October 2024
The State Administration for Market Regulation Has Released a Draft of the "Compliance Guidelines for Pharmaceutical Enterprises to Prevent Commercial Bribery Risks" for Soliciting Opinions (Mainland China)
October 2024
Yanting Pei and Teresa Huang
On October 11, 2024, the State Administration for Market Regulation announced on its official website the "Notice on Publicly Soliciting Opinions on the Compliance Guidelines for Pharmaceutical Enterprises to Prevent Commercial Bribery Risks (Exposure Draft)" (hereinafter referred to as the "Exposure Draft"). This is a new compliance guideline released after the draft for comments on the "Anti Monopoly Guidelines for the Pharmaceutical Industry", which further advances the compliance supervision of the pharmaceutical industry.
The Exposure Draft consists of 49 articles, including four chapters: General Provisions, Development of Compliance Management System for Preventing Commercial Bribery Risks in Pharmaceutical Enterprises, Identification and Prevention of Commercial Bribery Risks in Pharmaceutical Enterprises, and Disposal of Commercial Bribery Risks in Pharmaceutical Enterprises. Specifically， it includes the following main contents:
I. Scope of application
According to Article 3 of the Exposure Draft, the guidelines aim to provide reference for pharmaceutical enterprises and related third parties engaged in pharmaceutical product research and development, production, distribution and other activities within the territory of the People's Republic of China; encourage large and medium-sized pharmaceutical enterprises and related third parties to establish a comprehensive compliance management system for preventing commercial bribery risks in accordance with this guideline. Small pharmaceutical enterprises can refer to this guideline to carry out commercial bribery risk compliance management work. It can be seen that this guideline is applicable to pharmaceutical enterprises in the research and development, production, and distribution processes. For large and medium-sized enterprises, it is encouraged to apply it to all, while for small enterprises, it is recommended to refer to the guidelines, which should be understood as being selectively applicable according to the enterprise's own conditions.
The so-called pharmaceutical enterprises, according to Article 4 of the Exposure Draft, include research and development, production, and distribution enterprises of drugs and medical devices. The so-called third party refers to individuals, legal persons, or unincorporated organizations acting on behalf of pharmaceutical enterprises or providing goods or services to pharmaceutical enterprises. It can be said that the applicable objects of the guidelines are aimed at covering various types of enterprises in the pharmaceutical industry, so all types of enterprises in the pharmaceutical industry can refer to the guidelines to improve their compliance management systems.
II. How should pharmaceutical enterprises establish a compliance management system to prevent commercial bribery risks?
According to Chapter 2 of the Exposure Draft, pharmaceutical enterprises can establish a compliance management system to prevent commercial bribery risks from the following aspects:
A. Establish a compliance management organization and allocate compliance management personnel.
B. Establish a compliance management system to prevent commercial bribery risks.
C. Based on the goal of preventing commercial bribery risks, establish and improve compliance operation mechanisms, and effectively prevent and respond to commercial bribery risks through systematic operation. The operational mechanism should include risk identification and assessment, risk compliance review, risk response, internal reporting, compliance training, compliance management monitoring, improvement measures, and compliance culture construction, etc.
III. How to identify the risk of commercial bribery under specific behaviors?
Chapter 3 of the Exposure Draft on the Identification and Prevention of Commercial Bribery Risks in Pharmaceutical Enterprises lists nine specific activity scenarios, including academic visits and exchanges, business receptions, consulting services, outsourcing services, discounts and commissions, donations, sponsorships and funding, gratuitous placement of medical equipment, clinical research, and retail terminal sales. It provides detailed introductions on how to regulate behavior and prohibited behavior in each scenario.
For example，in academic visits and exchanges, sales personnel and other personnel should be prohibited from participating in academic visits and exchanges, and pharmaceutical representatives and medical device promoters should be prohibited from using the name of the visit to request and collect information on the usage of various pharmaceutical products opened by medical and health institutions, departments within medical and health institutions, or personnel of medical and health institutions. When conducting business receptions in business activities, attention should be paid to business receptions with unreasonable frequency or exceeding business practices. Hiring medical and health personnel for teaching, research, and other consulting services should be based on real, reasonable, and legitimate business needs, etc.
