State issued document: opening a new era of anti-monopoly! pharmaceutical and device industry face a major clean-up
On 24 March 2023, the NMPA issued four regulations to accompany the Anti-Monopoly Law, namely the Regulations on the Suppression of Abuse of Administrative Power to Exclude and Restrict Competition, the Regulations on the Prohibition of Monopoly Agreements, the Regulations on the Prohibition of Abuse of a Dominant Market Position and the Regulations on the Review of Concentration of Operators, which will come into effect on 15 April 2023.
01
Strictly investigating the abuse of administrative power to monopolize the distribution and purchase of medicine and equipment
The new version of the Provisions on Stopping the Abuse of Administrative Power to Exclude and Restrict Competition makes it clear that administrative organs and organizations authorized by laws and regulations to manage public affairs shall not abuse their administrative power to prevent other operators from entering the relevant market by signing cooperation agreements, memorandums and other means with operators, or implement unequal treatment for other operators to exclude or restrict competition.
For a long time, in the field of medicine, this kind of abuse of administrative power to exclude and restrict competition has gradually penetrated all aspects of bidding, procurement and distribution, seriously disrupting the market of related drugs, consumables and instruments and equipment. Among them, the implementation of illegal monopolies through “government-enterprise cooperation” agreements, tenders and franchises has become even more common in recent years.
In this regard, the new regulations are forming a more comprehensive and clear determination for this new type of administrative monopoly, plugging the “loopholes” of the original rules. With the implementation of the supporting regulations, the nationwide monopoly on the procurement and distribution of pharmaceuticals will usher in a stronger and more precise hunt.
02
The era of “antitrust” in the medical industry has arrived
Since last year, the State Administration for Market Regulation has deployed a nationwide special action to prevent the abuse of administrative power to eliminate and restrict competition enforcement. It has investigated and dealt with a number of violations of the relevant provisions of the Anti Monopoly Law of the People’s Republic of China in restricting transactions, impeding the free circulation of goods, restricting foreign operators from participating in local bidding activities, and other abuses of administrative power to eliminate and restrict competition.
In the field of medicine, as of January 2023, among the five batches of cases published by the State Administration for Market Regulation, a total of 9 health bureaus/commissions have been corrected for abusing administrative power to exclude and restrict competition. The disclosure shows that the health bureaus monopolize, formulate distribution and purchase by signing cooperation agreements and other means. And the phenomenon of restricting medical institutions’ right to choose distribution and bidding is prominent. In addition, three education bureaus were named for designating ophthalmic institutions as document agencies for school vision tests.
Not only administrative units, but also the monopoly behavior of the enterprises of raw materials and high-value medical consumables are also the focus of close attention of the state. Under the crackdown, the State Administration for Market Regulation has imposed huge fines on several drug companies suspected of monopolizing raw materials.
On February 20, the State Administration for Market Regulation issued the Administrative Punishment Decision on the Case of Abuse of Dominant Market Position of Northeast Pharmaceutical Group Co., LTD. After investigation, Northeast Pharmaceutical abused its dominant market position in China’s L-carnitine API market and sold L-carnitine API at unfairly high prices from November 2018 to June 2019 and was fined 133 million yuan.
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Source：Device Market
Translated & edited ：Bradyknows
