospital and should actually be viewed as transactions that take place between the pharmaceutical industry and the patients. Under this theory, the patients become the counterparty to the transaction, and both healthcare institutions and healthcare professionals, with their power to prescribe medicines to patients, fall into the scope of entities and individuals having the power or influence to affect a transaction. As a result, the general anti-bribery rules apply to benefits provided to healthcare professionals and benefits provided to healthcare institutions.

On the criminal level, Criminal Law prohibits both individuals and entities from bribing several types of recipients. These include:

  • state functionaries;
  • the close relatives of or other persons closely related to a state functionary;
  • former state functionary or close relatives of or other persons closely related to a former state functionary;
  • state agencies, state-owned enterprises, public institutions or people’s organisations;
  • employees of a company; and
  • foreign individuals performing official duties or officials of an international public organisation.

Penalties for individuals include fines or confiscation of property and criminal detention or fixed-term imprisonment ranging from three years to life imprisonment. For entities, penalties include fines and criminal detention or fixed-term imprisonment up to five years for the responsible individuals.

The Drug Administration Law prohibits drug manufacturers, distributors and their agents from providing any property or other benefits to the responsible person, the procurement personnel, the physicians and other relevant individuals of a health institution that uses their drugs. The listed categories of individuals are also prohibited from receiving these benefits.

Under the RDPAC Code, if a member company engages healthcare professionals to serve as the company’s consultants or advisers, one of the requirements for such an engagement is that the hiring of the consultants or advisers to provide the relevant service must not be an inducement to prescribe, recommend, purchase, supply and/or administer any medicine.

Under the RDPAC Code, gifts for the personal benefit (such as sporting or entertainment tickets, social courtesy gifts etc) of healthcare professionals, either directly or through clinics and institutions, are prohibited. Providing or offering cash, cash equivalents or personal services is also prohibited. For these purposes, personal services are any type of service unrelated to the healthcare professional’s profession and that confer a personal benefit to the healthcare professional.

However, the Interim Provisions on the Prohibition of Commercial Bribery promulgated by the SAIC carves out gifts of 'small value' provided in the course of customary business practice, which is permitted and would not be considered commercial bribery

According to the RDPAC Code, samples of a pharmaceutical product with a limited quantity can be supplied directly to healthcare institutions so healthcare professionals can familiarise themselves with the product, but should be delivered through a qualified third party. Samples should be marked as such so that they cannot be resold or otherwise misused. Member companies should have adequate systems of control and accountability for samples provided to healthcare professionals through healthcare institutions with respect to the distribution, delivery and acceptance of samples.

Pharmaceutical companies are generally allowed to sponsor scientific meetings. Under the Standards for the Examination and Publication of Drug Advertisements, the sponsored event cannot be titled the same as the name of any prescription-only medicine, even if the name of the prescription-only medicine is registered as trademark or as the company’s name. Where the name of an over-the-counter medicine is involved, the company is allowed to use the medicine’s brand name.

Pharmaceutical companies are generally allowed to sponsor the attendance by healthcare professionals to these events as well, but should be careful not to violate the rules against commercial bribery. Under the RDPAC Code, member companies may sponsor healthcare professionals to attend medical interaction programmes if such sponsorship complies with the following requirements:

  • the programme itself complies with the requirements in the RDPAC Code;
  • the sponsorship of healthcare professionals is limited to the payment of travel, meals, accommodation and registration fees;
  • no payments are made to compensate healthcare professionals for time spent attending the programme;
  • under no circumstances should a company make any payment or transfer any sponsorship fund directly to a healthcare professional or a hospital department; and
  • any sponsorship provided to individual healthcare professionals must not be conditional upon an obligation to prescribe, recommend, purchase, supply, administer or promote any pharmaceutical product.

Under the Interim Provisions on the Prohibition of Commercial Bribery promulgated by the SAIC, commercial bribery includes both monetary bribery and other means, where “other means” refers to non-monetary benefits such as tours and field trips in China or abroad.

Similarly, under the RDPAC Code, no entertainment or other leisure or social activities should be provided or paid for by member companies. Cultural, sports or other non-scientific events in relation to scientific conferences may easily fall into the scope of “entertainment or other leisure or social activities” and therefore are generally prohibited.

