Under the PRC legal system, advertising on medicines is subject to the following regulations:
The major laws and regulations are listed below:
In addition to the above laws and regulations, industrial associations and institutions also have their own codes of conducts to regulate the promotion and advertising activities of members. These are normally referred as industry benchmarks. The major self-regulatory codes that regulate medicine advertising include:
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 of the RDPAC Code 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.
None of these self-regulatory codes are mandatory requirements. 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 with respect to 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 sanctions.
The definition of advertisement under the Advertising Law is broad and vague. Advertising appears to cover any commercial activities whereby business operators or service providers directly or indirectly introduce and recommend products or services they are marketing using certain forms of media.
The former State Administration for Industry and Commerce (SAIC, now reformed into the State Administration for Market Regulation, SAMR) and the Legislative Affairs Commission of the Standing Committee of the National People’s Congress, in their interpretations of the Advertising Law, summarise the characteristics of advertisements. An advertisement is a commercial activity which:
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, however, 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 legal scrutiny under the Advertising Law. 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 Administrative Measures for Review 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. Other compliant requirements are discussed in 7.4 Provision of Disease Awareness Information to Patients Online.
The law in China is silent on whether press releases regarding medicines are allowed. In practice, press releases are allowed if they only contain a strictly factual description of the medicine, 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. In one case in Shanghai, the court ruled that a "press release" regarding the commendation of the head of a hospital was an advertisement, because the information had a for-profit purpose and pointed to a specific service and brand (of the hospital) while the name, address and contact information of the hospital appeared on its press release page. The court held that this constituted a commercial advertisement published in the form of press release.
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.
Comparison may nevertheless be allowed if the underlying activity is considered to be 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, must not be misleading.
PRC laws do not expressly prohibit the provision of information on unauthorised medicines or unauthorised indications but it is nonetheless prohibited under the Advertising Laws if such information sharing or provision constitutes advertising. Under the Advertising Laws, all drug advertisements are subject to the pre-approval of the National Medical Products Administration (NMPA; formerly known as China Food and Drug Administration) before release, and only advertisements of authorised medicines can be approved by the local NMPA. The advertising may not refer to anything that is inconsistent with the medicine’s instructions as approved by the authorities. Therefore, advertising may not provide information on unauthorised medicines or unauthorised indications.
As mentioned above, the definition and concept of “advertising” is vague and could have broad scope. In practice, pharmaceutical companies in China are cautious in providing information on unauthorised medicines or unauthorised indications, to avoid constituting illegal advertising. Benchmark practice discourages this activity. For example, 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 NMPA. Similarly, in one-on-one visits by medical representatives with healthcare professionals, medical representatives, are not allowed to provide information on unauthorised medicines or unauthorised indications without the supervision of medical experts, 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, the Code does not intend to restrict the full and proper exchange of scientific information concerning a pharmaceutical product, including appropriate dissemination of investigative findings in scientific or lay communications media and at scientific conferences.
Therefore, information on unauthorised medicines or unauthorised indications is generally allowed if it is confined to scientific exchanges and is not promotional in nature. However, if the information is promotional in nature, law enforcement may easily view it as prohibited advertising, especially if there is a large audience.
RDPAC Code states that pre-approval of off-label communication with healthcare professionals, whether in oral or written form, should be conducted by or under the supervision of medical experts instead of personnel with commercial functions.
Healthcare institutions in China generally do not procure drugs on their own initiative. Procurement is organised by the government through bidding performed on bidding platforms (including the recent volume-based procurement). 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, the National Health Commission and the National Healthcare Security Administration may access such information.
Under PRC law, there is no legal definition of compassionate use programme but expanded clinical trial which is a form of early access for patients. If a drug under clinical trial is used for a serious, life-threatening disease for which there is, as yet, no effective therapeutic means, it may apply to other patients with the same disease condition in the institution where such clinical trial is carried out upon review and other preconditions.
Expanded clinical trial is only generally mentioned in the Drug Administration Law and no implementation rules have been made. So far, no expanded clinical trial has been carried out in China, according to public information.
PRC laws do not expressly prohibit publication of expanded clinical trial, however, if it is published to the public but cannot be proved it is necessary for the purpose of expanded clinical trial, it might constitute advertising which is not allowed to provide information on unauthorised medicines or unauthorised indications, as discussed in 3.1 Restrictions on Provision of Information on Unauthorised Medicines or Indications.
