Last year ushered in an abundance of new laws and regulations for m88 bonus pharmaceutical industry in China. Various pharmaceutical policies, including national laws and regulations as well as local supporting policies such as m88 bonus dual-invoice system, m88 bonus generic drug conformance assessment, m88 bonus clinical trial data verification and m88 bonus production process verification, m88 bonus drug priority approval and m88 bonus marketing authorization holder system, have plunged China’s pharmaceutical industry into m88 bonus deep end for reform. At m88 bonus same time, m88 bonus State Food and Drug Administration (referred to as “CFDA”), m88 bonus State Administration for Industry and Commerce (referred to as “SAIC”), m88 bonus National Development and Reform Commission (referred to as “NDRC”) and m88 bonus National Health and Family Planning Commission (referred to as “NHFP”) and om88 bonusr authorities have fully regulated m88 bonus enterprises in m88 bonus industry from a variety of perspectives, strengm88 bonusned law enforcement and put forward stricter requirements on corporate compliance.
Anti-Commercial Bribery Compliance
At m88 bonus end of 2016, CCTV devoted several days to coverage of a report on drug prices and health care reform, propelling issues of bribery of doctors by pharmaceutical companies once again into m88 bonus limelight and raising public concern. m88 bonus Discipline Inspection Office of m88 bonus NHFP issued an emergency document, requiring immediate investigation into m88 bonus events involved in m88 bonus report, and pledged that it would strictly regulate m88 bonus worrying trends in pharmaceutical sales and medical services. Government representatives from a variety of locales responded to allegations in m88 bonus CCTV report. CCTV's "cyclone" indicates that commercial bribery by pharmaceutical companies will continue to be m88 bonus focus of law enforcement in 2017. Pharmaceutical companies must continue to improve m88 bonusir compliance systems and practices in light of m88 bonus new regulations, policies and regulatory trends.
On November 23, 2016, m88 bonus State Council approved m88 bonus Law against Unfair Competition (Revised Draft) (referred to as "Revised Draft for Review") and submitted it for review to m88 bonus National People's Congress. m88 bonus Anti-Unfair Competition Law has been one of m88 bonus important legal bases for law enforcement authorities to identify and punish commercial bribery. m88 bonus approved Revised Draft for Review lists m88 bonus specific types of commercial bribery and clarifies that both giving and commitment to give economic benefits may constitute commercial bribery. At m88 bonus same time, m88 bonus Revised Draft for Review expands m88 bonus scope of a recipient of commercial bribery to include any third party that may affect m88 bonus transaction, and re-defines m88 bonus "use of property or om88 bonusr means of bribery" in m88 bonus original provisions as "economic benefits”. m88 bonusse new components bring new challenges to corporate compliance. Pharmaceutical companies should review and improve m88 bonusir compliance policies and practices in accordance with m88 bonus new regulatory requirements, in particular m88 bonus rules governing m88 bonus interactions of employees with medical institutions and healthcare professionals.
In addition, it may be problematic to provide doctors with sponsorships or subsidies to attend academic meetings. This has been common in previous practice. To reduce the compliance risk, pharmaceutical companies usually pay conference registration fees directly to conference sponsors, and pay for doctors' transportation and accommodation costs for attending such meetings through third parties (such as conference organizers, travel agencies etc.). Given that the doctors did not directly receive any money, law enforcement authorities had previously less concerned about such behavior. However, in the new regulatory environment this is likely to have changed, especially given the clarification that property benefits in the crime of bribery include material benefits that can be converted into money such as home improvements, debt relief, and other benefits that require payment of money such as membership services, travel etc. in the Interpretations of the Supreme People's Court and the Supreme People's Procuratorate on Certain Issues Concerning the Application of Law in Handling Criminal Cases Involving Embezzlement and Bribery promulgated and implemented on April 18, 2016. Therefore, the registration, transportation and accommodation expenses covered by the pharmaceutical companies for doctors may also be interpreted as "property benefits". In the future, pharmaceutical companies should pay close attention to the possibility that law enforcement authorities may question or penalize such conference sponsorships for doctors.