Moreover, under the 'Nine Prohibitions' issued by the National Health and Family Planning Commission and State Administration of Traditional Chinese Medicine, healthcare professionals are prohibited from participating in entertainment activities arranged, organised or paid for by pharmaceutical manufacturers, distributors or their agents.

Pharmaceutical companies may provide grants or donations to healthcare professionals or healthcare institutions in accordance with the Measures for Administering the Receipt of Non-Profit Donations (for Trial Implementation).

Under the Measures, the requirements are generally similar for monetary donations and donations of equipment or services from pharmaceutical companies’ perspective. The differences between monetary donations and donations of equipment or services mainly concern the recipient institutions. For example, the recipient institutions are encouraged to use a third-party agency to confirm the value of non-monetary donations, and the ways in which recipient institutions can spend the donations differ depending on the type of donations.

Additionally, in practice, donations of equipment or services may face higher risks than monetary donations, because in addition to potentially violating the Measures, a wrongful donation of equipment or services may also be seen as offering equipment or services in connection with the sale of medicines under the prohibited buy-one-give-one model, thus violating the Provisions for Supervision of Drug Distribution.

As discussed under 3.4 Provision of Information to Healthcare Institutions, above, procurement of drugs in China is organised by the government through biddings performed on bidding platforms. As healthcare professionals and healthcare institutions are not directly involved in procurement, rebates or discounts provided to them are less common than in some other jurisdictions. Still, the Drug Administration Law explicitly prohibits pharmaceutical manufacturers, distributors and healthcare institutions from giving or receiving rebates or other benefits in the purchase and sale of drugs.

Moreover, under the Nine Prohibitions, healthcare professionals are prohibited from accepting any rebate offered by pharmaceutical manufacturers, distributors or their agents in any name or in any form.

It is possible to pay for services provided by healthcare professionals under certain circumstances. For example, companies may invite healthcare professionals who are key opinion leaders in their field to give a lecture or to serve on the company’s advisory board and attend board meetings. Under these circumstances, companies may pay these healthcare professionals speaker fees or consultation fees, as applicable.

The RDPAC Code sets forth a large number of restrictions on the amount of payment allowed. Chief among these restrictions are: the hiring of the healthcare professional to provide the relevant service must not be an inducement to prescribe, recommend, purchase, supply and/or administer any medicine and the compensation for the services must be reasonable and reflect the fair market value of the services provided.

Companies’ SOPs may set out more specific restrictions on the amount of speaker fees and consultation fees. For example, the SOP may establish the maximum amounts allowed for domestic and international lectures and meetings. The SOP may also state that, for foreign speakers or consultants, the payment shall comply with the fair market value of their respective countries of origin.

The law in China does not explicitly require prior authorisations or notifications in relation to gifts, hospitality, congresses and related payments described in this section. In practice, however, employers often do require that employees obtain prior consent before engaging in such activities.

In particular, because doctors in China must be employed by hospitals and cannot practice outside the hospital settings, their personal activities are more closely managed by the hospitals. Their activities in relation to gifts, hospitality, congresses and related payments described in this section will likely require the hospital’s prior consent.

The law in China does not provide explicit transparency requirements, but industry benchmark information may be found in self-regulatory codes. For example, the RDPAC Code states that, at medical interaction programmes between member companies and healthcare professionals, if material relating to pharmaceutical products and their uses, whether promotional in nature or not, is sponsored by a member company, the material should clearly indicate by whom it has been sponsored. Medical interaction programmes hosted or sponsored by member companies, whether promotional in nature or not, should clearly indicate by whom it has been hosted or sponsored. Academic activities should not in any way be concealed or disguised by member companies. If a member company sponsors medical interaction programmes organised by a third party, the above disclosure should be made subject to the knowledge and consent of the organiser.

On the other hand, healthcare institutions that receive donations are subject to disclosure requirements. Under the Measures for Administering the Receipt of Non-Profit Donations (for Trial Implementation), the recipient institution shall establish a publication system for donation information and shall publish donation receipt information to the society in an authentic, accurate, timely and complete manner by means accessible to the public.

The law in China does not provide explicit transparency requirements for foreign companies, while certain self-regulatory codes, such as the RDPAC Code, impose disclosure requirements on its member companies. As self-regulatory codes are contractual in nature, whether a company is subject to these requirements depends on whether the company undertakes to enter into the contractual arrangement as one of its members. If a company undertakes to be bound by certain self-regulatory codes, it will be subject to the same transparency requirements regardless of whether the company is domestic or foreign and regardless of whether its products are already on the market.