Not all categories of medicines can be advertised to the general public. The Administrative Measures for Review of Drug Advertisements strictly prohibit advertising for several special categories of medicines such as:
For all other prescription-only medicines, advertising is only permitted in professional 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, the Administrative Measures for Review of Drug Advertisements, forbid the use of the names of prescription-only drugs to sponsor/title various activities for advertising, and also prohibit the use of any trade mark or trade name identical to the name of a prescription drug to publish any advertisement in a disguised manner in any media other than professional pharmaceutical or medical journals, or the use such trade mark or trade name to title any activity for advertising.
Therefore, only over-the-counter medicines may be advertised to the general public, and such advertising must comply with substantive and procedural legal requirements. Under the Advertising Law, the Drug Administration Law and the Administrative Measures for Review of Drug Advertisements, drug advertisements are subject to review and approval from the drug regulatory department of the provincial-level government where the company is located (ie, the 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 to be published on media that targets minors.
Finally, medicines-specific advertising must comply with all requirements that apply to advertising in general. For example, the Advertising Law states that advertising cannot contain national symbols, words such as “national”, “supreme”, or “best”, or 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. All advertisements published through mass media must be prominently marked as "advertisement", and a distinction must be made by the advertiser between advertisement and non-advertisement information, so as not to mislead consumers. 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 residences or transportation devices, or sent via electronic messages. Electronic messages must contain the sender’s identity, contact information and ways to unsubscribe from the messages.
Under the Advertising Law, no endorsement can be made in advertising for medicines, whether or not made by healthcare professionals. The Administrative Measures for Review of Drug Advertisements further prohibits the use of the names or images of experts, scholars, physicians, pharmacists and clinical nutritionists for recommendation or as endorsement.
As a general principle, all advertisements must be true, lawful and must not contain any false or misleading contents. Advertisers are responsible for the veracity and legitimacy of the contents.
As advertising of prescription-only medicines is either prohibited entirely or only permitted in professional 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, adverse reactions and drug advertisement approval number. For over-the-counter medicines, the advertisement should clearly use the logo “OTC” and the following language: “Please follow the instructions for the drug or purchase and use it under the guidance of a pharmacist”. For required content, fonts and colours must be clearly visible and easily identifiable. When released on TV, movies, Internet and display screens, such content must be continuously displayed in the advertisements (rather than for only five seconds as required by previous regulations).
Also, pharmaceutical advertising cannot contain: assertions or guarantees of efficacy and safety; specifications about the cure rate or efficacy rate; comparisons with other drugs; endorsement by a spokesperson; and anything that is inconsistent with the approved instructions.
The Administrative Measures for Review of Drug Advertisements prohibit all of the following in pharmaceutical advertising. Bullet points two to five might also trigger false advertising claims and subject the advertiser to strict penalties, as discussed in 11.3 Penalties for Violating Advertising Rules and Rules on Inducements to Prescribe.
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 from being offered to patients for free, “buy one, get one free,” or other quantity related promotions. Donating prescription-only medicines to patients in a charity activity, such as donations made under patient assistance programmes (PAP), is not explicitly regulated in 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. Offering free prescription-only medicines is not prohibited under charitable PAP conducted by qualified persons.
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 that can only be advertised to healthcare professionals, the advertising should be marked “This advertisement is for medical and pharmaceutical professionals only”. in a prominent position.
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 Administrative Measures for Review of Drug Advertisements, that were 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 medicine advertisements should not have contents that induce unnecessary anxiety and fear among the public about their health status and the diseases they suffer from, or that lead to public misunderstanding that they will suffer from a certain disease or the disease will worsen if they do not use the products.
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. The Administrative Measures for Review of Drug Advertisements specify that, where a drug advertisement involves drug name, indications or major functions, pharmacological effects, etc, it shall not go beyond the scope of approved instructions. Therefore, advertising may not refer to data on file or other clinical studies that are not already included in the instructions.
Information on combination products need to be included in medicine’s instructions (similar to the Summary of Product Characteristics in Europe) under PRC law on the grounds that all usage information is legally required to be specified in medicine’s instructions.
Therefore, in principle, there should be no information on combination products that is not included in medicine’s instructions and advertising of such information will be prohibited for its inconsistency with the medicine’s instruction, as discussed in 5.2 Reference to Data Not Included in the Summary of Product Characteristics.
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.
