Circular on the Key Points of the 2018 Specialized Governance Program on Rectifying Bad Practices in Pharmaceutical Transactions and Medical Services Guo Wei Yi Circular [2018] No. 186 (Mainland China)

Karl Zhang

The National Health Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Finance, the Ministry of Commerce, the State Administration of Taxation, the State Administration of Markets, the State Administration of Medical Insurance, and the State Administration of Traditional Chinese Medicine jointly issued the Circular on the Key Points of the 2018 Specialized Governance Program on Rectifying Bad Practices in Pharmaceutical Transactions and Medical Services (the “Key Points”) recently to conduct specialized governance on potential bad practices in pharmaceutical transactions and medical services.  In particular, the Key Points consist of the following:

1. Regulating the production, distribution and use of pharmaceutical consumables and improving the supply security system

For the purchase and sales of pharmaceuticals and consumables, the Key Points stated that firstly, independent production should be encouraged and quality supervision be strengthened.  The research and development, transformation and production of pharmaceuticals and medical consumables with independent intellectual property rights should be encouraged, financial incentive support and transformation into results should be realized.  In addition, the intensity of “flight checks” on enterprises manufacturing pharmaceuticals and medical consumables should be enhanced along with strict implementation of an administrative system for the post-market launch re-evaluation and recall of high value medical consumables.  Secondly, the order of circulation should be cleared up by promoting centralized procurement.  Medical institutions are encouraged to prioritize large-scale, modernized, and specialized medical supplies distribution companies to reduce circulation costs.  In addition, the level of electronic purchase and sale vouchers for pharmaceuticals and medical consumables should be enhanced to realize the interconnection of tax receipt information between the production and circulation enterprises, the regulatory authorities and the medical institutions.  Thirdly, there is a need to regulate the use of medical resources and clean up the service environment by establishing an internal management system for pharmaceuticals and medical consumables at hospitals that meets modern hospital management standards, and through disclosing pricing information to the public.  In addition, supervision over the price of drugs and medical consumables sold to medical institutions should be strengthened, along with the establishment of comprehensive medical and clinical guidelines, technical specifications, and the promotion of clinical path management.

2. Strengthening the supervision of medical services and regulating the behavior of medical personnel

As far as medical service supervision is concerned, the Key Points pointed out that it is necessary to first safeguard the legitimate rights and interests of patients and severely crack down on illegal activities by increasing restrictions on the conduct of enterprises that manufacture and manage pharmaceuticals and medical consumables, as well as that of medical institutions and medical personnel so as to strictly punish violations of patients’ rights and interests.  Secondly, it is necessary to strengthen the supervision of medical insurance and medical care, as well as to explore innovative regulatory models.  The management of medical insurance service agreements shall be improved, and the focus of supervision shall be gradually shifted from medical cost control to control of both medical costs and the quality of medical care to effectively protect the rights and interests of the insured.

3. Promoting the recordation management of medical representatives and establishing a kickback control system

With respect to the sales of pharmaceutical products, the Key Points require an improvement to the pharmaceutical representative management system to regulate work done in hospitals.  The promotion and implementation of the Measures on the Recordation Administration of Pharmaceutical Representatives (Trial Implementation) to regulate their business behavior and improve the medical care service environment.  Drug manufacturers (those authorized for market launch) should disclose the recordation information about their pharmaceutical representatives.  Secondly, the regulatory system for medical consumables should be improved and an integrated governance system be established.  It is necessary to strengthen the development of pharmaceutical committees at all levels, improve their organizational structure and work system, regulate the selection process of pharmaceutical consumables, and realize a closed management system from application, procurement, use to supervision of pharmaceutical consumables at medical institutions.  The use of information technology should be enhanced with thorough implementation of random and spot medical prescription evaluations, warning for abnormal events, dynamic monitoring and other systems, while sorting out and disclosing the results in the corresponding regions.  In addition, a corresponding handling mechanism should be in place to deal with identified abnormal situations.

4. Implementing comprehensive policies through correction mechanisms to ensure effectiveness

Finally, in order to achieve practical results from the above work, there shall be a reliance on the mechanisms in place to form synergies.  Members of the local mechanism correction teams should make full use of the overall coordination role provided by the mechanisms, fulfill their departmental functions, and form a corrective synergy.  It is necessary to fulfill responsibilities and pay close attention to the performance of duties, as well as increase communications and properly conclude matters.

In conclusion, in the face of the current unhealthy trend in pharmaceutical transaction and medical care services, the Key Points aim at sustainable proper specialized governance of medical consumables, continued reasonable use of medical insurance funds, strict regulation of the order of pharmaceutical transactions, adherence to an equal emphasis on addressing both the symptom and the disease, and investigation of both taking and receiving bribes so as to improve the current practices in this profession.  As far as enterprises are concerned, they can also leverage the Key Points to conduct self-examination and reduce compliance risks.  The Key Points came into effect on the day of their promulgation.