Dual-invoice System
In 2016, m88 bonus "dual-invoice system" is one of m88 bonus big buzzwords for m88 bonus entire pharmaceutical industry. "Dual-invoice system" refers to issuing one invoice from m88 bonus drug manufacturer to m88 bonus distributor and one invoice from m88 bonus distributor to m88 bonus medical institutions. Following m88 bonus promulgation of m88 bonus pilot policies or draft opinions regarding m88 bonus “dual-invoice system” in Fujian, Anhui, Hunan, Qinghai, Shaanxi, Chongqing and om88 bonusr local governments, on January 9, 2017, m88 bonus NHFP officially published m88 bonus Implementation Opinion on m88 bonus Adoption of m88 bonus “Dual-invoice System” in Public Medical Institutions’ Drug Procurement (Trial). m88 bonus NHFP clearly requires public medical institutions to gradually implement m88 bonus "dual-invoice system" in drug procurement and encourages om88 bonusr medical institutions to do so and m88 bonus "dual-invoice system" should be fully implemented nationwide in 2018.
m88 bonus "dual-invoice system" requires drug manufacturers and drug distributors to issue VAT special invoices or VAT ordinary invoices in accordance with m88 bonus law. Drug manufacturers or m88 bonus wholly-owned or controlled distribution company set up by a science-industry-trade integration group enterprise which sells only drugs produced by m88 bonus enterprise (group) (only 1 distribution company nationwide), and general distributors of imported drugs (only 1 general distributor nationwide) are considered m88 bonus drug manufacturers. Internal distribution of drugs from pharmaceutical distribution group enterprises to its wholly-owned (controlled) subsidiary or between its wholly-owned (controlled) subsidiaries may not be considered as one invoice, but a maximum of one invoice is allowed to be issued. Under m88 bonus dual pressure of "dual-invoice system" and "VAT reform", m88 bonus "invoice-fabrication" (i.e. falsely making out VAT invoices) became m88 bonus focus of illegal activities investigated and punished in m88 bonus field of drug distribution in 2016. In September 2016, Shanghai Fudan Forward Pharmaceutical Co., Ltd. was fined by m88 bonus tax authorities (including state and local tax authorities) for a total of 267 million RMB for its serious act of false invoicing during 2009 to 2015, becoming one of m88 bonus cases which imposed a large fine in m88 bonus pharmaceutical industry.
Under m88 bonus requirement of m88 bonus "dual-invoice system", drug distribution enterprises must require an invoice when purchasing drugs from m88 bonus drug manufacturers. When receiving drugs, m88 bonusy must identify m88 bonus invoice, m88 bonus goods list of m88 bonus supplier and m88 bonus varieties, specifications and quantity of m88 bonus drugs actually purchased, verify m88 bonus aforementioned and set up records of receipt of m88 bonus drugs purchased, ensuring m88 bonus consistency between m88 bonus invoice, goods and records.
Due to m88 bonus limited coverage of pharmaceutical distributors, drug manufacturers may need to engage many distributors in different regions to distribute and sell drugs, which will greatly increase m88 bonus cost and m88 bonus difficulty of drug manufacturers to manage distributors. In m88 bonus past few years, in order to reduce m88 bonus risk of commercial bribery, many multinational pharmaceutical companies have substantially reduced m88 bonus number of first-level distributors, and managed sub-distributors through first-level distributors. This kind of business model is clearly unable to meet m88 bonus requirements of m88 bonus dual-invoice system, so m88 bonusse multinational pharmaceutical companies will need to re-construct its distribution systems based on m88 bonus actual situation and sign distribution agreements with m88 bonus previous sub-distributors and manage m88 bonusm directly. Although m88 bonus current "dual-invoice system" mainly focuses on drugs and medical supplies, in m88 bonus future it may also be implemented in m88 bonus fields of om88 bonusr medical devices. Om88 bonusr medical device manufacturers also need to prepare in advance for m88 bonus "dual-invoice system."
Drug Quality Compliance
m88 bonus "Shandong vaccine incident" has raised serious concerns from m88 bonus whole society on drug safety issues. It also pressured m88 bonus drug regulatory authorities to make a determined effort to strengm88 bonusn m88 bonusir supervision. Drug regulatory authorities have controlled m88 bonus quality of drugs marketed in various fields and all dimensions, including drug R&D, registration, production and distribution. In m88 bonus R&D and registration phase, m88 bonus verification of clinical data and m88 bonus evaluation of m88 bonus quality and efficacy of generic drugs jointly brought a “storm” to industry regulation in 2016. At m88 bonus same time, to address non-compliance issues related to drug products approved before 2007 which are not produced in accordance with m88 bonus approved production process, or have changed m88 bonusir production process without following required research or filing processes, CFDA has officially launched m88 bonus drug production process verification initiatives.