Medical Science Liaison (MSL) is not a legal term under PRC law. However, the medical representatives as professional personnel may assume similar functions as those of MSLs (such as delivery of pharmaceutical academic information and introduction of medical knowledge to healthcare professionals, and collection of feedbacks and suggestions on clinical use from healthcare professionals), according to the Opinions on Deepening the Reform of the Evaluation and Approval System and Inspiring Innovation of Drugs and Medical Devices (“Opinions”) of General Office of the State Council.
The Opinions require the medical representatives to be record-filled before practices. However, such filing requirement has not yet been implemented in practice as the implementation rules are still a draft.
Generally, medical representatives shall not take any sales function and are legally prohibited to mislead healthcare professionals in drug use. The draft implementation rules specify that they shall not exaggerate or provide misleading information about curative effects of drugs.
As discussed in detail in 3.1 Restrictions on Provision of Information on Unauthorised Medicines or Indications, though the law does not expressly forbid them to discuss scientific information on unauthorised medicines or indications with healthcare professional, in practice pharmaceutical companies in China are cautious about such activity to avoid constituting illegal advertising.
Benchmark practice wise, RDPAC Code requires such discussion to be conducted by or under the supervision of medical experts instead of personnel with commercial functions.
Under the Advertising Law, the Drug Administration Law and the Administrative Measures for Review of Drug Advertisements, drug advertisements are subject to approval from the drug regulatory department of the provincial-level government where the company is located (ie, local NMPA), which shall issue an approval number for the drug advertisement. An approval number is required before any drug advertisement can be made. In addition, the Administrative Measures for Review of Drug Advertisements have prolonged the validity period of the approval from one year to a period that is consistent with the shortest validity period of the drug registration certificate or drug production permit.
After the approval is granted, the local NMPA will file the approved advertising with the NMPA for record. It is worth mentioning that the Administrative Measures for Review of Drug Advertisements have simplified the review and approval process. For example, apart from the traditional on-site application, application can also be submitted via letter, fax, email, or an e-government platform. Fewer documents are needed for approval. However, the content review will still strictly follow the applicable rules. The Measures also grant that approved advertisements may be published nationwide in accordance with law. In practice, if advertising is made in provincial regions other than the place where the advertising is originally approved, before this March, such advertising was required for filing with local NMPAs. However, according to the the Administrative Measures for Review of Drug Advertisements, requirements on filing of cross-province advertising might be abolished, the actual enforcement of which needs to be closely followed-up.
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. In practice, large and medium-size pharmaceutical companies normally have their own SOPS guiding companies’ advertising practices in order to guarantee legal compliance. Legal or/and compliance teams or external counsel may be involved to conduct compliance reviews of certain advertisements.
If the company entrusts an advertising agency to provide advertisement design or production or agent services on a commission basis, the Advertising Law requires advertising agencies and advertisement publishers to inspect and verify the relevant certification documents and check the advertising contents in accordance with the law and administrative regulations.
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 cannot interfere with people’s normal use of the network. Online popups 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 may be attached to the emails sent by advertisers or its agents without the recipient’s prior permission. Pharmaceutical advertising on the Internet also requires approval by the local NMPA subject to the restrictions applicable to drug advertisements (see 4.1 Main Restrictions on Advertising to the General Public and 4.2 Information Contained in Advertising to the General Public).
In addition, the entity providing information on pharmaceuticals to online users via the Internet is subject to the Qualification for Internet Drug Information Services issued by the competent local NMPA according to the Administrative Measures for Online Drug Information Services.
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.
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.
Provision of disease awareness information to patients online is not legally prohibited but might be regarded by the law enforcement as advertising if the information provided can be viewed as pointing to a specific product with a promotional nature, as discussed in 2.2 Difference Between Information and Advertising.
According to our summary of the relevant laws, provision of disease awareness information to patients online or in other ways to the general public shall be compliant with the following requirements.
First, the provision should not include information on drugs, otherwise such provision will constitute advertising subject to approval for pharmaceutical advertising. In addition, only disease awareness information related to OTC medicines (but not prescription-only medicines) may be provided since the advertising is targeted at the general public as discussed in 4.1 Main Restrictions on Advertising to the General Public.
Second, the provision should not constitute retailing of pharmaceutical products without the distribution license. Third, other general rules on patient education also apply here, including not involving activity of diagnosis and treatment, not discrediting competitors, not constitute false promotion, etc.