IV. How to deal with the risks of commercial bribery?
The fourth part of the Exposure Draft guides pharmaceutical enterprises to effectively control risks by improving internal control measures and cooperating with regulatory enforcement. In terms of internal control, the Exposure Draft suggest that pharmaceutical enterprises immediately conduct investigations and risk assessments, hold accountable based on the assessment results, eliminate negative impacts, revise rules and regulations, improve management processes, strengthen compliance training, and establish a sound compliance management system to prevent commercial bribery risks.
In terms of external control, the Exposure Draft encourages pharmaceutical enterprises to proactively report to market regulatory authorities or cooperate with market regulatory authorities' investigations in accordance with the law when they discover suspected commercial bribery in their business activities, and provide reminders for situations where lenient, mitigated, or no administrative penalties may be imposed. If pharmaceutical enterprises can proactively report illegal activities before the market supervision department intervenes in the investigation, or proactively report the situation of illegal activities after the market supervision department intervenes in the investigation but does not confirm the illegal activities, and mitigate the harmful consequences through effective measures, they may receive lenient punishment from law enforcement agencies.
Overall, the biggest highlight of the Exposure Draft is the summary and organization of nine commercial bribery risk points in the pharmaceutical industry covering the entire business, process, and chain. It provides positive guidance through standardized matters and negative warnings through risk identification and prevention, providing specific and actionable guidance and suggestions for pharmaceutical enterprises to develop their anti-commercial bribery risks compliance management. No matter when the official draft is released, it can serve as a valuable reference for various pharmaceutical enterprises to establish and improve their own anti-commercial bribery compliance systems.
The contents of all newsletters of Shanghai Lee, Tsai & Partners (Content) available on the webpage belong to and remain with Shanghai Lee, Tsai & Partners. All rights are reserved by Shanghai Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Shanghai Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Shanghai Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Shanghai Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Shanghai Lee, Tsai & Partners.
Yanting Pei and Teresa Huang
On October 11, 2024, the State Administration for Market Regulation announced on its official website the "Notice on Publicly Soliciting Opinions on the Compliance Guidelines for Pharmaceutical Enterprises to Prevent Commercial Bribery Risks (Exposure Draft)" (hereinafter referred to as the "Exposure Draft"). This is a new compliance guideline released after the draft for comments on the "Anti Monopoly Guidelines for the Pharmaceutical Industry", which further advances the compliance supervision of the pharmaceutical industry.
The Exposure Draft consists of 49 articles, including four chapters: General Provisions, Development of Compliance Management System for Preventing Commercial Bribery Risks in Pharmaceutical Enterprises, Identification and Prevention of Commercial Bribery Risks in Pharmaceutical Enterprises, and Disposal of Commercial Bribery Risks in Pharmaceutical Enterprises. Specifically， it includes the following main contents:
I. Scope of application
According to Article 3 of the Exposure Draft, the guidelines aim to provide reference for pharmaceutical enterprises and related third parties engaged in pharmaceutical product research and development, production, distribution and other activities within the territory of the People's Republic of China; encourage large and medium-sized pharmaceutical enterprises and related third parties to establish a comprehensive compliance management system for preventing commercial bribery risks in accordance with this guideline. Small pharmaceutical enterprises can refer to this guideline to carry out commercial bribery risk compliance management work. It can be seen that this guideline is applicable to pharmaceutical enterprises in the research and development, production, and distribution processes. For large and medium-sized enterprises, it is encouraged to apply it to all, while for small enterprises, it is recommended to refer to the guidelines, which should be understood as being selectively applicable according to the enterprise's own conditions.