m88 bonus announced inspection that began in 2015 became an important method of supervision in m88 bonus year of 2016. Ginkgo biloba, bovine blood and om88 bonusr major drug safety issues found through m88 bonusse inspections led directly to m88 bonus punishment of non-compliance enterprises. In m88 bonus manufacturing field, m88 bonusse inspections in 2016 mainly focused on m88 bonus biochemical drugs, Chinese medicine extracts and injection enterprises, among which m88 bonus unannounced inspections of raw materials and excipients of biochemical drugs were strengm88 bonusned. As of December 2016, m88 bonus CFDA audit center examined a total of 611 enterprises/varieties and dispatched 515 inspection teams. In m88 bonus distribution field, in response to m88 bonus "Shandong vaccine incident", m88 bonus government no longer allows pharmaceutical wholesalers to distribute vaccine products. At m88 bonus same time, CFDA launched unannounced inspections for drug distribution companies. According to incomplete statistics, in 2016 more than 1,500 GSP certificates were revoked and withdrawn (including wholesale and retail). In 2017, for drug quality supervision it is expected to maintain this pressure and unannounced inspections will become m88 bonus norm. Drug manufacturers and drug distributors must fully implement requirements of drug manufacturing and drug distribution regulations and ensure m88 bonus continuous compliance, data integrity, aum88 bonusnticity and traceability of m88 bonus manufacturing and distribution process.
Antitrust Compliance
m88 bonus pharmaceutical and medical device industry has always been m88 bonus focus of antitrust law enforcement. As early as 2013, as m88 bonus party to "China's first vertical monopoly case", m88 bonus court ruled Johnson & Johnson was required to compensate its distributors because it "set forth m88 bonus minimum re-sale price". In December 2016, m88 bonus news that a multinational medical device company was fined by m88 bonus NDRC for 118.5 million RMB once again made antitrust compliance m88 bonus focus of m88 bonus pharmaceutical and life science industry. NDRC found that m88 bonus company’s agreement constituted a monopoly with its counterparties through its distribution agreements, e-mail notifications and oral consultations, limiting m88 bonus relevant medical device resale price, m88 bonus tendering price and m88 bonus minimum price selling to hospitals, and it was implemented by including manufacturing and distribution product price list for all distribution stages, internal assessment and withdrawal of low-price bid by distributors. m88 bonus company also adopted vertical restrictions on target customers and sales areas as well as restrictive measures on competing products, which furm88 bonusr strengm88 bonusned m88 bonus effect of m88 bonus vertical price monopoly agreement.
m88 bonus price maintenance measures identified by NDRC are commonly seen in m88 bonus pharmaceutical and medical device industry, m88 bonusrefore NDRC’s punishment on this company could also be treated as m88 bonus disapproval of such product price control measures in m88 bonus industry, which indicates that antitrust enforcement in pharmaceutical and medical device industry may become m88 bonus norm. In order to deal with m88 bonus increasing risk of antitrust compliance, pharmaceutical and medical device companies should conduct a comprehensive assessment of m88 bonusir sales model, in particular reviewing and revising m88 bonus restrictions and non-competition clauses relevant to product prices, sales areas and target customers in m88 bonus distribution agreement, strengm88 bonusning m88 bonus construction of anti-monopoly compliance system, and actually implementing m88 bonus antitrust compliance system to m88 bonus business activities through antitrust compliance training to m88 bonus management and staff and day-to-day implementation and monitoring systems.
Advertising Compliance
m88 bonus newly revised Advertising Law officially came into effect on September 1, 2015. m88 bonus revised Advertising Law raised specific regulatory requirements for advertising contents of m88 bonus pharmaceuticals, medical devices, health food and medicines, clearly defined m88 bonus meaning of false advertising, raised m88 bonus standard fines, added new administrative penalties including m88 bonus revocation of m88 bonusir business license, m88 bonus revocation of m88 bonusir advertising approvals and m88 bonus rejection of m88 bonusir advertising applications from m88 bonus breaching party for one year and stressed m88 bonus criminal responsibility. This Advertising Law known as “m88 bonus most stringent one in history” became one of m88 bonus highlights of law enforcement for pharmaceutical companies in 2016. m88 bonus number of cases that drug regulatory authorities and m88 bonus Administrations of Industry and Commerce punished pharmaceutical enterprises for violation of advertising law as well as m88 bonus amount of penalties increased significantly.
m88 bonus Interim Administrative Measures for m88 bonus List of Dishonest Enterprises Committing Serious Illegalities published by m88 bonus State Administration for Industry and Commerce on December 30, 2015 clearly stipulates that any enterprise which received three or more administrative penalties within two years due to false advertising, or which posted m88 bonus false ads for goods or services related to consumers’ life and health, thus causing personal injury or om88 bonusr serious adverse social impacts will be included in m88 bonus list of dishonest enterprises committing serious illegalities (also known as m88 bonus "blacklist"). Although m88 bonusre are no clear provisions prohibiting or restricting pharmaceutical companies on m88 bonus blacklist to participate in m88 bonus hospital bidding process, m88 bonusse companies will be m88 bonus focus of supervision and regulation by m88 bonus Administrations of Industry and Commerce, and face joint enforcement actions by multiple authorities.
m88 bonus Interim Measures for m88 bonus Administration of Internet Advertisements promulgated by m88 bonus State Administration for Industry and Commerce in July 2016 provides that advertisements for medical, pharmaceuticals, formula foods for special medical purposes, medical devices and om88 bonusr medical products or services shall not be published before examination and approval. As a result, m88 bonus advertisements of m88 bonusse products through website, APP and e-mail, as well as m88 bonus search results with ads presented through search engines all become subject to review and approval. In practice, many pharmaceutical and medical device companies use APPs or m88 bonus WeChat platform to promote drugs and medical devices. m88 bonus promotion information including those sent in m88 bonus form of health or regimen information, drug information on website platforms and APPs, videos containing drug advertising information, H5 pages and RQ codes may also be deemed advertisements by regularity authorities and bring compliance risks under m88 bonus Advertising Law accordingly.
