China's first official anti-corruption guideline for the healthcare Industry

published on 23 October 2024 | reading time approx. 3 minutes

On 11 October, China's State Administration for Market Regulation (SAMR) published a draft guideline on anti-corruption in the healthcare industry. Although the draft may be subject to change before it is finalized, it provides a good insight into what healthcare companies can expect.

Structure of the draft »
Regulatory requirements »
Classification of risks »
Typical situations of corruption risks »
Risk prevention measures »
Dealing with unlawful acts »
Recommendation »

Structure of the draft

The draft consists of a total of 49 articles divided into four chapters: General Provisions, Provisions on Establishing a Compliance Management System to Prevent Corruption, Provisions on Identifying and Preventing Corruption Risks, and Provisions on Managing Corruption Risks.

Regulatory requirements

In terms of the regulatory requirements for the behaviour of companies in various specific scenarios, the regulatory requirements are divided into four categories: "Mandatory", "Permitted", "Recommended" and "Encouraged". The categories are as follows:

Mandatory: Compliance obligations of companies set out in applicable laws and regulations, such as the Unfair Competition Act and the Medicines Act, as well as international and national standards
Permitted: Compliance obligations of companies set out in industry standards and regulatory guidelines
Recommended: Reference to proven compliance measures of companies in the healthcare industry ("best practices")
Encouraged: References to compliance measures that assist the company in establishing and implementing long-term mechanisms to combat bribery in business transactions and to promote the quality development of the medical and healthcare industry

Classification of risks

The risks that should be identified and avoided by companies in the healthcare sector are classified and regulated according to the severity of the illegality of the risk and are also divided into four categories: "Prohibited", "To be avoided", "Restricted" and "To be noted". The following actions fall under the different categories:

Prohibited: Behaviour that violates applicable laws and regulations or is classified and punished as commercial bribery by the market regulators
To be avoided: Behaviour that is not clearly prohibited by law or regulation, but which may enable or facilitate the commission of commercial bribery according to current market regulator practice and best practice principles (high risk)
Restricted: Behaviour that is not in line with the company's general compliance principles and may, under certain circumstances, lead to commercial bribery (medium risk)
To be noted: Behaviour that is not in line with the company's general compliance principles, but poses only a low risk (low risk)

Typical situations of corruption risks

Chapter 3 of the draft, Provisions for Identifying and Preventing Corruption Risks, lists nine typical types of behaviour that pose a high risk of corruption:

Academic visits and communication
Hospitality
Fees for services (e.g. speaker fees) to HCPs
Outsourcing
Discounts, rebates and commissions
Donations, sponsorship and grants
Free placement of medical devices
Clinical research
Retail sales

The draft guidelines explain each case group in detail, using the same structure, which consists of three parts: Definition and Content, Subject Matter, and Risk Identification and Prevention.

To help healthcare companies accurately identify, assess and classify corruption risks, the draft Guidelines focus on the classification (i.e. assessment) of corruption risks and the development of risk mitigation plans, and provide guidance to companies to create a sense of responsibility. At the same time, it aims to increase the motivation for proactive compliance management.

Risk prevention measures

For risk areas where unlawful or criminal misconduct has not yet occurred, the draft Guidance notes that when corruption risks are identified through compliance management, appropriate and necessary internal control measures, including internal investigations, risk assessments and corrective actions, must be taken promptly to effectively prevent such misconduct. The draft Guidelines also encourage companies to improve long-term mechanisms to prevent similar risks from recurring.

Dealing with unlawful acts

With respect to commercial bribery, the draft Guidelines require companies to take timely and effective action, such as proactively reporting before regulators initiate formal proceedings, cooperating with authorities during a case, and assessing and taking appropriate internal action following a case.

Recommendation

China's State Administration for Market Regulation's (SAMR) draft Guidelines on Anti-Corruption in the Healthcare Industry is a significant step towards improving compliance standards. Companies should take a close look at the regulations and adjust their internal control mechanisms accordingly. It is particularly important to proactively identify and assess corruption risks and develop and implement risk mitigation measures. In the long term, this will not only contribute to regulatory compliance, but also build trust in the integrity of the healthcare industry.