The so-called pharmaceutical enterprises, according to Article 4 of the Exposure Draft, include research and development, production, and distribution enterprises of drugs and medical devices. The so-called third party refers to individuals, legal persons, or unincorporated organizations acting on behalf of pharmaceutical enterprises or providing goods or services to pharmaceutical enterprises. It can be said that the applicable objects of the guidelines are aimed at covering various types of enterprises in the pharmaceutical industry, so all types of enterprises in the pharmaceutical industry can refer to the guidelines to improve their compliance management systems.
II. How should pharmaceutical enterprises establish a compliance management system to prevent commercial bribery risks?
According to Chapter 2 of the Exposure Draft, pharmaceutical enterprises can establish a compliance management system to prevent commercial bribery risks from the following aspects:
A. Establish a compliance management organization and allocate compliance management personnel.
B. Establish a compliance management system to prevent commercial bribery risks.
C. Based on the goal of preventing commercial bribery risks, establish and improve compliance operation mechanisms, and effectively prevent and respond to commercial bribery risks through systematic operation. The operational mechanism should include risk identification and assessment, risk compliance review, risk response, internal reporting, compliance training, compliance management monitoring, improvement measures, and compliance culture construction, etc.
III. How to identify the risk of commercial bribery under specific behaviors?
Chapter 3 of the Exposure Draft on the Identification and Prevention of Commercial Bribery Risks in Pharmaceutical Enterprises lists nine specific activity scenarios, including academic visits and exchanges, business receptions, consulting services, outsourcing services, discounts and commissions, donations, sponsorships and funding, gratuitous placement of medical equipment, clinical research, and retail terminal sales. It provides detailed introductions on how to regulate behavior and prohibited behavior in each scenario.
For example，in academic visits and exchanges, sales personnel and other personnel should be prohibited from participating in academic visits and exchanges, and pharmaceutical representatives and medical device promoters should be prohibited from using the name of the visit to request and collect information on the usage of various pharmaceutical products opened by medical and health institutions, departments within medical and health institutions, or personnel of medical and health institutions. When conducting business receptions in business activities, attention should be paid to business receptions with unreasonable frequency or exceeding business practices. Hiring medical and health personnel for teaching, research, and other consulting services should be based on real, reasonable, and legitimate business needs, etc.
IV. How to deal with the risks of commercial bribery?
The fourth part of the Exposure Draft guides pharmaceutical enterprises to effectively control risks by improving internal control measures and cooperating with regulatory enforcement. In terms of internal control, the Exposure Draft suggest that pharmaceutical enterprises immediately conduct investigations and risk assessments, hold accountable based on the assessment results, eliminate negative impacts, revise rules and regulations, improve management processes, strengthen compliance training, and establish a sound compliance management system to prevent commercial bribery risks.
In terms of external control, the Exposure Draft encourages pharmaceutical enterprises to proactively report to market regulatory authorities or cooperate with market regulatory authorities' investigations in accordance with the law when they discover suspected commercial bribery in their business activities, and provide reminders for situations where lenient, mitigated, or no administrative penalties may be imposed. If pharmaceutical enterprises can proactively report illegal activities before the market supervision department intervenes in the investigation, or proactively report the situation of illegal activities after the market supervision department intervenes in the investigation but does not confirm the illegal activities, and mitigate the harmful consequences through effective measures, they may receive lenient punishment from law enforcement agencies.
Overall, the biggest highlight of the Exposure Draft is the summary and organization of nine commercial bribery risk points in the pharmaceutical industry covering the entire business, process, and chain. It provides positive guidance through standardized matters and negative warnings through risk identification and prevention, providing specific and actionable guidance and suggestions for pharmaceutical enterprises to develop their anti-commercial bribery risks compliance management. No matter when the official draft is released, it can serve as a valuable reference for various pharmaceutical enterprises to establish and improve their own anti-commercial bribery compliance systems.
The contents of all newsletters of Shanghai Lee, Tsai & Partners (Content) available on the webpage belong to and remain with Shanghai Lee, Tsai & Partners. All rights are reserved by Shanghai Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Shanghai Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Shanghai Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors' opinions do not represent the position of Shanghai Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Shanghai Lee, Tsai & Partners.