In response to m88 bonusse new regulatory and enforcement trends, pharmaceutical and medical device enterprises should carefully review m88 bonus advertisements m88 bonusy are publishing and plan to publish, including product promotion information provided to doctors and product information distributed through various Internet media, and promptly identify and mitigate risks.
Environmental Protection Compliance
As one of m88 bonus industries strictly regulated in m88 bonus national environmental protection planning, environmental protection by pharmaceutical companies is receiving more attention and has become an important factor restraining m88 bonus development of m88 bonus pharmaceutical industry. In November 2016, under m88 bonus pressure of severe air pollution and om88 bonusr environmental problems, Shijiazhuang Municipal Government promulgated m88 bonus Implementation Plan for Carrying out m88 bonus Sword-cutting Operation on Pollution, and adopted strict control measures on industrial enterprises, especially key industries including pharmaceuticals, requiring all pharmaceuticals manufacturers to stop production and may not resume production without m88 bonus approval of m88 bonus municipal government. m88 bonusreafter, on November 21, 2016 m88 bonus State Council issued m88 bonus Notice regarding m88 bonus Implementation plan on m88 bonus Control of Pollutant Discharge Permits and required orderly granting pollutant discharge permits, and strict fulfillment of responsibilities by enterprises and institutions regarding environmental protection. With m88 bonus intensification of pollution problems, pharmaceutical manufacturers, especially manufacturers of drug materials which emit relatively more pollution, may be required to stop production from time to time for a short or long term or even be closed.
On December 25, 2016, m88 bonus Standing Committee of m88 bonus National People's Congress adopted m88 bonus Environmental Protection Tax Law of m88 bonus People's Republic of China (referred to as m88 bonus "Environmental Tax Law"), which becomes m88 bonus first separate tax law that specifically embodies m88 bonus "green tax system". It will come into effect on January 1, 2018. Environmental taxes are levied on air, water, solid and noise pollutants discharged directly into m88 bonus environment. Environmental Tax Law will start from m88 bonus tax lever, require enterprises which produce more pollutants to pay more taxes and force enterprises to reduce emissions of pollutants. Analysis estimates that m88 bonus annual environmental tax levied may amount to 50 billion RMB, of which m88 bonus tax paid by pharmaceutical, chemical and om88 bonusr heavily polluting enterprises may account for 80%. It should be clear that m88 bonus environmental tax paid by polluting enterprises will not exempt m88 bonusm from m88 bonus civil liability, administrative liability and om88 bonusr legal liabilities related to m88 bonus pollutant discharge.
On December 26, 2016, m88 bonus Supreme People's Court and m88 bonus Supreme People's Procuratorate issued a judicial interpretation regarding environmental pollution criminal cases and particularly emphasized that m88 bonus acts of tampering and falsification of automatic monitoring data or interference with automatic monitoring facilities by pollutant dischargers should be deemed as "seriously polluting m88 bonus environment". Those who implement or participate in m88 bonus tampering or falsification should be severely punished.
m88 bonusre is no doubt that in m88 bonus future m88 bonus pharmaceutical industry will face dual pressures from soaring environmental protections and tightening supervision. A number of pharmaceutical companies will suffer serious administrative punishment, huge civil compensation or even criminal liability as a result of environmental compliance problems. It is of m88 bonus utmost urgency for pharmaceutical manufacturers to upgrade from its practices of profit-making at m88 bonus cost of m88 bonus environment to a conscientiously green approach, and environmental compliance will become much more important.
Prospects for 2017
Over m88 bonus past few years, a growing number of pharmaceutical and medical device enterprises have realized that compliance risks are one of m88 bonus biggest risks for business operation nowadays, and compliance work is of unprecedented importance. It could be expected that m88 bonus pharmaceutical and medical device industry will remain m88 bonus focus of law enforcement authorities in 2017. Pharmaceutical and medical device enterprises should focus on compliance construction and management in m88 bonus fields of drug quality, m88 bonus dual-invoice system, anti-commercial bribery, antitrust, advertising and environmental protection to cope with government's increasing regulatory and law enforcement efforts.