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 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:
Penalties for violation include fines ranging from RMB100,000 to RMB3 million, confiscation of illegal gains and revocation of business licenses 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:
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 license holders, drug manufacturers, distributors and their agents from providing any property or other improper benefits to the responsible person, the procurement personnel, the physicians, the pharmacists 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.
The Interim Provisions on the Prohibition of Commercial Bribery promulgated by the SAIC permits gifts of “small value” provided in the course of customary business practice and would not be considered commercial bribery. However, there is no legal guidance for the maximum amount of "small value".
Gifts (such as sporting or entertainment tickets, social courtesy gifts, etc) for the personal benefit of healthcare professionals, either directly or through clinics and institutions, are prohibited under the RDPAC Code. 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, promotional aids of minimal value (not more than RMB100 in value per item) and minimal quantity may be provided or offered to healthcare professionals solely for the promotion of OTC medicines (but not prescription-only medicines) if relevant to the practice of the healthcare professional Similarly, items of medical utility to enhance the provision of medical services and patient care are also conditionally permitted under the RDPAC Code with a limit of RMB500 per item. Even if each individual item is appropriate, such offering should not be made on more than an occasional basis.
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 Administrative Measures for Review of Drug Advertisements, the sponsored event cannot be titled the same as the name of any prescription-only medicine and cannot be titled the same as a trade mark or trade name that is identical to the name of a prescription-only medicine.
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:
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 may 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 by the RDPAC Code.
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 institutions in accordance with the Measures for Administering the Receipt of Non-Profit Donations (for Trial Implementation). However, pharmaceutical companies are not allowed to specifically appoint the healthcare professionals from the healthcare institutions as the recipients of donations.
Under the Measures, the requirements are generally similar for monetary donations and donations of equipment or services from a 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 in 3.4 Provision of Information to Healthcare Institutions, 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 drug licence holders, pharmaceutical manufacturers, distributors and healthcare institutions from giving or receiving rebates or other improper 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 fields to give lectures or to serve on the company’s advisory boards 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, consultation fees and relevant expenses for meals and transportations, and may require employees to provide documents to prove the services provided by the healthcare professionals. 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 from their employer 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 disclosure requirements for pharmaceutical companies, but industry benchmark standards may be found in self-regulatory codes. For example, the RDPAC Code states that if material relating to pharmaceutical products and their uses, whether promotional in nature or not, is sponsored by a member company at medical interaction programmes between member companies and healthcare professionals, that 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 they have been hosted or sponsored. 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 must establish a publication system for donation information and must publish donation receipt information to the society in an authentic, accurate, timely and complete manner via their web portals or local major news media.
There are no explicit legal transparency requirements for foreign companies, although 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 2018, 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 has become part of the State Administration for Market Regulation (SAMR); the SAMR and its local branches now are responsible for enforcement actions. The restructuring enabled the SAMR to combine SAIC’s enforcement mechanism and the NMPA’s familiarity with the pharmaceutical industry, as a result of which the supervision of this industry has been strengthened.
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 Administrative Measures for Review 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). The penalties imposed will be listed in the National Enterprise Credit Information Publicity System for public notification as required by the Administrative Measures for Review of Drug Advertisements.
For example, in the 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 are obviously low, the amount will be RMB200,000 to RMB1 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 RMB2million will be imposed, the business licence may be revoked and local NMPA 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.
With regard to inducements to prescribe, if a case involves commercial bribery, then the penalties under the Anti-Unfair Competition Law and the Criminal Law discussed above 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.
From 2017 to now, we have observed a trend of increasing number of cases being investigated and penalised by the law enforcement authorities. This might be relevant to the 2018 government restructuring discussed. We anticipate that cases related to pharmaceutical advertising might increase after the Administrative Measures for Review of Drug Advertisements have come into effect and before the advertisers become familiar with the new rules because they impose new requirements on advertisers and clearer guidance to law enforcement officials.
In practice, the main reasons that penalties are imposed on illegal pharmaceutical advertising include:
Among the 75 illegal advertising cases in 2019 published by the SAMR, there are five cases of illegal pharmaceutical advertising, one of which is publicly known. A renowned OTC pharmaceutical company published its pharmaceutical advertising three times on a popular domestic variety show, Roast. For the reasons specified in bullet points one and three above, in August 2019, a branch of SAMR in Shanghai imposed a fine of RMB900,000 on the company.
Trends and Developments in Pharmaceutical Advertising
In recent years, the regulatory framework and enforcement practice in the area of pharmaceutical advertising in China have been evolving at a very quick speed, which, on the one hand, continuously explores a way to balance the interests of pharmaceutical companies and the public safety concerns while, on the other hand, causes confusion over regulatory compliance among pharmaceutical companies.
