New anti-corruption rules for pharmaceuticals introduced, and these 8 types of behaviour suspected of commercial bribery

Recently, the Chongqing Municipal Administration for Market Regulation issued the “Compliance Guidelines for Anti Commercial Bribery in the Pharmaceutical Industry of Chongqing”, aiming to guide and assist pharmaceutical enterprises and medical and health institutions in cultivating a culture of fair competition compliance, establishing and improving management systems for preventing commercial bribery, and preventing legal risks of commercial bribery.

#01 Eight forbidden areas exposed: these behaviors suspect bribery in the pharmaceutical industry

The document specifies 8 behaviors suspected of commercial bribery, as follows:
1. The act of reimbursing related expenses under various pretexts or forms such as sales fees and promotion fees, and giving improper benefits to medical institutions or their internal departments and employees.
2. The act of providing improper benefits to medical institutions or their internal departments and employees by falsely claiming to pay commissions.
3. The act of providing improper benefits to medical institutions or their internal departments and practitioners under the guise of conducting academic activities, scientific research collaboration, academic support, etc.
4. The act of giving improper benefits to medical institutions or their internal departments or employees through gift giving, arranging travel, catering, or entertainment activities.
5. The act of providing improper benefits to medical institutions, their internal departments, and practitioners through sponsorship or donation.
6. The act of borrowing a venue and linking the rental income with the medical and health institution’s diagnosis and treatment activities.
7. The behavior of pharmaceutical companies giving improper benefits to medical institutions or their internal departments and employees in order to obtain cooperation opportunities with medical and health institutions.
8. The act of medical institutions or their internal departments or employees issuing prescriptions in violation of regulations, receiving kickbacks or improper benefits from pharmaceutical companies.
9. In addition to the above-mentioned behaviors, the guidelines also remind attention to 8.whether free clinics, consultations, and other activities are linked to drug sales.
At the same time, detailed risk management factors are introduced, including:
• – Review of reasonableness of agent selection, frequency of payments, etc.
• – Preventing misrepresentation of projects, inflated costs, false invoicing and other fund-raising practices
• Review of the authenticity of business cooperation, e.g., project procurement, cataloguing, price setting, etc.
The guidelines specify penalties at the administrative, civil and criminal levels and set out the conditions for mitigation or exemption from penalties.

#02 It is worth noting that while cracking down, the compliance guidelines also leave room for the healthy development of the industry.

For example, Shanxi’s Compliance Guidelines for Pharmaceutical Manufacturing and Operating Enterprises to Prevent Commercial Bribery allow operators to pay discounts to counterparties or commissions to intermediaries in an express manner, but require that they be truthfully accounted for.
This approach not only reflects the strictness of regulation, but also provides a compliance pathway for normal business activities, which can be seen as a balanced strategy. It reflects the regulatory authorities’ recognition of the importance of protecting normal business activities while cracking down on illegal activities.
Faced with an increasingly strict regulatory environment, pharmaceutical companies and medical institutions need to take the following measures:
1. Establishment of a sound internal compliance system: including anti-commercial bribery policy, conflict of interest management, third-party due diligence, etc.
2. Enhancement of staff training: Regular compliance training is conducted to improve staff’s awareness of compliance and risk identification.
3. Optimizing business processes: re-examine existing sales, promotion, research and development processes to ensure compliance with the latest compliance requirements
4. Strengthening of financial management: strict control of expense reimbursement and recording of accounts to ensure financial transparency.
5. Establishment of a reporting mechanism: encourage internal and external reporting to detect and address potential violations in a timely manner.
6 Regular compliance audits: Through internal or third-party audits, timely discovery and correction of compliance loopholes.
7. Paying close attention to policy trends: timely understand the latest regulations and guidelines, and adjust business strategies in a timely manner.

Conclusion
With the help of high-precision supervision means, the long-standing hidden commercial bribery is expected to be effectively curbed.At the same time, this also creates opportunities for the long-term healthy development of the industry. Companies that are able to innovate their business models and improve the quality of their products and services based on compliance will stand out in the new regulatory environment.

In addition, with the implementation of policies such as medical insurance fee control and volume based procurement, the competitive landscape of the pharmaceutical industry is undergoing profound changes. In this context, compliant operation is not only necessary to avoid legal risks, but also an important way to enhance the core competitiveness of enterprises.

China is encouraging China end uses for more domestic products in latest years. Thus, more and more overseas manufacturers are planning localization in China. BradyKnows localization team has extensive experiences in facility establishment, audit, supplier evaluation, manufacturing, registration, and marketing in China. Pls feel free to let us know any questions on China entry via info@bradyknowsmedical.com

Source：Device Market
Translated & edited：Bradyknown