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China's NHFPC Tightened Its Regulation over Healthcare Industry over Irregularities

Recently, a serial of regulations and actions focused on the supervision of illegal medical practice by China’s National Health and Family Planning Commission (“NHFPC”) shows a long term supervising mechanism has been set up step by step. Here are the key events for the strengthening scrutiny:


1.      Q: How did the NHFPC put forward the main tasks of the supervision over healthcare industry?

A: Actually, first of all, the NHFPC placed emphasis on the purchase and sales of medical products by issuing the Implementation Opinion of the Special Campaign to Correct Bad Practice in Purchase and Sales of Medical Products jointly with other 8 authorities on December 13, 2013. And the main tasks set forth in this implementation opinion involve both medical products and medical services and include:

(i)                 Strictly regulating the purchase and sales activities to lower the excessively high prices of drugs and medical devices;

(ii)               Strengthening the supervision of medical institutions and healthcare professionals (“HCPs”) to regulate the medical services;

(iii)             Deepening the systematic reform to address issues from the roots;

(iv)             Tightening enforcement in punishing bad practice cases to further promote the industry ethics.


2.      Q: Since the NHFPC stressed regulating healthcare institutions and HCPs, what specific measures were taken subsequently?

A: Just several days after the implementation opinion, the NHFPC issued the Nine Prohibitions focused on healthcare institutions and HCPs which provided the general principles for eliminating corruption and concentrated on building up a healthy healthcare industry. And the following nine type of activities are expressly prohibited:

(i)                 Linking HCPs’ income with revenue from drug prescriptions or medical tests;

(ii)               Charging commissions for prescriptions;

(iii)             Charging illegal fees;

(iv)             Accepting illegal donations;

(v)               Participating in promotions or publishing illegal medical advertisement;

(vi)             Collecting for commercial purposes or facilitating collection by sales representatives of prescription statistics;

(vii)           Illegally procuring or using medical products;

(viii)         Accepting kickbacks;

(ix)             Accepting “red packets” from patients.


3.      Q: Besides the main tasks and prohibitions, is there any legal sanction for the irregularities in healthcare industry?

A: Other than the expressly provided prohibitions, the Action Plan of the Special Campaign to Maintain the Order of Medical Activities and Crack Down on Medical Related Crimes was issued at the same time. And major measures of such special campaign include:

(i)                 Tightening enforcement in punishing irregularities and crimes infringing personal safety of HSPs and patients and disordering medical activities;

(ii)               Improving security capability of medical institution;

(iii)             Improving medical service quality;

(iv)             Achieving better resolution of medical disputes;

(v)               Identifying hidden and potential trouble of medical disputes.


For the purpose of summarizing the working results at the very stage of the special campaign to crack down on illegal medical practice, on January 21, 2014, a teleconference meeting was held by the NHFPC together with other 5 authorities. And they agreed that after three months crackdown, awareness of laws applicable to medical practitioners and institutions has been strengthened, and public consciousness of boycotting illegal practices has increased. Health authorities at all levels are urged to take further steps.


4.      Q: According to the conference abovementioned, further measures at a specific level are required. And is there any specific step is taken for the strong repercussions such as accepting “red packets”, taking kickbacks from medical device or drugs manufacturers and distributors?

A: For the purpose of the strong repercussions of “red packets” and kickbacks, the Regulations Governing Practitioners of the Healthcare Institutions and Family Planning Institutions Who are in Breach of the Code of Conducts (draft for comment) was issued on January 28, 2014. And in accordance with the draft for comment, medical practitioners breaching the code of conducts will be sanctioned with warning, record with a demerit or dismissal.


5.      Q: Other than the punishment, is there any regulating measure in advance for the “red packets” or kickback issues?

A: For such purposes, the Circular on Introducing Doctor-Patient Agreement of Refusing to Accept or Give “Red Packets” was issued accordingly. Since May 1, 2014, all level-two or above hospitals shall provide the Doctor-Patient Agreement of Refusing to Accept or Give “Red Packets” to the patient or their representative within 24 hours after the patients are admitted into the hospital, which shall be signed by the doctor in charge of the patient or the doctor in charge of the ward on behalf of the hospital. Other medical institutions may adopt the same voluntarily. The template of such agreement was promulgated together with the circular.


As the long term mechanism tackling irregularities is being founded, meanwhile, the compliance risks faced by pharmaceutical and medical device enterprises are continuously increasing. The market players should change their sales model and code of conducts regarding interaction with medical institutions and HCPs in China in whole or in part to mitigate compliance risks.

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