Regulatory focuses on various forms of pharmaceutical advertisements

Traditional pharmaceutical advertisements are subject to strict regulation. They must go through advertisement review by the authorities before publication.

In addition, promotional contents about pharmaceutical products may also take the forms of (1) academic promotion (eg, conferences, lectures), targeting doctors as the audience; and (2) popular science articles, public service advertisements, influencer’s recommendations, etc, targeting consumers as the audience. Such “non-conventional” advertisements are increasing in frequency and have gained more and more attention from the regulatory authorities. The identification of certain contents as advertisements has become an important threshold question with growing complexity.

Regulatory focuses on promotional materials at educational and academic events

Article 2 of the PRC Advertising Law stipulates that “within the territory of the People’s Republic of China, this Law shall apply to commercial advertising activities in which commodity operators or service providers directly or indirectly introduce the commodities or services they promote through certain media and forms”. Hence, “promotion” and “media and forms” are crucial constituent elements in determining whether a piece of information is indeed an “advertisement”. Missing from this definition is any express requirement as to the scope of circulation or nature of the recipients.

On the other hand, the textual and natural meaning of “advertisements” in Chinese (“广告”, which literally means “to widely inform”) implies a certain level of publicity. Some people are therefore of the opinion that the intention or effect of spreading a message widely to the general public is an intrinsic feature of an advertisement. Partly due to such considerations, law enforcement authorities in China until recently had appeared to grant more latitude to materials displayed, distributed or circulated at an offline, face-to-face event with a relatively fixed and small size of audience, and had not exercised the same level of scrutiny over these events from the angle of advertising law as compared with other, more typical forms of advertisements.

However, due to a highly influential administrative penalty decision handed down in January 2024, the trend seems to be shifting. In this case, a leading Chinese pharmaceutical company received a fine of CNY400,000 from the Shanghai Administration of Market Supervision (AMR), Jing’an District Bureau, for violating Article 15 of the Advertising Law, which provides that prescription drug advertisements may only be published in designated professional medical and pharmaceutical journals. During a conference held at a hotel, the company used an easel and flyers with promotional contents about the prescription drug. The Jing’an AMR considered that the easel and flyers, placed in a public space and targeted at a non-specific audience, influenced the choices of general patients and consumers who had no professional medical knowledge.

The aforesaid case is an alert for the industry, as such meeting materials have often been overlooked by pharmaceutical companies’ advertisement compliance reviews due to the relatively small scope of circulation and the impression that they are not regulated as advertisements. However, as the case indicates (and probably rightly so), what matters is whether non-specific members of the public may access the materials rather than the actual scope of circulation.

The case is also significant because, the reasoning therein, if followed strictly, will potentially include a lot of materials used at promotional, educational and academic events hosted by pharmaceutical companies. Such events have already been subject to stringent scrutiny by the authorities, mostly in relation to “speaker fees” and from an anti-bribery perspective so far. Nonetheless, in cases involving “speaker fees”, the promotional nature/effect of the materials (eg, PowerPoint slides, outlines and other handouts) is also gaining more attention from the authorities, and therefore compliance review from an advertising law angle might also be called for.

As to what constitutes a “public space” or a “non-specific audience” in the context of advertising law, no clear line has yet been drawn, and the issue awaits further clarification by future provisions and law enforcement practice. We actually have received many enquiries from pharmaceutical companies regarding promotional materials such as easels and banners at academic events, and we have gained valuable insights through extensive discussion with the regulatory authorities. Generally speaking, the placement or distribution of promotional materials in areas such as conference hotel lobbies, elevator halls, hotel entrances, etc may easily be recognised as an act of advertising to the public, while making the conference registration-only, placing promotional materials only within the conference site, adding disclaimers that materials should not be distributed to non-professionals, etc should help mitigate the risks.

Regulatory focuses on promotional materials under the guise of public service advertisements, popular science articles and recommendation posts

In accordance with Article 89 of the PRC Drug Administration Law and Article 16 of the PRC Advertising Law, drug advertisements are subject to approval by the provincial drug administration authorities, and the content of a drug advertisement shall not differ from the contents approved by the authorities.

Additionally, pursuant to Article 19 of the PRC Advertising Law, radio stations, TV stations, newspaper, periodical and audio-visual publishers, and internet information service providers are prohibited from publishing advertisements for medical treatment, pharmaceuticals, medical devices and healthcare food by way of introducing knowledge on health or health maintenance or other means.

That said, the evolving nature of advertising practices has given rise to new issues in the realm of regulatory compliance related to pharmaceutical advertising. There has been a noticeable increase in the number of cases where pharmaceutical advertisements have been considered to be cleverly disguised as other forms of content.

Public service advertisements, for instance, often carry subtle messages promoting specific pharmaceutical products under the guise of raising public awareness about health issues. Similarly, popular science articles and online recommendation posts are increasingly being used to subtly promote pharmaceutical products without overtly appearing as advertisements. Such newly emerging forms of promotions risk being considered as pharmaceutical advertisements, which means failure to meet the relevant regulatory requirements (at least for the requirement of obtaining the authority’s approval) would run the risk of administrative punishment.