This confusion partially results from the overlapping laws and non-unified examination standards. Pharmaceutical advertising in China is not governed by a single law or regulation, but a series of overlapping laws and regulations, including the Advertising Law of the People’s Republic of China (the “Advertising Law”), the Drug Administration Law of the People’s Republic of China (the “Drug Administration Law”), the Anti-unfair Competition Law of the People’s Republic of China, etc. Following the amendment to the Advertising Law in 2018, the Drug Administration Law was also comprehensively amended in 2019 after years of discussion.
On the operational level, the regulation and supervision of pharmaceutical advertising largely rely on dispersed regulations promulgated by relevant regulatory bodies, including the Interim Measures for the Administration of Internet Advertising, Measures for the Examination and Approval of Drug Advertisements, Criteria for Censoring Pharmaceutical Advertisements, etc.
On 24 December 2019, the State Administration for Market Regulation (SAMR) issued the Interim Measures for Administration of Examination on Advertisements of Drugs, Medical Devices, Dietary Supplements and Foods for Special Medical Purposes, (the “Interim Measures”), integrating the administrative measures on advertisement examination of what is commonly known as “Three Products and One Device” in one regulation.
Regulatory Developments Over Pharmaceutical Advertising
In March 2018, the 13th National People's Congress approved institutional reform, which marks the eighth large-scale government restructuring since China implemented the reform and opening-up policy in the late 1970s. As part of the institutional reform, China established a new full-ministerial-level government agency: the State Administration for Market Regulation (SAMR), which has become a powerful regulatory authority with the duty to oversee the supervision and management of market order, drug and food safety, product quality, unfair competition and commercial bribery, and intellectual property protection matters in general. The SAMR replaces the State Council in overseeing the newly re-organised NMPA. In the past, the former CFDA (now known as NMPA) was responsible for reviewing and approving the pharmaceutical advertisements, while the former State Administration for Industry and Commerce (now known as SAMR) was responsible for supervising pharmaceutical advertisements.
Under the above background, and in need of a unified standard for pharmaceutical advertisement review, after three rounds of consultation for public comments, the Interim Measure was finally promulgated by the SAMR at the end of 2019, to take effect as of 1 March 2020. The Interim Measures not only align with the amendments made to the Advertising Law and Drug Administrative Law, but also aim to address realistic problems incurred in the regulatory practice in past years.
Optimising Review and Approval Procedures
With the reform of “separating operating permits from business licences”, the Interim Measures stipulates that, when applying for the pharmaceutical advertisements, the applicant will only need to submit the Application Form, sample advertisement, identity certificate, drug registration certificate, drug authorisation, drug label and documentation relating to the intellectual property involved in the advertisement. Certain redundant materials under the current standard will no longer be required.
The Interim Measures also simplify the contents that pharmaceutical advertisements must contain. According to the Interim Measures, advertisements for drugs must contain the contraindications, adverse reactions and advertisement approval number. For non-prescription drugs, the advertisements must clearly mark the non-prescription logo (over-the-counter or OTC), and the warning “please consult the instruction or a pharmacist before purchase and use”. For prescription-only drugs, the advertisements must clearly state the words “this advertisement is intended for medical and pharmaceutical professionals only”. Drug advertisements are no longer mandatorily required to contain the name of the drug manufacturer, the drug registration certificate and other information that the consumers can learn themselves by simply checking the advertisement approval number.
The Interim Measures further stipulate that the advertisement approval number should be valid during the validity term of the drug registration certificate, recordal certificate or manufacturing licence, whichever is the shortest. Where the above certificates do not specify the validity period, the advertisement approval number shall be valid for two years. at most, as opposed to the one-year validity period under the original standards. The purpose of these changes is to provide convenience for pharmaceutical enterprises and to avoid repetitive applications due to the short validity terms of advertisement approval numbers.
In 2018, the Circular on Effective Scrutiny Review over Advertisements for Drugs, Medical Devices, Dietary Supplements and Foods for Special Medical Purposes issued by SAMR already started to promote online processing for pharmaceutical advertising application in a general guiding manner. In this instance, the Interim Measures go a step further to specifically stipulate that advertisement applications can be filed either on-site or via express, fax, email, or online government service platform.