Until recently, the SAIC and its local branches were responsible for enforcing the rules on advertising and the rules on inducement. After the government restructuring in 2018, the SAIC now forms part of the State Administration for Market Regulation; the State Administration for Market Regulation now is responsible for enforcement actions.

The RDPAC Code has also created its own dispute resolution system, providing member companies the opportunity to file complaints against competitors and to request the association to enforce its rules through the established arbitration, mediation or sanction procedures.

Companies can initiate proceedings against competitors in court for advertising infringements on the basis of the Anti-Unfair Competition Law and the Civil Procedure Law. Companies may also file complaints against competitors with the State Administration for Market Regulation or its local branches in accordance with the provisions in the Law on Administrative Penalty. Additionally, member companies may also initiate arbitration or meditation procedures as established by the RDPAC Code.

The penalties or measures that regulators or courts can impose for violating medicines advertising rules are mainly found in the Advertising Law and the Measures for the Examination of Drug Advertisements. The penalties and measures include ordering the cessation of the publishing of advertisements, ordering the advertisers to eliminate negative impact, imposing fines, confiscating advertising fees and revoking business licences and approval documents for advertisement. The penalties can be imposed on the advertiser, the advertising agency or the advertising publisher, such as TV stations.

For example, in case of false advertising, law enforcement will order that the advertisement be stopped and that the advertiser eliminate the negative impact. There may be a fine on the advertiser equal to three to five times the advertising costs; if the advertising costs cannot be calculated or is obviously low, the amount will be RMB200,000 to 1 million. Where violations happen three or more times within two years, or where the circumstances are serious:

  • a fine of five to ten times the advertising cost will be imposed; if the advertising cost cannot be calculated or is obviously low, a fine of RMB1 million to 2 million will be imposed;
  • the business licence may be revoked; and
  • local NMPA (formerly known as local CFDA) may revoke the advertisement’s review and approval document and not accept applications from the advertiser for one year.

In serious cases, there may be criminal responsibilities too. For example, false advertising may result in criminal detention or fixed-term imprisonment of up to two years for advertisers, advertising agencies or advertising publishers. Criminal fines may also be imposed separately or concurrently.

There is no specific enumeration of penalties or measures that regulators or courts can impose for violating rules on inducements to prescribe. However, if a case involves commercial bribery, then the penalties under the Anti-Unfair Competition Law and the Criminal Law will become relevant.

There is no direct relationship between procedures before or measures taken by the self-regulatory authority and the procedures before or measures taken by courts. The former is not a prerequisite for the latter. Specifically, regarding the RDPAC Code, we are not aware of any case where a court had considered a decision under the RDPAC Code as basis for the court’s decisions.

Enforcement actions against pharmaceutical advertising has been relatively sparse in China. For example, in 2017, the former Shanghai Administration for Industry and Commerce investigated and issued penalties in 22 cases against pharmaceutical advertising with combined fines of RMB2.12 million. This number was significantly lower than the numbers in the same year of cases involving advertising in other industries, such as the 439 cases in food advertising, 217 cases in cosmetics advertising and 65 cases in medical devices advertising.

The lack of enforcement so far is partially due to the fact that the SAIC and the NMPA were separate agencies. Following government restructuring in 2018, the new State Administration for Market Regulation combines SAIC’s enforcement mechanism and the NMPA’s familiarity with the pharmaceutical industry. As a result, we may see a rise in enforcement cases.

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Law and Practice in China

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Global Law Office dates back to 1984, when it became the first law firm in the People’s Republic of China to take an international perspective on its business. Its market-leading pharmaceutical and healthcare practice group provides 'one-stop' legal services in areas including drug research and development, clinical research organisations, pharmaceuticals, life sciences, biotechnology and medical devices; its clients include producers and distributors of medical supplies, hospitals and healthcare providers, as well as various investment funds in the sector. The firm advises clients on challenging legal issues in pharmaceutical and healthcare such as regulatory compliance, structuring transactions and contractual arrangements, realisation of pipelines and regional expansions, capital raising and project financing, M&A, reorganisations, IP protection, licensing and distribution arrangements, and the settlement of disputes involving adverse effects in clinical trials and medical treatment. Global also has close links to industrial associations and is involved in making recommendations on industry codes of conduct.