For example, in an administrative decision made by the Changli AMR, Qinghuangdao City in Hebei province, a video titled “Health Guide” produced and released by the Changli converged media centre, featuring the treatment of hip and knee arthritis associated with a local hospital, was considered to be a medical treatment advertisement. Despite the fact that the Changli converged media centre had not entered into any advertising-related agreement with the local hospital and the fact that the said video was of a non-profit nature, the AMR denied that such video fell within the category of public service advertisement. Instead, the AMR decided that such video violated Article 19 of the PRC Advertising Law and imposed a fine.

The PRC Provisional Measures for Promotion and Administration of Public Service Advertisements provide that public service advertisements refer to non-profit advertisements that are aimed at spreading socialist core values, advocating good morality, raising the civilisation level of both citizens and the whole society, and safeguarding the national and public interests. While “non-profit” serves as a vital factor in identifying whether an “advertisement” falls within the category of public service advertisement, a “free” advertisement may likely be considered to be a commercial pharmaceutical advertisement if it involves a specific drug, even implicitly.

In addition, popular science articles on the pharmaceutical and medical industry also risk being penalised if such articles are connected to specific medical products or treatments.

The AMR of Suzhou Industry Park District imposed administrative penalties on a company which published a popular science article titled “Is It Really Necessary to Grab the Crazy HPV Vaccine?”, which contained a URL for booking and ordering an HPV vaccination from another entity. While the company responded to the AMR that the information in the article was cited from Popular Science China, Clove Doctor, People’s Daily, Beijing Daily, The Lancet, Health China WeChat’s official account, etc, such sources were not indicated in the article. Moreover, the company clarified that it neither sold the HPV vaccine nor provided any ordering or booking services related to the HPV vaccine. Nevertheless, the AMR found that a violation was constituted.

Notably, given the article contained the URL for booking the HPV vaccine service offered on the e-commerce platform of PDD, it is very likely that the authority would consider that such article with a purchasing channel falls within the category of advertisement, in accordance with the scope of internet advertising defined in Article 2 of the PRC Administrative Measures for Internet Advertising.

Likewise, the Yinzhou AMR in Ningbo punished a stomatological hospital for its article titled “There is Always One Question You Want Answered About Teeth”, which contained the contact information of the hospital. The AMR opined that the company had published the health knowledge article while simultaneously introducing its contact information, which might mislead consumers, and thus it had violated Article 19 of the PRC Advertising Law.

Similar to the above scenarios, online recommendation posts published by key opinion leaders (KOLs) or influencers, if they promote specific pharmaceutical products while circumventing the regulatory requirements of administrative review and approval, would be subject to administrative punishment in the context of the advertising law.

The definition of advertisements under the PRC Advertising Law is quite broad, and the Jiangsu Xuzhou Intermediate Court found that marketing by leveraging product reviews and comments made by influencers or common users on RedNote (a social media platform) falls within the category of advertisements, which is reflected in its judgment of (2020) Su 03 Min Zhong 5502.

The Jing’an AMR imposed a fine of CNY300,000 on a medical technology company, given it co-operated with three patients, inviting them to post promotional information on the social media platform Sina Weibo, and as rewards the three bloggers’ treatment fees were reduced accordingly. The Jing’an AMR held such posts constitute internet pharmaceutical and medical advertisements, violating the PRC Advertising Law.

As a matter of fact, not only are advertisers punished for illicit advertisements like the above, but the advertising agencies are subject to punishment as well. In the Hu Shi Jian Zong Chu (2024) 322022000253 case, the Shanghai Municipal AMR confiscated an advertising fee of CNY888,750.21 acquired by the advertising agency, meanwhile imposing a fine of CNY888,750.2, given it organised KOLs to promote and endorse an over-the-counter drug.

The rise of disguised forms of pharmaceutical advertisements such as the above can be partly attributed to the national centralised drug procurement system. The centralised procurement system, which aims to reduce drug prices and increase access to essential medications, has made it increasingly difficult for original drugs to compete with generic alternatives. As a result, pharmaceutical companies producing original drugs are to some extent compelled to find alternative ways to promote their products to consumers, in a special form that differs from traditional advertisements. However, the regulatory requirements related to pharmaceutical advertisements would still apply to such new forms of advertisements. Hence, prudence and carefulness should be exercised when engaging in those promotional activities in terms of internal review carried out by pharmaceutical companies.

It should be noted that in 2024, China officially opened its doors to allow wholly foreign-owned hospitals to be established within the territory. For foreign hospitals newly entering the Chinese market, it is crucial to thoroughly study and understand the PRC Advertising Law and relevant regulations. This will ensure that the hospitals’ operations and promotional activities comply with local regulations, thereby avoiding legal pitfalls and fostering a trustworthy relationship with Chinese patients. Adhering to these laws not only safeguards the hospitals’ reputation but also aligns with China’s legal framework, promoting sustainable and compliant business practices in the healthcare sector.