According to the Interim Measures, the advertisement examination authority should complete the examination within ten days since the acceptance of application, and if the application is approved, it should disclose to the public the information relating to the advertisement application within ten days via its official website or other convenient means of access.
Adopting Strict and Rigorous Scrutiny Standards
According to the Drug Administration Law and the Advertising Law, the contents of pharmaceutical advertisements must be consistent with those in the instructions approved by the drug regulatory authority under the State Council. The Interim Measures further stipulate that where the drug name, indications, pharmacological action of the drug or other contents are involved in the advertisement, the description of this information shall not exceed the scope of the drug instruction. For dietary supplements, the Interim Measures makes it clear that the advertisement for dietary supplements should not indicate any functions of disease prevention or treatment.
In fact, the misrepresentation and exaggeration of the function of dietary supplements has been one of the most common offenses in pharmaceutical advertising regulations. Last year, domestic healthcare giant Quanjian was under investigation for inappropriate promotional activities. Led by this high-profile enforcement case, starting on 8 January 2019, the SAMR initiated a joint action to rectify illegal promotional activities in the specific field of dietary supplements, especially the assertion of treatment effects in the advertisements. During the action, more than 30,000 cases were investigated with a total value of CNY137 billion involved and a total fine of CNY10 billion. Most of these cases involved misrepresentation in the advertisements. Recently, on 8 January 2020, the Quanjian case came to a close, resulting in a penalty of CNY1 billion for the company and a term of imprisonment of nine years for the legal representative for organising and leading pyramid selling.
In the meantime, in reference to the Advertising Law and other rules and regulations on the prohibitive contents of the advertisements of “Three Products and One Device”, the Interim Measures have listed the prohibited contents in an integrated manner, avoiding any discrepancy in different regulations. Specifically speaking:
To sum up, the Interim Measures adopt a strict, substantive standard on the review of pharmaceutical advertising, but the procedural requirements are lenient in order to provide convenience for pharmaceutical enterprises.
Enforcement Trends and Representative Cases
To implement the “Four Strictest” Requirements (ie, the strictest standard, strictest regulation, strictest punishment and strictest accountability) for food and drug safety raised by President Xi Jinping, the Supreme People’s Procuratorate, SAMR and NMPA jointly promulgated the Special Action Plan for the Implementation for “Four Strictest” Requirements for Food and Drug Safety on 17 October 2019, which reflects relevant authorities’ attitude to carry out strict enforcement in the field of foods and drugs. As a matter of fact, the enforcement actions in 2019 demonstrated a trend of strict enforcement and this trend is expected to continue into 2020.
Pharmaceutical Advertising without Approval and Mandatory Contents
At the end of 2019, the SAMR announced several typical enforcement cases involving illegal advertising, among which a particular case drew public attention due to the large fine and the established reputation of the product. During a popular talk show, a domestic pharmaceutical company published an advertisement for its Mometasone Furoate Gel, an OTC drug, by having actors state that the product relieves itching and possesses colourless, odourless and refreshing qualities. However, this advertisement was not approved by the advertising examination authority in advance. In addition, the advertisement did not clearly mark the contraindications and side-effects, nor did it display the words “please consult the instruction or a pharmacist before purchase and use”. As a result, the pharmaceutical company received a fine of CNY900,000 for its illegal advertising conduct, which is a relatively high penalty when compared with similar enforcement cases.
Misrepresentation of Medical Effects in Combination with other Violations
Similar to the Quanjian case, a listed company published an advertisement for its dietary supplement on its official website, online store and social media profile, stating that the product plays an ancillary role in preventing tumour metastasis and recurrence. In addition, this company published advertisements for an OTC drug, of which the contents were inconsistent with the drug authorisation, and the company also published an advertisement for prescription-only drugs. The company was eventually fined for several material breaches of drug advertising regulations. It is worth mentioning that the market value of this listed company has significantly dropped (more than 70% at the end of 2019) when compared to its peak in 2017.
E-commerce Platform Fined for not Stopping Illegal Advertising Activity
Nowadays, online platforms have become a common and convenient form shopping for the public. However, while the platform provider enjoys the convenience of business, it must also assume more obligations. In one of the above-mentioned cases, a seller published an advertisement claiming that its products have certain effects that lead to improvement of liver function and bone regeneration, which constituted a misrepresentation and exaggeration of treatment function for non-drug products. However, this case is special in that the online platform was punished as it “knows or should know” about the illegal advertising activities but took no actions to stop them as a platform service provider.