On January 14, 2025, China issued the final version of its compliance guidelines for health care companies to prevent commercial bribery risks (“Guidelines”), which took effect immediately. The Guidelines are applicable to pharmaceutical and medical device companies and other third parties involved in the research, development, production, and distribution of pharmaceutical and medical devices within China. While the Guidelines are generally consistent with best practices in other jurisdictions and reiterate China’s anti-corruption efforts in the life sciences industry over the past years, they specify nine scenarios of particular concern and provide suggestions on compliance actions health care companies can take to manage these risks. The Guidelines will be an important point of reference for health care companies operating in China, as they indicate the direction of future enforcement actions.
On January 14, 2025, China’s regulatory authority, the State Administration for Market Regulation (SAMR), issued the final version of its compliance guidelines for health care companies to prevent commercial bribery risks (“Guidelines”), which took effect immediately. The Guidelines are applicable to pharmaceutical and medical device companies and other third parties involved in the research, development, production, and distribution of pharmaceutical and medical devices within China. While the Guidelines are generally consistent with best practices in other jurisdictions and reiterate China’s anti-corruption efforts in the life sciences industry over the past years, they specify nine scenarios of particular concern and provide suggestions on compliance actions health care companies can take to manage these risks. The nine scenarios include:
- academic visits and exchanges;
- hospitality, e.g., meals and entertainment for health care professionals (HCPs) during business interactions;
- fee-for-service payments to HCPs;
- outsourcing the research, production, and other activities to third-party vendors;
- discounts, rebates, and commissions;
- donations, sponsorships, and grants;
- provision of free medical equipment;
- clinical research; and,
- retail sales.
In addition to the suggestions provided under each scenario, the Guidelines also generally encourage health care companies to establish and optimize compliance programs capable of preventing, detecting and addressing corruption risks, and outline the recommended measures including, for example, forming a compliance management team and internal compliance policies, providing regular trainings to employees, and setting up internal whistleblower programs.
These recommendations are consistent with most multinational health care companies’ compliance programs, thus may help to narrow the gap between the compliance standards and measures adopted by multinational companies operating in China and domestic companies. The Guidelines specifically emphasize the significance of conducting internal investigations and cooperating with regulatory investigations.
The Guidelines mention that health care companies may conduct internal investigations themselves or may engage third parties to investigate when identifying potential risks, and encourage voluntary reporting of potential misconduct to SAMR and its local branches and taking immediate remediate actions, and cooperating with regulatory investigations by providing relevant and truthful information, which may serve as mitigating factors in potential penalties.
The Guidelines will be an important point of reference for health care companies operating in China, as they indicate the direction of future enforcement actions, in particular, the nine key scenarios. While multinationals might have been aligned with most of these suggested best practices, they are advised to review and refine their internal compliance policies and procedures to meet the expectations of SAMR and manage compliance risks.
Companies operating in the life sciences industry in China are advised to review and refine their internal compliance policies and procedures to meet the expectations of SAMR and manage compliance risks.
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